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From 100.0 to 0.0 — and the road back that stopped halfway

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There are numbers that live cramped in the middle of the scale, going back and forth without ever touching the edges. The Perene Risk Index was not one of them. Between March 2014 and August 2015, it ran the full ruler — from peak to floor — and then spent months trying to retrace the path. The story of an entire cycle fits, sometimes, into the journey of a single dial.

The extreme

In the beginning, it was confidence with no counterweight. Domestic money was returning to risk at full force, and the gauge left no room for doubt: it pinned the ceiling. Seventeen months later, the same needle was touching the ground. In numbers: the Perene Risk Index jumped from 31.8 to 100.0 in March 2014, the absolute top of the scale; in August 2015 it closed at 0.0, the floor. Over the same arc, the dollar went from R$ 2.3261 to R$ 3.5143, public debt moved from offstage to 62.97% of GDP, and the Selic rose from 10.75% to 14.25% a year.

What happened next

The descent was not a straight line. In March 2015, at the halfway point, mood still hesitated to call it defense — the Perene Risk read 55.2, neutral — but the composition of capital had already decided: the intermarket had retreated to 37.8, with money migrating to utilities and commodities priced in reais, the kind that doesn't depend on Brazil growing. Then came the August floor. And only then did the road back begin. Three months of uninterrupted improvement took the intermarket from its floor to 43.29 in March 2016, when the banks lifted off the ground — Financials/IBOV from −1.65 to 0.18 — and the household mood index surged from 51.8 to 95.5.

What did not happen

The return was never completed. Anyone expecting the Perene Risk to retrace the entire climb — from 0.0 back up to 100.0 — did not find it: in March 2016, it read only 54.0, back to neutral, far from the ceiling. The number that screamed euphoria in 2016 was another one, mood at 95.5; the risk axis stayed behind. And the structure did not normalize either — 43 is still moderate aversion, not calm terrain. Debt, already alarming at the floor, kept climbing to 66.3% of GDP. The cycle drew a circle, but the line never closed.

The honest verdict

The Perene Risk ran the full ruler on the way down, in seventeen months; on the way back, over another seven, it reached only halfway. The symmetry that memory likes to impose — peak, floor, peak again — was not in the numbers. The fall was a cliff; the recovery, a staircase. And when mood was already screaming buy again, the structure was still putting the house in order.

Continue reading: The euphoria at the top · The three alarms of August 2015 · Who bought at the scream →

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Characters: Flow (risk appetite) · Structure (intermarket) · Mood · Dollar