The third week of May is always a very busy week for Brazilians in NY and for investors interested in Brazil. Several events take place this week, such as the Person of the Year awards, the Itau investment conference, the BTG annual presentation, and more. Last week we had the opportunity to see Paul Volcker and Hillary Clinton talking to participants at those events, which was thrilling, at least for me. I know many people that didn’t find Volcker’s comments interesting but I did. Maybe that’s because he stated the obvious: the American economy is improving, but not enough; the deficit is declining, but there is still a long road ahead in order to achieve a balanced budget; there has been some progress in Spain and Italy but the question remains if the Euro will hold together; the emerging markets ex-China are suffering from disappointing growth, and so on and so forth. The picture of the world economy is evident; at this point there will not be many surprises, and if there are, they will be on the positive side. The question is what can be done with that information . Luc...
Read More »Every time a bear, or someone who still doesn’t believe in the market rally, tries to find an explanation for the recent highs, the argument goes somewhat like this: The economy is not improving, but with the central banks of Japan and the United States pumping money in the markets and, more recently, with the ECB cut on interest rate, the stocks go up. I disagree with that argument mainly because as I wrote in my April newsletter, I think that “not improving at the rate most people would like” is different from recession. If there is no recession on the horizon, asset prices will tend to go up. Regardless, the important point to be noted is that whatever the reason, the stocks are going up, more homes have been built and sold at better prices and people feel more wealthy. That alone is a good reason for stocks to proceed upward, because when people feel wealthier they spend more and the companies do better. So, as I have been saying, aside from the volatility that is inherent to the market, the trend is up and as they say, the trend is your friend. This argument, however, o...
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