Archive for the ‘English’ Category
 

Despite the bad news the markets are up.

Posted on February 15, 2012 in English, Euro Zone, Internacional, US Economy, US Stock Market | No Comments »

As the tension in the Middle East grows, the oil price grows too and so the price of gasoline at the pump. We really don’t need that when the economy is still in slow mode recovery. The morning started with some not-so-good news like the rise in oil prices, the fact that the Ministers of Finance in Europe postponed their meeting to approve the Greek measures, and the news that the economy in the Eurozone contracted 0.3% in the last trimester of 2012. Despite that, the markets in Asia and Europe are up and so are the futures in the US.  During an interview in the morning, the Governor of the Bank of England said that the Europeans have to act fast to avoid chaos, and that nobody is prepared for a Greek default. England’s economy contracted 0.2% in the last trimester of 2011.

Back to the United States the good news is the possibility that the congress approve the extension on payroll tax cut , which would leave more money  in the hands of  about 160 millions of Americans.

 

The Greek drama continues

Posted on February 13, 2012 in English, Euro Zone, Internacional, US Economy, US Stock Market | No Comments »

The reaction to the approval of more austerity measures in Greece was received with a violent riot. Not surprising, considering that the recession hit Greece hard with a retraction of 6% in the GDP in 2011. The expectation is that  after the implementation of the measures, the GDP should shrink another 7% in 2012. Markets are celebrating, with the European stocks  and the  futures in the  USA up. Rally?  Not so fast. The deal has to be approved by the Finance Ministers on a meeting scheduled for Wednesday.

In the USA, President Obama sent the budget proposal to the Congress and we should expect long debates and no resolution. Meanwhile and despite Obama’s change of the bill, the catholic Bishops are not happy about the contraceptive rule. People are crazy and it looks like they just can’t see the problem limited to what it is: who should pay for the pills? There is nothing to do with religion freedom or conviction. If one works in a Catholic institution- and this person is not necessarily catholic- one should have an insurance plan to buy the pills. Isn’t that simple?

I finalize with my prayers and thoughts on Whitney Houston: may her wonderful voice be with us forever.

 

One more day waiting for Greek talks.

Posted on February 09, 2012 in English, Euro Zone, Internacional | 1 Comment »

More uncertainty coming from Greece: as of yesterday the 3 political parties had not agreed on further cuts in the economy, but everybody believes that it will happen today, at the last minute. Also, today the banks will finalize the agreement and accept losses of almost 70% at the same time the IMF and EU should agree on the new package of aid. Despite the uncertainty, the European  and Asian stock market were in positive territory .In the US, futures are pointing to a decline but the announce of jobless claim at 8:30 should give direction to the market. The BOE announced more quantitative easing and left interest rate unchanged .Today should be one more good day for the market, if jobless claim helps.

 

Mr 1%.

Posted on January 27, 2012 in English, Politics, US Economy, US Stock Market, USA | No Comments »

This has been an interesting week, with two republican debates, the state of the Union, the FED meeting and the announcement of GDP. The Fed’s announcement that interest rates would continue to be very low until 2014 provoked euphoria in the market. Once the euphoria passed,  however, people started to  realize that if that was the decision, it must be because they are not very optimistic – to say the least- about the prospects of the economy and Europe’s ability to resolve its problems. Unfortunately the GDP came in lower than expected, so we are ready for a pullback in the stock market. The tug of war continues; risk on, risk off.

Obama’s speech was great, as always. If only he would follow up his words with actions, that would be even better. One of his problems is too many words, and very little action – except when it comes to military acts, like the killing of Osama Bin Laden and the rescue of the prisoners in Somalia. In fact, one of the best statements of the night was “Osama is dead and General Motors is up!” Meanwhile in the political arena, the republican establishment decided to attack the Gingrich candidacy, and Romney was very aggressive in the debate on Thursday. However, the disclosure of   Romney tax returns’ made him THE archetype of the 1%: Mitt Romney makes per day what most Americans make per year. Can he get the vote of the 99%?

 

Brazil 2012

Posted on January 19, 2012 in Brazil, Brazilian Economy, English | 1 Comment »

Today I attended a seminar sponsored by the Brazilian Chamber of New York about the economic and political outlook of Brazil. The program had excellent speakers – Murilo de Aragão, Monica Baumgarten de Bolle, Mauro Leos and Eduardo Loyo – and a great moderator – Paulo Vieira da Cunha.

The main points highlighted by the speakers were the following:

1-      In the short term, and more specifically in 2012, Brazil will continue to do very well, especially compared to the rest of the world. We will see economic growth – though less than it was in 2011, and we will still have primary surplus. Additionally, despite being in the high range of the target, inflation will be under control.

2-      In the long term, structural problems will continue to be a challenge: lack of infrastructure, loss of competitiveness, taxes, etc. Unfortunately, there is no political will or popular pressure to make any reforms to tackle these problems.

The truth is that success is the enemy of transformation. When a country faces a crisis, it is necessary to look for solutions and correct whatever is wrong, as we are seeing in some countries in Europe. However, there is no need for change in Brazil: the people are happy, the unemployment rate is at its lowest, poverty has declined, the middle class has gotten bigger, and the government has high rates of approval. So, why change?

Only the future will tell whether ignoring the challenges today will be the main obstacle for sustainable growth tomorrow. Let’s wait and see.

 

The Eurozone

Posted on January 17, 2012 in English, Euro Zone, Internacional | No Comments »

According to Nouriel Roubini there are seven headwinds to Eurozone growth:

1-The slowing core (France and Germany)

2-Fiscal Austerity- it will take years to see the benefits and in the meantime will make the recession worse

3-Politics- draconian measures will lead to a public backlash

4-The banks – will get worse in a slowing economy

5-The ECB- valiant, but overwhelmed

6-An overvalued currency

7-Greece, yet again.

 

Nine causes of slow global growth in future years

Posted on January 11, 2012 in English, Euro Zone, Internacional, US Economy, USA | No Comments »

excerpted from the January 2012 edition of A. Gary Shilling’s INSIGHT

Volatility is here to stay.

Posted on December 14, 2011 in English, Euro Zone, US Economy, US Stock Market, USA | No Comments »

According to the movie “Too Big to Fail” (HBO), after the Lehman Brother’s collapse, Christine Lagarde , then the  French Minister of Finance, called Hank Paulson, the Secretary of Treasury. The “dialogue” went more or less like this:

“You allowed it to fail, Hank. It was a horrible mistake. How could you let this happen? It is having enormous consequences all over Europe. The European Banks have tremendous exposure and it will be even worse with AIG. It is not just an American problem!” She then hung up on Paulson.

 

Last week, the current Secretary of Treasury of the US, Tim Geithner, decided to return the call…in person. Geithner travelled through Europe in the days before the Euro Summit and his main message was that they could not allow the countries to default; they had to find a lender of last resort.

 

On Friday, the markets were exulting because of the results of the Euro Summit, and the Dow Jones closed almost 200 points up. Of course during the weekend, investors digested the news from Europe and the markets went down on Monday. As I write, the markets are awaiting the Fed announcements.

So, I guess the volatility story is not coming to an end anytime soon.  Investors know that the European problem is not resolved but they want to make the “Santa rally” a reality.  Every piece of good news is a reason to go up, as much as every piece of bad news is a chance to go down. However, we are now better that we were two months ago for one important reason: the economy in the US is in better shape than it was then; the risk of a recession is much lower now and the earning season was good. Nonetheless we still have the same political problems we had two months ago, the paralysis of Congress. If Congress doesn’t pass the bill that extends the payroll cuts, there will be a drag in the economy next year. The estimate is that about 160 million of Americans will pay more tax next year, which means they will have less income to spend.

As always, just be alert. If you don’t have time to manage your portfolio, just reduce the risk and stick to very conservative, high quality investments.

 

Lessons from Brazil.

Posted on December 03, 2011 in Brasil, English, Euro Zone, Internacional, Politics, US Economy, US Stock Market, USA | No Comments »

I have been talking in my newsletters about the fact that the European leaders are not doing their jobs. Everybody knows that they are kicking the can down the road. It was necessary for the Central Banks to step in and coordinate joint actions with other central banks to calm the markets. Well, it worked: the stock market had its best week in a while.

The action probably was initiated by Bernanke:  those who read the book Too Big To Fail, know that his intervention and his knowledge was critical to injecting funds into the American banks in 2008. He not only spent his academic life studying the great depression but improved his knowledge with the 2008 lessons. Thank God the central bank is independent, because if it was up to the leaders and American politicians, nothing good would come of it.

During my lifetime, I never thought I would see the day where Brazil could set an example for other countries. Well, that day has arrived. In 2008, the Brazilian authorities implemented a series of measures that not only lessened the  impact of the crisis but made the recovery faster than that of the other countries. The Brazilian President has shown that she is not afraid of taking tough decisions. Yesterday the Minister of Finance announced a series of preemptive measures, aiming to prepare Brazil for the slowdown in the global economic outlook. The Government announced a reduction on taxes that will result in a loss of revenue for the Government in 2012 of about 1 billion dollars but it will stimulate demand and investment. Two weeks ago the Central Bank had lowered the interest rates.

In the USA, the democrats are trying, unsuccessfully, to extend the current payroll-tax break, which would benefit about 160 million Americans and of course the economy. Once again, the Republicans show where they really stand: they are in favor of tax cuts when the beneficiaries are the wealthy and infamous 1%. When the cut benefits the 99%, they are against it.

Maybe they should learn something from the Brazilians

 

Central banks act, market jumps.

Posted on November 30, 2011 in English, Euro Zone, US Economy, US Stock Market, USA | 1 Comment »

Today we woke up with the news that the major central banks- our FED, Canada, Bank of England, Switzerland and Japan- decide to act in coordination to improve global liquidity. Also, the Bank of China decided to lower its reserve requirements for Chinese banks, and there were good news on the employment front in the USA. As a result, there was a jump in the stock market. Increase liquidity helps Europe, helps economic growth and at the same time increases the risk of inflation. The question is if this will be enough to sustain an upward movement in the market. Will the markets break the trading range they are since July? Are we going to see a “Santa Rally”?   I am skeptical. At the end of the day the euro zone fundamentals are still unchanged. However is a good opportunity to take a look in your positions and make adjustments

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