On India's gang rape and global warming.
January 14, 2013 16:10:09 | 0 comments

Here is a link for an article wrote by Peter Rajsingh, my partner at Aquila,  assessing the recent rape in India. And for those who don't believe in Global Warming, take alook at this link: Today, January 14th, the temperature in New York is almost 60 F.

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Deal or no deal?
December 13, 2012 15:00:31 | 0 comments

After the elections there was a selloff in the stock market. As of yesterday, however, the markets had returned to the pre-election levels. The S&P closed at 1428 on November 6th and at exactly 1428 yesterday, December  12th. In the meantime, volatility was the norm, and the stocks would go up or down according to the rumors and statements coming from Washington. News from the rest of the world- an improvement in the Chinese economy or the upcoming change of government in Italy- didn’t matter that much. All eyes were focused on the political resolution of the so called fiscal cliff- which in fact is not a cliff but an austerity shock. Right after the elections, fear that we going over the cliff prevailed; later came hope that a solution would happen. Finally the fear is coming back. The FED announcement of QE4, that should be well received, turned out to be negative. As a matter of fact, buying long term bonds would have a positive impact on the economy. The underlying message, however, is that the economy still needs lots of help. Furthermore, and maybe even ...

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Fiscal cliff and Middle East.
December 04, 2012 14:41:23 | 0 comments

Yesterday the fiscal cliff negotiations proceeded without results. The republicans finally sent their counter proposal, which was vague. The “market” continues to believe there will be a solution but now I’m not so sure. The differences between the two proposals are huge and show two very different visions of how to solve the problem. Is there room to even start a discussion? The US stock market could not continue last week’s rally, not only because the talks are stalled but also because the ISM Manufacturing index has been disappointing. The Ibovespa had a very volatile day, with the issue of the electric companies’ concession dominating the agenda and causing increases (or decreases) in shares. I think the news coming from the Middle East should cause more concern: the Israeli government, in retaliation to the UN vote, decided to expand its occupation of the Palestinian territory. Even more worrisome is the news that the Syrian government, incapable of winning the war with regular weapons, could use chemical weapons. Last July, when this possibility floated, the ...

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Keep focused and carry on -2
November 29, 2012 02:34:27 | 0 comments

Every time someone talks about the fiscal cliff there is an impact on the stock market. Yesterday, reacting to the comments of the democratic leader in the Senate, the markets went down. The headline of the Journal was “Stocks Drop on Reid’s Downbeat Fiscal-Cliff Comments”.  Today, in the beginning of the session a commentary by Erskine Bowles sent the markets down. Then comments from Obama e Boehner send the S&P back to 1400. This kind of behavior will be a norm until a deal is reached. If by Christmas a deal is not reached, then we could see the markets take a big dive. Thursday will probably be a good day for the markets: as he was leaving the meeting with president Obama today, Goldman’s CEO said that the president’s plan is very detailed and credible. The report from the Beige book showed what we have been saying for a while, meaning the economy is improving, slowly, but improving. Warren Buffett and Carol Loomis, an editor at Fortune, have appeared in different shows this week, to promote “Tap Dancing to work” a new book written by Loomis about Buffett.  ...

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Keep focused and carry on.
November 27, 2012 17:09:05 | 0 comments

The economic indicators announced today in the US were pretty good: consumer confidence reached a four year high and durables goods stayed flat, while home prices climbed. Machinery, electronics and non-defense capital goods rose. The EU reached an agreement in regards to outstanding loans to Greece. The stocks in the US are in negative territory this morning, despite the good numbers. If you see the news you will read that this is caused by uncertainty over the fiscal cliff- which is not a cliff. Hence the title of this note: just ignore the noisy and focus on the positive. The American economy is getting better. The consumer, representing 70% of the demand, is willing to spend which is good news for business. In Brazil, the economic indicators are mixed. Consumer confidence fell, service sector confidence rose but industry sector confidence declined. This week will bring the last Copom decision on Wednesday, the inflation on Thursday and GDP estimate on Friday. The Bo Vespa index is still in the 50.000 range affected by the uncertainty in the USA.

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Still counting votes!
November 26, 2012 16:31:45 | 0 comments

Almost a month has passed since Election Day and the final results are not known yet. About 37 states are still counting votes, amongst them California, Pennsylvania, Colorado.  Americans are very proud- and righteously so- of their democracy. The electoral process, however, is nothing to be proud of – from the 8-hour lines to the complicated ballots (some of which, like California’s, were 20 pages long). Voters have to decide about the death penalty, gay marriage, and other items that slow down the process.  In Brazil we just touch a screen and the votes are counted on election night. Here, it takes time. As some states are still counting, Obama’s victory seems even bigger. As of last week, Obama had increased his margin on the popular vote to 3.3%. Also, it is important to note that the democrats in the House had 500,000 votes more than republicans. Thanks to the “redistricting” sponsored by republicans in the states they control, however, democrats didn't increase  much their number in the House.

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Looking ahead.
November 26, 2012 02:11:40 | 0 comments

Although it was a quiet week the S&P had a great performance, increasing 3.6%. There was not much news: the market was closed on Thursday and opened for only few hours on Friday. The only economic data released were jobless claims that came at 410 k - not good - but better than the 451k of the previous week. Apparently, the news that democrats and republicans will talk ,plus the cease fire in the Middle East, was enough to change the mood. That was last week, anyway. Let’s see what this week will bring. Politicians will go back to Washington and the economic calendar will be heavy: Consumer Confidence, Durable Goods, New Home Sales, second estimate of GDP for third quarter and personal income. The market will also open with the news that the sales this Thanksgiving Day exceeded last year’s sales by 13%. A week before last, we were oversold. Now we are overbought. The date to be released this week and the talks in Washington will determine in which direction we will go.

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Volatility is still the norm.
November 19, 2012 03:06:37 | 0 comments

This should be another bumpy week for the stock market in the USA and the rest of the world. Obama is travelling through Asia and in the meantime leaders of both parties are supposed to be working on a concrete solution for the fiscal cliff.(remember, it is really not a cliff). However they are not going to work very hard, at least this coming week; due to Thanksgiving they probably will go back to their districts on Wednesday. The American stock market is closed on Thursday and will open for few hours on Friday. Without an agreement in sight, with the European problem always on the agenda, and with the tensions between Israelis and Palestinians intensifying, there is no reason to expect something else than volatility, not only here. In Brazil, the Bovespa is still falling with low volume. The Bovespa will probably end the year at least 10.000 points below the estimates made in the beginning of the year. The only person that has reason not to care so much about the slow pace of the conversation is president Obama. Indeed, if an agreement is not reached, the Treasury will have ...

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Show me the money
November 14, 2012 21:41:28 | 0 comments

Today, again, the markets were down. The morning started with the news that retail sales fell for the first time in 14 months. Then the losses picked up after Obama’s press conference. Apparently the market interpreted Obama’s words as if he had said: the taxes cuts for the wealthy will expire, tax on dividends will go up and it will be difficult to reach an agreement. Also, he reiterated that he won the election with his agenda so it should not surprise anyone .Finally, with the release of the minutes of the FOMC meeting in October, the stocks accelerated their losses because of the understanding that there might not be QE4. Although there was pain for almost every stock, dividend stocks took a bigger hit. Well, it looks like people are taking for granted that there will be an increase on taxes over dividend income. I might not be getting it right, but when you look at the choices, even with higher taxes, some dividends still beat the income on bonds. Back to Obama, my reading was different: I thought that he left room for compromise, as long as the proposal is specific: mean...

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Still the cliff
November 14, 2012 04:36:48 | 0 comments

Today President Obama met with labor leaders and members of the progressive movement, tomorrow he will meet CEOs and Friday he will talk to the leaders of both parties. On the agenda, the so called fiscal cliff, which is not a cliff, is truly a set of actions that will have a negative impact in the still vulnerable American economy. It is more like an austerity “package”. Although Obama didn’t talk to the press after the meeting, the leaders talked. Richard Trumka, the AFL-CIO president was pleased with the meeting. They went there to tell Obama that they would not accept cuts on social programs and we don’t know what they were told in regards to that issue. However Obama told them that he is committed to let the Bush tax cuts expire for the " rich". Tomorrow we will hear from the CEOs. In the meantime, while all this talk is going on, the markets continue to go down. Since the elections the Dow Jones fell more than 400 points. The intraday movements have been very volatile. Notwithstanding the media’s obsession with the affair Petraeus-Paula Broadwell the fiscal cliff...

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