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Posted by BradyNet ( Friday, September 12, '03 )
 
*NEW* Stay on top of important market events with the IdeaGlobal/BradyNet Economic Calendar

 GLOBAL MARKET HIGHLIGHTS
*Two 9/11s, one story 09-12-03 (guardian.co.uk) On the morning of September 11 I watched aircraft flying overhead. Minutes later I heard explosions and saw fireballs of smoke fill the sky. As a result of these attacks thousands died, including two good friends.
*Trade Deficit Widens to $40.3B in July 09-12-03 (Yahoo) WASHINGTON - America's trade deficit expanded in July to $40.3 billion as imported goods from China and the quantity of overseas crude oil sold to the United States each hit record highs.
*Job Market Weak Despite Growth Signs 09-12-03 (Yahoo) WASHINGTON (Reuters) - Americans are finding it unexpectedly tough to hold onto their jobs but other areas of the economy are showing signs of a pickup, two government reports out on Thursday showed.
*US trade gap swells 09-12-03 (BBC) The US trade deficit widened slightly in July as consumers bought the second highest level of imported goods on record, according to official figures.
*Argentine leader set to sign IMF deal 09-11-03 (Yahoo) BUENOS AIRES (AFP) - Argentine President Nestor Kirchner was on the verge of signing an elusive deal with the IMF (news - web sites), one day after missing a three-billion-dollar loan repayment, a government source said.
*IMF strikes positive note 09-11-03 (guardian.co.uk) The International Monetary Fund yesterday added its voice to optimism about the prospects for the global economy, saying rock-bottom interest rates and ADVERTISEMENT the "remarkable resilience" of financial markets had left firms poised to invest.

 LATIN AMERICA
*IDB Approves Peru Pipeline Project Loan 09-12-03 (Yahoo) WASHINGTON - The Inter-American Development Bank on Wednesday approved $135 million in financing to support construction of a controversial natural gas pipeline project in Peru that environmentalists contend represents a threat to the country's rain forests.
*Perus Amazon gas project approved 09-12-03 (BBC) The Inter-American Development Bank (IADB) has approved $135m in financing for Peru's controversial Camisea natural gas project.
*Argentina payment secures temporary respite in debt battle 09-12-03 (Yahoo) BUENOS AIRES (AFP) - Argentina made a 2.9 billion dollar payment to the International Monetary Fund (news - web sites) but a new debt restructuring accord has done little to reassure private bankers.
*Chile Takes Painful Look at Coup 30 Years Later 09-12-03 (Yahoo) SANTIAGO, Chile (Reuters) - A prosperous and democratic Chile painfully looked back 30 years on Thursday to the military coup on Sept. 11, 1973 that split the nation and ushered in 17 years of dictatorship under Augusto Pinochet (news - web sites).
*Brazil seeks to reassure markets on policy 09-12-03 (Financial Times) The Brazilian government has sought to reassure investors that it will continue to pursue an agenda of sound economic reforms whether or not it renews an accord with the International Monetary Fund later this year.
*Brazilians Soured by U.S. Sugar Tariffs 09-11-03 (Washington Post) SERTAOZINHO, Brazil -- Wearing a straw hat, shin guards and goggles, Joaquim Batista dos Santos swings his machete in wide, looping arcs, hacking away at the eight-foot-high stalks of sugar cane like a baseball player warming up in the on-deck circle.

 ASIA
*Indonesians Plan Exploring for Iraq Oil 09-12-03 (Yahoo) JAKARTA, Indonesia - Indonesia's state-owned Pertamina oil company will restart an oil and gas exploration project in Iraq (news - web sites) interrupted earlier this year by the U.S.-led attack on that nation, the company said Thursday.
*China tumbles in white goods 09-11-03 (Financial Times) Many of China's leading washing machine makers have been bought out or gone bankrupt in recent months, confounding expectations the mainland's low-cost manufacturers would become dominant international players.

 AFRICA
*Refuge for the Wild, With No Land Mines, Please 09-12-03 (NY Times) IMPOPO NATIONAL PARK, Mozambique, Sept. 4 — Wildlife specialists released seven elephants into this new game sanctuary the other day, and Santos Ngoverne, dressed in a blue plaid shirt and battered sandals, was on hand to watch.
*End cotton subsidies demands Africa 09-12-03 (BBC) World Trade Organisation chief Supachai Panitchpakdi is reviewing demands by African cotton producers for an end to subsidies paid to farmers in richer countries.
*Africans Burden: Wests Farm Subsidies 09-11-03 (NY Times) ASESE, Uganda — Erikangin Thembo does not think much about agricultural policy as he farms. Sweating in the midday heat, he keeps his mind focused on the earth in front of him. He raises his hoe above his head. With a grunt, he sends it plummeting into the rich soil.

 OIL PRICES
*Australian hunt for African oil 09-12-03 (BBC) An Australian consortium has started exploration drilling at the Chinguetti oilfield off the coast of Mauritania, Perth-based company Hardman Resources has announced.
*Casting a Cold Eye on Arctic Oil 09-11-03 (NY Times) RCTIC NATIONAL WILDLIFE REFUGE, Alaska — Here's a helpful hint for backpackers here in the Arctic: If you're lying in your sleeping bag and suddenly feel a pat on the behind from outside the tent, YELL!
 
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09-12-03  carib: Alvarion above 7$...

09-12-03  savonarola: Glutt...<TAKE A LOOK AT TURKISH FISCAL & CURRENT ACCOUNT DEFICITS !!!>

I consider my intellectual battle against Turkey, (and Colombia and Uruguay) irreversibly lost. I am unable to find any reason why any person in his right mind would be willing to allocate capital to any of those three. Yet they are.. so for me, case closed. White flag.


09-12-03  savonarola: victor.....<savo, didn't you say that, for the first time in many years, you were optimistic about Brasil because they were doing things right?>

Exactly.. that is why I thought it was fair to post that I have sold 50% of my remaining Brazil (I had sold all my corps some time ago) which is something that I do not normally do, meaning that I do not normally post the particular day in which I buy or sell although I usually post what do I buy or what do I sell.

fox...<what are you planning to do with the cash <savo.?> > I think the best risk reward at the moment is in Veni, Guano, Mendoza and Galicia.

Nonetheless, given that, as I said yesterday, timing is not one of my virtues, if I have any, I hope that Brazil continues performing well so that I can sell what I have left.


09-12-03  Fox: <12/09/2003 - 15h41 Decisão sobre tarifa de telefone indica "viés político", diz analista Folha Online

O mercado de telecomunicações dava como certa, desde o último dia 27, que a decisão final da Justiça seria a de conceder o reajuste pelo IGP-DI nas tarifas de telefonia fixa, o que representaria um aumento maior para o consumidor.

Entretanto, a decisão de hoje da Justiça Federal de Brasília, que confirma o aumento pelo IPCA, apesar de provisória, foi vista como um sinal negativo para as empresas do setor.

No dia 27 de agosto, o STJ (Superior Tribunal de Justiça) havia indicado o Tribunal de Brasília como o foro competente para julgar a questão, o que poderia derrubar a decisão anterior da Justiça do Ceará, favorável ao IPCA.

"Estávamos acreditando que o Tribunal de Brasília poderia optar por manter provisoriamente o reajuste pelo IPCA enquanto obtinha tempo para estudar com mais detalhes a matéria. Entretanto, os argumentos utilizados pelo juiz em seu despacho nos preocupam", disse a analista do Banco Brascan, Roberta Kosaka de Oliveira.

Segundo ela, apesar das empresas poderem contestar a decisão, a argumentação do juiz indica um "viés político", como no caso do Tribunal de Fortaleza.

O juiz Rodrigo Navarro de Oliveira disse que a aplicação do IGP-DI nas tarifas do serviço fixo se mostra "abusiva".

Roberta afirmou que as empresas de telefonia móvel também serão afetadas por essa interpretação.

"A decisão abre um precedente de 'quebra de contrato' que potencialmente é negativo para todo o setor de telecom. O que mais nos preocupou foi a argumentação do juiz de que a regra contratual pode ser modificada quando o valor da tarifa se mostrar desproporcional à prestação do serviço", disse>


09-12-03  Fox: <would have gained some four millions by now...but I was chicken...> We all have our tolerance to risk, it depends on the size of the balance sheet you carry, state of mind etc...Taking calculted risks is more of an art than science for me I dont care how many <Matrixes, Correlations, DV01, BPVS or risk simulators you show me>. For me the best risk reward is the folcrum between my <Economic Capital & Intelectual Capital>. @ the time you took your risk in SpalSchtoks you decided to put $X you the result was $XXXX, clearly that if you would of started with $XXXX the result would of been much higher! Fine! Is not a matter of being Chicken it is a matter of mastering risk taking whilst increasing your <Economic & Intelectual Capital> in the process.

<THIS IS A BUSINESS OF MAKING MONEY NOT GLORY>


09-12-03  Fox: <I see, you think is ggod to reduce brazil exposure now, and than get back in in a hurry at 550 over?> Im not even arguing that you are not right e.g. that Brazil will go to 550 or 500 SOT. But for me SOT doenst really matter I should have reduced my Brazilian exposure in June when 10yr UST was in its lows. Now it is going to take a long time before I get the same amount of dollars for my bonds even is spreads do go down.

09-12-03  Chuy: Insurance Co.? http://www.weather.com/newscenter/t... You can bet Warren is keeping track.

09-12-03  Fox: Carib as a matter of fact Im starting to reduce my only Brazilian Golden Cucaracha I had EMT.

09-12-03  Advice55: I see, you think is ggod to reduce brazil exposure now, and than get back in in a hurry at 550 over?

Maturity of options on monday will take a lot of sellers out for the week, locoal sellers!


09-12-03  carib: Fox: correct, had I put a million dollars in <SPAL stocks> (notably BLX) I would have gained some four millions by now...but I was chicken...

09-12-03  Fox: <Golden cucarachas + SPAL?> Yes, SpalSchots have more fundamental value but as any equity they are inherently rikier than fixed income. Dont get me wrong I still think we may have a couple dollars in Brazil, Guano & Venny. Is just that we made a lot of money and it maybe time to rethink things. Im buying SHY until I decide what to do.

PD: My balance sheet is in USD.


09-12-03  carib: Different <ladronvagna> version: <El ministro de Economía, Roberto Lavagna, afirmó esta mañana que "habrá caras largas en varios idiomas" cuando el país haga su propuesta para reestructurar las deudas en mora con los acreedores privados por unos 100.000 millones de dólares.

"Después de la primera oferta, seguro que va a haber un rechazo y la realidad irá indicando qué es lo que se puede hacer", dijo el titular del Palacio de Hacienda, en declaraciones efectuadas en el programa Desayuno que emite Canal 7.

A pesar de sus comentarios, Lavagna sostuvo que la Argentina "va a hacer una oferta creíble y pagable" durante la asamblea anual del Fondo Monetario Internacional (FMI) que se realizará en Dubai. El lunes 22 del actual, en el salón Al Lulu del centro de convenciones de Dubai, la Argentina definirá con el mayor detalle posible la propuesta de reestructuración de la deuda.

"La oferta será mejor que la situación actual, en la que (los acreedores) no están cobrando", señaló. >


09-12-03  Glutt: savonarola: <I decided to reduce today my Brazilian exposure by 50%. Frankly speaking Brazil fiscal numbers look awful. > AWFUL??? TAKE A LOOK AT TURKISH FISCAL & CURRENT ACCOUNT DEFICITS !!! these are awful... however i agree on that Brazil is not and was not a bunch of flowers so it is time to kiss Lula and reduce... as i said i agree with torgay on EM which is at historic highs while UST and BUND are in bear market, which somehow i do not like … I understand that RF is a reliable willing paying credit, but dismal 200bps on RF30 sound like a bad joke for me personally. is it so reliable to be 200bps??? damn i know this is not !!!

09-12-03  Patient-Trader: Neznaika, <it is quite possible that Brazil will bounce from one crisis to another - as it did since 1998 - with tepid recoveries, weak average growth and gradually deteriorating debt> It seems that the Brazilian banks have doing very nicely in these crises so the next is probably not that far off.

09-12-03  carib: Fox: what are your <high risks>? Golden cucarachas + SPAL?

09-12-03  Glutt: <torgay: I reduced my Emerging Market Exposure by approx. 90 %. I even sold Turks, which I like very much. All EM performed very well. We have seen all time highs. It is now time for profit taking... Lets wait and see.. > guys, listen to torgay, he is damn right.

09-12-03  Fox: <<I decided to reduce today my Brazilian exposure by 50%> what are you planning to do with the cash <savo.?> Whatever the reason to reduce EM debt it makes sense, Im not particularly worried with Brazil´s Economy but I do think that spreads are quite tight & everyone seems to be overweight Brazil. There is still Venny & Guano but dont want to increase exposure on them either. What to do with the money...well I like a <Barbell> strategy @ the moment. It is less comfortable than a pure coupon clipping situation but I sleep better.

PD: Just in case soemeone asks, Barbell: Consists of the two extremes of the risk spectrum cash & a very risky asset.


09-12-03  victorn: savo, didn't you say that, for the first time in many years, you were optimistic about Brasil because they were doing things right?

09-12-03  leo: Everyone is reducing to invest the cash at 2%....ehmmm!

09-12-03  wally: <I decided to reduce today my Brazilian exposure by 50%> what are you planning to do with the cash <savo.?

09-12-03  torgay: I reduced my Emerging Market Exposure by approx. 90 %. I even sold Turks, which I like very much. All EM performed very well. We have seen all time highs. It is now time for profit taking... Lets wait and see..

09-12-03  manya: fyi!!!! new venny priced. now @ 91.5 / 91.875 indicative $700m (upsized from $500m)
venezuela
10.75
9/19/13
90.689
12.40
+819
s/d 9/19
caa1/b-

09-12-03  carib: O presidente Luiz Inácio Lula da Silva deu sinal verde para o ministro Antonio Palocci Filho (Fazenda) negociar um novo programa de ajuda financeira com o Fundo Monetário Internacional, mas desde que em bases mais favoráveis para o crescimento do que as previstas no atual acordo.

09-12-03  savonarola: I decided to reduce today my Brazilian exposure by 50%. Frankly speaking Brazil fiscal numbers look awful.

09-12-03  Amateur: <US debt dynamics are leading in a far worse direction> I mean the GNOE public debt, worse than the Brasilian dollar debt...

09-12-03  carib: Was the new veny bond priced and already trading? Levels?

09-12-03  Amateur: Neznaika: <Brasil...Eventually it will have to do some restructuring and radical departure from the course of the last several years - sky-high interest rates and piling debt on and on.>

IF Lula stays course, the high interest rates may become a problem of the past. There is room for a long period of declining domestic rates (Think in Argentina domestic rates are at 6%). and in the context of a stable real. This would imply dramatic reductions in the deficit without any reduction in other spending or rising taxes. Debt/GDP would also keep falling.

Success is not granted, politicians can sc..ew almost anything. But but it is possible.

US debt dynamics are leading in a far worse direction....


09-12-03  carib: Neznaika: in a way you have a point: sky high interest rates are unsustainable, in the long term, and the first batch of lula-reforms are going in the right direction...but not far enough. IMHO Brasil should cut the size of public expenditure, and streamline (downwards) the tax system. Bring down the budget deficit (not primary, overall) to 2% of GDP, and interest rates will come down, so that the primary surplus might actually come down too. It must be noted, I add, that Brasil short term yields in Dollars are very low.

09-12-03  Neznaika: <Brazil bragging rights> and A. Schwartsman's J'Accuse article: It was indeed one of the most interesting publication on brazil finance situation in recent memory, and naturally we discussed it here last year.

I can offer a glance back to my own post: http://www.bradynet.com/bbs/em/1000... and other Colores comments, in particular a thoughtful response from Gaucho.

In retrospect, I was wrong. To be fair, those of us who were skeptical on Brazil in 2002 did not predict immediate Argy-style default, only pointed out that the present situation is unsustainable.

Today the acute financial crisis of mid-2002 is far behind, and Lula is doing right things. Yet my feeling is that these reforms, while necessary, won't be nearly enough.

How exactly this situation is "sustainable" when Brazil keeps borrowing at 11-12% (or more on the internal market) with near-zero economic growth (and actually in recession in the last 6 months), and no signs of a radical economic upturn? While there is no immediate danger of default or going back to August- September 2002 situation, it is quite possible that Brazil will bounce from one crisis to another - as it did since 1998 - with tepid recoveries, weak average growth and gradually deteriorating debt. Eventually it will have to do some restructuring and radical departure from the course of the last several years - sky-high interest rates and piling debt on and on.


09-12-03  manya: oops, diddn't see carib/fox postin on this issue...

09-12-03  manya: Sept. 12 (Bloomberg) -- Argentina expects its debt restructuring proposal, to be unveiled in Dubai on Sept. 21, to be rejected initially by bondholders, Economy Minister Roberto Lavagna said, the newspaper Clarin reported. Argentina defaulted in late 2001 on $95 billion of debt and devalued the currency a month later. Argentina on Wednesday said a group of lenders led by the International Monetary Fund pledged $21 billion in new financing and will help get talks with bondholders started.

09-12-03  carib: Leo: <guano 12 @ 63,75> are you trying to kill Savo?

09-12-03  leo: oopppsss 83.5......

09-12-03  leo: braz mid 91.75 ecu 12 mid 63.75..

09-12-03  Amateur: In this day of "exhuberance" for USTs, how are our AAA+++ BrazC and Ecu 12 doing?

09-12-03  ozymiani: <Advice55>: <Brazil: Buy on weekness....> yes: but buy on <weakends>

09-12-03  Amateur: Fox, <<Telco price index> The truth of the matter is that the contracts between Brazil & the Telcos are legally perfect. There is no way the Telcos will loose their IGP-DI indexation. >

Why didnt someone explain Duhalde that "legally perfect" contracts are suposed to be respected?


09-12-03  carib: Thanks Leo. Stupid me. now they are trading on NYSE, no longer OTC, I guess, so the WSJ has that quote. Any idea if and when the warrants will start trading?

09-12-03  leo: Carib...
http://finance.yahoo.com/q?d=t&...

09-12-03  carib: Leo: can you post the link to the new conseco quote?

09-12-03  leo: Carib Pillz...
http://biz.yahoo.com/djus/030912/10...

09-12-03  carib: Fox: then Bloomberg was really wrong in quoting Ladronvagna. They should have printed the correct quote, and added the comment: Math indicates the minister might be disappointed. Anyway: bad journalism, as usual.

09-12-03  leo: Pillz conseco shares trade at 21.64...valuing the unexchanged bond at 55.40....

09-12-03  Fox: He actually said this phrase:
<... esperamos que <<<no nos digan>>> que rechazan totalmente la propuesta...> I watched the interview benefit of my big satellital dish I can watch Argy & Brazilian air channels.

My take was that he is hoping that creditors dont send him to hell!


09-12-03  Fox: <Telco price index> The truth of the matter is that the contracts between Brazil & the Telcos are legally perfect. There is no way the Telcos will loose their IGP-DI indexation. The more important issue is that here is not this mumble jumble but the fact that Lula & the boys do learn sooner or latter they do the right thing. I was watching Miro Teixeira in the Jornal Nacional the other day & the bastard made a 180 degree change since he fostered people to go against Telcos in court.

@ times faster than others but the boys learn ;-))



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