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post #41 of 45 (permalink) Old 04-25-2008, 06:39 PM
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Bear,
Brazil is fine and dandy but is Argentina going to trigger a crisis AGAIN ?

April 25 (Bloomberg) -- Argentina's benchmark dollar bonds fell the most in nine months after Economy Minister Martin Lousteau resigned amid a surge in inflation and a dispute with farmers over an increase in export taxes.

Standard & Poor's cut the outlook on the country's debt ratings to negative from stable, saying Lousteau's resignation ``reflects the government's rejection of policies to correct the country's overheating economy.''

The yield on Argentina's benchmark 8.28 percent bonds maturing in 2033 jumped 65 basis points, or 0.65 percentage point, to 10.98 percent at 4:11 p.m. in New York, according to composite data compiled by Bloomberg. The bond's price fell 5 cents on the dollar, the biggest drop since July 26, to 75.5 cents. The price is the lowest since the government issued the security in December 2005.

``This is a negative development,'' said Cristina Panait, an emerging-market strategist at Los Angeles-based Payden & Rygel, which manages more than $50 billion in assets. ``Lousteau was seen as an orthodox economist who would have been more likely to address the inflation problem.''

Lousteau's resignation comes just four months after President Cristina Fernandez de Kirchner succeeded her husband, Nestor Kirchner. Shortages of products such as beef and poultry have surfaced in South America's second-biggest economy after farmers carried out a three-week nationwide strike last month to protest the export taxes.

Farmers are threatening to resume the work stoppage on May 2 unless there's progress in negotiations with the government.

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S&P said accelerating inflation could ``fray social cohesion and lead to additional direct governmental interventions in the economy.'' S&P rates Argentine foreign debt B+, four levels below investment grade.

``If no corrections to the policies are made, the chances of a downgrade will increase,'' Sebastian Briozzo, an economist with S&P in Buenos Aires, said in an interview.

The risk of owning Argentine bonds increased to the highest since at least June 2005, according to Bloomberg data. Five-year credit default swaps based on the country's debt jumped 45 basis points to 620 basis points. That means it costs $620,000 to protect $10 million of the country's debt from default.

Annual inflation quickened to 8.8 percent last month, according to government figures. Economists say the government has been underreporting inflation after Kirchner appointed a political appointee last year to run the institute that compiles the data. Fernandez and Kirchner say the figures are accurate.

Bloomberg.com: Latin America

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Originally Posted by mcbear View Post
Here you go.

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post #42 of 45 (permalink) Old 04-25-2008, 06:41 PM
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Poor management includes the bloke who starts a printing business in ground zero
of mortgage meltdowns and the family buying a new house while they
can barely keep up the payments on the old.
That's all management be it a small business or family finances.

Shit happens regardless of whether there is a recession or not. Businesses fold and others prosper. What's the stats ? 2 out of 3 fail ?
Actually the excesses that I was speaking about were at a higher level than that but those are there also. You can count startups as part of the folks who fold in a recession, and you are correct, they would tend to fold first BUT it is CORE businesses that have established reputations and established track records that fold in a recession that are the problem for the economy, not the small number of small biz startups.

As for poor management, I was thinking more of the high level triggers like the FED who waited until 9 months after things were starting to slide hard before starting to do its job. Or Regulators that ignored sloppy business practice in the financial sector. Or Primary Stockholders who didn't care that the companies were exercising poor business judgment as long as the carrot of unrealistic returns was waved in front of their face.

Yes, shit happens in business. But it happens a lot less when people play by the rules and use sound business judgment, from the regulators to zoning commissions to internal auditors to mortgage brokers to purchasing managers.

McBear,
Kentucky

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Last edited by mcbear; 04-25-2008 at 06:43 PM.
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post #43 of 45 (permalink) Old 04-25-2008, 06:56 PM
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Originally Posted by mlfun View Post
Bear,
Brazil is fine and dandy but is Argentina going to trigger a crisis AGAIN ?

April 25 (Bloomberg) -- Argentina's benchmark dollar bonds fell the most in nine months after Economy Minister Martin Lousteau resigned amid a surge in inflation and a dispute with farmers over an increase in export taxes.

Standard & Poor's cut the outlook on the country's debt ratings to negative from stable, saying Lousteau's resignation ``reflects the government's rejection of policies to correct the country's overheating economy.''

The yield on Argentina's benchmark 8.28 percent bonds maturing in 2033 jumped 65 basis points, or 0.65 percentage point, to 10.98 percent at 4:11 p.m. in New York, according to composite data compiled by Bloomberg. The bond's price fell 5 cents on the dollar, the biggest drop since July 26, to 75.5 cents. The price is the lowest since the government issued the security in December 2005.

``This is a negative development,'' said Cristina Panait, an emerging-market strategist at Los Angeles-based Payden & Rygel, which manages more than $50 billion in assets. ``Lousteau was seen as an orthodox economist who would have been more likely to address the inflation problem.''

Lousteau's resignation comes just four months after President Cristina Fernandez de Kirchner succeeded her husband, Nestor Kirchner. Shortages of products such as beef and poultry have surfaced in South America's second-biggest economy after farmers carried out a three-week nationwide strike last month to protest the export taxes.

Farmers are threatening to resume the work stoppage on May 2 unless there's progress in negotiations with the government.

Default Insurance

S&P said accelerating inflation could ``fray social cohesion and lead to additional direct governmental interventions in the economy.'' S&P rates Argentine foreign debt B+, four levels below investment grade.

``If no corrections to the policies are made, the chances of a downgrade will increase,'' Sebastian Briozzo, an economist with S&P in Buenos Aires, said in an interview.

The risk of owning Argentine bonds increased to the highest since at least June 2005, according to Bloomberg data. Five-year credit default swaps based on the country's debt jumped 45 basis points to 620 basis points. That means it costs $620,000 to protect $10 million of the country's debt from default.

Annual inflation quickened to 8.8 percent last month, according to government figures. Economists say the government has been underreporting inflation after Kirchner appointed a political appointee last year to run the institute that compiles the data. Fernandez and Kirchner say the figures are accurate.

Bloomberg.com: Latin America
If you buy into a Latin America mixed fund that has much Argentina then it can impact that fund pretty quick. I watched Fidelity pull some of its Arg stocks out last month which was good. They are not heavy into either Argentina OR Mexico [which is pretty tied to the US economy].

Brazil is weighted pretty heavy toward Energy, consumer goods and industrial materials which, considering they are not slowing down seems pretty safe right now. I just did a check on my portfolio and I am about 27% in Brazil right now and it is up 36%YTY. It has been flat for the past month or so but that is pretty much in its normal cycle.

I am playing with a small green energy ETF right now that is interesting. It has a bunch of SSEC stocks [which means they took that 50% hit from earlier this year] so that should be interesting to see as the year goes on. I am not big in it [10K] just to see what its growth looks like. If it looks like it has legs I might move more in. It is pretty much contra the big energy stocks.

McBear,
Kentucky

Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #44 of 45 (permalink) Old 04-25-2008, 07:05 PM
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Latin American funds in Fidelty FLATX and Price PRLAX are 65% Brazil and 25% Mexico.
But the whole region can suffer from panic in a hurry ala 2001.

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Originally Posted by mcbear View Post
If you buy into a Latin America mixed fund that has much Argentina then it can impact that fund pretty quick. I watched Fidelity pull some of its Arg stocks out last month which was good. They are not heavy into either Argentina OR Mexico [which is pretty tied to the US economy].

Brazil is weighted pretty heavy toward Energy, consumer goods and industrial materials which, considering they are not slowing down seems pretty safe right now. I just did a check on my portfolio and I am about 27% in Brazil right now and it is up 36%YTY. It has been flat for the past month or so but that is pretty much in its normal cycle.

I am playing with a small green energy ETF right now that is interesting. It has a bunch of SSEC stocks [which means they took that 50% hit from earlier this year] so that should be interesting to see as the year goes on. I am not big in it [10K] just to see what its growth looks like. If it looks like it has legs I might move more in. It is pretty much contra the big energy stocks.
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post #45 of 45 (permalink) Old 04-25-2008, 07:38 PM
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Latin American funds in Fidelty FLATX and Price PRLAX are 65% Brazil and 25% Mexico.
But the whole region can suffer from panic in a hurry ala 2001.
There is also Fidelity FLTAX [don't ask, it drives my broker nuts when she typoed a 20K error last month] but they pretty much mirror each other. So now I have FLATX and FLTAX. It requires paying attention.

The 25% Mexico is pretty new. That was smaller late last year.

McBear,
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