Latin America in Favor….at least for now.
Yesterday Fitch upgraded Brazil to Investment Grade. This is big news as Brazil now has two rating agencies giving it this important rating. Fixed income and the currency rallied on the back of this news and brought the rest of the region with it.
There was word out of Argentina that the Farmers strike was basically resolved, but I an hearing this morning that this might be a bit premature.
Rates initially moved lower, but as of the morning there looks to be more buying interest. I continue to look for Crude to top out and as such so should the Euro.
Good Luck and Good Currency Trading.
Bear Stearns Part Three….
Here is the final installment from the Wall Street Journal about the Bear Stearns “Shot Gun Wedding” as Jamie Dimon put it.
A few Ramdon Thoughts
Yesterday we had a Traders meeting at my office. It was surprisingly depressing. Talk of inflation, stagflation, Bank failures and this was the positive stuff! Getting through all of that Doom and Gloom the general message took from the meeting was:
1. Higher rates globally.
2. Weaker dollar
3. Higher Crude
4. Higher Inflation
5. The Fed on hold….for a considerable amount of time. With a steepening yield curve to combat inflation this would be the best of both worlds for the Fed. A steep yield curve allows the banks to recapitalize (maybe a slow process) and the higher long term rates can help combat inflation.
Another thought today was that the Fed’s view of the economy is that the U.S. slowdown is deeper then they will admit. This deep(er) recession will cause a global slowdown which in turn will lead to lower commodity prices.
Any thought….let me know.
Good Luck and Good Currency Trading
Bear Stearns Part two……
Here is the second installment of the Fall of Bear Stearns from the Wall Street Journel…..A very good read….
Lot’s of Action out of Latin America
There was lots of movement in Latin America today. In Argentina the farmers were asked by local leaders to show patience in dealing with the Government.
“There is a very strong desire across the country to express anger at the government’s decision to stand us up,” Buzzi said. “We’re asking the people to be patient and tolerant.”
This shows that everyone is aware of what is at stake if talks totally crumble.
To READ MORE
In Brazil the finance minister Guido Mantega said that
Brazil may cut more import duties to help fight inflation and stem rising food costs.
“If we see more products experiencing price increases, we can lower tariffs,” Mantega told reporters today in Rio de Janeiro. Brazil has more ways to fight inflation than just raising interest rates, he said.
This “Help” sent Brazilian rates off the highs of the day. Still closing higher but possible signalling a near term top. With 2-3 year sector rates at 14.5% and the latest projection for short term rates to peak at 14.5%, lending in the 2-3 year sector against paying a shorter run seems like it has some potential. I cut down on my widening differential play against dollars and will look to exit totally when I can.
In Mexico tere was talk by President Felipe Calderon of “opening up the energy and telecommunications industries to more investment as well as improvements to education and labor laws may boost economic growth to as much as 6 percent a year. “
This could really help with economic growth in Mexico. The news was taken favorable with the currency stregthening marginally against the dollar.
In Chile the dollar strengthened alot over the last two days. Why, I am not exactly sure. The CB has been in daily buying it’s usual 50 mio usd. This it totally expected and I do not think is the reason. When I know more I will pass along.
Take a look at Crude, LOWER Today. This will be good for Asia and bad for Latam overall. I sold Usd/Krw at 1043.50 in the 1mth. I expect the market to open lower in Asia time tonight.
Good Luck and Good Currency Trading.
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