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The Money Map Advantage
Wednesday, November 23, 2005
By Horacio Marquez
#19
** Brazil’s Fundamentals – Looking Better All The Time
Brazilian stocks are taking off, propelled by:
* The strong underlying fundamentals of the global commodity rally (notably iron ore and minerals);
* The resilient strength of the global economy, where emerging markets are achieving a “soft landing” at a high rate of economic growth;
* The strength of the Brazilian economy, which will be one of the few emerging economies to accelerate in 2006; and
* The consistently conservative monetary and fiscal policies implemented by a leftist president and former finance minister.
In particular, these two major factors ignited Brazilian stocks:
1. The realization that we might be closer to the end of the Fed rate hikes, as per revealed by the discussions in the Fed minutes; and
2. The public backing of President Lula to Minister Palocci, who is seen by the markets as the architect and guarantor of successful fiscal policy.
With very prudent fiscal performance and inflation in check, both uncharacteristic of the emerging economies of the old days, Brazil is in a great position to keep lowering interest rates and spurring growth. And, the beneficiaries are the banks, which helps our position in Bradesco (NYSE: BBD). Economic growth in Brazil and higher energy prices will also keep propelling Petrobras (NYSE: PBR) and Tenaris (NYSE: TS).
In Europe, Angela Merkel in Germany is getting some traction, and change in a positive direction is better than no change at all. This will stimulate Austria and our EWO holding.
Meanwhile, in Japan, Prime Minister Junichiro Koizumi is pressuring Bank of Japan not to raise rates, which will keep benefiting banks, especially Mitsubishi UFJ (NYSE: MTU).
In the U.S., having broken 1,230 in the S&P 500, the market is flying and should continue to do so helped by the prospect of the Fed hikes ending sooner. I can “feel” the mega mutual fund managers at the large funds, awash in cash, trying to figure out what to buy in order not to look foolish before year-end. I am off to lunch with one of them now.
Happy Thanksgiving,
Horacio Marquez
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
Stock
Current Price
Comments
Banco Bradesco (NYSE: BBD)
$60.71
Buy. Sell stop is $43.
Petrobras (NYSE: PBR)
$67.98
Buy. Sell stop is $55.
Mitsubishi UFJ Finan. (NYSE: MTU)
$13.06
Buy. Sell stop is $10.20.
iShares Japan Fund (AMEX: EWJ)
$12.67
Buy. Sell stop is $10.
Cerner Corp. (Nasdaq: CERN)
$98.00
Buy. Sell stop is $69.00.
Tenaris (NYSE: TS)
$115.58
Buy. Sell stop is $95.
MSCI Austria Fund (AMEX: EWO)
$26.67
Buy. Sell stop is $20.90.
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Market Watch
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As Of 6:11AM 3/26/2009
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