. December 10, 2007 SouthAmerica: Basically thereâs a very simple solution for this problem related to Floridaâs pension investment in Petrobras stock. All they have to do is contact a major pension plan in Brazil that would be willing to exchange their investments in the United States in sub prime crap with the Florida pension money invested in Petrobras stock. After the stock swap it is done Florida would have an investment based on the American Dream or nightmare â and the Brazilian pension fund would have an investment in a major Brazilian company of the future. And in the meantime Petrobras should continue doing business with Iran and it should help them develop new oil fields in that area of the world. It is a win-win-win situation for everyone Florida is able to unload the Petrobras stock, the Brazilian pension fund is able to unload the US sub prime crap - and Petrobras would not give a shit that Florida is no longer a shareholder. ********* âState pensions, Brazil's oil and Iran entangledâ Florida invested $112-million in Petrobras, which poses a conflict. By DAVID ADAMS, Times Latin America Correspondent Published December 10, 2007 St. Petersburg Times, FL. MIAMI - When Florida Gov. Charlie Crist led a trade mission to Brazil last month, all the talk was of improving commercial ties with the state's largest trading partner. "God bless sweet Brazil," Crist told his hosts, hailing the country's world-renowned biofuels program. So it came as a surprise on Crist's last day in Brazil when he abruptly announced the cancellation of a meeting with executives at the state-controlled energy giant, Petroleo Brasileiro, or Petrobras. "We will continue to follow the moral and prudent path by not doing business with companies that sponsor terror and by setting an example for all other states and nations," he said. He cited a new Florida law requiring that the state pension fund divest from companies doing business with Iran and Sudan. At the time, Crist's staff said it was entirely symbolic. While Petrobras had a modest $35-million invested in an Iranian oil drilling company, as far as they knew, Florida had no investments in Petrobras. Except for a few ruffled feathers - Petrobras officials were taken aback by the scolding from a politician on only his second overseas trip - that seemed like the end of the saga. Now the St. Petersburg Times has learned that the Florida pension fund has $111,919,435 in foreign equity assets invested in Petrobras, according to the State Board of Administration, which manages the state's investments. "I talked to the fund before I met with Petrobras to see what amount might be affected," said George LeMieux, Crist's then-chief of staff. "Perhaps someone missed it." The miscalculation could have serious repercussions for the relationship between Petrobras and the state. Under Florida law, Petrobras has until September 2008 to sever its ties with Iran before state officials would be forced to withdraw the $112-million investment in Petrobras. What effect such a withdrawal might have on relations between Brazil and Florida is unclear. But Crist had viewed Petrobras, the world's largest distributor and retailer of biofuels, as a potentially key partner in his plans to promote renewable energy. "Petrobras is a company that one way or another U.S. interests will have to deal with," said Jorge Pinon, a former Amoco oil executive in Latin America, now with the University of Miami's Center for Hemispheric Studies. "We're going to need Brazil if we move to E10," he added, referring to ethanol-blended gasoline, which is catching on in America but remains hard to find in Florida. Petrobras has in recent years emerged as one of the world's largest oil and gas companies, with a major stake in renewable fuel. A monster offshore oil discovery announced last month could catapult Brazil to number eight in the ranks of the world's major exporters. In just the last two years, its U.S. subsidiary, Petrobras America, has become a major player in drilling off the U.S. Gulf Coast. "Pretty soon Petrobras is going to become one of the largest producers of oil in the Gulf of Mexico," Pinon said. Although Florida's pension fund cannot invest in Petrobras under current circumstances, that would not prevent the Brazilian energy giant from investing in Florida, according to LeMieux. Petrobras has expressed interest in entering the retail fuel market in Florida. "We are trying to make a policy statement about how we make our investments. That's really the only leverage point the state has," LeMieux said. Florida's $112-million stake in the company is small compared with the company's market value of $75-billion. It registered profits of $12-billion in 2005. Petrobras' investment in Iran is tiny compared with other international energy companies, limited to a $35-million drilling services contract in the Persian Gulf with the state-owned National Iranian Oil Co. The contract was signed on July 14, 2004, well before a recent intensification of concern about Iran's nuclear ambitions, Petrobras officials say. The contract is due to expire on Jan. 14. "Petrobras is internationally recognized for its responsible activities all over the world and it would never sponsor terror," the company said in a statement. The company noted that it has won wide praise for its efficient and transparent management. Crist knew about Petrobras' Iran ties two months before the trip, staff members concede. "A couple of months ago the Cabinet took further steps to divest from Iran, and a list of companies was provided to the governor," said the governor's spokeswoman, Erin Isaac. "During the meeting, he called me down to the Cabinet room and asked that the meeting be canceled immediately." But Brazilian officials say the governor's action took them almost completely by surprise. Though they were given notice of the governor's change of schedule, they received no explanation until Crist's last day in Brazil. The Brazilian consulate in Miami assumed the change had something to do with Crist's plans to travel to Argentina later that same day. Brazil's Consul General in Miami, Joao Almino, has contacted Crist's office to express his government's "surprise" over Crist's decision and the language used in his Nov. 7 statement. Brazil respects Florida's right to regulate its pension plan, officials say, but they deny that Petrobras is associated with terrorism. Brazil considers itself an ally in combating terrorism, said Rafael Vidal, Brazil's Deputy Consul General in Miami. "We are playing on the same side," he said. LeMieux said he was hopeful Petrobras would sever its Iran ties after its drilling contract expires in January. "So it may all work out." Source: http://www.sptimes.com/2007/12/10/State/State_pensions__Brazi.shtml .
. January 22, 2008 SouthAmerica: Regarding the current Panic in global financial markets â the smart money should be flowing into Brazil right now â if you want a safe haven and an economy that is moving forward into a great future. It does not matter that the financial markets are melting down â at the end of the day people from around the world need to eat and the demand for agricultural products it will only increase in the coming years. China and India it will continue to grow and these countries will continue importing all kinds of stuff from Brazil. Progress canât stop on these countries just because the financial markets got stupid â sub prime and so on⦠China will continue having a massive number of people moving to its new cities and the Chinese canât stop building these massive new cities just because of the mess in global financial markets. The Brazilian economy it is also isolated from the major economic shocks associated with the massive increase in the price of oil. In a Nutshell: Only the people with no vision about the future would panic regarding the Brazilian economy â If you want a safe haven today â probably Brazil it is your best bet. Only fools will panic at this time regarding the prospects of the Brazilian economy in the coming years. .
January 22, 2008 SouthAmerica: I assume the smart money is going into the Brazilian stock market as I mentioned on my above posting at 5:50 AM New York Time. Right now the Bovespa Index is up about 3 percent in Brazil - but we still have a few hours of afternoon trading. It seems to me that at least the smart money got the point. .
. January 30, 2008 SouthAmerica: The enclosed article was published yesterday on Brazzil magazine the article was written by one of the regular columnists of the magazine. I agree with the author when he said: âBrazilians are an optimistic people and they have every reason to be so. Just think of some of the benefits Brazil enjoys: it is one of the largest countries in the world yet has a relatively low population density; it has no areas which are uninhabitable for reasons of geography or climate; it has vast areas which have not been exploited; it has practically every agricultural and mineral resource you can imagine; it has a culture which is open to change and is tolerant of diversity.â ******* Brazil's Politicians Set to Cash in on Oil and Gas Discoveries Written by John Fitzpatrick Tuesday, 29 January 2008 Brazzil Magazine As if Brazil was not blessed with a bounty of natural resources it seems that God has decided to help his favorite nation once again by unveiling his latest gifts - massive reserves of oil and gas. The state-owned oil company Petrobras announced on January 21 that it had discovered huge offshore gas reserves which could be as large as the oil resources it discovered in November at the nearby Tupi field, which are estimated at five to eight billion barrels. This means that Brazil is on its way to becoming one of the world's leading oil and gas producers. Brazil is already self-reliant in oil and when the natural gas is flowing in 2014 it will no longer depend on Bolivia. Ironically, this good news comes amidst fears of energy rationing this year as the country's current power resources cope to meet with the rising demand from a growing economy. This latest announcement is excellent news for Brazil and shows once again how this country could become one of the most prosperous countries in the world if it could free itself from the shackles which are holding it back. These shortcomings include needless poverty, an inefficient educational system, endemic corruption, a tolerance for law-breaking and an ungainly political system. Brazilians are an optimistic people and they have every reason to be so. Just think of some of the benefits Brazil enjoys: it is one of the largest countries in the world yet has a relatively low population density; it has no areas which are uninhabitable for reasons of geography or climate; it has vast areas which have not been exploited; it has practically every agricultural and mineral resource you can imagine; it has a culture which is open to change and is tolerant of diversity. Its farmers grow everything from rice to tea and export beef and poultry all over the world. Its mines produce riches from commodities like iron ore to more valuable products like gold and nickel. It has over 7,000 kilometers of coastline and fishing resources which have barely been tapped. It has an entrepreneurial class, particularly in the south and southeast, as dynamic as anywhere in the US or Asia. Its bigger companies, like Vale, Petrobras, Gerdau and Votorantim have become multinationals with a growing presence abroad. It has no problems with minorities and no separatist movements. Its people have a genuine shared patriotism regardless of their racial or ethnic originâ¦. You can read the entire article at: http://www.brazzil.com/content/view/10035/41/#jc_writeComment .
. April 16, 2008 SouthAmerica: Here are 3 interesting articles about Brazil. ***** "Brazil, Russia to build jet fighter" By MARCO SIBAJA The Associated Press â April 15, 2008 BRASILIA, Brazil (AP) â Brazil and Russia signed an agreement on Tuesday to jointly develop top-line jet fighters and satellite launch vehicles. Brazil's Strategic Affairs Minister Roberto Mangabeira Unger told reporters the agreement will lead to the development of fifth-generation jet fighters that are built using sophisticated engineering, such as composite materials, stealth technology and advanced radar. The agreement signed by Unger and the deputy secretary of Russia's Security Council, Valentin Sobolev, includes the construction of rockets capable of hurling several kinds of satellites into space. Brazil builds its own small and medium-size rockets that are launched from the Alcantara base in the northeastern state of Maranhao. The base is considered an excellent launch site because it is located just 2.3 degrees south of the equator, the line at which the Earth moves the fastest, helping propel rockets into space with less fuel. Tuesday's agreement calls for advanced training in the field of cybernetics, which Mangabeira called "essential for the defense and the technological evolution of our industry." It also involves the transfer of technology, something Brazil has always insisted on. Earlier this year, France aid it would transfer technology to the Brazil for construction of the Scorpene attack submarine, helicopters and the Rafale fighter plane. The Scorpene is a conventional attack submarine, but Brazilian officials have said they want the diesel-powered vessel to serve as a model for the development of a nuclear submarine that would be the first in Latin America. University of Brasilia political scientist David Fleischer said the agreement may not advance very far because Russia may limit the transfer of technology for the fighter jets. "The problem is that the Russians have never been all that keen on technology transfer," Fleischer said. "But then again the Russians may want to beat out the French, so the deal could eventually go through." "A deal with Russia, together with Venezuela's recent purchases of Russian weapons, could spark an arms race in South America," Fleischer added. Venezuela recently bought 53 Russian-made attack helicopters, 100,000 assault rifles, 24 Sukhoi fighter jets, 12 military transport planes and 5,000 sniper rifles. Source: http://ap.google.com/article/ALeqM5hGPCxiqRRJLngsk8BuZpMfNlz7LwD902HJ2O3 ***** "Brazil Rises As An Oil Power" Paul Maidment, 04.15.08 Forbes Magazine Haroldo Lima may have jumped the gun, but he fired a warning that Brazil is an emerging petropower. The director of Brazil's energy regulator, the National Petroleum Agency, said Monday that the world's third largest oilfield lay 400 kms offshore from Rio de Janeiro. Investors ran up the market value of the energy companies involved, including Petrobras, Repsol, Hess and BG Group by $20 billion. The agency has since distanced itself from its director's claim that that field held reserves of 33 billion barrels of oil equivalent, saying the number was probably based on an informal estimate from Petrobras, the country's state-run oil company. For its part Petrobras says more drilling and studies are needed to assess the find, known as Carioca in the Sugar Loaf prospect. A reasonable assumption would be that the number quoted is a projection of the total reserves rather than of the recoverable ones, which could be two-thirds less. But no one is denying that there is a potentially a big new find under evaluation. Morgan Stanley guesstimates it may be a15 billion barrels of oil equivalent field. Oilmen consider 5 billion barrels of recoverable oil a superfield. Carioca would at least be that. Last year, a neighboring subsalt field known as Tupi was found, and is now thought to have recoverable reserves of 5 billion-8 billion barrels of oil equivalent. The two boost Brazil's prospects as a consequential world oil power. Using the conservative estimates, the discoveries would taking Brazil from being the worldâs 16th largest oil producer to No. 7, just behind Russia. That won't happen overnight. Regardless of Carioca volume, the oil would lie at great depths in the subsalt cluster under the floor of the southern Atlantic, and represent expensive technological and cost challenges to extract. It won't be landed for many years yet. Source: http://www.forbes.com/business/2008/04/15/oil-brazil-carioca-biz-energy-cx_pm_0415notes.html ***** "Brazil boasts 23 of Latin America's top 50 companies" Chinaview â CN 2008-04-16 RIO DE JANEIRO, April 15 (Xinhua) -- Brazil boasts 23 of Latin America's 50 biggest companies, and four of the top ten are headquartered in the country, a study by consulting firm Economatica said Tuesday. Total revenues of the 23 Brazilian companies in the ranking amount to 299.5 billion U.S. dollars, up 39.6 percent from the study held in 2006, according to Economatica. The ranking also enlists 16 Mexican companies (down from 19 in 2006), six Chilean companies and three Argentine companies. In terms of revenue, the oil and gas sector was the heaviest segment on the list, with a total of 131.5 billion dollars, followed by the telecommunications sector, with 87.8 billion dollars. The three biggest Latin American companies in terms of revenue were Petrobras (oil and gas, Brazil), with 96.3 billion dollars; Vale (mining, Brazil), with 36.56 billion dollars; and America Movil (telecom, Mexico), with 28.54 billion dollars. The top ten also included Brazil's steel producer Gerdau, energy supplier Eletrobras, as well as Mexico's cement maker Cemex, retailer Wal Mart Mexico, beverage maker Femsa, oil and gas company Copec and telecommunications company Telmex. Source: http://news.xinhuanet.com/english/2008-04/16/content_7986930.htm .
. April 16, 2008 SouthAmerica: Here are 2 interesting articles about Brazil. ***** âBrazilians' income is up, but U.S. firms' investments in Brazil aren'tâ By JIM LANDERS Tuesday, April 15, 2008 The Dallas Morning News SÃO PAULO, Brazil â The U.S. may be in a recession, but these are the best economic times in Brazil's history. By government estimates, 20 million Brazilians raised their incomes enough to join the middle class in the last two years. Despite this rise in consumer power, American investment here is diminishing. "If U.S. companies want to go to Russia or China and risk their money, that's OK," said Rubens Barbosa, Brazil's former ambassador to Washington. "But U.S. companies are not paying attention to the changes here." The biggest of those changes is the shift of millions of Brazilians from lower to middle incomes. Measured by U.S. standards, this group's average monthly income of $625 per family seems like dressed-up poverty. Lower income averages $340 a month. Yet a recent cover story in Brazil's weekly news magazine, Veja, notes that one in three of these middle-income families has a bank account. One in four has at least one credit card. One in five has a computer. One in 20 has high-speed Internet service. And one in three has a car. Brazil's interest rates are extraordinarily high. Car dealers disguise the impact by advertising car financing by the month, at 0.8 percent or 0.76 percent interest rates. Yet Brazilians talk of the arrival of consumer credit because the new middle class is buying. New cars are hitting the streets at a pace averaging 7,200 a day, or 2.6 million a year. Forty-six percent of Brazilians are now in the middle of the country's income pyramid, with 15 percent counted as upper-middle income or rich. That still leaves 39 percent of the country poor. But low inflation, a sound currency, growth rates averaging 5 percent a year and sustained government investments in schools and teachers are helping Brazilians of all incomes. "We're hoping that we can now move from a developing to a developed country, but it's too soon to know," said São Paulo University engineering professor Kazuo Nishimoto. The improvements are quite a contrast to Brazil's reputation as one of the most unequal countries in the world. Brazil's per capita income â measured against the rest of the world in purchasing power parity â came to $9,700 last year. And more than 40 percent of the country's wealth is held by 10 percent of the population. (In the United States, the richest 10 percent owns 30 percent of national wealth.) The vast favelas, or slums, stacked up the slopes of Rio de Janeiro speak of poverty that looks little changed. But the population has stabilized, and the birth rate is now just 1 percent. The world is paying high prices for Brazil's ore, food, oil and manufactured goods. In turn, more Brazilians are shopping. Companies such as Energy Equipment Resource Inc. of Dallas and TruEnergy Renewable Fuels of Irving are doing multimillion-dollar deals in Brazil. Houston companies such as GE Energy Financial Services, TransOcean Inc. and Noble Energy Inc. are moving toward multibillion-dollar relationships with Brazilian firms. There's room for more â lots more, argues Mr. Barbosa, the former ambassador. "Look at all the new cars and the other new consumer products people are buying," he said. "And we're only just beginning to develop consumer credit." ***** âGM to build $200 mln engine plant in Brazilâ Reuters - Mon Apr 14, 2008 DETROIT, April 14 (Reuters) - General Motors Corp will invest $200 million to build an engine and auto components plant in Brazil to cater to fast-growing demand in the country, the No. 1 U.S. automaker said on Monday. The plant, to be located in Joinville, will have the capability to produce 120,000 engines and 50,000 cylinder heads per year, GM said. It said the plant would begin production in the fourth quarter of 2009 and employ 500 people. While GM is staggering in its core U.S. market amid a housing slump and credit market turmoil, it has enjoyed booming demand in emerging markets such as Brazil and China. GM sold a record 499,000 vehicles in Brazil in 2007, up more than a fifth from 410,000 units a year earlier. "The decision to build a new engine plant in Brazil is essential to our ability to expand vehicle production capacity throughout the Mercosul Region," Jaime Ardila, president of General Motors Brazil, said in a statement. GM spokeswoman Laura Toole said the engines would be supplied to GM plants in Brazil initially, with a possibility they might head to Argentina in the future. The plant will manufacture flex-fuel engines, which can run on gasoline or ethanol made from sugar cane or any mixture of the two. Flex-fuel vehicles account for nearly 90 percent of all new car sales in Brazil. Sales of new vehicles surged in the South American country to a record 648,000 units in the first quarter, up 31.4 percent from the year-ago period, according to automobile manufacturers' association Anfavea. Source: http://www.reuters.com/article/marketsNews/idUSN1438913020080414 .
Inflation is less than 4.5% and well controlled for a decade now. The Real is world leader in appreciation against the dollar in last year (up 18+%) - In part by "carry trade" but mainly by commodities. Brazil is net exporter of oil, world leader in several agricultural exports, including alcohol and Beef as well as grains, and the world leading exporter of enriched iron ore and big player in several other minerals. - China recently agreed to 65% increase in the iron ore price. The secure interest rates paid on bank application exceed 12% last year and have often been (Currently, are I think, but perhaps Turkey is back to No.1) highest real rates in the world. The recently merged Sao Paulo stock markets are the world's third largest. The income gap between rich and ppor is closing (slowly but closing) Brazil is a "net creditor" nation. (Could pay all external debts, public and private, and have money left over in foreign investments.) More than half of the fuel used in cars is home-grown alcohol. PetroBras is discovering new large oil fields ever month or so now. See more at: http://www.economist.com/opinion/displaystory.cfm?story_id=11052873 But you forget all that when you see what the beautiful and liberal ladies are not wearing on the beaches. "The future" has finally come to Brazil - and they said it never would: "Brazil is the land of the future - and it always will be" has been said for many years.