Investo • Blogs

An interesting article by Tom Hennigan for the Irish Times about how General Motors and Ford, in contrast to the North American market, are growing sales in Brazil thanks to the strenghtening of the country’s middle class.

Click here to read the full article.

New-York based agrobusiness company Bunge is acquiring Usina Moema Participações for a deal totalling almost $ 1 Billion Dollars aiming the production of ethanol.

Click here to read the full article by MarketWatch.

Tags: Ethanol, purchase, sugar

In September, I attended an Investment Conference in New York City, and the key note speaker was Alan Greenspan, former Chairman of the Federal Reserve in the United States.

Mr. Greenspan mentioned the global disappearance of credit and how the global trade came to a halt, all across the world. The collapse in export, overhanging inventories made production fell well below consumption and a rapid liquidation of products took place.

The major issue not getting enough attention was and still is the shift of paper assets to physical assets. Short-term credit was financing long-term projects, once short-term credit dried up, the financial crisis happened.

In the 1850’s, banks would hold 50% of their capital, today, they hold less than 10%, which clearly it is not enough.

In today’s economy, there is still a major degree of liquidation, but it is showing signs of slowing. It looks like it will take until the end of this year for things to start shifting.

East Asia is coming around from this curve (and I would argue that Brazil is following). Europe is still lagging, but it appears that a synchronized global recovery will be taken place, led by East Asia.

By year end we should start seeing an inventory adjustment and looking beyond this year, we should experience a fairly pronounced recovery worldwide.

Mr Greenspan expects a deflation early next year and for the exit strategy the critical issue will be inflation: Money/Supply x Production/Demand. Given historical data, inflation is predicted for 2012, if not sooner.

Commodities soar on inflationary periods. The next five years will be interesting to watch the commodities market.

These days there is a lot of excitement in the gold sector since bullion nudged over US$1,000/oz several times this September, hitting $1,200 in November, driven predominantly by the weakness in the US dollar and to a lesser extent by speculation that inflationary pressures are building in the world economies.

The major gold companies and large producers have already seen higher gold prices factored in to their share prices. We do not see evidence of this, however, in the junior and emerging companies in large part due to their inherently higher risk profiles. The other factor being that the climb back after the 2008 market downturn which saw these same companies lose 60-85% of their value has been slow and hesitant for many. Experts agree that near-term producers have the most to gain (and potentially the most to lose) from the gold price movement.

Published by Jeanny So

Tags: alan greenspan, Brazil, commodities, credit, deflation, demanda, inflation, nova iorque, United States

I was asked by my good friend Sandro to write a blog about investments where I could share with you what I am exposed to in the midst of the investment community in Canada.
With a Business Degree from Brazil, I started working in the investment industry in Canada some 11 years ago and one of the first things I have learnt is to pay attention on market trends.
In investing, financial markets are commonly believed to have market trends, where market cycles occur with regularity and persistence. Market trends are described as sustained movements in market price over a period of time, therefore major components of technical analysis is based on market trends.
We are currently living an unprecedented time in the markets and avoiding a recession since early 90’s.
The term recession refers to a significant drop in economic activity, lasting more than a few months, and measured by employment rate and real gross domestic product (GDP).
Recessions occur for various reasons. Most often, businesses build up inventories and, consequently, cut back their production and lay off workers, thus depressing earnings. The spiraling effect of lower income and low spending also dampens confidence in the economy. Large-scale natural disasters such as floods and droughts or trade wars between countries can induce recessions as well.
During the last recession in the early 1990s, the Canadian economy shrank substantially. From 1990 to 1991, real GDP decreased more than 1 per cent, and the unemployment rate rose above 10 per cent in both 1991 and 1992. Governments, both federal and provincial, posted higher deficits because they collected less tax on income and corporate profits but spent more money on programs such as employment insurance benefits.
Governments try to avoid or overcome recessions by adjusting monetary and fiscal policies—increasing spending, cutting taxes, and lowering interest rates—and each of these actions helps create demand for goods and services. The Bank of Canada reduced interest rates several times in the early 2000s to avoid a potential recession.
The decade of the 2000s saw a global explosion in prices, focused especially in commodities and housing, marking an end to the commodities recession of 1980-2000. In 2008, the prices of many commodities, notably oil and food, rose so high as to cause genuine economic damage, threatening stagflation and a reversal of globalization.
In January 2008, oil prices surpassed $100 a barrel for the first time, the first of many price milestones to be passed in the course of the year. In July 2008, oil peaked at $147.30. These high prices caused a dramatic drop in demand and prices fell below $35 a barrel at the end of 2008.
In the second half of 2008, the prices of most commodities fell dramatically on expectations of diminished demand in a world recession.
Some believe we started the recession in 2007, and working with many microcap and small cap companies I did feel the recession starting up towards the end of 2007 when these companies were not able to fund themselves as easily as it has been earlier in the year. The amount of new investment in the market was drying up quickly.
A lot of bullish commentators are talking about a recovery being in the works, and they may very well be right. The S&P/TSX Composite advanced as strong job figures stabilizing and more financings being completed.

Tags: economy, financial markets, investment, market trends, PanTV, recession

Hi and welcome to Investo! This is your place for economy and investment related to Canada and Brazil.

PanTV is back today, and this is an exciting opportunity to introduce this new great blog which becomes part of our family. The project is still being run as a test, with several minor tweaks to be dealt with, however, the content of the blogs won’t be anywhere near tests. This is the real thing!

Get ready for Investo, meet our new bloggers and columnists, check the other blogs, relax, enjoy, and we’ll see you soon around our website. Welcome back to PanTV!

Tags: Investo, PanTV