segunda-feira, 31 de janeiro de 2011

(BN) Chicago Purchasing Managers Index Increases to 68.8 in January

Chicago Purchasing Managers Index Increases to 68.8 in January
2011-01-31 16:10:26.172 GMT


By Alex Kowalski
    Jan. 31 (Bloomberg) -- Businesses in the U.S. expanded in
January at the fastest pace since July 1988
, indicating the
world's largest economy has momentum at the start of the year.
    The Institute for Supply Management-Chicago Inc. said today
its business barometer rose this month to 68.8 from 66.8 in
December. Figures greater than 50 signal expansion, and
economists projected the gauge would slip to 64.5, based on the
median estimate in a Bloomberg survey.
    Orders, production and employment increased as
manufacturers such as Caterpillar Inc. benefited from a pickup
in consumer purchases and stronger export markets in emerging
economies such as China. Consumer purchases in the final three
months of 2010 were the strongest in more than four years,
figures last week showed.
    "This fortifies the stability of the recovery," said
Maxwell Clarke, chief U.S. economist at IDEAglobal in New York.
"You definitely see traction from manufacturing going
forward."
    Estimates from 41 economists for the Chicago purchasers'
index ranged from 60 to 71.3, according to the Bloomberg survey.
    Data today from the Commerce Department showed Americans'
spending rose more than forecast in December. Household
purchases increased 0.7 percent, while incomes gained 0.4
percent for a second month, the figures showed.
    Stocks held gains after the reports and Treasuries fell.
The Standard & Poor's 500 Index rose 0.5 percent to 1,282.74 at
11:07 a.m. in New York. The yield on the benchmark 10-year note
increased to 3.35 percent from 3.32 percent late on Jan. 28.

                     Orders, Employment

    The Chicago group's production gauge rose to 73.7 from
December's reading of 72.2. The gauge of new orders increased to
75.7, the highest since December 1983, from 71.3. The employment
measure rose to 64.1, the strongest since May 1984, from 58.4
the prior month.
    Economists watch the Chicago index and other regional
manufacturing reports for an early reading on the outlook
nationally. The Chicago group says its membership includes both
manufacturers and service providers, making the gauge of measure
of overall growth. Its members have operations across the U.S.
and abroad.
    Other measures of regional manufacturing have shown
strength in January. The Federal Reserve Bank of New York on
Jan. 18 said manufacturing expanded in that region this month,
and the Philadelphia Fed said two days later that factories grew
for a fourth month.

                        Auto Sales

    Automakers are seeing sales pick up. Car purchases in
December rose to a 12.53 million unit annual pace, the highest
since August 2009, from 12.3 million in November, industry data
showed this month.
    The ISM's monthly national factory index, due tomorrow, was
probably little changed at 58 in January after 58.5 the prior
month. A reading above 50 signals expansion.
    A pickup in consumer demand, which accounts for about 70
percent of the U.S. economy, could add to gains in
manufacturing. The Commerce Department reported last week that
household purchases rose at a 4.4 percent pace in the fourth
quarter, the fastest in more than four years, while the economy
grew at a 3.2 percent rate.
    Consumers may further ramp up spending as they benefit from
an $858 billion bill extending all Bush-era tax cuts for two
years. The legislation also extended the window for expanded
unemployment insurance benefits through 2011, trimmed payrolls
taxes and included accelerated tax depreciation for equipment
purchases.
    The manufacturing industry, which accounts for about 11
percent of the economy, has been at the forefront of the
economic recovery that began in 2009.

                     Caterpillar Profit

    Caterpillar, the world's largest maker of construction
equipment, posted fourth-quarter profit that topped analysts'
estimates as sales advanced in China, Australia and Latin
America. Revenue climbed 62 percent to $12.8 billion from $7.9
billion a year earlier, the company said last week.
    In 2011, sales will exceed $50 billion, compared with
$42.59 billion in 2010, according to the company.
    "There's quite a bit of pent-up demand there yet to
come," in North America, Ed Rapp, chief financial officer of
the Peoria, Illinois-based company, said last week during a
conference call. "The tailwinds come as we get more robust
growth."

For Related News and Information:
For U.S. economy stories: NI USECO <GO>
For U.S. manufacturing stories: TNI US MAC <GO>
For stories on manufacturing and trade: TNI TRD MAC <GO>
Factory Orders and Durable Goods reports: FODG <GO>
Stories on GDP: GDP CQOQ <Index> CN <GO>

--Editors: Vince Golle, Carlos Torres

To contact the reporters on this story:
Alexander Kowalski in Washington at +1-202-654-7372 or
akowalski13@bloomberg.net

To contact the editor responsible for this story:
Christopher Wellisz at +1-202-624-1862 or
cwellisz@bloomberg.net.

quinta-feira, 27 de janeiro de 2011

Folha São Paulo: FMI vê deterioração 'brusca' das contas fiscais do Brasil

Folha São Paulo: FMI vê deterioração 'brusca' das contas fiscais do Brasil
2011-01-27 17:15:46.547 GMT

http://www1.folha.uol.com.br/bbc/866790-fmi-ve-deterioracao-brusca-das-contas-fiscais-do-brasil.shtml

PageExcerpt:
O FMI (Fundo Monetário Internacional) divulgou nesta quinta-feira, em Washington, um relatório em que afirma que a deterioração nas contas fiscais do Brasil "é particularmente brusca" e vai impedir que se alcance a meta de superavit primário. ...

segunda-feira, 24 de janeiro de 2011

(BN) Super-Cycle Leaves No Economy Behind as Davos Shifts to Growth

Super-Cycle Leaves No Economy Behind as Davos Shifts to Growth
2011-01-23 23:01:01.0 GMT


By Simon Kennedy
    Jan. 24 (Bloomberg) -- For only the third time since the
Industrial Revolution, the world may be entering a long-term
growth cycle that will lift all economies simultaneously,
driving bond yields and commodity prices higher.

    The depth and scope of the expansion will be a focus for
discussion at this week's annual meeting of the World Economic
Forum in Davos, Switzerland. Evidence of a broadening global
recovery will enable U.S. Treasury Secretary Timothy F.
Geithner, investor George Soros and 2,500 political, business
and academic leaders to shift their emphasis away from crisis-
fighting.
    With the economic and investment outlooks "much better"
than in recent years, "people are talking about how to get back
to business as normal and what comes next," said Jitesh Gadhia,
a delegate to the conference and the London-based senior
managing director at Blackstone Group LP, which runs the world's
largest buyout fund.
    Goldman Sachs Group Inc., PricewaterhouseCoopers LLP and
London's Standard Chartered Bank are among the financial
companies sending executives to the meeting. Their economists
predict a growth spurt in coming decades led by emerging nations
that will be strong enough to boost developed countries.

    Global gross domestic product will swell to $143 trillion
by 2030, allowing for inflation and market-exchange rates, from
$62 trillion in 2010, with China and other emerging markets
accounting for about two thirds of the rise, estimates Gerard
Lyons, chief economist and group head of global research in
London for Standard Chartered, which generates most of its
earnings from Asia.

                   Investment, Urbanization

    Lyons and his colleagues predict a "super-cycle" of
historically high growth that will last at least a generation
and will be led by booming trade, investment and urbanization,
according to a report published in November.
He reckons such a
cycle has occurred only twice since the end of the 18th century:
the four decades before World War I and the three following
World War II.
He's betting the new phase will contribute to a
reversal in the three-decade decline for U.S. bond yields after
10-year Treasury notes lost an average 40 basis points a year
since the early 1980s.
    Richard Dobbs, a director of the research division at New
York-based McKinsey & Co., will use the Davos meeting to
highlight a study by the international consulting firm that sees
an imminent end to cheap capital. The causes are a building
bonanza in developing economies and aging populations who are
draining their savings, according to the report, which was
released Dec. 9.

                       Signs of Momentum

    The 10-year U.S. Treasury note yielded 3.41 percent in New
York on Jan. 21, according to BGCantor Market Data, compared
with 15.8 percent in 1981 and a record low of 2.04 percent in
December 2008. Signs of momentum in the U.S. economy have helped
increase the yield from about 2.9 percent at the start of
December.
    "It's a topic capturing the attention of people who want
to think beyond the crisis," said Seoul-based Dobbs.
    While Goldman Sachs Asset Management Chairman Jim O'Neill
has found fame for promoting the "BRIC" economies of Brazil,
Russia, India and China, he says their rise has positive impact
beyond their borders, with Chinese imports totaling about $400
billion, almost the equivalent of South Africa's economy last
year. That should attract investors to rich-nation companies
with links to these markets, and the resurgence in the U.S.
economy has prompted O'Neill to predict higher U.S. bond yields
in 2011. He didn't provide a specific forecast.

                         'Out of Date'

    "World-trend economic growth is being lifted," said
London-based O'Neill, who helps manage $840 billion. "The
notion that BRICs benefit at the expense of others is
increasingly out of date."
    Investors should buy copper, coal and oil to take advantage
of the growth of cities in emerging markets, according to
Standard Chartered, which says the Chinese yuan, Indian rupee
and Korean won will appreciate on strengthening domestic growth.

    Developed nations also will benefit as their emerging-
market counterparts invest more abroad, hire more of their
workers and rely on their expertise in areas such as financial
services, said Lyons, who will be at Davos. He predicts both the
U.S. and European Union will enjoy an average trend growth of
2.5 percent through 2030, compared with the 1.9 percent and 1.7
percent he forecasts for this year.
    "It's a win-win situation," said Lyons, who concedes
growth won't always be strong and continuous during the entire
period.

                    Increasing Integration

    The increasing integration of China and other developing
economies will boost commerce and investment worldwide, agrees
Edward Prescott, a senior monetary adviser to the Federal
Reserve Bank of Minneapolis who shared the 2004 Nobel Prize for
analysis of business cycles and economic policy.
    Prescott points to South Carolina, which has benefited from
new factories opened by Chinese companies such as appliance
maker Haier Group. The International Monetary Fund projects this
year will be the first in which Chinese foreign investment
outpaces inward flows.
    "The whole world's going to be rich by the end of this
century,"
Prescott said.
    Such euphoria may be muted in Davos, given the European
sovereign-debt crisis, fears of a real-estate bubble in China
and mounting public-debt burdens, said Nariman Behravesh, chief
economist at consultants IHS in Lexington, Massachusetts, who is
attending the meeting.
    "There's going to be more optimism but still some
worries," he said.

                       High Unemployment

    Talk of a super-cycle gets little support from Joseph
Stiglitz, a Davos veteran and 2001 Nobel laureate. He contends
that globalization and free trade may be stymied by unemployment
in rich nations and the risk that more of these countries' jobs
will be lost abroad. The U.S. jobless rate has remained above 9
percent since May 2009.
    "Standard Chartered works mostly in developing markets,
and that shapes its world view," said Stiglitz, an economics
professor at Columbia University in New York. "If you work in
emerging markets, you feel the energy. If you are in the U.S. or
Europe, you see the numbers and it's hard not to feel
depressed."
    The difference reflects a "shift in the center of gravity
in the world economy, in which the West is struggling to keep up
with turbo-charged," emerging markets, says Stephen King, chief
global economist in London at HSBC Holdings Plc and a former
U.K. Treasury official. He will outline in Davos what he calls
the next phase of globalization: increased trade among emerging
countries.

                     Rising Global Output

    His team calculated this month that by 2050, global output
will have trebled and average annual growth will accelerate
toward 3 percent from 2 percent in the last decade, with
emerging markets contributing twice as much to the expansion as
the developed world.
    Ian Bremmer, president and founder of the Eurasia Group, a
political-risk consulting company in New York, is more downbeat
as he heads to the Swiss ski resort. He predicts what he calls a
"G-Zero" era in which no country has the political or economic
leverage to dominate the international agenda and all nations
focus on their own priorities. That will reduce economic
efficiency and prompt trade conflicts, he said.

                   Volatility, Uncertainty

    The subsequent volatility and uncertainty mean U.S. assets
will prove the "comparative safest bet" and the price of gold
will stay high, Bremmer said, after touching a record $1,432.50
an ounce on Dec. 7. Fixed-income securities still may suffer as
nations impose capital controls, which Brazil and South Korea
have done lately, while companies will continue saving rather
than spending, he predicted.
    "Corporations will keep trillions of dollars on the
sidelines," he said Jan. 5 on "Bloomberg Surveillance" with
Ken Prewitt and Tom Keene. "They're just very uncertain about
where the world is heading."
    John Hawksworth, the London-based head of macroeconomics at
PricewaterhouseCoopers, is confident a so-called zero-sum world
isn't in the cards. His own attempt to see into the future this
month generated a projection that a bloc of seven leading
emerging markets, including India and China, will be 64 percent
larger than the current Group of Seven by 2050 at market-
exchange rates, compared with 36 percent smaller today.
    Even so, average income levels in the G-7 countries will
rise in absolute terms as new market opportunities open up for
their businesses, and consumers will benefit from lower-cost
imports, predicts Hawksworth, who has served as a consultant to
the World Bank and whose company will release its annual survey
of executives in Davos tomorrow.
    "There is a shift in economic power from West to East, but
the West can still do well," Lyons said.

--With assistance from Helene Fouquet and Greg Viscusi in Paris,
David Lynch in Washington, and Michael McKee and Tom Keene in
New York. Editors: Melinda Grenier, Daniel Moss.

To contact the reporter on this story:
Simon Kennedy in Zurich at +44-20-7330-7086 or
skennedy4@bloomberg.net

To contact the editor responsible for this story:
Craig Stirling at +44-20-7673-2841 or
cstirling1@bloomberg.net

quinta-feira, 20 de janeiro de 2011

(BN) Yuan to Trade With Aussie, Singapore, Standard Chartered Says

Yuan to Trade With Aussie, Singapore, Standard Chartered Says
2011-01-20 10:53:48.222 GMT


By Emma O'Brien
    Jan. 20 (Bloomberg) -- China will allow direct trading of
the yuan against the Australian and Singaporean dollars as the
world's largest exporter strives to reduce the role of the
greenback in trade, Standard Chartered Plc says.
    Spot trading of the yuan versus Malaysia's ringgit started
in August and Russia's Micex exchange has traded the yuan
against the ruble since Dec. 16. HSBC Holdings Plc plans to
offer spot trading between the yuan and the Turkish lira in
March, according to a Jan. 11 statement.
    "The yuan internationalization process is clearly
accelerating and I would expect this to continue, particularly
in Asia," Callum Henderson, global head of currency research in
Singapore at Standard Chartered, the U.K. bank that generates
more than three quarters of its earnings from Asia, said in an
e-mail interview yesterday. "We expect more countries, such as
Singapore and Australia, to see this kind of bilateral currency
agreement in due course."

For Related News and Information:
To chart the yuan vs the ruble: RRCCO+TD <Crncy> GIP <GO>
The ringgit against the yuan: CNYMYR <Crncy> GP <GO>
More currency news: TOP FRX <GO>
More China news: TOP CH <GO>
Further news on currencies: TOP FRX <GO>

--With assistance from Sonja Cheung in Beijing and David Yong in
Singapore. Editors: Alex Nicholson, Peter Branton.

To contact the reporter on this story:
Emma O'Brien in Moscow at +7-495-771-7749 or
eobrien6@bloomberg.net

To contact the editor responsible for this story:
Gavin Serkin at +44-20-7673-2467 or gserkin@bloomberg.net

(BN) Bullish Real Bets Jump as Rates Undercut Mantega: Brazil Credit

Bullish Real Bets Jump as Rates Undercut Mantega: Brazil Credit
2011-01-20 02:39:30.689 GMT


By Boris Korby and Ye Xie
    Jan. 20 (Bloomberg) -- International investors are building
bullish bets on Brazil's real at the fastest pace in four months
as the central bank begins raising benchmark rates after a six-
month pause.
    Wagers the currency will rise increased by a net 36,820 in
the week through Jan. 18, the most since the period ended Sept.
21, and now stand at 31,681. On Jan. 11, bets the real would
fall outnumbered wagers the currency would gain by 5,139, the
most in six months, data from BM&FBovespa SA in Sao Paulo show.
    The rebound in foreigners' confidence in the real indicates
Finance Minister Guido Mantega may struggle to stem the
currency's two-year rally as central bank President Alexandre
Tombini raises interest rates to curb inflation amid the fastest
economic expansion in two decades. Yesterday's 50 basis-point
increase in the overnight rate to 11.25 percent bolsters the
yield advantage investors get in buying debt in Brazil, which
has the highest inflation-adjusted rates among G-20 nations.
   "The central bank and the government have different
objectives," Paul Biszko, an emerging-market strategist at
Royal Bank of Canada in Toronto, said in a telephone interview.
"They are in a difficult situation. Brazil is still flooded
with diversified capital inflows. All they can do is slow the
pace of the appreciation."
    The real has climbed for six of the past seven days and
strengthened 39 percent since the beginning of 2008 against the
U.S. dollar, the most among the 16 major currencies after the
Australian dollar. The extra yield investors demand to own
Brazilian government bonds instead of U.S. Treasuries rose 8
basis points to 175 yesterday, according to JPMorgan Chase & Co.

                      Exporters' Profits

    The currency's surge is cutting into exporters' profits by
making their goods more expensive in dollar terms and helping
push the country's annual current-account deficit to a record
$49 billion.
    In a bid to brake the rally, Mantega tripled the tax on
foreigners' purchases of fixed-income securities in October,
imposed reserve requirements on short dollar positions last
month and authorized the country's sovereign wealth fund to buy
dollars in the futures market this month.
    Last week, the central bank made bets against the real in
the futures market by auctioning off $1 billion worth of reverse
currency swaps. Mantega told reporters on Jan. 14 that he'd take
more measures if needed.
    None of the measures so far are sufficient to weaken the
real, said Roberto Melzi, a strategist at Barclays Capital in
New York.

                       'Massive' Inflows

   "Flows coming in are massive," Melzi said. "Generally
speaking there is a limit to what" can be done, he said.
    Investors have piled into Brazil in search of higher
returns amid near-zero rates in the U.S., Japan and European
Union. Foreigners poured a record $62 billion into Brazilian
debt and stocks in the first 11 months of last year, up from $46
billion in 2009, according to the central bank.
    Tombini, in his first policy meeting as head of the central
bank, raised the benchmark rate to 11.25 percent yesterday from
10.75 percent, in line with the median forecast in a Bloomberg
survey of 51 economists. Yields on interest-rate futures
contracts show traders expect the bank to raise the rate an
additional 200 basis points to 13.25 percent by year-end,
according to data compiled by Bloomberg. On Jan. 3, the
contracts signaled a year-end rate of 12.75 percent.
    Investor expectations for consumer price increases over the
next two years, implied by the yield gap between Brazil's
inflation-linked and fixed-rate bonds, rose to 6.5 percent on
Jan. 17, the highest since November 2008. Annual inflation was
5.9 percent in December, exceeding the government target of 4.5
percent.

                         Bullish Bets

    Bullish bets outnumbered wagers the currency would fall by
as many as 221,615 on Oct. 15, three days before Mantega raised
a tax on foreign capital inflows for a second time that month.
    Other emerging market countries have also moved to limit
currency gains. Chile's central bank has a $12 billion plan to
buy dollars in the spot currency market, while South Korea and
Taiwan last month tightened capital controls to help stem
inflows of funds from abroad.
    Analysts surveyed by Bloomberg predict the real will fall
to 1.69 per dollar by the end of June from 1.6705 yesterday,
according to the median of 13 forecasts.
    A combination of a stronger dollar and further measures by
Brazil will cause the real to decline by the second quarter,
said David Beker, chief Latin America strategist at Bank of
America Corp. in New York.

                       Bearish Forecast

    "We are convinced that the government is not comfortable
with the currency where it is," Beker said in a telephone
interview. "This indicates a likelihood of further measures"
to weaken the real. Bank of America expects the real depreciate
to 1.80 by the second quarter, the most bearish of the forecasts
compiled by Bloomberg along with Standard Chartered.
    The cost of protecting Brazilian bonds against default for
five years climbed three basis points yesterday to 110,
according to data provider CMA. Credit-default swaps pay the
buyer face value in exchange for the underlying securities or
the cash equivalent should a government or company fail to
comply with debt agreements.
    Petroleo Brasileiro SA, the state-controlled energy
producer, said yesterday it plans to sell bonds overseas in what
may be its only benchmark international debt sale this year to
help finance a five-year, $224 billion investment program.
    The yield on Brazil's interest-rate futures contract due in
January 2012 rose one basis point to 12.42 percent.
    Efforts by the government to stem currency gains will be
ineffective, said Kevin Daly, who helps manage $6 billion at
Aberdeen Asset Management in London.
    "A lot of that pressure on the currency is still there,"
he said in an interview. "We don't see any catalyst in the
short term for any sharp selloff in the real.

For Related News and Information:
Brazil Credit Market Stories: NI BZCREDIT <GO>
Top Emerging-Market News: TOP EM <GO>
Most-Read News on Brazil: MNI BRAZIL <GO>
Bloomberg News in Portuguese: NH PBN <GO>

--Editors: Brendan Walsh, David Papadopoulos

To contact the reporters on this story:
Boris Korby in New York at +1-212-617-1073 or
bkorby1@bloomberg.net;
Ye Xie in New York at +1-212-617-2768 or
yxie6@bloomberg.net;

To contact the editor responsible for this story:
David Papadopoulos at +1-212-617-5105 or
papadopoulos@bloomberg.net

sexta-feira, 7 de janeiro de 2011

(BN) Country of the Future Owes Much to One Man: Mohamed A. El-Erian

Commentary by Mohamed El-Erian
    Jan. 7 (Bloomberg) -- Eight years ago, a newly elected
president, Luiz Inacio Lula da Silva, faced the challenge of
saving Brazil from economic and financial collapse.
    Last Saturday, Lula passed the presidency to Dilma Rousseff
having done much, much more than that during his two terms. In
the process, he relied on four simple pillars that other leaders
would be well advised to consider.
    After winning a hotly contested presidential election in
2002, Lula overcame tremendous domestic and international
skepticism to guide his country to a development breakout phase.
As a result, he left the presidential palace last weekend with
Brazil in a position to sustain high economic growth for many
years, strengthen an already robust financial situation, and
better meet the aspirations of the poorest segments of its
society.
    He inherited a country that was on the verge of economic
implosion and default. Growth was languishing, international
reserves evaporating, investors fleeing, and hyperinflation
threatening. Markets for Brazilian sovereign debt were pricing
an imminent and disorderly default.
    Lula's domestic challenges were compounded by unfriendly
regional and global conditions. With Argentina having defaulted
a year earlier in the midst of social unrest, a heavy cloud of
doubt and pessimism hung over most of Latin America. Meanwhile,
global growth was sputtering, undermined by the collapse of the
tech bubble and a series of corporate scandals in the U.S.,
including the failures of Enron and WorldCom.

                           No Rescue

    There wasn't much of an international cavalry to ride to
Brazil's rescue. America's focus was dominated by post-9/11
responses to terrorist threats. And no European country felt
eager to fill the void in support of a newly elected president
who for years had embraced extreme left-wing rhetoric.
    Despite this, Lula managed to turn his country around. He
did so in a manner that allowed it not only to navigate the
2008-2009 global financial crisis but to emerge from it stronger
in relative and absolute terms. In the process, he demonstrated
the potency of his four pillars.
    First, and from his first day in office, Lula recognized
that there were no inherent contradictions among financial
stability, economic growth and improved social conditions. His
approach was to explicitly embrace all three within a well-
defined multiyear framework and maintain appropriate flexibility
with regard to sequencing and mid-course adjustments.

                     Clear Communication

    Second, he understood the imperative of clear and timely
communication. He was open about the serious challenges facing
Brazil and the sacrifices required. And he didn't hesitate to
reiterate his vision for how Brazil would overcome these
challenges.
    Third, after clearly setting the strategic economic vision,
he delegated implementation to a carefully chosen set of
technocrats. He intentionally didn't rely on experienced policy
makers, choosing instead new faces that quickly became credible
economic spokesmen both within and outside Brazil.
    Finally, he understood the importance of institutional
integrity and clear accountability. This was most evident in his
respect for the operational autonomy of the central bank. It was
also crucial to promoting broad respect for fiscal
responsibility.
    As a result of all this, Rousseff has assumed the
presidency amid great domestic optimism. Brazilians no longer
joke that their country is the economy of tomorrow -- as in,
always has been and always will be. Instead, numerous indicators
point to record and once-unthinkable levels of economic self-
confidence.

                          Better Off

    With unemployment almost cut in half during Lula's term,
many Brazilians now believe that they will be much better off
than their parents, and that their children will do even better.
This is noteworthy, given that Brazil's trading partners in the
West face discouraging unemployment trends, particularly for
younger workers.
    Both current and future generations of Brazilians will
remember their popular president for far exceeding even the most
optimistic expectations about what Brazil could achieve in terms
of economic, financial and social progress. Thanks to its
domestic strength, today Brazil also plays an increasingly
influential role on the international stage, particularly when
it comes to trade and reform of the multilateral system.
    Yet Lula's global legacy may be even larger, coming from
the impact that his successful pillars could -- and should --
have on the thinking of many current and aspiring politicians in
other countries. If this were to materialize, Lula's presidency
will end up benefiting many more hundreds of millions of people
around the world.


    (Mohamed A. El-Erian is Pimco's chief executive officer and
co-chief investment officer, and the author of the book "When
Markets Collide." The opinions expressed are his own.)

For Related News and Information:
Top government news: GTOP <GO>
Top Latin America News: TOP LAT <GO>
More Bloomberg commentary: OPED <GO>

--Editors: James Greiff, Laurence Arnold.

Click on "Send Comment" in the sidebar display to send a
letter to the editor.

To contact the author of this column:
Mohamed A. El-Erian at Mohamed.El-Erian@pimco.com

To contact the editor responsible for this column:
James Greiff at +1-212-617-5801 or jgreiff@bloomberg.net

quarta-feira, 5 de janeiro de 2011

(BN) China Stocks’ Best Forecaster Predicts Further Slump

China Stocks' Best Forecaster Predicts Further Slump (Update1)
2011-01-05 08:20:47.947 GMT


    (Updates with today's market decline in fourth paragraph.)

By Bloomberg News
    Jan. 5 (Bloomberg) -- China's stocks may slump for a second
year as the central bank raises interest rates to tame inflation,
according to Zhang Kun, the strategist at Guotai Junan
Securities Co. who correctly predicted last year's drop.
    "There will be no gains again," Zhang, whose Shanghai-
based firm Guotai Junan is the nation's second-largest brokerage
by revenue, said in an interview. "Inflation is the biggest
risk. The government will keep tightening."
    Guotai Junan is alone among China's major brokerages in
predicting declines for 2011. Citic Securities Co., China's
biggest listed brokerage, and Shenyin & Wanguo Securities Co.,
voted the nation's most influential research unit by New Fortune
magazine, forecast gains of at least 25 percent in the benchmark
Shanghai Composite Index. China International Capital Corp., the
only other major Chinese brokerage to correctly forecast the
index's drop in 2010, also expects an advance this year.
    The Shanghai Composite fell 14 percent in 2010 to 2808.08,
making it the worst performer among benchmark indexes in the
world's 10 biggest markets, according to data compiled by
Bloomberg. Premier Wen Jiabao's government ordered banks to set
aside more reserves six times and boosted rates twice since
October to tame inflation and curb asset bubbles after record
gains in lending and property prices. The index dropped for the
first time in five days today, losing 0.5 percent to 2,838.59.
    The central bank will keep increasing borrowing costs to
cap inflation at around 4 percent this year after it reached a
28-month high of 5.1 percent in November, Zhang said. Last March,
he said the Shanghai gauge, which had already dropped 9.2
percent, would fall a further 17 percent to 2,500 in the first
half as the government boosted measures to cool economic growth.
The index slid 27 percent in the first six months of 2010.

                          'Trend Up'

    Hao Hong, global equity strategist at CICC, the top-ranked
brokerage for China research in Asiamoney magazine's annual
survey, expects the Shanghai gauge to rebound as the economy
grows more than 8 percent and inflation eases.
    Last January, Hong predicted stocks would fall in the first
six months as the government reined in property speculation. The
Shanghai Composite dropped in the first half before rebounding
25 percent between July 1 and the end of October.
    "China's stocks will trend up in 2011, but it will be
volatile," said Hong, who is based in Beijing. "A continuing
global recovery and sustained Chinese growth should support the
market." Hong said he favors commodity producers, agriculture
and health-care companies. Both Hong and Zhang declined to give
a yearend target for the Shanghai Composite in 2011.
    Investor Mark Mobius and Jing Ulrich, chairwoman of China
equities and commodities at JPMorgan Chase & Co., say China's
stocks are set to rebound because the government will keep
inflation under control.

                        'Perform Well'

    China's purchasing managers' index fell to 53.9 last month
from 55.2 in November, the nation's logistics federation and the
statistics bureau said Jan. 1.
    CICC estimates consumer prices rose 4.5 percent in December
from a year earlier, while Bank of America Corp. forecast 4.8
percent. The inflation rate jumped 5.1 percent in November on
surging food prices after a 4.4 percent gain in the previous
month. The government's annual CPI target is 3 percent.
    "We are confident that the Chinese government has the
capability to control inflation at a reasonable level in 2011,"
Mobius, who oversees about $40 billion as executive chairman of
Templeton Emerging Markets Group, said in an e-mailed response
to questions on Dec. 29. "If China can keep the CPI at about 4
percent in 2011, the equity market should perform well."

                         Rate Laggard

    Government leaders have pledged to soak up excessive money
supply that fueled a record gain in property prices and drove up
food costs, which account for a third of the weighting of
inflation. In the so-called Central Economic Work Conference,
attended last month by President Hu Jintao and Premier Wen, the
leaders announced a shift in monetary policies to "prudent"
from "appropriately loose" this year.
    "After the Chinese New Year period, we might begin to see
more stability in food inflation," JPMorgan's Ulrich said in a
Dec. 21 interview, referring to the lunar new year that ends by
mid-February. The Hong Kong-based strategist likes consumer and
construction-related stocks as they will benefit from government
efforts to boost domestic consumption and public housing.
    China is lagging behind counterparts across Asia that took
steps earlier to raise borrowing costs from global recession
lows. India has lifted its benchmark rate six times since March,
while Malaysia increased it three times, also starting in March.
Taiwan began increasing rates in June and South Korea in July.
    "Inflation isn't an issue that's going to be easily
tackled," said Larry Wan, Beijing-based head of investment at
Union Life Asset Management Co., which oversees the equivalent
of $2.21 billion.

                         Stock Bulls

    Last year's drop for China's benchmark gauge was the
biggest since 2008, when the global financial crisis curbed the
nation's exports. The index jumped 80 percent in 2009 as a 4
trillion-yuan ($605 billion) stimulus package and record new
lending helped the economy recover from the slump in growth.
    "We'll see tighter monetary policies with new loan growth
to be cut more than the market anticipates," Guotai Junan's
Zhang said, predicting the government will boost rates twice
more and cut the quota for new bank loans from 2010's 7.5
trillion yuan. "Liquidity will be a problem for the market."
    Citic, Shenyin & Wanguo, Haitong Securities Co. and Galaxy
Securities Co. are all forecasting gains of more than 20 percent
for the Shanghai Composite. Sinolink Securities Co., based in
the western city of Chengdu, is the most bullish with a
prediction that the index will rise to 4,200 this year, or a 50
percent advance from the 2010 close.

                       Property Outlook

    Among non-Chinese brokerages, JPMorgan is targeting a 20
percent gain, while Citigroup Inc. predicts Shanghai's A-share
index could climb to as high as 4,000. Forecasts for the MSCI
China Index range from 81 at Credit Suisse Group AG and 88 at
UBS AG to 94.5 at Morgan Stanley, the most bullish prediction 42
percent above the 66.6 close at the end of 2010.
    The mid-year rebound for the Shanghai Composite faltered in
November after the central bank raised rates on Oct. 19 for the
first time in three years. A measure of property developers was
the worst performer in the index in the last quarter of 2010. A
gauge of banks and real-estate companies plunged 27 percent last
year, the most among the 10 industry groups in the CSI 300 Index,
comprising stocks in the Shanghai and Shenzhen stock exchanges.
    Jim Chanos, the hedge fund manager who was one of the first
investors to foresee the 2001 collapse of Enron Corp., said in a
Bloomberg Television interview Dec. 17 that China's property
boom continues "unabated" and has even picked up since the
government enacted policies to cool speculation. Home prices in
70 Chinese cities climbed 7.7 percent in November from a year
earlier, according to the statistics bureau, even after the
government suspended mortgages for third-home purchases and
pledged to introduce a property tax.

                        Cheaper Stocks

    The Shanghai gauge's decline has driven down valuations for
the 913 companies to an average of 18.3 times reported earnings,
compared with the historical average of 30.5 times, according to
data compiled by Bloomberg.
    "Current valuations in China, despite having risen from
the lows of early 2009, still remain attractive to us," said
Mobius, who likes commodity and consumer companies in emerging
markets including China. "Over the longer term, markets should
reflect the underlying strong economic growth in the country and
the region."
    China's economy grew 10.1 percent last year, according to
the median estimate of 18 economists in a Bloomberg survey. The
expansion will slow to 9 percent this year, three times the rate
of the U.S., Bloomberg surveys show.
    Citic predicts the Shanghai Composite may rebound to 3,500
by the end of this year, bolstered by earnings that are growing
at a rate of 22 percent. The brokerage had estimated the gauge
would soar to 4,500 in 2010.

                     Continued Volatility

    Shenyin & Wanguo said the index will jump to 3,800 in 2011
as policy tightening eases. The brokerage cut its 2010 target to
3,000 during its mid-year investment conference in June from the
original forecast of 4,200.
    "The index target is subject to revision in the course of
the year with the changes of policies and other factors," said
Fang Bo, a Shanghai-based press official at Shenyin & Wanguo.
    China's stocks entered a so-called bear market in May after
the government introduced tightening measures to curb real-
estate speculation. Equities reversed course and entered a bull
market in October as the Shanghai Composite rebounded 20 percent
from the 2010 low in July on an improving economic growth
outlook and faster yuan appreciation.
    "We'll probably continue to see a volatile stock market as
long as inflation persists," said Union Life's Wan.

Major Brokerages' Forecasts for Chinese Stocks in 2011
----------------------------------------------------------
Brokerage             Index                         Target
----------------------------------------------------------
Citic Securities      Shanghai Composite            3,500
Shenyin & Wanguo      Shanghai Composite            3,800
Haitong Securities    Shanghai Composite            3,500
Sinolink Securities   Shanghai Composite            4,200
Galaxy Securities     Shanghai Composite            4,000
Guotai Junan          Shanghai Composite            No Gain
JPMorgan              Shanghai Composite            20% Gain
Citigroup             Shanghai A-Share Index        4,000
Credit Suisse         MSCI China Index              81
Morgan Stanley        MSCI China Index              94.5
UBS                   MSCI China Index              88
CLSA                  MSCI China Index              25% Gain
Deutsche Bank         MSCI China Index              15% Gain
----------------------------------------------------------

For Related News and Information:
Chinese stocks stories: TNI CHINA STK <GO>
The most-read Chinese stock stories: MNI CHS <GO>
Global stocks stories: TOP STK <GO>
World equity index monitor: WEI <GO>
World equity valuations: WPE <GO>

--Zhang Shidong. With assistance from Shiyin Chen and Reinie
Booysen in Singapore and Li Yanping in Beijing. Editors: Allen
Wan, Eric Martin

To contact Bloomberg News staff for this story:
Zhang Shidong in Shanghai at +86-21-6104-3040 or
szhang5@bloomberg.net

To contact the editor responsible for this story:
Reinie Booysen at +65-6212-1154 or rbooysen@bloomberg.net

terça-feira, 4 de janeiro de 2011

(BN) Biggest Financial Decision in 2011 Is European: Matthew Lynn

Biggest Financial Decision in 2011 Is European: Matthew Lynn
2011-01-04 00:00:00.8 GMT


Commentary by Matthew Lynn
    Jan. 4 (Bloomberg) -- What's the biggest financial decision
facing Europe in 2011? Easy. The choice of a new president at
the European Central Bank.
    When Jean-Claude Trichet steps down from the post in
October, the leading candidates to succeed him will be
Bundesbank President Axel Weber and the governor of the Bank of
Italy, Mario Draghi.
    Neither is the right man. Weber would be intolerable to the
peripheral euro countries, while Draghi might well provoke the
Germans into quitting the single currency.
    For the leaders of the euro area, there are only three
solutions to this fix. They could take the traditional way out
of a difficult decision and give the job to an obscure Dutchman,
which is what they did when Wim Duisenberg became the first ECB
president. They could extend Trichet's term to steer the euro
through an emergency. Or they could choose a wild-card candidate.
    Most big European jobs are grand titles without much power.
The national leaders, such as German Chancellor Angela Merkel,
French President Nicolas Sarkozy and U.K. Prime Minister David
Cameron, make the real decisions.

                        Job With Clout

    But the ECB president is different. He is the key economic
policy maker for the 17 countries sharing the single currency.
Within the euro area, the national central banks have little
genuine influence left. Along with the Federal Reserve chairman,
he is one of the two most important monetary officials in the
world. It is a job with real clout.
    This year, it is even more important. With both Greece and
Ireland bust, it is no exaggeration to say the euro is in mortal
danger. Its survival depends on decisions made in the next few
years. There is a lot resting on the shoulders of the person
installed in the ECB's headquarters in Frankfurt.
    The trouble is, neither of the two leading candidates is
suitable. That isn't because of who they are. Both Weber and
Draghi are clever, well-qualified men. Normally, they could do a
good job. But not this year. Why? Because of their nationalities.
    Draghi has impressed the markets during his spell at the
Bank of Italy. But imagine the impact an Italian at the ECB
would have on German public opinion, which has already soured
regarding the euro. Putting an Italian in charge would confirm
all the worst German fears. He would be seen as the candidate of
the highly indebted countries. His appointment may convince
ordinary Germans that the euro wasn't for them, prompting the
country to quit. Austria and the Netherlands would follow suit.

                          Hard Money

    Bundesbank President Weber would be just as provocative to
the peripheral nations. He would be seen as the hard-money,
austerity candidate. His appointment could force Portugal or
Greece to quit -- with Spain and Italy next in line. If three or
four countries were to leave, there wouldn't be much point in
continuing with Europe's monetary experiment.
    So what's the solution?
    There are three possibilities.
   One, just do what the European Union usually does when it
can't agree on who should get a big job: Take the obscure-
Dutchman option. This time, give it to some little-known figure
from one of the minor countries. Austria's central-bank governor,
Ewald Nowotny, has been mentioned as a possibility. So have
Finland's Erkki Liikanen and Belgium's Guy Quaden. All of them
would be safe choices, largely because few people have ever
heard of them. Whether they have the high-level experience to do
the job is another matter.

                          Safe Hands

    Alternatively, extend Trichet's term, even if it means
changing the rules on renewing his eight-year tenure. He's only
68, by no means an unreasonable age, and has handled the crisis
as well as anyone could be expected to. He could be presented as
a safe pair of hands to steer the currency through a dangerous
period. The only problem would be that it wouldn't be a long-
term solution.
    Or, third, how about a wild-card choice?
    Who says the ECB has to be run by one of the people in
charge of the national central banks? How about French Finance
Minister Christine Lagarde? She has already played a crucial
role in piecing together the rescue packages for Greece and
Ireland. This is going to be a largely political job for the
next few years. It is about selling bailout packages and
negotiating compromises. She'd be good at that.
    Or perhaps Emilio Botin, the chairman of Banco Santander
SA? He is probably Europe's most successful commercial banker,
having turned Santander into one of the world's biggest lenders.
He steered it through the credit crunch largely unscathed. He
may be from an indebted nation, but his international experience
with bank mergers would stand him in good stead at the ECB.
    There are arguments to be made for and against any of those
solutions. Maybe the wild-card suggestions aren't serious. But
the point is this: The EU should go for anything other than the
current candidates. Surely any of the alternatives would be
better than a divisive new ECB president who would be deeply
unpopular in one half of the continent or the other -- and could
easily end up presiding over the currency's dismemberment.

    (Matthew Lynn is a Bloomberg News columnist and the author
of "Bust," a book on the Greek debt crisis. The opinions
expressed are his own.)

For Related News and Information:
Top Europe stories: TOP EUR <GO>
To read more columns by Matthew Lynn: NI LYNN <GO>
Commentary menu: OPED <GO>

--Editors: David Henry, Charles W. Stevens.

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letter to the editor.

To contact the writer of this column:
Matthew Lynn in London at +44-20-330-7171 or
matthewlynn@bloomberg.net

To contact the editor responsible for this column:
James Greiff at +1-212-617-5801 or jgreiff@bloomberg.net

domingo, 2 de janeiro de 2011

My view : IBOV in 2011 / IBOV em 2011

My view for Brazilian Bovespa (BRL) in 2011.
Here we go.

Best Guess up 89.000 (Forecast  2011 - 1 y ago : 97.000)
Best Guess down 59.000 (Forecast 2011 - 1y ago 67.000)

My guesses for 2010 were:
Best Guess 2010 up : 77.000
Best Guess 2010 down: 55.000

Good Trades,

Alea jacta est,

Bertrand