(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:
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(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

(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.)

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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

(BN) Brazil Finds More Signs of Oil at Libra Offshore Field

Brazil Finds More Signs of Oil at Libra Offshore Field
2010-12-28 13:05:06.361 GMT


    (Updates with Libra reserve estimates in third paragraph.)

By Peter Millard
    Dec. 28 (Bloomberg) -- Brazil found more evidence of oil at
the government's Libra offshore field, which may be the largest
oil discovery in the America's in more than three decades.
    Brazil's oil regulator, known as the ANP, found a second
layer of hydrocarbons at Libra, according to records on its
website dated Dec. 27. The regulator first discovered oil at the
field in late October.
    Libra is estimated to hold as much as 15 billion barrels of
recoverable oil, which would eclipse Brazil's total current
reserve base and make it the biggest find in the Americas since
Mexico discovered Cantarell in 1976. The estimate disclosed by
the ANP in October means Libra may hold almost twice as much oil
as state-controlled Petroleo Brasileiro SA's nearby Tupi field.
    Libra is the first field the government plans to auction
next year under the country's new concession model, Magda
Chambriard, a director at ANP, said in September. Petrobras, as
the Rio de Janeiro-based producer is known, will operate all new
concessions in the so-called pre-salt area where Libra and Tupi
were discovered.

For Related News and Information:
Top Latin America Stories: TOPL <GO>
Company Financial Analyis: PETR4 BZ <Equity> FA <GO>

--Editors: Carlos Caminada, James Attwood.

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pmillard1@bloomberg.net

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ccaminada1@bloomberg.net

(BN) Petrobras May Trail Bovespa as BlackRock Favors Banks & Homebuilders

Petrobras May Trail Bovespa as BlackRock Favors Banks (Update1)
2010-12-22 15:51:11.945 GMT


    (Updates trading starting in fourth paragraph.)

By Fabiola Moura and Eric Martin
    Dec. 22 (Bloomberg) -- Petroleo Brasileiro SA, the biggest
drag on Brazil's benchmark stock index this year, may trail the
Bovespa in 2011 on investors' concern the oil producer's
investments will crimp profits, according to BlackRock Inc.
    Will Landers, who oversees the $1.05 billion Latin America
Fund at the world's biggest asset-management firm, said he sold
Petrobras as the stock plunged 30 percent in 2010 and remains
"underweight" heading to next year. Banks and homebuilders are
the most attractive industries in Brazil, poised to benefit from
rising domestic demand, Landers, 41, said in an interview.
    Petrobras "has become a bit of a show-me story," said
Landers, whose Latin America Fund returned an average 20 percent
a year over the past five years, better than 90 percent of
competitors, according to data compiled by Bloomberg. "For next
year, I think most of the overhang or most of the issues with
Petrobras are done in terms of its underperformance, but it
doesn't mean I think it is going to be an outperformer."
    The Bovespa will probably climb 32 percent from yesterday's
close to a record 90,000 next year, Landers said at Bloomberg's
headquarters in New York yesterday. The index is down 1 percent
this year, the only decline among benchmark measures in the
Americas, data compiled by Bloomberg show. The Bovespa lost 0.5
percent to 67,909.84 at 10:38 a.m. New York time today.
Petrobras preferred shares dropped 0.3 percent to 25.52 reais.

                   Financials, Real Estate

    Profit for companies in the Bovespa will probably rise 24
percent next year on a per-share basis, according to the average
projections of analysts surveyed by Bloomberg. The index trades
for 10.3 times analysts' 2011 earnings estimates as of Dec. 17,
less than the 11.3 price-to-earnings ratio for the MSCI Emerging
Markets Index, weekly data compiled by Bloomberg show.
    Financial and real-estate stocks should benefit from the
country's economic growth even as interest rates climb in 2011,
as borrowing costs remain historically low, Landers said.
Brazil's benchmark Selic rate, currently at 10.75 percent, was
as high as 26.5 percent in 2003.
    "Some sectors have been overly penalized with this
interest-rate concern," he said. "The homebuilders look very
attractive here, because they have come down quite a bit. The
banks have continued to underperform even though they make a lot
of money, they are very profitable during periods of interest
rates going up. Those are the two sectors within the domestic
side that we like the best for the beginning of the year."

                        Fiscal Outlook

    Brazil's benchmark interest rate may be raised to 12.5
percent next year as the central bank tries to tame inflationary
pressures, Landers said.
    "There are some headwinds," Landers said. "We have to
keep an eye on the Copom and see how much interest rates will go
up," he added, referring to Brazil's monetary policy committee.
    Investors in Latin America's largest economy will also wait
to see the new administration's 2011 budget and how much
President-elect Dilma Rousseff is willing to cut spending,
including funds for state development bank BNDES, Landers said.
    "They need to slow down growth to keep inflation under
control, to tighten up the fiscal side a little bit, get a lot
of credit from the market and eventually allow interest rates to
come down," he said.
    The Brazilian financial system is liquid and the country's
regulators are "vigilant," Landers said. He considers the
bailout needed for Banco Panamericano SA a "one-case deal."

                     Petrobras Valuation

    Panamericano, the country's 21st-largest bank by assets,
got a 2.5 billion-real ($1.5 billion) bailout loan last month
from its controlling shareholder, Silvio Santos, after the
central bank said it found accounting irregularities related to
sales of pools of loans. Prosecutors later began an
investigation into alleged fraud at Panamericano.
    Panamericano doesn't comment on ongoing investigations,
said a spokesman at the bank's external press agency in Sao
Paulo.
    "At the end of the day, if any company wants to be
fraudulent, it is very hard to catch until it comes out,'
Landers said. "There is not much you can do about it."
    Petrobras, the world's third-biggest oil company by market
value, trades for 8 times estimated 2011 earnings, compared with
an average of 9 times profit for the 26 oil and gas companies in
the FTSE All-Share Oil & Gas Index, Bloomberg data show. Exxon
Mobil Corp., the largest oil company, fetches 11 times profits.

                        Oil Production

    Petrobras, which is state controlled, had a "horrible
year" in corporate governance, Landers said, citing its sale of
$70 billion in stock on Sept. 24 to help finance $224 billion in
offshore field development and refining capacity growth through
2014. The company, based in Rio de Janeiro, is developing the
offshore Tupi field and may take a minimum stake of 30 percent
in the government's Libra field, the Americas' biggest oil
discoveries since Mexico's Cantarell in 1976.
    Tupi and Libra, which may hold as much as 8 billion barrels
and 15 billion barrels, respectively, are in a deep-water region
known as the pre-salt along Brazil's coast. Petrobras Chief
Executive Officer Jose Sergio Gabrielli plans to double output
to 5.38 million barrels a day by 2020, from 2.7 million barrels
in 2010.
    "The asset base that Petrobras has is terrific," Landers
said.
    As part of the share sale, Petrobras issued about $42.5
billion of stock to Brazil's government in exchange for the
rights to develop 5 billion barrels of oil reserves.
    Brazilian President Luiz Inacio Lula da Silva is tightening
the state's grip on the domestic oil industry after Tupi was
discovered. He says Brazil is relying on the country's oil
wealth to fight poverty in the nation of 192 million people.
    "They have to prove that they can generate appropriate
rates of return," Landers said. "Their plans are very
ambitious, to double production of oil over the next 10 years.
If they can achieve that, it is going to be transformational for
Brazil. But it is going to be costly for Petrobras."

For Related News and Information:
Developed Market Monitors: DMMV <GO>
Emerging Market Monitors: EMMV <GO>
Top Emerging-Market News: TOP EM <GO>
Most-Read News on Brazil: MNI BRAZIL <GO>
Bloomberg News in Portuguese: NH PBN <GO>

--With assistance from Alexander Ragir in Rio de Janeiro.
Editor: Brendan Walsh

To contact the reporters on this story:
Fabiola Moura in New York at +1-212-617-5772 or
fdemoura@bloomberg.net;
Eric Martin in New York at +1-212-617-5383 or
emartin21@bloomberg.net

To contact the editor responsible for this story:
Alan Mirabella at 1-212-617-4149 or amirabella@bloomberg.net

(BN) Petrobras’s $40 Billion Debt Plan Sparks Selloff: Brazil Credit

Petrobras's $40 Billion Debt Plan Sparks Selloff: Brazil Credit
2010-12-09 11:28:52.230 GMT

 By Camila Russo and Tal Barak Harif
    Dec. 9 (Bloomberg) -- Petroleo Brasileiro SA's bond yields
are climbing the most in 12 months after Brazil's state-
controlled oil company said it plans to boost debt by as much as
60 percent to $107 billion over the next four years.
    The yield on the company's 5.75 percent dollar bonds due in
2020 jumped 81 basis points in the past month to 4.88 percent,
according to data compiled by Bloomberg. Yields on emerging-
market corporate bonds climbed 40 basis points, or 0.40
percentage point, during the same period, JPMorgan Chase & Co.
data show.
    Chief Executive Officer Jose Sergio Gabrielli said in Rio
de Janeiro on Dec. 7 the company plans to raise between $30
billion and $40 billion of new debt over the next four years to
finance the biggest investment plan in the oil industry.
Petrobras, which has $67 billion of total debt, hasn't issued
bonds this year after selling $6.75 billion in international
markets in 2009, according to Bloomberg data.
    "Investors are betting that they're going to see a lot of
new supply of Petrobras debt," Jack Deino, who oversees about
$1.6 billion of emerging-market debt at Invesco Inc. in New
York, said in a telephone interview. "That's why they're
underperforming. There's also uncertainty on when they're going
to get the new supply and how much of it."
    Petrobras's bonds yielded 112 basis points more than
similar-maturity government notes on Dec. 7, the biggest gap
since August, according to Bloomberg data. The yield is 129
basis points lower than the 2020 dollar bonds of OAO Gazprom,
Russia's gas export monopoly, which climbed 31 basis points in
November and are yielding 6.312 percent today, data compiled by
Bloomberg show.

                        Share Sale

    Rio de Janeiro-based Petrobras plans to fund investments in
coming years through bond sales and bank loans after holding the
world's biggest stock offering in September, Gabrielli told
reporters in Sao Paulo on Dec. 6. The company, which sold $70
billion of shares on Sept. 24, aims to invest $224 billion
through 2014 to develop reserves along Brazil's coast.
    Petrobras shares dropped 9.2 percent in the past month,
leaving them down 32 percent this year.
    The company needs to roll over $38 billion of debt through
2014 as it seeks to double production over the next decade,
Gabrielli said on Nov. 9.
    "Statements by Gabrielli have definitely had an impact,"
Juan Cruz, a corporate bond analyst with Barclays Plc in New
York, said in a telephone interview. "Investors are demanding
to get paid more because of the uncertainty."
    Petrobras doesn't have any "defined plans" right now to
sell bonds, Gabrielli said yesterday. The company's press office
declined to comment in an e-mailed statement.
    The company's $6.75 billion of overseas debt offerings in
2009 was more than the $5.55 billion it raised over the previous
10 years, according to Bloomberg data.

                        Oil Bill

    Brazilian President-elect Dilma Rousseff, 62, plans to
reappoint Gabrielli, a Boston University-trained economist, as
chief executive of Petrobras, a government official briefed on
the decision said on Dec. 7. She takes office Jan. 1.
    Brazil's lower house of Congress approved on Dec. 1 new oil
regulations that will increase government control over the
energy industry and reduce competition against Petrobras. The
regulations will allow the company to be the sole operator of
oil fields where licenses haven't yet been auctioned. Petrobras
will be able to explore every field in areas designated
"strategic."
    President Luiz Inacio Lula da Silva, who sent the bill to
congress, may sign it this month.

                   'Harder To Justify'

    "Even if the regulation secures assets, the risk is
actually higher because it means more spending and the cash flow
takes a few years to start coming in," Eduardo Suarez, an
emerging-markets strategist at RBC Capital Markets in Toronto,
said in a telephone interview. "It's much harder to justify
Petrobras being rated higher than the government now that the
government controls 60 percent of the stock."
    Petrobras is rated Baa1 by Moody's Investor Service, the
third-lowest investment grade and two steps above the Brazilian
government's Baa3 grade.
    Gabrielli said in a May 3 interview in Sao Paulo that the
company doesn't plan to sell bonds this year because it's
reaching the "upper limits" of debt ratios before putting
credit ratings at risk.
    Messages left for Moody's analyst Thomas Coleman in New
York and Milena Zaniboni in Sao Paulo at S&P were not returned.
    Concern European countries may have to restructure their
debts after bailouts for Ireland and Greece prompted investors
to shun Petrobras's bonds in the past few weeks, according to
Jansen Moura, a corporate bond analyst with BCP Securities in
Rio de Janeiro.
    "It has absolutely more to do with global concerns than
Petrobras fundamentals," he said in a telephone interview. "As
soon as the market is a little bit more comfortable with
Europe's situation and other macroeconomic points, things might
calm down a bit and yields can come back."

                        Default Swaps

    The extra yield investors demand to own Brazilian
government dollar bonds instead of U.S. Treasuries narrowed 3
basis points to 165 at 6:22 a.m. New York time, according to
JPMorgan's EMBI+ index.
    The cost of protecting Brazilian bonds against default for
five years climbed 3 basis points to 109, according to 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 adhere to its debt agreements.
    The real was little changed at 1.6896 per dollar.
    The yield on the overnight interest-rate futures contract
due in January 2012 fell 4 basis points to 12.03 percent.

                        Tupi, Libra

    Petrobras is developing the offshore Tupi field and may
take a minimum stake of 30 percent in the government's Libra
field, the Americas' biggest oil discoveries since Mexico's
Cantarell in 1976. Tupi and Libra, which may hold as much as 8
billion barrels and 15 billion barrels, respectively, are in a
deep-water region known as the pre-salt along Brazil's coast.
    The company will invest about $7 billion to $8 billion
through 2014 in deepwater fields that it purchased from the
government in exchange for new stock, Chief Financial Officer
Almir Barbassa said last month.
    Petrobras's bonds are also lagging behind Brazilian
corporate bonds in the past month. Yields on debt sold by
Brazilian companies climbed 37 basis points during that period,
according to JPMorgan.
    "Changes to the capital expenditure program will be the
most important factor moving forward," RBC's Suarez said.

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>

--With assistance by Gabrielle Coppola in New York, Peter
Millard in Rio de Janeiro, Maria Luiza Rabello in Brasilia and
Denis Maternovsky in Moscow. Editors: Lester Pimentel, Brendan
Walsh

To contact the reporters on this story:
Camila Russo in New York at +1-312-493-9048 or
crusso15@bloomberg.net;
Tal Barak Harif in New York at +1-212-617-3026 or
tbarak@bloomberg.net

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

(BN) Blackstone’s Byron Wien Says S&P 500 May Rally to Record in 2011

By Rita Nazareth
    Dec. 8 (Bloomberg) -- The Standard & Poor's 500 Index may
rise at least 28 percent through next year to a record as
corporate profits and the economy improve, according to Byron
Wien, the vice chairman of Blackstone Advisory Services.
    In January, Wien wrote in his annual "Ten Surprises" list
of predictions that the S&P 500 would finish 2010 unchanged at
1,115.10. It has gained 9.7 percent this year through yesterday.
The index will extend the advance into 2011 and may reach its
all-time high of 1,565.15, reached in October 2007, Wien said.
    That "isn't crazy," Wien, 77, said in a telephone
interview from New York. "It's certainly possible. Things are
improving. You'll have earnings over $90 a share for 2011. As
people become comfortable with the fact that calamity is not in
store, they will be willing to take more risk."
    The S&P 500, which closed at 1,223.75 yesterday, near its
two-year high of 1,225.85 reached Nov. 5, rose 20 percent from
this year's low in July amid improving corporate earnings and
the Federal Reserve's plan to pump more money into the economy
to stimulate growth. More than 70 percent of S&P 500 companies
beat the average analyst profit estimate for the sixth straight
quarter.
    Strategists surveyed by Bloomberg have a median estimate of
$91 in earnings per share for S&P 500 companies next year,
compared with than the $84 projected for 2010. They see the S&P
500 rallying to 1,325 by the end of 2011, according to the
median projection. Forecasts range from 1,200 to 1,550.

                   Profit Margin Expansion

    Wien, the former chief U.S. strategist for Morgan Stanley,
said gross domestic product growth will exceed economists'
projections for next year. The U.S. economy, which contracted
2.6 percent in 2009, is expected to grow 2.7 percent this year
and 2.5 percent in 2011, according to the median forecast of 63
economists surveyed by Bloomberg. In January, Wien forecast that
GDP would expand 5 percent this year.
    "I was optimistic about 2010 and the economy did not turn
out that well," he said. "The economy is improving. There are
more favorable signs on the economy than unfavorable ones."
    The S&P 500 advanced 3 percent last week after a record
increase in sales of existing homes, retail sales that topped
projections and reports showing an expansion in Chinese and
European manufacturing. Stocks pared gains on Dec. 3 after
government data showed that the jobless rate advanced to the
highest since April last month, rising to 9.8 percent.

                     'An Aberration'

    "I view that report as an aberration," Wien said about
the November unemployment data. "I'm not willing to say that's
the beginning of a new upward trend. The figures next month
might be more favorable."
    As the economy improves, Wien says economically sensitive
companies, especially those in technology, commodities and
industrial, and companies that rely on consumer discretionary
spending, should benefit.
    Wien also said investors should invest 10 percent of their
assets in large, multinational companies in developed markets.
In his December 2010 "Market Commentary", he said Coca-Cola
Co., General Electric Co., Unilever NV and Siemens AG have
"great products, strong brands and promising prospects."
    The strategist, who said in January that financial-services
stocks would beat the market, is less optimistic on the
industry's prospects in 2011. The KBW Bank Index has risen 12
percent so far this year, outpacing the S&P 500.

                 'Neutral' on Financials

    "I'm sort of neutral on them," Wien said. "There's some
good news, their earnings are improving. On the other hand,
conforming to the new regulatory requirements in Basel III will
hamper profitability."
    Wien, who correctly predicted rallies in equities, gold and
oil last year, called the recession in 2001. With the Fed's
benchmark rate at a 10-year high of 6.5 percent, he predicted a
series of interest rate cuts that began with a surprise
reduction by the central bank on Jan. 3, 2001.
    He was less prescient during previous bull markets, saying
the Dow Jones Industrial Average would fall in 1997 and 1998.
The gauge rose 23 percent in 1997 and 16 percent a year later.
    On Nov. 3, the Fed said it will buy an additional $600
billion of Treasuries in a second round of so-called
quantitative easing, and Wien said there could be more to come.
    "They will keep on easing," he said. "That's the only
tool left to them right now. They can't have any fiscal
stimulus. They will never get that through. There would be more
of quantitative easing if the unemployment rate is persistently
rising. Hopefully, that won't be the case. I'm not sure QE2 or
QE3 would do that much good."

For Related News and Information:
Stories on U.S. stocks: NI USS <GO>
Top stories on stocks: TOP STK <GO>
Market map of the S&P 500: SPX <Index> IMAP <GO>
Global heat map: MMAP <GO>
Most-active U.S. stocks: MOST US <GO>
Feature stories on U.S. stocks: TNI USS FEA <GO>
Stories on U.S. stock options: NI USO <GO>
Equity screening: EQS <GO>

--Editors: Joanna Ossinger, Chris Nagi

To contact the reporter on this story:
Rita Nazareth in New York at +212-617-8908 or
rnazareth@bloomberg.net.

To contact the editor responsible for this story:
Nick Baker at +1-212-617-5919 or nbaker7@bloomberg.net.

(BN) Aspirin Cuts Death Rates From Range of Cancers, Researchers Say

By Chris Kay
    Dec. 7 (Bloomberg) -- Aspirin, a century-old medicine known
to relieve pain and prevent blood clots, also reduces the risk
of death from a variety of cancers, researchers said.
    Taking 75 milligrams of aspirin a day for more than five
years cut deaths from cancer by 20 percent, according to the
study published in The Lancet medical journal today. The
researchers found the pill was associated with a reduced risk of
death from esophageal, colorectal, lung and prostate cancers.
    The findings, based on data from eight trials involving
25,570 patients, expand on previous studies that found aspirin
lowered the risk of colon cancer. More studies are needed before
aspirin, which can increase the risk of internal bleeding,
should be recommended for cancer prevention, said the
researchers, led by Peter Rothwell, professor of clinical
neurology at the John Radcliffe Hospital in Oxford, England.
    "I have been taking aspirin for several years," Rothwell,
who founded the Stroke Prevention Research Unit at the
University of Oxford, told reporters in London yesterday. "I
personally believe this."
    The risk of death after 20 years was lowered in patients
who took aspirin by 60 percent for esophageal cancer, 40 percent
for colorectal cancer, 30 percent for lung cancer and about 10
percent for prostate cancer. Aspirin doses greater than 75
milligrams didn't appear to increase the benefit. The data came
from trials whose main purpose was to determine aspirin's effect
on cardiovascular risks such as heart attack and stroke.

                       Medical Guidelines

    Healthy middle-aged men and women may benefit the most from
taking aspirin over a long period, and medical guidelines ''may
be updated on the back of these results," Rothwell, 46, said.
    "The benefit is likely to be less at 75 to 80 because
those cancers that will kill you will have already developed,"
he said.
    Aspirin blocks prostaglandins, which are involved in a
range of functions such as the contraction of blood vessels and
inflammation. The eight trials reviewed by Rothwell and his
colleagues looked at the effects of aspirin on cardiovascular
disease.
    Taking aspirin almost doubles the risk of internal bleeding
to one in every 2,000 to 3,000 people, Peter Elwood, an
epidemiologist at Cardiff University who has published 300
research papers over 50 years, told reporters in London. That
doesn't increase the number of deaths, and the chance of cancer
or stroke outweighs the risk from bleeding, he said.
    "The man on the street knows betting odds," said Elwood,
80, who has been taking aspirin since 1974 and wasn't involved
in the study. People should "evaluate the risks for
themselves."

                         Colon Cancer

    A low daily dose of aspirin taken over an average of six
years reduced colon cancer risk by 24 percent and the likelihood
of dying from the disease by 35 percent, according to a separate
study authored by Rothwell published in October by The Lancet. A
trial published in the medical journal Gut in September found
that 75 milligrams of aspirin taken daily lowered the risk of
colon cancer by 22 percent after just one year.
    The effects of the drug over a longer period are unknown,
and further data on the risks of taking aspirin for tumors that
affect women, such as breast cancer, is needed, Rothwell said.
    "The problem is you can't do a 30-year trial," he said.
"It's tough to do a trial and keep patients compliant for more
than a few years."
    The authors of the study plan to publish further research
into the link between aspirin and cancer prevention next year,
they said in an e-mailed statement.
    The researchers funded the study through their own budgets.
Rothwell and his four co-authors disclosed to the journal that
they had individually received payments from drugmakers
including AstraZeneca Plc, Bayer AG, Boehringer Ingelheim GmbH,
Sanofi-Aventis SA, Bristol-Myers Squibb Co. and Servier
Laboratories Ltd. that were unrelated to the study. Bayer, based
in Leverkusen, Germany, is the inventor of aspirin.
    "This study remains a very important new development in
our understanding of how to prevent cancer in general,"
Alastair Watson, a professor of translational medicine at the
University of East Anglia who wasn't involved in the study, said
in an e-mailed statement.

For Related News and Information:
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Top Stories: TOP <GO>

--Editors: Kristen Hallam, Phil Serafino

To contact the reporter on this story:
Chris Kay in London at +44-20-3216-4703 or ckay5@bloomberg.net

To contact the editor responsible for this story:
Phil Serafino at +33-1-5530-6277 or pserafino@bloomberg.net

Investment Fraud Arrests to Be Announced, U.S. Official

The Justice Department today will announce arrests in a crackdown on investment frauds including Ponzi schemes and stock market manipulations, according to a U.S. law enforcement official familiar with the ...
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(BN) Obama Calls Hu to Urge China Assist in Restraining North Korea

Obama Calls Hu to Urge China Assist in Restraining North Korea
2010-12-06 08:46:34.37 GMT


By Bloomberg News
    Dec. 6 (Bloomberg) -- President Barack Obama called Chinese
counterpart Hu Jintao to urge his help in communicating to North
Korea that its uranium-enrichment program and recent artillery
attack on a South Korean island are "unacceptable."
    Obama placed the call, made today Beijing time, to discuss
Korea tensions, the White House said in a statement. Both
leaders agreed to work together to make the peninsula free of
nuclear weapons, it said.
    The call coincided with the start of live-firing drills by
South Korea's military, similar to exercises held last month
that North Korea said prompted it to shell Yeonpyeong, killing
four people. China is North Korea's main ally, helping sustain
Kim Jong Il's regime with food, fuel and foreign currency.
    Obama "urged China to work with us and others to send a
clear message to North Korea that its provocations are
unacceptable," the White House said. Hu said all sides need to
be calm to prevent the situation from getting out of control,
the official Xinhua News Agency reported.
    The U.S., Japan and South Korea, China's three biggest
trading partners, have all urged officials in Beijing to use
their influence over North Korea to restrain its actions. The
U.S. and South Korea last week conducted naval exercises in the
sea between the peninsula and China.
    Today's South Korean drills cover 29 areas, including one
about 7 miles (11 kilometers) from Daecheong island close to the
disputed western border. A spokesman at the Joint Chiefs of
Staff in Seoul, who declined to be named citing military policy,
couldn't confirm whether all the drills had started on schedule.

               'Catastrophic Consequences'

    North Korea yesterday warned that the South risked
"catastrophic consequences" with the exercises. The government
"is so hell-bent on the moves to escalate the confrontation and
start a war that it is recklessly behaving bereft of reason,"
the state-run Korean Central News Agency said in a commentary.
    Tensions have risen on the Korean peninsula since North
Korea's Nov. 23 attack on Yeonpyeong, which also lies close to
the western maritime boundary. Prime Minister Kim Hwang Sik
reiterated today that South Korea will bolster its military
presence in border areas.
    North Korea fired artillery at the fishing community and
military outpost in the first shelling of South Korean soil
since the 1950-1953 war. It said it responded to provocation
after South Korea fired into waters each side claims.
    The North doesn't recognize the western sea border
demarcated by the United Nations after the war and demands it
should be redrawn to include Yeonpyeong and four neighboring
islands.

                     'Reckless Moves'

    North Korea two days ago blasted the U.S., South Korea and
Japan for "reckless moves" to create a military alliance that
threatens peace in North Asia. Secretary of State Hillary
Clinton will today host Japan's Foreign Minister Seiji Maehara
and South Korean counterpart Kim Sung Hwan in Washington to
discuss regional security.
    "The situation on the Korean Peninsula is getting tenser
as the days go by and the danger of a war is increasing hour by
hour," KCNA reported, citing a commentary in the state-run
Rodong newspaper. "The U.S. is giving spurs to an arms buildup
and preparations for a war."

For Related News and Information:
Asia government news: TNI ASIA GOV <GO>
Japanese Defense news: TNI JAPAN DEFENSE <GO>
Korean news: TOP KR <GO>

--Michael Forsythe, Bomi Lim, Jungmin Hong. Editors: Bill
Austin,

To contact the reporters on this story:
Bomi Lim in Seoul at +82-2-3702-1673 or
blim30@bloomberg.net;
Jungmin Hong in Seoul at +82-3702-1605 or
jhong47@bloomberg.net;
Michael Forsythe in Beijing at +86-10-6649-7580 or
mforsythe@bloomberg.net;

To contact the editor responsible for this story:
Bill Austin at +81-3-3201-8952 or
billaustin@bloomberg.net

A frente do monstrinho

eletricista, encanador o que for....sou liquidante faço tudo que estiver ao meu alcance, sempre, senão aprendo :P

(BN) U.S. Senate Approves Biggest Food-Safety Overhaul in 70 years

U.S. Senate Approves Biggest Food-Safety Overhaul in 70 Years
2010-11-30 15:33:28.462 GMT


By Molly Peterson
    Nov. 30 (Bloomberg) -- The biggest U.S. food-safety
overhaul in more than 70 years won Senate passage as lawmakers
sought to curb food-borne illnesses that cost the nation an
estimated $152 billion a year.
    The U.S. Food and Drug Administration would gain more power
to police food companies under the bill that passed today in a
73-25 vote. The measure, backed by the food industry, public-
health groups and consumer advocates, adds inspections and lets
the FDA force recalls, rather than relying on companies to
voluntarily remove contaminated foods from store shelves.


Link to Company News:{3400398Z US <Equity> CN <GO>}
Link to Company News:{K US <Equity> CN <GO>}
Link to Company News:{KFT US <Equity> CN <GO>}
Link to Company News:{NESN VX <Equity> CN <GO>}
Link to Company News:{GIS US <Equity> CN <GO>}

For Related News and Information:
Top Stories:{TOP<GO>}

To contact the reporter on this story:
Molly Peterson in Washington at +1-202-654-7383 or
mpeterson9@bloomberg.net

To contact the editor responsible for this story:
Steve Walsh at +1-202-654-4336 or
swalsh@bloomberg.net

US November consumer confidence rises to 54.1: good thing!

Monthly chart

(BN) Kim Jong Il Sends Top Aide to Beijing as Diplomacy Founders

Kim Jong Il Sends Top Aide to Beijing as Diplomacy Founders
2010-11-30 08:02:23.80 GMT


By Bloomberg News
    Nov. 30 (Bloomberg) -- North Korea dispatched one of Kim
Jong Il's top aides to Beijing the same day as leaked U.S.
diplomatic dispatches showed China is increasingly willing to
consider a unification of Korea under the South's control.
    Choe Thae Bok, chairman of North Korea's Supreme People's
Assembly, left for Beijing today for talks with Chinese leaders,
state-run Korea Central News Agency reported. Choe met China's
President Hu Jintao in the Chinese capital on Oct. 2 and
accompanied Kim on a trip to the city in May, according to KCNA.
    Choe's visit comes after China proposed on Nov. 28 that
negotiators from the two Koreas, Japan, Russia and the U.S. meet
in Beijing early next month to defuse tensions following a Nov.
23 North Korean artillery attack on a South Korean island that
killed four people. A U.S. Navy aircraft carrier is now
conducting exercises in the Yellow Sea off the Korean coast.
    Japan rejected the Chinese proposal yesterday. Talks can't
be held only because North Korea has "run amok," Japanese
Foreign Minister Seiji Maehara told the Wall Street Journal in
an interview. Nicholas Snyder, a spokesman at the U.S. Embassy
in Beijing, said "clear steps by North Korea are needed to
demonstrate a change of behavior." South Korea's Ministry of
Foreign Affairs and Trade said it would consider China's call
for talks "very cautiously."
    China is North Korea's biggest trading partner and a source
of much of the country's food, fuel, and foreign currency. The
two countries have been allies for 60 years since fighting
together against U.S.-led forces during the 1950-53 Korean War.
The two countries share a 1,415-kilometer (880 mile) border.

                          Unreliable

    A leaked Feb. 22 diplomatic cable provided to the Guardian
by WikiLeaks.org said that South Korea's then-vice foreign
minister, Chun Yung Woo, told U.S. Ambassador Kathleen Stephens
that young Chinese Communist party leaders don't think North
Korea is a reliable ally. Chun also said two unidentified
Chinese officials told him they believed Korea should be unified
under the South.
    U.S. Secretary of State Hillary Clinton yesterday said the
Obama administration "strongly condemns" the unauthorized
release of more than 250,000 diplomatic documents that WikiLeaks
began posting two days ago. State Department spokeswoman Nicole
Thompson said she "can't provide veracity of anything WikiLeaks
has released to the media," adding the agency's policy is to
refrain from commenting on specific leaked materials.
    China hopes the U.S. will "properly handle" the situation
caused by the leaked messages, Foreign Ministry spokesman Hong
Lei told reporters in Beijing today.
    South Korea's foreign ministry spokesman Kim Young Sun said
it would be "inappropriate to comment on other countries'
diplomatic documents.

                      'Regrettable'

    ''If it is true that details of diplomatic discussions have
been leaked, it is regrettable,'' Kim said.
    The U.S. is pressing China to censure North Korea for the
shelling of Yeonpyeong island. China has avoided blaming its
ally of 60 years, instead criticizing joint naval exercises by
South Korea and the U.S. in the Yellow Sea that began Nov. 28.
    Chun, now South Korea's national security adviser, told
Stephens that China ''has much less influence than most people
believe'' over Kim Jong Il's regime, according to the Feb.
22 cable cited in the Guardian, a U.K. newspaper.
    Chinese officials told U.S. diplomats that their efforts
to cajole North Korea had been rebuffed, and that the U.S. was
the only country with real influence, according to a leaked
June 17, 2009, cable. "The United States was the key while China
was only in a position to apply a little oil to the lock," the
cable cited an unidentified Chinese official as saying.

                     'Spoiled Child'

    A separate message from Beijing said China's vice-foreign
minister He Yafei in April 2009 told an American diplomat that
North Korea's missile tests were designed to get the attention
of the U.S. and that the government in Pyongyang was acting
''like a spoiled child." Two months later, U.S. Ambassador to
Kazakhstan Richard Hoagland sent a cable saying his Chinese
counterpart, Cheng Guoping, told him North Korea was a "threat
to the whole world's security," the Guardian said.
    The cables all predate a surge in diplomatic activity
between China and North Korea this year.
    Kim made an unprecedented two visits to China this year,
meeting with President Hu Jintao on both occasions. In October,
Zhou Yongkang, a member of China's ruling Politburo Standing
Committee, stood next to Kim during a Pyongyang military parade.
Later that month, top Chinese general Guo Boxiong visited North
Korea, marking the two countries' "victory" over
"imperialist" U.S.-led forces during the 1950-53 Korean war.
    China also refrained from criticizing or blaming North
Korea over the March sinking of a South Korean warship. An
international panel found evidence that a North Korean torpedo
was responsible for the sinking, which killed 46 sailors.
    WikiLeaks.org, a nonprofit group that releases information
that governments and businesses want to keep confidential, has
over the past two days posted on its website what it says are
secret, confidential or in some cases unclassified U.S. embassy
cables.

--Michael Forsythe, Yidi Zhao, Bomi Lim, John Brinsley. Editor:
Bill Austin, Ben Richardson.

To contact the reporter on this story:
John Brinsley in Tokyo at +81-3-3201-7048 or
jbrinsley@bloomberg.net

To contact the editor responsible for this story:
Bill Austin at +81-3-3201-8952 or
billaustin@bloomberg.net

(BN) Rousseff Said to Appoint Tombini as Brazil Bank Chief

By Andre Soliani and Iuri Dantas
    Nov. 24 (Bloomberg) -- Brazilian President-elect Dilma
Rousseff will appoint Alexandre Tombini as central bank head,
signaling she'll keep the policies that helped her predecessor
slow inflation to about 5 percent last month from as high as 17
percent in 2003.
    The 46-year-old Tombini, who has served as a board member
since 2005, will replace Henrique Meirelles, 65, Brazil's
longest-serving central bank chief, two government officials
said on condition that they not be named because the decision
hasn't been made public. Meirelles, appointed in 2003, will
remain at the post until the end of President Luiz Inacio Lula
da Silva's administration on Dec. 31, one of the officials said.
    The Bovespa index of most-traded stocks increased almost
sixfold under Meirelles and the real more than doubled against
the dollar, becoming the best performer amid the 16 most-traded
currencies tracked by Bloomberg. By tapping Tombini, Rousseff is
seeking to extend policies that helped Brazil win its first
investment grade rating in 2008, said Tony Volpon, a Latin
America strategist at Nomura Securities in New York.
    "The fact that it is him instead of someone else ensures
the central bank won't be taken by a new heterodox philosophy --
that there will be continuity," Volpon said in a phone
interview.
    Tombini, who has a doctorate in economics from Illinois
University, will need to be approved by the Senate.
    The real gained 0.3 percent to 1.7302 per U.S. dollar at
10:41 a.m. in Sao Paulo. The yield on interest rate futures
contracts due in January 2012 rose 3 basis points to 11.86
percent.

                   Interest Rate Votes

    Before joining the Brasilia-based central bank, Tombini was
the senior adviser to Brazil's executive director at the
International Monetary Fund. He's one of eight people who vote
to set interest rates in Brazil. The individual votes aren't
made public.
     "This is the right moment to end the mission," Meirelles
told reporters in Brasilia today.
    Rousseff will appoint Miriam Belchior as Planning Minister,
replacing Paulo Bernardo, according to Bernardo. The president-
elect invited Bernardo to her cabinet in a position that will be
determined later, he told reporters in Brasilia. Finance
Minister Guido Mantega will retain his position under Rousseff,
said a person familiar with her decision on Nov. 18.
    The extra yield investors demand to hold Brazilian debt
rather than U.S. Treasuries has fallen to 189 basis points from
1,446 basis points on Dec. 31, 2002, the day before Lula took
office, according to JPMorgan Chase & Co.'s EMBI+ index.

                       'Greater Control'

   Latin America's biggest economy will expand 7.6 percent this
year, the fastest pace in more than two decades, according to
the median forecast in a central bank survey of about 100
economists.
    Yields on interest rate future contracts rose across the
board on Monday amid speculation that Rousseff would replace
Meirelles and end the bank's operational autonomy, potentially
skewing policy in favor of economic growth at the expense of
faster inflation.
    "Tombini has a good education, he's a professional," said
Pedro Tuesta, a Washington-based economist for Latin America at
4Cast Inc. "The problem is that this gives the impression that
Dilma wants to have greater control of the central bank. I'm not
saying that's the way it is. She gives us that impression, and
the impression has a certain base."
    Central bank policy makers are appointed and removed by the
country's president and aren't limited by set terms. Lula
appointed Meirelles to replace Arminio Fraga at the start of his
term.

                       'Showdown Coming'

    Traders are wagering policy makers will be forced to resume
interest rate increases early next year and push the benchmark
interest rate to as high as 12.75 percent by the end of 2011,
according to Bloomberg estimates based on interest rate futures.
    "There's a wide gap between the market pricing in what is
needed and what some policy makers are hoping to be able to
accomplish," said Gray Newman, chief Latin America economist at
Morgan Stanley in New York, who expects the bank to raise rates
to 12.5 percent next year.
    "There's a showdown coming," said Newman. "The market is
expecting a pretty significant series of rate hikes and yet I
think the new policy team is trying to adopt measures that will
allow the central bank to cut rates."

                       Rising Inflation

    Bond traders are betting Brazil will miss its inflation
target for the first time since 2003 as commodity prices jump
and concern builds that Rousseff will fail to curb spending.
    Investor expectations for annual inflation over the next
two years, implied by the yield difference between the
government's inflation-linked and fixed-rate notes, rose to 6.68
percent as of yesterday, the highest since November 2008. That
gap, known as the breakeven rate, tops the 6.5 percent upper
limit in the bank's target range for consumer price increases.
    By tapping a policy maker who has worked under Meirelles, a
former head of global banking at FleetBoston Financial Corp. for
more than five years, Rousseff may be seeking to ease investor
concerns.
    "The Brazil market has matured enough that the change in a
member of the central bank doesn't imply great movements in the
market as long as we know the philosophical position of the new
central banker," said Alfredo Coutino, Latin America director
for Moody's Analytics. "A person from the same board should
bring relative calm to the markets."

For Related News and Information:
News on Brazil's central bank: TNI CEN BRAZIL <GO>
Top Latin America news: TOPL <GO>
News on BRIC countries: STNI BRICS <GO>
Stories on Brazil: NI BRAZIL <GO>
News on the Brazilian economy: TNI BRAZIL ECO <GO>
Surveys on Brazil's Economy: ECO BZ <GO>
Central Bank Interest Rate Decisions: CPOM <GO>
Brazil's Annual Consumer Prices: BZPIIPCY <Index> GP <GO>

--With assistance by Jens Gould and Jon Levin in Mexico City,
and Carla Simoes, Iuri Dantas and Arnaldo Galvao in Brasilia.
Editors: Harry Maurer, Andrew J. Barden

To contact the reporters on this story:
Andre Soliani in Brasilia at +55-61-3329-1605 or
asoliani@bloomberg.net;
Arnaldo Galvao in Brasilia at +55-61-3329-1608 or
agalvao1@bloomberg.net

To contact the editor responsible for this story:
Joshua Goodman at +55-21-2125-2535 or jgoodman19@bloomberg.net

(BN) N. Korea Attack on South Kills Two, Sets Homes Ablaze (Update2)

N. Korea Attack on South Kills Two, Sets Homes Ablaze (Update2)
2010-11-23 12:31:47.829 GMT


    (Updates with North Korea's confirmation of shelling in
third paragraph.)

By Bomi Lim
    Nov. 23 (Bloomberg) -- North Korea lobbed artillery shells
at a South Korean island near their border, killing two soldiers
and setting houses ablaze in the worst attack on its neighbor in
at least eight months.
    South Korea returned fire with 80 shells and scrambled
fighter jets as President Lee Myung Bak vowed to respond
"sternly." Local television channel YTN showed smoke billowing
from Yeonpyeong island off South Korea's northwest coast and
said residents took cover in bomb shelters. Stocks and U.S.
futures dropped while the dollar and Swiss franc strengthened.
    Tensions with Kim Jong Il's regime have risen in the past
year after the sinking of the South Korean warship Cheonan in
March killed 46 sailors. U.S. President Barack Obama this week
dispatched envoy Stephen Bosworth to Asia after reports by a U.S.
scientist that North Korea had revealed a "stunning" uranium-
enrichment plant.
    "They want to direct attention to themselves, to say:
'Look we are here, we are dangerous and we cannot just be
ignored," said Andrei Lankov, an associate professor at Kookmin
University in Seoul. The U.S. position had been to engage in
talks when there was a prospect of democratization in the North,
he said. "Now the chances for democratization are virtually
zero, so they have nothing to talk about."

                         Stocks Fall

    The MSCI Asia-Pacific excluding Japan Index declined 2.3
percent to 453.89 as of 8:06 p.m. in Hong Kong, set for its
biggest loss since June 29, while the Stoxx Europe 600 Index
fell 0.6 percent. Standard & Poor's 500 Index futures sank 0.8
percent. The dollar rose against all of its major counterparts
except the Swiss franc.
    Obama was woken at 3:55 a.m. for a security briefing on the
attack, an administration official who requested anonymity said.
    The U.S. condemned the North's shelling and said it was
"firmly committed" to defending South Korea, according to a
statement released by the White House.
    China expressed "concern" over the North Korean shelling.
    "We hope the parties do more to contribute to peace and
stability on the Korean Peninsula," Foreign Ministry Spokesman
Hong Lei told reporters in Beijing today. Reports on North
Korea's new uranium-enrichment plant underscore the need for
disarmament talks, Hong said.
    "What is important is to restart six-party nuclear talks
at an early date," he said.
    Sixteen more South Korean soldiers and three civilians were
injured in the shelling, a defense ministry official said on
condition of anonymity because of military policy. Joint Chiefs
of Staff official Lee Hong Kee called the shelling, which began
around 2:30 p.m. local time, an "intentional attack."

                        Military Drill

    Shin Seung Won, 70, who has been running a motel on
Yeonpyeong for about 20 years, said by telephone: "I heard a
sudden, roaring sound. I ran to the window and saw my neighbor's
house was burning and the neighborhood was covered in smoke."
    North Korea accused South Korea of opening fire first and
warned of more "merciless military attacks" if its territory
is violated. The North Korean army's Supreme Command made the
statement in the official Korean Central News Agency.
    South Korea yesterday kicked off a nine-day military
exercise, which North Korea said today was aimed at attacking
the country. The KCNA statement didn't mention if North Korea
suffered any casualties.

                          Tinder Box

    "The North Korean issue is a tinder-box for the region,"
said Gavin Parry, managing director of Hong Kong-based Parry
International Trading Ltd. "They like to saber rattle for
attention, but on the heels of a nuclear inspection that
indicated they could have bomb capabilities, markets can't
afford to ignore any instability for the region."
    By attacking Yeonpyeong, 2 miles (3.2 kilometers) from the
border, North Korea has escalated its provocations against the
South and its U.S. ally, according to Kenneth Quinones, former
State Department director of North Korean affairs, and a
professor at Akita International University in Japan.
    "This is one of the most serious North Korean provocations
in at least two decades," he said. The latest attack "was on a
civilian-occupied island, unlike the Cheonan, which was a naval
warship."
    North Korea may be trying to force a change in U.S. policy
that has shunned talks with Kim's regime until it ends
provocations and lives up to commitments on ending its nuclear
weapons program, Lankov said. The attack may also signal
domestic instability as the ailing Kim seeks to cement the
handover of power to his youngest son, Kim Jong Un.

                         'Gut Feeling'

    "My gut feeling is that Kim Jong Il is having a very hard
time controlling his generals," Quinones said. "The North
Korean military is asserting itself at a time when Kim is weak
both physically and militarily. Kim Jong Un means nothing; he's
a puppet."
    Kim Jong Un made his public debut in September, when he was
named a general and vice commissioner of the Central Military
Commission, the nation's most powerful body. Those were his
first public appointments and were followed by a succession of
appearances alongside his father.
    Korea is laboring under United Nations sanctions over its
two previous nuclear tests. Attempts to force Kim's regime back
to disarmament talks have foundered after North Korea quit the
six-party forum last year. The talks include the U.S., Russia,
Japan, South Korea and China, the North's main political ally
and source of aid.

                      History of Attacks

    North Korea has a history of attacks on the South since the
two sides fought to a standstill in their 1950-1953 civil war.
China backed the North and the United States led an
international force fighting on the side of the South, laying
out a Cold War relationship that endures to this day.
    The U.S. has about 25,000 troops in the South and Obama
said during a Nov. 10 Veterans Day speech in Seoul that
America's resolve to stand alongside its ally will never waver.
    Previous incidents have included the 1987 bombing of a
civilian airliner that killed 115 people, two assassination
attempts on the president and incursions by mini-submarines
carrying commandoes.
    At an emergency meeting of security-related ministers,
South Korean President Lee ordered the military to "respond
sternly, while making sure the situation doesn't get
aggravated," his office said.
    South Korea's Unification Ministry cancelled inter-Korean
Red Cross talks scheduled to take place on Nov. 25.
    "What can South Korea do apart from a bit of chest
beating?" Lankov said. "They are not going to start a war. I
think they will try to play it down."

For Related News and Information:
Stories on North Korea's nuclear program: TNI NKOREA NUK <GO>
Most-read news on Korea: MNI KOREA 1W <GO>
Top government stories: TOP GOV <GO>

--With assistance from Sookyung Seo, Seonjin Cha, Jungming Hong,
Eunkyung Seo, Frances Yoo and Brett Miller in Seoul, Mike
Forsythe in Beijing, Darren Boey in Hong Kong, John Brinsley in
Tokyo and Daniel Ten Kate in Bangkok. Editors: Ben Richardson,
Douglas Wong.

To contact the reporter on this story:
Bomi Lim in Seoul at +82-2-3702-1673 or
blim30@bloomberg.net

To contact the editor responsible for this story:
Bill Austin at +81-3-3201-8952 or
billaustin@bloomberg.net

IBOV: Será que o descarego acabou? I think so

(BN) Berkshire to Make Loans for Luxury Jet Customers (Update1)

Now we will see an explosion of continental jet demand appearing...

http://www.netjets.com/NetJets_Programs/NetJets_Direct_Financing.asp

+------------------------------------------------------------------------------+

Berkshire to Make Loans for Luxury Jet Customers (Update1)
2010-11-17 16:28:04.126 GMT


    (Updates with NetJets CEO comment in the fourth paragraph.)

By Andrew Frye
    Nov. 17 (Bloomberg) -- Warren Buffett's Berkshire Hathaway
Inc. will make loans to clients of its luxury air-travel unit
after sales declined during the financial crisis.
    The financing minimum is $100,000 and the loans are only
available to commercial clients, according to a statement today
from Omaha, Nebraska-based Berkshire's NetJets business.
    Buffett has called the unit Berkshire's "major problem"
for 2009 as cash-strapped clients gave up their accounts and
NetJets slid into losses. NetJets Chief Executive Officer David
Sokol, who took over in August of last year, has fired pilots
and sold aircraft to cope with the slump in demand.
    "Owners are able to structure a payment solution that
exactly meets their needs," Sokol said in the statement.
    Credit approval for the loans may take "as little as a few
days," NetJets said. The loans are fixed rate and have terms of
as long as five years, the company said.

--Editor: Dan Kraut

To contact the reporter on this story:
Andrew Frye in New York at +1-212-617-1869 or
afrye@bloomberg.net

To contact the editor responsible for this story:
Dan Kraut at +1-212-617-2432 or dkraut2@bloomberg.net

(BN) U.S. Factory Production Rose by Most in Three Months in October

U.S. Factory Production Rose by Most in Three Months in October
2010-11-16 14:15:00.16 GMT

By Courtney Schlisserman
    Nov. 16 (Bloomberg) -- Factory production in the U.S.
increased in October by the most in three months, signaling
industries continue to support the U.S. economic recovery.
    Manufacturing rose 0.5 percent after a 0.1 percent increase
in September that was previously reported as a 0.2 percent drop,
figures from the Federal Reserve showed today. Total production
was little changed, restrained by the biggest drop in utility
use in six months that was probably caused by unseasonably mild
temperatures last month.
    Gains in exports and business investment may keep assembly
lines churning, just as the initial spark from the need to
rebuild inventories wanes. The increases in global demand that
benefitted companies like General Electric Co. and helped lift
the economy gave American consumers time to repair finances and
resume spending, leading to a more balanced recovery.
    "Manufacturing output should be strengthening into the end
of the year," Zach Pandl, an economist at Nomura Securities
International Inc. in New York, said before the report. What's
supporting growth is "a little bit better domestic demand and
fantastic growth overseas."
    Economists surveyed by Bloomberg News projected total
industrial production would increase 0.3 percent after a 0.2
percent decline for September, according to the median of 78
forecasts. Estimates ranged from no change to a gain of 0.7
percent.
    Another report today showed wholesale costs rose 0.4
percent in October from the prior month, less than forecast,
reflecting declines in prices of cars, trucks and computers that
shows limited demand is keeping a lid on inflation, according to
figures from the Labor Department.

                         Utility Use

    Capacity utilization, which measures the amount of a plant
that is in use, was unchanged at 74.8 percent last month, the
production report showed. The gauge averaged 80 percent over the
past 20 years, showing there's enough spare plant equipment and
space to prevent bottlenecks that would lead prices higher.
    The gain in factory output was led by makers of autos,
computers and communications gear.
    Utility production dropped 3.4 percent after a 2.2 percent
decrease the prior month. Temperatures for the month averaged
56.9 degrees, making it the eleventh-warmest October on record,
according to the National Oceanic and Atmospheric
Administration.
    Mining, which includes oil drilling, fell 0.1 percent.
    Carmakers increased output by 1.6 percent last month after
little change in September.

                          Auto Sales

    Auto sales in October reached a 12.3 million annual pace,
the highest in more than year, according to researcher Autodata
Corp. Ford Motor Co. said its sales rose 15 percent in October
and demand for its F-Series pickups increased 24 percent,
pushing deliveries past last year's total in the first 10 months
of 2010.
    "That's a good harbinger of the economy starting to move
forward," Ken Czubay, Ford's U.S. sales chief, said on a
conference call with analysts. "It's good to see the industry
nudging forward."
    Previous reports pointed to an October rebound in
manufacturing, which makes up 11 percent of the U.S. economy.
    The Institute for Supply Management's factory gauge rose in
October to the highest level in five months, reflecting
acceleration in orders and production. Factories also boosted
the workweek by 0.2 percent last month, enough to overcome a
7,000 drop in payrolls, figures from the Labor Department
showed.

                         November Drop

    The first of this month's regional factory reports raised
the risk that the rebound will prove to be short-lived.
Manufacturing in the region covered by the Fed Bank of New York
unexpectedly contracted in November for the first time in more
than a year, the branch of the central bank said yesterday.
    Some Fed policy makers are concerned economic growth is not
strong enough to reduce an unemployment rate close to 10
percent. At the same time, inflation remains below the Fed's
longer-term projections. The central bank this month announced a
program to buy an additional $600 billion in Treasury securities
in a bid to keep borrowing costs low and spur growth.
    Foreign sales remain a bright spot. Exports in September
rose to the highest level in two years, according to Commerce
Department data released Nov. 10.
    General Electric Chief Executive Officer Jeffrey Immelt
last week appointed Vice Chairman John Rice to accelerate a push
to bolster exports and expand partnerships in countries like
China and India that are modernizing infrastructure to foster
faster economic growth.

                       Emerging Markets

    "The growth in the next decade or decades that's going to
take place will be quite robust in places like China and
India," Immelt said Nov. 9 in Beijing. GE is based in
Fairfield, Connecticut.
    Some businesses are also responding to increased exports
and to a pickup in U.S. demand by replacing aging equipment and
bringing more parts of their plants online.
    Rockwell Automation Inc., the maker of factory software,
said it sees interest rising in large-scale plant projects for
full-production lines in developed markets, a sign that those
economies may be picking up steam.
    "These are projects that are significant expansion in
production capacity or new lines," Chief Executive Officer
Keith Nosbusch said in an interview last week. "These would be
larger capital spending investments," which means those markets
have a more positive outlook on their future.

For Related News and Information:
Stories on U.S. manufacturing: TNI US MAC <GO>
Bloomberg stories on the U.S. economy: NI USECO BN <GO>
Stories on U.S. automakers: TNI US AUT <GO>
To track capacity utilization: CPTICHNG <Index> GP <GO>

--Editors: Carlos Torres, Christopher Wellisz

To contact the reporter on this story:
Courtney Schlisserman in Washington +1-202-624-1943 or
cschlisserma@bloomberg.net.

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

Company News:
GE US <Equity> CN
CMI US <Equity> CN