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With hedge fund manager, CNBC regular and long-time veteran of the Russian markets Tim Seymour at the helm, Emerging Money ( provides education, trading analysis and comprehensive views of emerging markets around the world. As economies in the BRIC group and beyond... More
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  • Jobless number feeds into dollar rally

    The chart on the weekly jobless claims data — once a relatively minor indicator — is truly impressive, and this morning’s release does nothing to change that.

    In fact, with initial claims only edging up 18,000 in the first week of the year, economists are actually impressed. They had expected a slightly more serious increase after claims hit their lowest level since late 2008 in the previous week.

    While it is true that at 409,000, the number of people filing for unemployment benefits is still quite elevated from historical standards — but it is nothing like the 650,000 jobs a week the credit crunch was destroying at the peak of the layoffs in early 2009.

    Given the holidays, it is also significant that the four-week moving average, a better gauge of the trend, continued to dip and now stands at 410,750, lower than at any time since July 2008.

    The dollar is getting a boost here as fundamental sentiment on the U.S. economy finally brightens. This is one of the few places where the employment situation looks like it is actually normalizing.

    Watch commodities for signs they are decoupling from the dollar trade. And start watching the Fed to see where and when it admits that the economy is showing signs of life again.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 07 12:24 PM | Link | Comment!
  • Can Petrobras really be buying into Galp?
    The Brazilian media are reporting that Petrobras is gearing up to announce that it is spending at least $5.3 billion for a 33% stake in Portugal’s Galp Energy. This would be crazy.

    Petrobras (PBR) is reportedly talking to Italy’s Eni (E) about buying the strategic stake in Galp, which thinly trades in ADR form as GLPEF .

    At current market price, the deal could cost PBR at least $5.3 billion and probably quite a bit more to make it worth Eni’s while.

    Sadly, PBR is officially offering a “no comment” instead of debunking the buzz as an unsubstantiated rumor. This is not ideal — if the company has no interest in an expensive acquisition like this, they could simply say so.

    If this is true, the market will punish PBR fast and decisively. The company has more reserves than it knows what to do with, and since it has already gone to such lengths to raise capital, I do not know where they will get the money.

    Watch this one to see whether any facts emerge. In theory, this could be a downstream play as far as PBR management is concerned — a way to get a toehold into Europe’s retail fuel markets. But in practice, it simply does not make sense.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: PBR, E, GLPEF, oil, PBR
    Jan 05 1:00 PM | Link | Comment!
  • Sinopec buying into Argentina
     China's giant refining company is adding Occidental Petroleum's $2.45 billion Argentine unit to its global empire as Beijing's energy acquisition spree continues to deliver new deals

    Sinopec (SNPquote) will be paying OXY (quote) the equivalent of $6.20 to as high as $6.90 per barrel of oil equivalent that its Argentine assets represent.

    The mystery surrounding the precise valuation is a factor of the immature state of the fields, which have yet to be fully explored to the point where analysts can formally estimate their reserves. But in any event, the deal seems a little rich given the amount of work that needs to be done.

    Petrobras (PBRquotepaid the Brazilian government equivalent of $8.50 in stock per barrel of oil in its recent recapitalization. Unlike the SNP-OXY deal, those barrels were fully delineated, but even given the maturity differential, that valuation was considered expensive -- but the buyer was motivated enough to pay whatever the seller asked.

    Likewise, Chinese oil has emerged as motivated buyers throughout the world. SNP and its peers have now paid $38 billion this year for Latin projects and still seem eager to pay nearly any price to boost their reserves.

    This kind of activity can only boost valuations throughout the oil patch.

    Meanwhile, OXY is using the cash to fund massive M&A of its own back in the United States, as well as boost its dividend.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: CEO, PBR, SNP, Argentina, China, oil
    Dec 13 12:25 PM | Link | Comment!
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