Max Zeledon

Petrobras: Opportunity or Trap?

Ambet,

Where is the dogma? I presented facts...The free-market system is not in question here--crooks and greedy bankers are. The free market always exposes these crooks---in socialist systems we never know about it until they collapse entirely or run to the IMF for rescue. I think we need to call things what they are. We need more regulation and less speculation. That being said I'll take my chances in a free market system any day before I put my money in a socialist state or nationalize operation. But this is not the argument. I'm simply trying to explore this company's potential once we get out of this crisis.


On Feb 06 10:05 AM Amvet wrote:

> Max, your major interest seems to be economic dogma. At this point,
> after the free market idiots have ruined the world economy, stop
> the preaching about a company being bad because it is government
> owned. Be thankful that free market Madoff doesn´t control it.

Petrobras: Opportunity or Trap?

Yes, in four years a lot can happen. But right now I don't see this stock moving.


On Feb 06 01:47 PM User 352398 wrote:

> You missed one key issue here. In the next four years why US stops
> exploring for off shore oil, the market especially India and China
> triple their demand for oil we will see prices way over $50.. This
> stock is well positioned for a good long term run.

Petrobras: Opportunity or Trap?

Yes, it all depends on the the price of crude.


On Feb 06 12:25 PM kotika98 wrote:

> "Petrobras has enough experience in deep-water offshore operations
> to make them profitable"
>
> True, but as you yourself said it depends on the price of oil. If
> they are profitable with $50 oil, that means their overall operations.
> The deepwater stuff, especially anything thats going to be done in
> the future requires a price of $70-90 to be profitable. So that takes
> out all prospects for giant increases in production, on which the
> whole bubble was based.

Petrobras: Opportunity or Trap?

Thanks for your input Michael. You provide an optimistic outlook. I worry a bit about the debt they are incurring, but if oil prices do explode again you are correct--Petrobras is a lucrative play. Myself, I will wait and see what unfolds in the next few months. I think Q1 and Q2 are going to be horrific. PBR will revisit those lows. It's only my opinion and I am somewhat bearish right now.


On Feb 06 05:00 PM Michael Fitzsimmons wrote:

> the current economic crisis actually helps keep petrobras and the
> brazilian government at arms length. petrobras needs capital to tap
> the huge oil deposits it has found. lula and the government know
> this capital needs to come from investors who would recoil if the
> brazilian gov. completely nationalized the company. your question
> about the price of oil in 2017 being high enough to make petrobras'
> production worth the cost? the answer is "absolutely". at the depletion
> rates currently being experienced in mexico, alaska, the north sea,
> and saudi's biggest reservoirs, combined with the reduction in oil
> production and infrastructure due to the current economic climate,
> the next oil spike leave 2008's high of $145 in the dust. petrobras'
> oil discoveries are the most significant on the planet in the last
> decade. if XOM thought they could buy PBR today, they certainly would.
> PBR at $30 a share is a steal. it was even more of a steal when it
> traded at $20/share during the market "turmoil". PBR will get funding.
> PBR will tap their resources. oil will be higher in the near future...and
> so will PBR's stock price.

Nassim Taleb: Renegade Trader with Renegade Ideas - That Work

Cute article. But here is the only problem with this story: The subprime crisis and stock meltdown was not a Black Swan--everyone with half a brain and some common sense not to trust quant models or Wall Street charlatans knew what was coming over a year ago. The hedge fund managers I know were short 15 months ago. This was not a black swan.at all. The only ones who didn't know anything was CNBC and Jim Cramer!

McGraw Hill vs. Ritholtz

Barry Ritholtz is a guy of the utmost integrity. I sure another publisher will pick up his book.

Petrobras: Opportunity or Trap?

That's a very good point!


On Feb 06 09:36 AM sligoo wrote:

> Good analysis of PETROBRAS, but what about their international partners?
> They will want their share of any production notwithstanding the
> politics.

Nassim Taleb: Renegade Trader with Renegade Ideas - That Work

Cute article. But here is the only problem with this story: The subprime crisis and stock meltdown was not a Black Swan--everyone with half a brain and some common sense not to trust quant models or Wall Street charlatans knew what was coming over a year ago. The hedge fund managers I know were short 15 months ago. This was not a black swan.at all. The only ones who didn't know anything was CNBC and Jim Cramer!

Caterpillar: Revving Up Growth

china and India certainly won't bail out the global economy, but that does not mean they won't continue to grow while we slug through this mess. I go by what experts are saying--keeping in mind that the data is not entirely accurate. But here is the evidence: China's economy expanded 11.9% last year--a pace that has obviously slowed down this year. Nevertheless, the IMF thinks the Chinese economy will grow 9.7% in 2008 and 9.3% next year. That's good enough for me even if we're off by two percentage points.

Both China and India are prepared to ramp up government spending when it comes to infrastructure in order to boost their domestic economies. China has $1.8 trillion in foreign exchange reserves, so yes I expect growth to continue because they have the liquidity to support state-sponsored projects.

The dynamics in the emerging markets are much different than in the developed world. The emerging economies will have much more government support--particularly China and India because they need the infrastructure. But that's my belief and I'm willing to take the risk.

Staying Away from iShares MSCI Brazil ETF

@ khwender:

Look, our expectations and assumptions about the world seldom match reality. This is a huge crisis. We don't know what's going to happen over the next couple of years. The fall in exports to the U.S. and Europe will have devastating consequences for Brazil and other BRIC nations. To what extent? I don't know. Also, hedge funds are dropping like flies and I just don't think people understand the power these institutions had over the market. Many hedge funds were playing the “carry trade” in Brazil. They were borrowing Yen at a very low rate and they were investing the proceeds in Brazil. When things got rough for the real they had to dump. just don't see how EWZ will gain any momentum right now.

Will 2008 Be Google’s End Of Innocence?

Excellent take on Google and its future prospects. Google will continue to be huge, but regulators and competitors will make future growth much more difficult.

EWZ Not a True Indicator of Brazilian Economy

The government's Applied Economic Research Institute found the richest 10 percent of Brazilians control 75 percent of the country's wealth, according to an analysts of figures mostly from 2006.

www.iht.com/articles/a...

EWZ Not a True Indicator of Brazilian Economy

US-centric view? This is amusing. I'm from Latin America and travel to the region all the time. I know what life is really like in Latin America for the average worker and the middle class--the people who make those economies work. In Brazil the middle class is not moving up like in India, Russia, and China. I'm not the one who opted to compare Brazil to other BRICs, but since that's the benchmark that's what I used and by all measures it lags behind. Look at the numbers and compare. Opinions? I'm not gonna do your homework, but the numbers don't look so good for Brazil. Look them up yourself--Goldman Sachs has a great report on Brazil and so does the World Bank and the IMF. There is a lot of hype on Wall Street and that's because they are making a killing from the commodities boom, but these things function via a boom/bust cycle which unlike in the U.S. where you get a mild recession in between these things truly paralyze emerging economies for years and even decades. Read the economic history of Brazil, please! We have history to show us how these booms end. My only point was that this is not sustainable in the long term. Not under the current social and economic conditions. I'm not recommending anybody to buy this ETF right now.

Yes they found oil in Brazil. Well, Venezuela is drowning in oil yet look at the hardships Venezuela is going through--high unemployment, inflation, food shortages, declining GDP and productivity. Why? The political and economic culture is erasing any gains from oil. Sure, Brazil is not run by Chavez, but do you think Lula doesn't have corruption?

The sarcastic remark about investing in foreign markets was not necessary because there are plenty of countries that are relatively safer alternatives simply because they are well-diversified and fiscally responsible. Chile! The ECH fund is less known and it is not as hyped up in the news because you don't have the massive speculation we have in Brazil, but it is a better selection in my view.

Oh, yes, China and India are very poor nations, but they also have a middle class larger than the U.S. population

Coca Cola: Olympic Sponsorship is a Profitable Tradition

Shaun:

You're research is very specific to China and it will be interesting to visit the numbers when Coca Cola releases earnings at the end of the year. I'm willing to bet sales will go up as they did last. But I'm also addressing the global market.

Billions of people watch the Olympics and that's a historically proven platform for Coca Cola in terms of brand exposure. The exposure is huge around the word. I'm not just talking about China (a tea drinking nation by the way where Coca Cola sells other products besides Coke to please local taste). The Olympics and World Cup soccer are the two most important international sporting events and brand linkage to these events increase brand awareness.

While there was a great deal of controversy over Coca Cola's sponsorship of the Beijing Olympics there is no evidence to suggest this has hurt sales. In fact, Coca Cola sales are up across the board despite the backing of the controversial Olympic torch tour. And the public has known about its sponsorship for years. The balance is in good shape.

As I a researcher I've learned that what people say does not always reflect what they do. As for Lenovo and others brands you mention in your Forbes article I suspect their problems are beyond the sponsorship of the Olympic games. They have an image problem that has nothing to do with the Olympics.

Consider this as well: Coca-Cola, Visa and McDonald's are long-term sponsors of the Olympic Games; if Beijing fall short of commercial expectations they will move on to London 2012. People are not going to link these brands to Beijing beyond this summer.

There is also no consistent research showing consumers make buying decisions based on their political views--in developing markets it's about price, feeling good, and value. I don't think Coke drinkers in Hungary or Costa Rica will boycott Coca Cola because they are sponsoring the Beijing Olympics. But I'm willing to bet they will be drinking a Coca Cola beverage while they watch the 100m dash.
That's why this political boycott talk is nonsense.