iShares MSCI Brazil Index (EWZ)

All Comments on EWZ

  • commenter
    Claus
    Vistesen
    Aug 22 03:32 AM
    My Website
    What's Next for Brazil's Economy? [view article]
    Hi Guys,

    Thanks for your comments.

    @ User247325

    "I agree with the points above, but the biggest issue that Brazil has today is corruption at

    all levels."

    Point taken! I certainly do not want to come off as someone who seems complacent towards

    this issue. Honestly, I also have to admit that it is a topic of which my knowledge is very

    limited. However, if I take your points at face value they would obviously constitute an

    important obstacle for whatever Brazil sets out to "become".

    Ultimately though beauty, as always, is in the eye of the beholder and I would be surprised

    to see if Brazil's development endeavors shored up at the sluggishness by which the state

    apparatus conformed to modern "western standards". This does not mean of course that

    something should not be done and that the issues should not be treated.

    I guess that I am seconding Egan's points here since what is "corruption" really in this

    context. Clearly, if you are placed with operations in Venezuela et al. the threat of

    trigger happy govvy soldiers marching in and taking your property is a BIG issue, but I

    would argue that Brazil is another level up from these kinds of adverse business

    environments.

    @ Brahm

    Thanks for this elaborate comment. I do have to concur that this piece was not one of my

    most succinct.

    It is of course interesting to note that those four economies you mention constitute that

    almost infamous BRIC economy group coined by Goldman Sachs almost a decade ago (I think).

    My main argument here is consequently first and foremost that Brazil together with other

    rapidly developing emerging markets WILL see their share of world GDP grow. I think that

    this is the big global development story of the 21st century and it really should not be

    lamented. I would also expect that their increasing clout of their economies as a share of

    world GDP be especially pronounced in DOLLAR terms. In this way, the world already HAS de-

    coupled from the US economy so to speak, but it is a much longer term process than what we

    are immediately seeing.

    Within this frame of reference I am fundamentally bullish on Brazil (and India btw)

    especially compared to China and Russia where I think we will NEVER see a them becoming a

    net absorbers of global capacity (i.e. sustainable external deficit economies). Of course,

    Russia may experience an external balance at some point but Gazprohm inc will fight long and

    hard before that happens.

    You see, what Brazil has is a relatively favorable demographic structure and one which at

    this very point in time is almost at its "optimal" level if we look at age structure. This

    is really the gist of my argument (I guess that I should have been clearer here).

    So, I would simply put up the simple hypothesis that Brazil CANNOT be expected to crash

    completely due to internal momentum. Obviously, as you say yourself; both India and Brazil

    are hard at work to try to halt the spike in inflation and to prevent the money from coming

    in too fast. So, they WILL definitely slow, but 1997 style crises should not occur in these

    two countries I think.

    "Brazil is an interesting case. My take here is that commodity prices will have some effect

    on the export revenues. However, I do not expect severe decrease as commodity prices will

    moderate probably by only 10-15% overall. Don't expect massive decrease in revenue because a

    disproportionate fraction of exports of commodities is to emerging economies. These

    economies will not have much decrease in infrastructure investment, and hence the need for

    commodity imports will remain significant as most of the economies do not serious balance of

    payment problems."

    I could not agree more really. I think this is an excellent point. Sure, commodity prices

    are falling and can fall further if the investor community starts to worry about deflation

    and recessionary risks in OECD, but once countries as Brazil, India, Turkey etc start

    accelerating again (my guess is end 2009), then commodities will once again begin their

    structurally bound upward march.

    @ Whidley

    Thanks for your points and also those of educative nature. SA readers and commenters are a

    demanding bunch, but I do appreciate that you (they) take their time to massage the more

    argumentative side of my pieces.

    "I did not see much on internal consumption in the economy in your analysis: why?"

    A fair point, and while the Brazilian consumer is sure to wind down in the coming slow down my main argument is that she will not fold completely. Moreover, I am arguing that the relative "gusto" of Brazilian domestic demand is high compared to other (especially OECD) economies which should flatter the the economy in terms of inflows for investments and portfolio purposes.

    "The structure of the demand side of the economy is weak and seriously underdeveloped for want of educational and training policies that foster the middle classes and a stable lower class and lack of economic opportunity and mobility."

    Definitely, and nothing comes for free. More specifically, I would say that Brazil now has a golden opportunity to lock in a growth and optimal growth path for the next 20 something years. One of the challenges/pre-requisi... here will certainly be investment in human capital (i.e. on the quality side that is).

    best wishes everybody

    Claus     Reply
  • commenter
    John Egan
    Aug 21 06:21 PM
    Emerging Markets: Ready to Rebound? [view article]
    Mr. Greenstein... I think being a contrarian is fine if there is a solid reason behind the contrarian thinking. If you had said 'everything returns to its mean', or 'it'll be a pendulum', I'd at least accept your explanation. I do have to say that your explanation here doesn't make much sense to me. If it is true that:

    - Decoupling is a myth
    - That American equities are beginning to pick up and foreign equities are dropping
    - That foreign markets and economies have been suckling at the teat of the American consumer

    I just don't see how foreign countries are going to have the income to support their workers. Your argument that the workers in these countries are going to benefit from cheaper food and oil reminds me of Carly Fiorina's exhoratation that sending jobs overseas is good for the American consumer because merchandise will cost less. A recent TV expose showed a bewildered unemployed factory worker trying to explain the benefit of buying at Walmart while she was running out of unemployment insurance.

    Just doesn't jive to me.... jegan ;-)     Reply
  • commenter
    John Egan
    Aug 21 06:10 PM
    What's Next for Brazil's Economy? [view article]
    User 247325 is concerned with corruption in Brazil..... Unlike the corruption in Russia, China, India, Mexico ...etc. etc ... I figure if you invest in foreign equities you had better believe that the companies you invest in are capable of dealing with corruption on that countries scale.

    Course, we don't have any such issues... Like Enron, financials, government dirty tricks, baiting of Russia, lying to involve our country in expensive un-winnable wars........ Because we are righteous Americans! Ta-Dah!

    jegan ;-)     Reply
  • commenter
    whidbey
    Aug 21 04:30 PM
    What's Next for Brazil's Economy? [view article]
    Easily the most long winded review I have seen, but the facts mustered are interesting if not totally persuading.

    I did not see much on internal consumption in the economy in your analysis: why? True, Brazil must export and it will, but it must also develop its own internal markets and consumers. The structure of the demand side of the economy is weak and seriously underdeveloped for want of educational and training policies that foster the middle classes and a stable lower class and lack of economic opportunity and mobility. Secondly Brazil must become more involved in SA economics in general. Brazil is the logical leader of SA and should be encouraged to seek that role by more overt leadership on hemispheric issues.

    You have promise as an analyst,but your focus to too narrow. Keep it up. I like your work and you have a future W     Reply
  • commenter
    Brahm
    Aug 21 01:48 PM
    What's Next for Brazil's Economy? [view article]
    This article is well argued, but it is too long and touches on too many important points. One can disagree on the degree or extent of the effects on the global economy. My strong feeling is for a painful slowdown of the overall global economy with different levels of effects in different regions. But no deep global slowdown. It will be somewhat painful for Western Europe, Japan and the US. Perhaps outright recession in Europe nd Japan. The US is already in mild recession (desoite the official GDP numbers!), but will perhaps be not be in as serious recession as in the foregoing two regions. Because the US tolerates a higher level of inflation, than Europe or Japan. The US's banking and housing sectors are in more bad shape than elsewhere, and will need the Fed's "moderation" which will be forthcoming at least in this political year.

    India is actually trying to moderate or slow its economy to get a handle on its inflation problem. So there will be a lowering of the growth rate for the GDP.However, a reduction of its GDP, to say 5-6%, would be painful for India. The Government would want to avoid going lower than this rate.

    China has room to crank up its domestic economy as exports to Europe and Japan pullback somewhat. But will it? Inflation is rampant in China as well. The extent of the slowdown in China requires an expert in reading Chinese tea leaves to figure out how China will act or not act!

    Brazil is an interesting case. My take here is that commodity prices will have some effect on the export revenues. However, I do not expect severe decrease as commodity prices will moderate probably by only 10-15% overall. Don't expect massive decrease in revenue because a disproportionate fraction of exports of commodities is to emerging economies. These economies will not have much decrease in infrastructure investment, and hence the need for commodity imports will remain significant as most of the economies do not serious balance of payment problems.

    Food imports by emerging economies (China, Pakistan and others) will continue without appreciable benefit of decrease in food commodity prices (supply and demand issues here!). Unlike in the past, Brazil has a healthy balance of payment situation. The marginal decrease in export revenues for a year or two can be taken in stride. I do not expect serious slowdown in Brazil's economy.

    Unmentioned is Russia. The Russian economy is expected to continue growing, perhaps with marginal rate decrease, as most investment is infra-structiure related, consumer demand and energy/commodity export related production. The Russian balance of paynebt situation is comfortable to make for some slack in exports, if any at all.

    Overall, my take is still for marginal growth of 2% at least for the global economy. But that will be painful in some regions.     Reply
  • commenter
    User 247325
    Aug 21 11:48 AM
    What's Next for Brazil's Economy? [view article]
    I agree with the points above, but the biggest issue that Brazil has today is corruption at all levels. The executive is so corrupt and it is not just at the federal level, but at the state and local goverment as well. The legislator, which are supporsed to monitor the executive, are member of the corruption cartel. Money is sent from the Federal government down to states and cities, but by the time it gets into its final destination - Health - most of the money is gone or has been diverted into other areas - people pocket or what they call in Brazil - Laranjas. Reply
  • commenter
    xander
    Aug 21 03:30 AM
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    usa is not detroit . Reply
  • commenter
    jjc7477
    Aug 20 12:33 PM
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    Gabe,

    I'm in Detroit and believe me, we have inflation AND deflation here. Homes and businesses deflating while costs and taxes inflating. I think you should seriously take off those rose colored glasses you wear and take a good look around. It may be true that the European and emerging nations will feel dramatic pain, but if you think that's going to be our resolution here, you are very sadly mistaken my friend.     Reply
  • commenter
    Simple Simon
    Aug 20 09:32 AM
    My Website
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    Very thorough outlay of the big picture. Thanks. And I like the metaphor of a 'stampede'. ( the cowboys of old used to chase down and 'rope and hog tie' the leader to stop the stampede; and don't we wish there were a few of those brave souls now! ) A flock of birds, or a school of fish also works. So, we knew the economy would contract...so when the figures come in, "we" ( they?) wheel like a school of fish even though there is no shark, just photographers ( bean counters ) . I freely admit that i , personally am not in the loop, nor an expert - hence the moniker, 'simple simon'...but there are cash rich ( cash drunk ) sovereign funds, and others, 'poised' , as the last commentator said, to ameliorate or 'deflate' the current panic. For those folks ( sovereign funds like Dubai ) 25% loss of a trillion here and a trillion there, doesn't matter that much, if there is a hundred trillion remaining to squander somewhere. It's the small potatoes 'flock' that needs realistic assessments via 'big picture' analysis like this here. Thanks again. Reply
  • commenter
    Umm, yeah
    Aug 20 08:52 AM
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    @gabe - if you're going to count house prices deflating today, then you would've needed to count them massively inflating 3+ years ago. Reply
  • commenter
    gabe
    borenstein
    Aug 20 08:05 AM
    My Website
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    Clearly ,the PPI is an abberation and it did not pick up the recent minor commodity price implosion.More important,at the CPI level the data may be overstating the rate of inflation.Almost 70% of Americans are (were),the home owners .The CPI includes changes in rents ,not the home prices.If home prices were substituted for the rent component ,the drop in the rate of inflation would be noticeable.In addition it is clear that other than gasoline ,just about every consumer item is on sale.The CPI is not picking this up..As the global deceleration becomes more pronounced,the crude prices will likely sharply decline.Tell Detriot about the inflation ,they are not likely to understand the word given the economic state of the automobile business.In fact I would argue that over the longer period of time,the high energy prices are deflationary as the decimate the real disposable income causing implosion of the consumer demand for the other goods.
    In the meantime we are on the way to recovery .The problems have been identified and addressed .The investors and economists should review the word monetary lag which would then eliminate the investment hysteria.
    On the other hand if the FED,the investors and some of the financial institutions had behaved more responsibly 18 months ,we would not have to experience the current" trauma". One more time ,it is not the U.S that will be the economic issue in the period ahead,it is Europe and Emerging market economies (includes many Asian countries),that are about to feel the unprecedented economic pain.
    As long as there are radically different opinions,the market volatility will continue.Market is consolidating and poised for a major rally in the period ahead .
    Reply
  • commenter
    Philly Jim
    Aug 20 07:09 AM
    Wednesday Outlook: Commodities, Emerging Markets [view article]
    Anything can happen at any moment and the world economy seems to be a hair away from a global depression. Though the ECB, FED and BOE seem to be scratching each other's back at the moment, we can expect some commodities (oil & gold) to "decouple" from their presupposed levels and possibly get a mind of their own or rather a mind created by frustrated traders with little faith in the murky global financial system. I'd like to think China is doing wonderful and no longer needs the "West" to move forward; reality is, these emerging markets are running on vapors from the drunken buying binge westerners have been on for the past 10 years and those checks are gonna start bouncing from skyscrapers to the rice fields. Reality is hitting home and banks are waking-up with a severe hangover and serious lessons to be learned. I just really hope the U.S. gov't catches up and begins monitoring financial conditions in realtime rather than waiting for something bad to happen then making a move. A lot of lessons can be learned from the past decade that can "fine tune" the U.S. economy and get all cylinders firing again. The eastern allure has been demystified, the information age ushered in and now it's time for professionalism to reign and exceed expectations in the West. The states will need to sacrifice some welfare expenditures and expect a period of stagflation in order to balance their budgets and weather this credit storm. Reply
  • commenter
    George
    Spritzer
    Aug 19 04:20 PM
    My Website
    Fundamental Analysis for Emerging Markets [view article]
    MXF has annual tender offers where you exchange your MXF shares at NAV in return for Mexican securities. This is a good deal, since MXF sells at a double digit discount to NAV.

    But in order to do this efficiently, you need a large position (at least 100K) and use a broker who can sell shares on the Mexican stock exchange.     Reply
  • commenter
    Chance
    Carson
    Aug 19 03:23 PM
    My Website
    Currencies: Dead Cats and Yapping Dogs [view article]
    Oops..I meant PGD not PDG..sorry! Reply
  • commenter
    Chance
    Carson
    Aug 19 03:09 PM
    My Website
    Currencies: Dead Cats and Yapping Dogs [view article]
    Hi Ray..I'm writing an article on the several ETNs currently distributing dividends and was wondering if there are more than these four that I've found so far- GCE, JEM, PDG and BSR? Thanks for your help. We really appreciate your thorough articles on SeekingAlpha.com.

    We're also wondering if you might be willing to write a contributing editor article on currency ETN/ETF investing for our web-site AboutETFs.com. If so, would you mind calling me to discuss what we're looking for in such an article? We believe an article by you would really be appreciated by our readers (we are a ETF/ETN resource portal for average individual investors seeking unbiased information about ETFs.) We personally have found your articles on currency investing to be pithy, extraordinarily informed pieces! We can even understand (usually) what you're talking about! LOL! Thanks again, Chance Carson, Editor, AboutETFs.com. 719-268-0800. chance@retire101.net     Reply
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