Following the merger between the number four and number two banks in Brazil last November, the newly forged conglomerate, Itaú-Unibanco (ITU) is the frontrunner in a race for consolidation in the Brazilian banking market.

As a result of the merger, Itaú-Unibanco is now 13% larger than Banco do Brasil and 58% larger than the other two main rivals, Bradesco (BBD) & Spain’s Santander (STD). At current prices, Itaú-Unibanco’s combined assets total $201 billion, while Banco do Brasil holds $178 billion and Bradesco $128 billion, only $1 billion ahead of Santander.

IBM (IBM), Sun Microsystems (JAVA), Hewlett Packard (HPQ), Semiconductors Holdrs ETF (SMH)

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

This week, turning the focus to global macro funds, we'll be checking in on Bruce Kovner's Caxton Associates. Do note that global macro funds are typically not equity focused funds. While they do indeed have equity exposure, the majority of their holdings are in other markets. So, we mainly check in on their sector exposure to see what types of global macro themes they may be investing in.

Investors occasionally use a stock trading technique called 'Buying Dividends,' which is the technique of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets.

If you are interested in buying dividends, there are many stocks in many different industries to choose from. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks.

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co.
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp.
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
  

Next up is Soros Fund Management ran by George Soros. Soros is famous for his stellar returns with partner Jim Rogers when they ran their Quantum fund. Soros' fund is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global. Soros is more of a global macro player, seeking investments in whatever market it can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. It is not required to disclose holdings outside of equities, notes, and stock options.

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13Fs here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp

Next up, we have Moore Capital Management, ran by Louis Bacon. Moore, named after Bacon's middle name, is a $10 billion global macro set of hedge funds. The next few funds we will be covering are global macro oriented funds, which is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital , and Andreas Halvorsen's Viking Global. Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.

• GM, Chrysler deal on hold. Reluctant to broaden its $700B financial bailout, the Treasury turned down a request by General Motors (GM) for up to $10B to help finance a merger with Chrysler, sources say. Instead, it will try to speed up the Energy Department's $25B loan program for fuel-efficient vehicles. Some think the refusal is politically motivated, and say the pair hopes to move forward with talks after Tuesday's election, when the extent of the government's role in a merger should become clearer. While Obama basically supported a government guarantee of their debt last week, McCain's position remains unclear.
• Thousands of banks pursue rescue cash. Not long ago, many banks worried taking on government money through its $700B TARP framework would give investors the impression they were in need of a bailout. In an abrupt change of attitude, officials now say up to 1,800 publicly-traded banks - and potentially thousands more private banks - could apply for government investments in coming weeks as institutions worry they will be judged as too unhealthy to qualify, or lacking the savvy to deploy cheap government capital, if they don't try for the money. Some bankers worry the $125B now earmarked for 'other' banks won't suffice.
• Panasonic denies deal rumors. Despite reports over the weekend, notably from the Nikkei newspaper, that Panasonic (PC) had reached a preliminary agreement to buy Sanyo Electric (SANYY.PK), Panasonic says no decision has been made. Reuters had reported that the presidents of the two companies met last month and agreed on a deal in principle but hadn't agreed on other details like price. Japanese media reported Panasonic was in talks with Sanyo's major shareholders, including Goldman Sachs (GS), to buy a controlling stake in the world's largest producer of rechargeable batteries. If a deal is ultimately agreed upon, the merger would challenge Hitachi (HIT) as Japan's largest electronics maker.
• Brazil bank tie-up. Brazil's Banco Itau (ITU) and Unibanco (UBB) agreed to merge their operations, creating Brazil's largest financial group. The new firm will have assets of $265B, giving it the ability "to compete on the international stage with the biggest global banks," the companies said in a joint statement.
• Lacker wary on inflation. The Fed can't forget about inflation as it battles recession, nor leave interest rates too low too long, voting governor Jeffrey Lacker said Monday. "As a recovery begins, the path of least resistance is often to hold the policy rate at a low level until it is completely clear that recuperation is complete," he said. "The risk associated with that path is that inflation may not moderate obediently during the downturn, and may firm with the ensuing recovery." On the R question, he said, "Up until the summer it was a fairly mild recession... How deep, how steep, and (how) long it's going to be is uncertain. We don't know if it's going to be a garden variety recession or something steeper. I think it's most likely to be of a fairly moderate size"
• Airline prospects soar. The biggest U.S. airlines stand to return to profitability next year - a stunning turnaround for an industry that appeared to be heading toward mass bankruptcy and/or game-changing consolidation just months ago. Crude's now off more than 50% from its summer highs, so the steps large carriers took to trim costs and increase revenue in the hope of staying afloat will now drive 2009 earnings to unexpected levels. Outstanding questions: How much will the economic downturn eat away at the industry's customer base, and how long will carriers stay lean once the cash starts flowing?
• Gas gets cheaper. U.S. gasoline prices have decreased for 46 days in a row to a 19-month low - $2.45/gallon - according to the AAA. GasBuddy founder Jason Toews says prices could hit $2.20 by December, but will likely head back up in January as drivers get back behind the wheel and crude prices bottom. "There's only so far that crude oil prices can go. A lot of major oil fields are not profitable below $60 a barrel for oil," he says.
• KKR delays IPO. Famed private equity firm Kohlberg Kravis Roberts & Co. has pushed off its IPO until next year. "As the decline in KPE's (its European arm, KKR Private Equity) quarterly NAV evidences, some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global capital markets," co-founder George Roberts said. It looks to join publicly-traded rivals Blackstone (BX) and Fortress Investment Group (FIG).
• Back to work at Boeing. 74% of Boeing's (BA) machinists accepted a 15% pay hike Sunday, ending an eight-week strike that cost the planemaker over half a billion dollars and $5.6B in revenue. Analysts say that although Boeing doesn't appear to have lost any orders, it could take a year or more for the firm to make up the lost time.
• JPMorgan, mortgage savior. Late Friday, JPMorgan (JPM) launched an ambitious plan to renegotiate 400,000 mortgages worth $70B in the hopes of saving homeowners from foreclosure. The move suggests banks may be better off with mass modifications rather than foreclosures and/or case-by-case negotiations.
• Mortgage rates on the rise. Rates on 30-year mortgages spiked last week as rising Treasury yields put pressure on home loans linked to government debt. 30-year fixed-rate mortgages averaged 6.46% last week, up from 6.04% a week earlier. 15-year mortgages rose to 6.19% from 5.72%. One year ago, 30-year rates were 6.26% and 15-year mortgages were 5.98% - though at the time the fed funds target, now 1%, stood at 4.5%.
• Three-month Libor fell 17 BPs to 2.86% - the lowest level since the collapse of Lehman Brothers on Sept 15, and the 16th consecutive decline. Overnight rates slid 2 BPs to 0.39%, another record low, and 61 BPs below the Fed's target rate.

Earnings: Monday Before Open

• American Tower (AMT): Q3 EPS of $0.15 beats by $0.01. Revenue of $409M (+11.3%) vs. $102M. (PR)
• DryShips (DRYS): Q3 EPS of $3.53 misses by $0.07. Revenue of $329M (+119.3%) vs. $306M. "The lack of financing of global trade has temporarily brought the spot market to a virtual standstill, but we expect this situation to normalize as the credit crunch subsides and stockpiles are gradually but steadily drawn down." (PR)
• Goodyear Tire & Rubber Company (GT): Q3 EPS of $0.43 beats by $0.10. Revenue of $5.17B (+2.1%) in-line. Shares +4.3%. (PR)
• Oshkosh Truck (OSK): FQ4 EPS of $0.72 beats by $0.05. Revenue of $1.9B (+5.8%) vs. $1.82B. Expects continued weakness in economies worldwide to significantly affect sales in 2009. (PR)
• PMI Group (PMI): Q3 EPS of -$1.83 beats by $0.60. Revenue of $225M (-6.1%) vs. $289M. Shares +8.4% premarket. (PR)
• Rockwell Collins (COL): FQ4 EPS of $1.13 beats by $0.06. Revenue of $1.28B (+4.2%) in-line. (PR)
• Ryanair (RYAAY): H1 profit fell 47% to €214.6M, but its passenger base grew 19% from April to September and could gain another 9% as travellers switch to low-cost airlines. The firm expects profits to recover if oil remains below $80/barrel. (BBC)
• Sierra Pacific Resources (SRP): Q3 EPS of $0.64 beats by $0.01. Revenue of $1.12B (-7.3%) vs. $1.27B. (PR)
• Simon Property Group (SPG): Q3 EPS of $1.61 beats by $0.04. Revenue of $936M (+3.1%) vs. $924M. (PR)
• SYSCO (SYY): FQ1 EPS of $0.46 misses by $0.01. Revenue of $9.88B (+5%) in-line. Shares -0.8%. (PR)

Today's Markets

• Most of Asia closed higher Monday. Hang Seng +2.69% to 14,345. Shanghai -0.52% to 1,720. BSE Sensex +5.62% to 10,338. Nikkei closed.
• In Europe, shares are marginally higher at midday. London +0.3%. Paris +0.3%. Frankfurt +0.5%.
• U.S. futures are higher at 7:00. Dow +0.47% to 9342. S&P +0.47% to 971.50. Nasdaq +0.11%. Crude +0.34% to $68.11. Gold +2.9% to $739.

Monday's Economic Calendar

• 10:00 Construction Spending
  10:00 ISM Manufacturing Index
• Notable earnings before Monday's open: AMT, AYE, BLC, COL, DRYS, DVA, GT, ICON, MFA, OSK, PMI, SPG, SRP, SYY.
• Notable earnings after Monday's close: ADP, APC, CRK, EOG, ERJ, EXTR, FST, HCN, HLF, MA, MHK, OTEX, PBI, PFG, POM, SM, UDR, VIA.

Seeking Alpha editor Rachael Granby contributed to this post.

Like most other markets, Brazil has been battered by the credit crisis – the BOVESPA index is currently down 28% in October alone and no less than 52% from its peak as recently as May. It now appears to represent excellent value, with a historic Price/Earnings (P/E) ratio of only7.0.

But are Brazil’s prospects good enough to justify investing there?

Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here.

It's time to continue the Hedge Fund tracking series. If you've missed them, I've already covered Jeffrey Gendell's Tontine Partners, Bret Barakett's Tremblant Capital, Peter Thiel's Clarium Capital, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Boone Pickens' BP Capital, Louis Bacon's Moore Capital Management, Paul Tudor Jones' Tudor Investment Corp, and Bruce Kovner's Caxton Associates. If you want to hear some insightful thoughts from many of the hedge fund managers listed above, head over to my post on Hedge Fund manager interviews.

"They've fallen far worse than everybody else, and probably are once again cheap relative to the world's other equity markets," money-manager Ben Inker says. Inker threw in the towel on emerging markets in July, but now he's turning bullish.

A few a days ago I read an interesting post titled “50 SPX Stocks Down > 50%” in “The Big Picture” site.That article inspired this post where I analyze the performance of 43 foreign banks since the October 2007 peak.

I followed these rules for this study:
a. Take the highest intra-day high reached in October 2007 as the peak.
b. If a stock reached higher price before or after October ignore it.
c. Include bank stocks listed in the OTC market as sponsored ADRs.

Friday was a down day in the markets, ending with the major indices finishing lower. The Dow lost 1.14% to 11,100.54, the S&P 500 dropped 1.11% to end at 1239.49, while the Nasdaq lost 0.83%, finishing at 2239.08.  

With a five-year annualized return of 55.6%, iShares MSCI Brazil (EWZ) has been the best-performing ETF tracked by Morningstar. The fund is also tops over three years (also 55.6%) and 14th among all ETFs, with a one-year return of 47.7%.

But EWZ stumbled over the last month, falling 11.3% (through June 20) to an eight-week low, thanks to a sell-off driven by concerns over global inflation and a potential dip in China’s demand for the commodities that drive Brazil’s economic engine (chart courtesy of bigcharts.com - click to enlarge).

Oil Rebounds: AMR (AMR), UAL (UAUA), Alpah Natural Resources (ANR), Consol Energy (CNX), Massey (MEE), Eastman Chemical (EMN), Sasol (SSL), First Solar (FSLR), Energy Conversion Deviced (ENER)

Macke said Nigerian rebels were a convenient excuse for oil to go higher, and that the upward trend will last. Guy Adami likes AMR and noted there is talk of a deal between UAL and U.S. Airways. Macke would sell the airline rally and Pete Najarian says oil will have to drop before airlines recover. Pete Najarian is bullish on natural gas and coal and likes ANR, CNX, MEE, EMN and SSL. Even though Germany has discussed cutting aid to solar, Najarian says FSLR and ENER look strong.

Brazil is a lot like a person who gets a new job, pays off some of his debts, and has his credit score upgraded.

In pretty short order, all the charge-card companies boost his credit limits, cut the interest rates he’s paying on his outstanding balances, offer him new credit lines - and even make him eligible for various “rewards” programs that give him all sorts of freebies for spending money.

Employment Number and Wal-Mart (WMT)

Jeff Macke said investors were skeptical about the jobs number, and added the market has been flat, and good for picking stocks. Tim Seymour didn’t think the number reflected the fact that jobs are being lost, but the positive feeling was due to lowered expectations. He would take profits, since the performance this week was strong. Guy Adami noted the S&P 500 reached a resistance level of 1410, and said bears should sell and bulls should buy. The market has rallied for three consecutive weeks, and Karen Finerman said she would take profits in Wal-Mart (WMT)

Market Overview: Financial Select Sector SPDR (XLF), Citigroup (C), Bear Stearns (BSC)

There was a selloff in the financials late in the day, observed Pete Najarian, and he said XLF has pulled back after hitting $27 for the seventh time. He blames Citigroup for keeping XLF back. Jeff Macke said there was a potential rally on Citi’s raising capital, but it didn’t pan out. He didn’t think the Fed meeting had much of an impact on the market and didn’t think the selloff was so severe. Guy Adami predicted a slow start for Thursday and Karen Finerman said April was good considering Bear Stearn’s creation of a bottom at the beginning of the month. Najarian disagreed, saying the market was performing poorly before the BSC sale, and April didn’t seem so great.

After five straight years of 39% or better annual gains, iShares S&P Latin America 40 (ILF) cooled off in the first three months of 2008, along with most emerging market funds and the region’s stocks.

But a 9.7% NAV return in the 30 days ended April 25 made ILF one of only four international ETFs with a 10% or better year-to-date gain (10.04%), according to Morningstar, with iShares MSCI Taiwan (EWT) being another.

Brazil is considered one of the leading economies outside of Europe and the U.S. There are dozens of Brazilian stocks that trade on the New York Stock Exchange. Previously I had written about Brazil Chemical, Energy and Mining Stocks. One of the best ways to play this market is through the Brazilian financial stocks.

A diversified way to invest in Brazilian stocks, including the financials, is through the Brazil exchange traded fund, iShares MSCI Brazil Index (EWZ), which invests 95% of its assets in stocks traded primarily on the Bolsa de Valores de So Paulo. The fund pays a yield of 1.5%, and was up approximately 75% last year.

União de Bancos Brasileiros SA (UBB)

Q3 2007 Earnings Call