Mak

Brazil Upsets Economists with Decision on In-House Drilling Rigs

While it does not change the fact that the policy is unwise, the premise of this article is incorrect in that Brazil/Petrobras have always had local content rules in place for rig/ship tenders, and this is not a new policy. In fact -- and also contrary to the article -- some of the smarter Asian shipbuilders have already opened yards locally in Brazil. Chief amongst these is Singapore's Keppel Corp., which operates a major shipyard in Angra dos Reis in the State of Rio de Janeiro, which builds oil service ships and rigs in Brazil and has a massive order backlog at the moment. www.kfelsbrasil.com.br/

Petrobras: Buy and Sit Tight Like Soros

I am bullish on Brazilian oil, but think that the much better way to play it is through shares of Keppel Corp., which trades in Singapore (with a US sponsored ADR trading on the pinks). Keppel is the largest builder of offshore rigs, and the principal supplier to PBR and the Brazilian offshore explorers/servicers, with a $13.5 Billion backlog to fill. They also own, through sub Keppel-Fels, the largest shipyard in Brazil (located near Angra) building offshore rigs (and which fulfills the Brazilian government's locally sourced procurement policies). Keppel is downright cheap compared to the drillers and servicers active in Brazil, but its business will benefit as much or more than these companies if Brazilian offshore oil finds continue to grow.

Bank of America vs. Banco Santander: Whose Dividend Is Secure?

In actual fact, almost all mortgages in Spain are ARMs, and there are plenty of lenders (I have no personal knowledge if Santander is one of them) that will give you an interest only mortgage. Like Florida, the Spanish real estate market is also highly influenced by second home owners (many of whom avail themselves of the cheap and easy mortgage money) for whom foreclosure could turn out to be an easier option than struggling with an underwater property. Santander might be amongst the best underwriters in the Country (I have no opinion on this), but nonetheless will be a victim of the Spanish housing collapse which is now getting underway -- in the same way that the housing collapse in Florida and S.Cal., have dealt a blow to even the most careful banks (see e.g. WFC). I do not think that any bank in either Spain or the UK will be immune from this. We have the benefit of hindsight from the US experience to be able to predict the rest of the story.

Bank of America vs. Banco Santander: Whose Dividend Is Secure?

You say that Santander has no exposure to subprime mortgages, but that is only half true, and fails to recognize the banks exposure to residential real estate in the toppiest markets in the world. They might have little exposure in the US (I don't claim to know), but Santander is highly exposed to the two scariest real estate markets in the world, England (through Abbey National) and Spain. Both of these markets have undergone massive speculation in the past half decade, and can be compared to Las Vegas or Florida -- and we know what happened in those places, and to the banks that lent to homeowners there.