The Australian Dollar Is An Interesting Storer of Value That Is Waiting To Be Invested In Equity
Posted by blodmell in Uncategorized on March 9th, 2010
Australia was the first rich country to emerge from the great recession. The Australian government just raised the central banks benchmark interest rate to 4% to head off inflation. Remember, Australia is in Asia- the region of growth. The Aussie dollar has ralled from 63 cents to 91 cents against the US dollar as well. Aussie dollar cash positions also pay a significantly higher interest rate too! 3.5%Compare that to the 20 basis points the US Dollar is paying.
Again, CR Investment advisors does not recommend that our client’s speculate in currency trading. Short term currency movements are unpredictable. We do recommend that they diversify their cash positions in various hard currencies. The Australian dollar is one of them.
- Starting To Smile
While The Economic Czars of China Fret About A Real Estate Bubble, The Market Booms
Posted by blodmell in Uncategorized on March 5th, 2010
Take a moment to read this article in the New York Times because it effectively communicates what it is like on the ground in China, especially in Shanghai.
http://www.nytimes.com/2010/03/05/business/global/05yuan.html?hp
Vale Asked Steelmakers To Accept a 50% Increase in the Prices of Contract Iron Ore, A China Daily Reported Today
Posted by blodmell in Uncategorized on March 5th, 2010
This is right in line with our positive view iron ore prices and for VALE.
A Brazilian Start Up Company Is Pushing An IPO for $5.6 Billion
Posted by blodmell in Uncategorized on March 5th, 2010
It is incredible what is occuring in Brazil. OSX Estaleiros’ bold move is not only a sign of the economic zietgeist in Brazil but a great sign for Petrobras and VALE SA. OSX aims to win business from Brazil’s oil and gas industry, which is expected to expand rapidly after the discovery since 2007 of potentially enormous reserves of oil and gas off its coast. Brazil’s government is keen to encourage a ship-building industry to carry its growing iron ore exports. Vale, the country’s mining giant, is said to be under pressure to place planned orders for ore carriers – the world’s largest dry bulk ships – at Brazilian yards, even though none is yet equipped to build such vessels. It is also interesting to note that several Brazilian financial institutions such as BTG Pactual, Itau and Bradesco are on the lead on the IPO. Brazil’s financial industry has grown up.
Now That The Prospect Of Total Collapse Has Passed…
Posted by blodmell in Uncategorized on March 5th, 2010
The exit strategies for governments that have been fueling economies with easy money and low interest rates in order to jump start growth are struggling to find a way out…the surgery is over but now the patient is addicted to pain killers. It seems like the reckoning day is getting closer and it´s causing a lot of commentary and concern. For example, concern that loans made in last year’s record 9.59 trillion yuan ($1.4 trillion) credit boom may go bad. The dilemna is that continuing low rate expectations imply a weak economy. The markets are still getting it both ways; counting on record-low interest rates and a V shaped recovery. The concern is that if we can´t have it both ways, then something has to give. Thus, a correction and perhaps a serious one. The flip side is that investors don´t want to sit on the sidelines while markets, especially emerging markets, roar ahead. A lot of CR Investment Advisors clients have purchased shares in the last few months after they have already risen 50 or 100% or more (year on year), but the majority of their portfolios are liquid in cash. This is appropriate. We are steadily stepping into markets while being prepared for a correction. The correction, if it comes, is an excellent opportunity to buy and lower our average price per share. In other words, we are walking with purpose and caution. That´s good investing.
As Johnny Says, "Keep Walking!"
The Commodity Price Index Reveals The Boom Of The “Commodity Story” And The Materials Sector
Posted by blodmell in Uncategorized on March 4th, 2010
The Materials sector (the bone of global production) along with Financials (the circulating blood) and Energy (the heart) are the core building blocks of our client´s portfolios. What are materials? Mining, minerals, metals and more is how I explain it. Vale SA, the Brazilian mining giant, is the quintessential hallmark of a Materials Sector winner. The Aluminum Corporation of China, CHINALCO, is another example. But observe the percentage increases in the commodity index below. Our logic is sensical. The world is growing and resources, real materials, are scarce. Materials used to be exported from poor countries to rich countries (to produce something of value). Now, the materials are the storage of value. It is safe to say that the materials sector will become more dear.
http://www.chalco.com.cn/zl/web/chinalco_en.jsp
More Money Chasing Mines, Minerals, Metals and More
Bloomberg Reports that “Brazil’s Economy May Overheat”
Posted by blodmell in Uncategorized on March 4th, 2010
Who would have imagined that these are the kind of “worries” Brazil has now, the economy is so hot they have to keep money out to tame inflation or asset bubbles and are afraid of “overheating.” How the world has changed! Brazil’s economy may overheat as too much foreign investment flows into the country, said Luciano Coutinho, president of state development bank BNDES. “We are worried about excessive inflow or excessive growth this year,” Coutinho said during an interview at Bloomberg’s London office yesterday. He added that the government is seeking economic growth of 5 percent to 5.5 percent in 2010. Foreign investors are piling money into Latin America’s largest economy as the country builds houses, roads and stadiums for the 2014 World Cup soccer tournament and 2016 Olympic Games in Rio de Janeiro. Gross domestic product has tripled since President Luiz Inacio Lula da Silva came to power in 2003. Foreign direct investment will jump 47 percent this year to $38 billion, according to the median forecast of about 100 economists in a central bank survey published this week. International investors added 20.5 billion reais ($11.4 billion) to their stock holdings last year, the most since records began in 1994, as the benchmark Bovespa Index gained 83 percent. (Bloomberg)
Benjamin Reid Lodmell, “Great Investors Are Fundamentally Patient Optimists.”
Posted by blodmell in Uncategorized on March 3rd, 2010
I am reviewing the CPB numbers which track global trade volumes. Since 1961 trade volumes have fallen only three times: 1975 by %1.9%, 1982 by .9% and last year by a staggering 13.2%. What descriptive language can I use to impress the degree to which the world economy peered over the brink as a result of the financial crisis? When share prices were falling through the floor only a year ago, I felt like I was asking clients to buy burning, hot rocks. It kept me awake at night. Yet, I kept thinking to myself, “Ben, Brazil’s Vale, SA is the second largest diversified mining and metals company in the world. You know their financial statements, their governance, their assets. This crisis won’t last forever and VALE is prepared to weather it. Buy! They are on sale.” Even experienced money managers deal with doubt. I always remind clients that volatility is here to stay and we need to be prepared to stomach even drastic market swings. This is why we stay as liquid as possible while still having the courage to engage equities. In the end, however, great investors are fundamentally patient optimists.
Patience Is A Virtue
The Demographics Are Quite Revealing About the Future of Economic Power
Posted by blodmell in Uncategorized on March 2nd, 2010
I just read an interesting article by Dominque Moisi titled, “The Final Decline of the West.” I don’t know if the West’ decline will be so final but he makes a relevant observation about why economic power will shift, “By mid-century, the Western world is expected to represent only 12% of the world’s population and only around 30% of global output, down from 68% in 1950. We are entering a new historical cycle, in which there will be proportionally fewer Westerners, more Africans and Middle Easterners, and – with greater relevance economically and strategically – many more Asians.”
CR investment advisors are picking market winners in stalwart sectors within the big emerging economies such as China and Brazil. They are the most likely companies to catch the rising tide Moisi just described.
Australia Raised Interest Rates Today
Posted by blodmell in Uncategorized on March 2nd, 2010
NY Times just reported that… Australia raised interest rates on Tuesday for the fourth time since October, in a widely anticipated move that showed that the central bank remains confident in the country’s rebound despite still-difficult international credit conditions and lingering concerns about the debt levels of several European countries.
The Reserve Bank of Australia raised its key cash rate by a quarter of a percentage point to 4 percent, taking the total amount of rate increases since Oct. 7 to 1 percentage point.
Many of our clients have diversified away from US dollar by buying Australian Dollar, which pays a signficantly higher interest rate on cash. The Aussie dollar has evaluated a lot against the US dollar as well from 63 cents to 90 cents. We will closely follow developments regarding the Australian currency.
www.crinvestmentadvisors.com
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