Results for Latin America
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Chile--OECD Membership, Rates Steady, CLP Outlook

December 16, 2009
Yesterday was an important day for Chile. After two years of campaigning and making reforms Chile was invited to join the OECD. It is the first South American country to join and second behind Mexico in Latam. Chile becomes the 31st member of the OECD. Measures Chile adopted to pave the ground for membership included reforming the management of Co…
Chile--OECD Membership, Rates Steady, CLP Outlook Chile--OECD Membership, Rates Steady, CLP Outlook Reviewed by magonomics on December 16, 2009 Rating: 5
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Mexican Peso New Highs for 2009

December 03, 2009
An upward revision in the central bank of Mexico's inflation forecasts announced yesterday propelled the peso to new highs for the year on ideas that the new forecasts are a signal of a rate hike early next year. We suspect the market, which the non-commercials (speculators) in the futures market held as of last week a net 89k long contracts, …
Mexican Peso New Highs for 2009 Mexican Peso New Highs for 2009 Reviewed by magonomics on December 03, 2009 Rating: 5
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Data and Policy Mix Frustrate Attempts to Stabilize BRL

December 02, 2009
Brazil has reported FIPE inflation and Oct industrial production figures today. The former did not rise as much as expected and the latter was a stronger than expected. FIPE calculation of CPI rose 0.29% in Nov. The consensus was for a rise of 0.32%-0.34%. In Oct, it rose 0.25%. The important point here is that Brazilian inflation appears to be ba…
Data and Policy Mix Frustrate Attempts to Stabilize BRL Data and Policy Mix Frustrate Attempts to Stabilize BRL Reviewed by magonomics on December 02, 2009 Rating: 5
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Check-in Brazil ADRS vs Local Shares

November 25, 2009
One of the noteworthy developments here in Q4 has been the renewed interest in capital controls by countries trying to manage the flood of portfolio capital. Brazil's 2% tax on purchases of Brazilian stocks and bonds is among the most significant examples.
Check-in Brazil ADRS vs Local Shares Check-in Brazil ADRS vs Local Shares Reviewed by magonomics on November 25, 2009 Rating: 5
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New Initiative from Brazil?

November 05, 2009
Media reports are playing up local press stories that Brazil officials are evaluating additional measures to slow capital inflows which are driving the Brazilian real higher. The 2% tax may have led to some greater volatility in the currency, but net-net the currency remains firm. Other ideas being considered include the government selling a BRL d…
New Initiative from Brazil? New Initiative from Brazil? Reviewed by magonomics on November 05, 2009 Rating: 5
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More Thoughts on Brazil's 2% Transaction Tax

November 04, 2009
Investors continue to grapple with the 2% front-end tax BRL purchases for bond and equity investments. One might expect that the efficiency of the market is such that arbitrage will keep the ADR in line with what one would pay for the local shares. This does not seem to be the case, making the ADR a potentially viable alternative to the local shar…
More Thoughts on Brazil's 2% Transaction Tax More Thoughts on Brazil's 2% Transaction Tax Reviewed by magonomics on November 04, 2009 Rating: 5
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USD Stabilizing Against the Mexican Peso

October 30, 2009
Earlier this week the US dollar rallied strongly against the Mexican peso, nearing MXN13.37 and was even near MXN13.36 yesterday before staging an outside down day (traded on both sides on Wed range and then the dollar finished below the Wed low). However, the pressure on the greenback appears to be abating just below the MXN13.00 level. That said…
USD Stabilizing Against the Mexican Peso USD Stabilizing Against the Mexican Peso Reviewed by magonomics on October 30, 2009 Rating: 5
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More Thoughts on Brazil

October 29, 2009
Brazil's 2% IOF tax comes as a wave of profit-taking weighs emerging markets in general. The MSCI EM index is off nearly 8% since Oct 20, while the Brazilian Bovespa entered "correction" territory yesterday with a cumulative decline of a little more than 11% in the same period. In the last 5 days, net-net the Brazil real has slipped …
More Thoughts on Brazil More Thoughts on Brazil Reviewed by magonomics on October 29, 2009 Rating: 5
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More Thoughts on Deciding What to do with the Brazil Real

October 28, 2009
Investors continue to grapple with the best way to work around Brazil's new 2% front-end tax on foreign inflows. Understanding that in order to minimize impact, many investors would contemplate holding BRL balances received as proceeds of a sale, a dividend or coupon payment to use to make purchases of other Brazilian assets at some future tim…
More Thoughts on Deciding What to do with the Brazil Real More Thoughts on Deciding What to do with the Brazil Real Reviewed by magonomics on October 28, 2009 Rating: 5
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Brazilian Bonds and Stocks

October 20, 2009
Late yesterday Brazil announced it would impose a 2% tax on foreign purchases of Brazilian bond and stock transactions. This is particularly aggressive in that the new tax replaces a 1.5% tax that was scrapped last year during the crisis and only was applicable to fixed income purchases. The new tax goes into effect today. The tax may weigh on the…
Brazilian Bonds and Stocks Brazilian Bonds and Stocks Reviewed by Marc Chandler on October 20, 2009 Rating: 5
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US Farm Subsidies Gradually Coming Under Pressure at WTO

September 02, 2009
Agriculture subsidies by Europe and the US sticks in the craw of many developing countries. It can distort prices, spur excess production and retard development. In recent years US corn subsidies and EU sugar subsidies have been challenged. The World Trade Organization has succeeded the GATT, which some believe stood for the General Agreement to T…
US Farm Subsidies Gradually Coming Under Pressure at WTO US Farm Subsidies Gradually Coming Under Pressure at WTO Reviewed by magonomics on September 02, 2009 Rating: 5
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Mexican Peso Dragged Lower by Rating Jitters

August 31, 2009
The short-term speculative market likes the Mexican peso. The net long speculative position at the IMM has risen sharply in recent weeks. The net long non-commercial position rose to 70.8k as of last Tuesday up more than 6-fold since late July. A number of investment houses have recommended long peso positions as a way to take advantage of the glo…
Mexican Peso Dragged Lower by Rating Jitters Mexican Peso Dragged Lower by Rating Jitters Reviewed by magonomics on August 31, 2009 Rating: 5
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LATAM Update: Brazil and Mexico

August 17, 2009
With the recent stream of macro-economic news, leaving aside today's Empire State survey, has been disappointing that this has helped trigger a dramatic wave of profit-taking. Last week China reported exports are still falling and today it reported that direct investment inflows extend their decline into the tenth consecutive month. Japan'…
LATAM Update: Brazil and Mexico LATAM Update: Brazil and Mexico Reviewed by magonomics on August 17, 2009 Rating: 5
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Canadian Intervention Highly Doubtful

August 12, 2009
There is much talk today, circulating NY dealing rooms, that the Bank of Canada is getting ready to intervene in the foreign exchange market. We are dubious are that the BOC would intervene unilaterally on the CAD/USD exchange rate. In fact, we cannot recall a single episode of BOC intervening on CAD/USD in recent years, if ever. Last week, when U…
Canadian Intervention Highly Doubtful Canadian Intervention Highly Doubtful Reviewed by magonomics on August 12, 2009 Rating: 5
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Venezuela Spurs Action

June 23, 2009
Venezuela is produces a heavy crude oil that requires extra processing/upgrading to make it useful. It has been trying to diversify its sales away from the US. Not all countries have refineries that can process Venezuela's heavy crude, but China has some capacity, for example. Heavy crude supply from Mexico has also fallen over the past year. …
Venezuela Spurs Action Venezuela Spurs Action Reviewed by magonomics on June 23, 2009 Rating: 5
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Why Chile is So Strong, While Copper Prices Slide

June 22, 2009
Copper prices are off almost 4.5% today, yet the Chilean peso has recovered from early weakness to trade at fresh 9-month highs. If it is not copper driving the Chilean peso, what is?
The most important consideration that has extended the peso's advancing streak to its fifth consecutive session is anticipation that the government will increase…
Why Chile is So Strong, While Copper Prices Slide Why Chile is So Strong, While Copper Prices Slide Reviewed by Marc Chandler on June 22, 2009 Rating: 5
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Bric or Crib?

June 12, 2009
Brazil, Russia, India and China, now collectively known as the BRICs, will hold a summit in Russia on June 16th. Besides the Goldman-Sachs invented moniker, these countries have very little in common except for the fact that they believe, to seemingly varying degrees of intensity, that they deserve greater influence in the conduct of world affairs…
Bric or Crib? Bric or Crib? Reviewed by magonomics on June 12, 2009 Rating: 5
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Mexican Peso Bounces Back

June 04, 2009
Along side other regional and major currencies, the Mexican peso has recovered as the North American session progressed. Although it is trading within yesterday's ranges, the near-term bias is for additional peso gains.
Since early May the US dollar has traded roughly between MXN12.82 and MXN13.40. Yesterday and today, the dollar tested the up…
Mexican Peso Bounces Back Mexican Peso Bounces Back Reviewed by magonomics on June 04, 2009 Rating: 5
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Brazil to China: Show us the Money

May 18, 2009
Brazilian President Lula is in China today hoping to secure new investment commitments. Many observers appear to have mistaken verbal commitments with actual funds, but Brazilian officials don't. In 2005, many cited China's $7 bln investment pledge to Brazil as a sign of the expansion of the PRC's influence and its help to developing c…
Brazil to China: Show us the Money Brazil to China: Show us the Money Reviewed by magonomics on May 18, 2009 Rating: 5
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Disappointing U.S. Retain Sales Did to MXN What S&P Failed to Do Disappointing U.S. Retain Sales Did to MXN What S&P Failed to Do Reviewed by magonomics on May 13, 2009 Rating: 5
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