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  • phil_fgv phil_fgv Apr 27, 2010 9:59 AM Flag

    Cost Basis: 43.80 Short -- loving every minute :)

    This was the most telegraphed sell-off of the century. Interest rate hike tomorrow (the market expects 50 to 75 bp) and Jan Selic now getting more sanguine, predicting an 11.75 SELIC by Jan 2011 -- that's a full 3% higher than today!!

    Oh yeah, and next month we have the largest secondary EVER in the history of the capital markets coming out of PBR. There's also talk now that they're upping their initial raise from US$ 25B to US$ 40B.

    You clowns must be joking if you think this stock is going higher with all the adversities coming down the pipeline. But keep holding your longs in your margin accounts. After all, it's from you that I borrowed to short 1000 shares at 43.55 and 1000 shares at 44.05. Good times...

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    • So much "cherry picking" by Americanos ...it's a wonder we need Latinos to pick our fruit.

      Wins

    • <The US economy boomed in the 80's, which according to you should have caused the dollar to plummet via high inflation.>

      Inflation came down in the 80s, Ilap, which means the currency should get stronger. The Real got stronger than the dollar in the last five years in part because Brazil had decelerating inflation.

      <It went from 360 per dollar to 144 by 1990. The exact opposite of what should have happened according to your peculiar theories.>

      Wrong, again, Ilap. The U.S. had huge inflation rates in the 70s. The U.S. today is poised for deflation not inflation.

      <So how exactly does that bolster your continual claims that monetizing the debt won't cause the dollar to collapse?>

      Three reasons. Private debt has been cut much more than federal debt has been expanded. The expansion of federal debt has not worked its way into the economy; it is stuck on bank balance sheets. And finally, overall demand is down. Look at electricity, oil use, travel miles. They all indicate lower demand. Granted, things are mildly better now, but demand is still way, way down from 2007.

      As far as budget deficits leading to inflation, that is an urban myth because it doesn't factor in consumer demand. Budget deficits as a percent of GDP were lower in the late 70s than in the 80s or today, and inflation was much higher. Ilap, instead of just listening to Milton Friedman, look at the raw data yourself. You will see there is little to no correlation between deficits and inflation.

      <Cherry picking time periods and selectively picking out something that matches up with your preferred explanation for things, which is what you seem to do, is really stupid.>

      Again with the insults. Cherry picking data to disprove a theory is how it is done. You haven't done anything to disprove what I have said; you have just insulted, and worst of all, insulted without facts.

      Deflation by definition means a stronger currency, and the cause of deflation is always decreased consumer demand. What the fed has done is print out gobs and gobs of money to spur demand and fight off deflation by creating inflation. You Friedman guys assume it will work; history shows it doesn't. Expansion of monetary policy in Japan in the 90s and the U.S. in the 30s didn't stop deflation.

      What did stop it wasn't the new deal. What stopped it was World War 2. Nothing like bombing the snot out of Asia and Europe to decrease world capacity and spur demand for U.S. goods and services.

      The U.S. population is aging, and on average people start consuming less of almost everything after they hit age 47. So demand in the U.S. for goods and services is and will continue to be down, and that will cause deflation.

      Brazil on the other hand is much younger and growing and demand for goods and services will continue to rise. They will have their bumps in the road, but demand will continue higher which will lead to economic expansion and that will cause inflation. Inflation by definition means a weaker currency.

      The Friedmanesque approach to inflation doesn't take into account consumer demand, and that is why it is so stupid. You need to take into account supply, i.e. money supply, AND consumer demand. And by money supply, I don't mean some esoteric figure, but the amount of money and credit people actually have on hand.

      And in the grand scheme of things, the deficits aren't that big of a deal. GDP is $14 trillion and the deficits are $1 to $1.5 trillion. If you can borrow money at 1% and grow GDP by 3 to 5%, deficits aren't really a big deal.

      The real issue isn't the deficits then as how the money is spent. For example, spending money to keep 95 year olds with dementia and cancer alive an extra month is throwing money down the drain. On the other hand, building bridges and highways can increase GDP, and that kind of spending can be very beneficial to our economy.

    • uncu phil where are you? this POS is going up . if margin call comes then what am I going to do uncu phil? uncu phil our bet was for may 7, 2010 valuation and looks to me it will soundly beat your estimate of 41/42 around that time.

    • docjoe now that I listened to phil so what am I supposed to do? Do you think POS will keep on going up from now on?

    • <The markets were all dead ducks one day all due to Portugal and Spain. Now all of a sudden everything is rosy ? ... you now how they manipulate the news day to day to move the markets... no ?>

      No doubt, RG, but the reality is Phil was dead wrong about what caused PBR to go down. He then followed up with a comment about my posting something stupid. I don't have a problem with someone refuting me with evidence, but a proclamation is no way to debate and inform.

      His egoism rubbed me the wrong way. The truth is that he was more lucky than good, and his luck went the other way.

      So seeing that the market moved on what the German Chancellor said about bailing Greece out on Monday. Then it rallied on what the IMF and German parliament said. What's next? Who knows? I am not going to trade on what some politician or bureaucrat says.

      But if you look at the numbers, it is apparent to me is that Germany can kick the can down the road by bailing out Greece now or risk European calamity by refusing to help Greece. I think the smart trade here is to buy Greek bonds, and I may do so. Betting that politicians are going to kick the can down the road seems like a wise move to me.

    • "The US, on the other hand, is like Greece."

      LOL. Well, apart from the fact that they are altogether different in every other way!

      I think, though, there are some points to your arguments. In my opinion, there are reasons that long-term the real will strengthen against the dollar, as long as the government there maintains their current fiscal financial policy. That is a contributing factor that Petrobras should continue to be a good investment. Of course that is one factor of a hundred though.

    • No offence taken, I just like to know what the battles are about when I'm in a fight.

      Wins

    • Oh, thanks for enlightening me Rush Ilap. So budget deficits are the cause for a stronger or weaker dollar. Do you mind telling me than why the dollar went down in value from 2004 to 2007 while budget deficits were going down? Let me anticipate your response. Trade deficits, right?

      Then how about in the 1980s. We went from $2 trillion total debt to $4 trillion and the trade deficit exploded, so the dollar must have gone down... but it didn't. How could that be?

      Now let us see how my inflation theory holds up. In the 1980s, inflation came down which meant the dollar went up in relative value so it got stronger. That works.

      And from 2004 to 2007, prices on oil and housing went way up, and the dollar got weaker. And then when we had the massive fall in commodity prices in early 2009, the dollar got stronger. Gosh, so when inflation goes down, the dollar goes up. Who woulda thunk that?

      Now look at today. Where is inflation in today's economy? Wages? Nope. Real estate? Nope. Natural gas? Nope. Domestically produced food? Not there either.

      It is almost entirely due to China converting money into stuff just like we did from 2004 to 2007. The Chinese are going out of cash and into real estate, copper, oil, and steel. Anything that can be sent to China and stored has gone up. Anything that can't hasn't.

      In fact, the Chinese real estate bubble has gotten so dumb, the Chinese government had to step in and stop a sale. See the link: http://www.bloomberg.com/apps/news?pid=20601089&sid=aM5uszh.UBL8

      But you knuckleheads here think that the Chinese real estate bubble is contained. I don't know why you guys make so much fun of the U.S. when you all are channeling your inner Bernanke on one of the world's biggest bubbles. China is doing the same damned thing the U.S. did after the dot com bust and Japan did after the Nikkei bust. They are giving out easy money and inflating a housing bubble. China has expanded their money supply more than the U.S. has.

      Let me make sure I have this right about what you and the other knuckleheads here think. We are set for inflation. So wages are going up? Real estate is going up? Natural gas is going up?

      The current commodity bubble we are seeing is due to China building empty buildings and unsold cars, and storing up commodities. And Brazil selling China iron ore to build empty building is a business model that all the Brazil nuts and China humpers here seem to enjoy. Hey, maybe we should do that too.

      Bottom line is that Brazil has always had higher inflation than the U.S. has. For the last few years, the rate of inflation has decelerated much more in Brazil than in the U.S. But let me ask you this: Are you all saying that the U.S. is going to have higher rates of inflation over the long haul than Brazil is?

    • "The US on the other hand, is like Greece."

      It's a slippery slope when everyone is greasing the markets.

      Maybe comes down to knowing who is the least like Greece if you're placing a bet and it's not likely the US.

    • rato_branco@ymail.com rato_branco Apr 28, 2010 12:36 PM Flag

      "Of course, what does that guy Mish know about anything?"

      Obviously not much, if you look at his market performance over the last year. He's been whining about deflation for as long as forever, yet the CPI keeps ticking up. Has no understanding of the global economy, and think's that what happens will necessarily drive prices. Nonsense. The U.S. is 5% of the world's population.

      He's not even a legitimate economist. Just a humble layman like yourself.

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PBR
15.19-0.01(-0.07%)Jul 11 4:00 PMEDT

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