Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Frank Pembleton who started this subject	7/2/2002 8:50:03 AM
From: Frank Pembleton	of 36161

Growth in U.S., But Not South America Interview by Donna Guzik The U.S. is showing respectable growth, even though the U.S. dollar is in a bear market, but a recent trip to Brazil shows that investing in South America may not be such a good idea, says RBC Capital Markets Chief Economist John Johnston Summary The final revision on U.S. GDP numbers was higher than expected, up 6.1% which is very encouraging for the economy. The number is broken down into two components; final demand growth was revised from 2.0 to 2.6% and the inventory decline was revised even larger. We are not likely to see growth like that in the second quarter. Consensus on the street is estimating that growth in the second quarter will be about 3%. The U.S. Federal Reserve policy is very stimulative, real interest rates are the lowest they've been since the early 80s. The Fed is going to have to start boosting rates, and they will most likely do that this year. However, the U.S. dollar is not likely to go up, we are in the early stages of a bear market in terms of the dollar. Brazil is a market that requires caution at the moment. They are going into an election, the market favourite candidate would maintain the current economic policy. The leading candidate would create a U-turn in the direction of economic policy which is causing a lot of nervousness in the market. The Brazilian Real has hit historic lows and the Central Bank has had to intervene to smooth things over. investorcanada.com

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