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To: pater tenebrarum who wrote (96883)	4/20/2001 12:52:23 PM
From: ild	Read Replies (2) \| Respond to of 436258

Heinz, All, Today's Roach is a must read. morganstanley.com Global: Staring Into the Abyss Stephen Roach (New York) I wouldn't be surprised to learn he reads this thread. Is he Luc's farther? -G-

To: pater tenebrarum who wrote (96883)	4/20/2001 1:30:12 PM
From: John Pitera	Read Replies (2) \| Respond to of 436258

Heinz, good point on the call volume, ... what do you make of this brewing concern south of the border?? ---------- Heading South of the border once again, we would note that the carnage we highlighted earlier in Brazil is not surprisingly somewhat a function of renewed Argentina concerns. Remember, Economy Minister Cavallo continues to talk about altering the peso peg. Regular readers know that we have long-argued that the exclusive dollar peg could not withstand the competitive pressures surrounding the global economic slowdown. Of interest, one-year peso non-deliverable forwards are now implying an 18% devaluation, suggesting that Cavallo may not wait for the euro to reach parity with the dollar before pegging the peso to a basket including both currencies. Then again, there is always the possibility that the euro will move above parity with the dollar, a dynamic that would further erode the competitiveness of Argentine exports. However, the bottom line is that all of these concerns are weighing heavily on Latin American debt, while exposure fears may be fostering some semblance of a flight to quality bid into Treasuries this morning. Argentine debt is now off more than 3% on the session and is now yielding more than 1000 bp over Treasuries. Brazilian bonds are off 2% on the day, with concerns over a political scandal also contributing to the selling pressure. 09:45 ET 30-year: +14/32..5.757%....GNMAs: unch....$-¥: 122.43 A few spread product pricings to report. FHLMC priced $3 bln 2s at +34 bp, while Anadarko priced $400 mln 10s at +149 bp and $900 mln worth of 30-year paper at +169 bp. 09:40 ET 30-year: +12/32..5.762%....GNMAs: unch....$-¥: 122.38....Euro-$: 0.8998 The Brazilian real has been hammered already again today to fresh life lows, as we continue to lose faith in central bank president Fraga. While the Fed was cutting rates on Wednesday, Brazil's central bank raised the benchmark rate another 50 bp to 16.25%. The problem however, is that rate hikes are not going to provide any credibility on the inflation front when considering that the foreign exchange market is clearly focused on growth. This dynamic is easily evidenced by the inability of the Bovespa to take advantage of the global reflation theme.