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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (58597)	12/3/2009 12:17:37 AM
From: elmatador	Read Replies (1) \| Respond to of 217942

US Economist Krugman Expects Asset Bubble In Brazil -Estado SAO PAULO (Dow Jones)--U.S. economist Paul Krugman expects an asset bubble is forming in Brazil based on current capital inflows since early 2009, according to the local Estado newswire. "Capital inflows into Brazil are creating a bubble," he was quoted by the newswire as saying during the ExpoManagement 2009 conference in Sao Paulo, Latin America's largest city. In November, foreign investor inflows totaled 932.7 million Brazilian reals ($542 million) into Brazil's stock market despite a new 2% tax imposed in October on foreign investments. Inflows slowed, but still remained positive as investors positioned for 2010 growth, expected to come in around 5% in Brazil, from zero growth in 2009. The newswire also quoted Krugman as saying that slow growth in the U.S., no more than 2% in 2010, and a lackluster job market would most likely result in near 0% interest rates for the next two years there. Low interest rates in the U.S. have helped fuel a carry-trade, where investors can borrow money at low costs and invest in higher interest rate nations like Brazil. The benchmark interest rate in Brazil is 8.75% and expected to rise to around 10% in the second half of 2010 as the country's economy heats up and the central bank grapples with possibly higher inflation. Krugman was quoted as saying that the local currency, the real, was priced "unrealistically" at current levels. The real has been trading in a range of BRL1.70 to BRL1.75 for the last several months. Former General Electric CEO Jack Welch, and former presidential candidate and New York City mayor Rudolph Giuliani were also speakers at the Sao Paulo ExpoManagement forum Tuesday. -By Kenneth Rapoza, Dow Jones Newswires, 5511-2847-4541, kenneth.rapoza@dowjones.com