Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (9017)	10/15/1998 11:47:00 AM
From: md1derful	Read Replies (1) \| Respond to of 22640

SF: No babies today, I understand...what are we looking at 5-10 days from now???? Go Yankees

To: Steve Fancy who wrote (9017)	10/15/1998 3:32:00 PM
From: DMaA	Read Replies (1) \| Respond to of 22640

Wow!! Fed's getting serious now. 15:15 FED CUTS FED FUNDS RATE 25 BASIS POINTS, DISCOUNT RATE 25 BASIS PTS- DOW JONES.

To: Steve Fancy who wrote (9017)	10/15/1998 7:14:00 PM
From: Fred Levine	Respond to of 22640

Steve and all-- Just thinking out loud about the inevitable financial reforms in Brazil. Altho the reforms seem vital in the LT for the economy, my major concern is that they will reduce the amount of available money people will spend on, among other things, telephones. E.g., decreasing retirement benefits for civil service worker will give them less disposable income. Almost all of the reforms will have, IMO, a similar short-term effect. Increasing taxes will do the same, as will increasing interest rates--which I understand to be very high now. Tho I welcomed the reforms, and agree with a very intelligent assessment by Darkgreen some time ago, that the financial crises facilitated these necessary reforms, I am now concerned that they may backfire, and that the need for devaluation of the real, as advocated by Jeffrey Sachs, may be better for the economy. Comments? f

To: Steve Fancy who wrote (9017)	10/15/1998 11:23:00 PM
From: Steve Fancy	Read Replies (8) \| Respond to of 22640

INSTANT VIEW - Brazil reacts to U.S. Fed rates cut Reuters, Thursday, October 15, 1998 at 16:22 SAO PAULO, Oct 15 (Reuters) - Following are comments from Brazilian economists and market players after the U.S. Federal Reserve cut the federal funds rate 25 basis points to 5.0 percent and the discount rate 25 basis points to 4.75 percent. Brazil's benchmark stock index surged more than 5 percent after the unexpected announcement on Thursday afternoon. CARLOS KAWALL, CHIEF ECONOMIST AT CITIBANK IN BRAZIL: "It's in the right direction. "The risk aversion scenario still makes a 25 point cut not enough to restore confidence. We need this to be supplemented by internal measures." JUSCELINO SILVIO FLORIDO, FUND MANAGER AT BANCO REAL: "The market is showing a positive emotional reaction, but in practice, the rates cut doesn't change much for Brazil. "It isn't the kind of cut that is going to change investors minds and make them take on the risk in emerging markets. It has an effect, but not a very big one." CARLOS GUZZO, CHIEF ECONOMIST, BANCO PONTUAL "A cut in U.S. interest rates would help capital return to Brazil quicker than expected, possibly by April next year, because some pessimistic economists were not expecting capital flight from Brazil to end for another year. "But basically the lower rates in the United States would only help. Brazil would need to show what it is planning to do on its own to effectively clear the current crisis." PAULO PEREIRA MIGUEL, CHIEF ECONOMIST BANCO BOAVISTA: "For Brazil it's good because a calmer international market gives the Brazilian government more time to prepare its adjustment. It's not going to turn around the lack of liquidity or reduction of funds for emerging markets, but it will give the government more space to work in." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9017)	10/15/1998 11:26:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs close up 6.65 pct on U.S. Fed rate cut Reuters, Thursday, October 15, 1998 at 17:17 SAO PAULO, Oct 15 (Reuters) - Brazilian shares surged in the last hour of trading to close 6.65 percent higher after the U.S. Federal Reserve cut two key interest rates by a quarter percentage point each, traders said. "I don't think the cut could come at a better time," said a trader at a local brokerage. "It's going to help the market here, which had gotten very pessimistic, a lot." Sao Paulo's key Bovespa (INDEX:$BVSP.X) rose to 6,874 points as shares on Wall Street closed up a sharp 4.15 percent. Brazil's benchmark C-Bond foreign debt also jumped more than 5 percent in afternoon trade to 65.50. Trading was strong with 500.1 million reais of shares trading hands, up from average daily trading of less than 400 million reais in recent sessions. The Fed unexpectedly cut the federal funds overnight bank lending rate to 5 percent from 5.25 percent. It also cut the discount rate, at which the Fed provides emergency loans to commercial banks, to 4.75 percent. While the move is not expected to send investors rushing back to Brazil to the high yields there, it could calm markets, giving the Brazilian government a window to hammer out tough fiscal measures aimed at fending off the global crisis. Telecommunications shares led the gains. Telebras preferred receipts (SAO:RCTB40), the Bovespa's benchmark security, jumped 8.42 percent to close at 89.99 reais. Embratel preferred (SAO:EBTP4) surged 21.79 percent to close at 19 reais after suffering big losses the day before. Among other blue-chips, Petrobras preferred (SAO:PETR4) closed up 5.75 percent at 138 reais. Energy company Eletrobras preferred (SAO:ELET6) ended up 4.94 percent at 25.50 reais and iron ore miner Cia Vale do Rio Doce preferred (SAO:VALE5) closed up 1.17 percent at 17.30 reais. shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9017)	10/15/1998 11:28:00 PM
From: Steve Fancy	Respond to of 22640

Congressional support key to Brazil fiscal plan Reuters, Thursday, October 15, 1998 at 20:34 By Joelle Diderich BRASILIA, Oct 15 (Reuters) - Brazilian President Fernando Henrique Cardoso will have to seek Congressional support for a large chunk of the belt-tightening measures the government is preparing to stave off a stinging devaluation, economists said Thursday. Latin American markets were treading water as all eyes turned to Brazil and a widely expected package of fiscal measures aimed at tackling the root of its economic woes -- a budget deficit of around 7 percent of gross domestic product (GDP). But foreign investors expecting some deft budget-slashing may be disappointed, analysts warned. Brazil's fate largely depends on the goodwill of lawmakers, many of whom will be out of Congress by early next year after failing to win re-election two weeks ago. "There is no doubt that (Cardoso) will have to ask Congress's approval for a substantial part of the measures," said Marcelo Allain, economist at BMC Bank in Sao Paulo. The government will have to save or raise through tax increases at least 23 billion reais ($19.5 billion) to meet its target of producing a primary budget surplus, excluding debt costs, of between 2.5 percent and 3 percent of GDP in 1999. Cardoso has told his economic team he wants a three-year fiscal adjustment plan to be ready by Oct. 20, clearing the way for the announcement of a financial aid package from the International Monetary Fund and other global lenders. But the government is seen releasing only dribs and drabs until a second round of state-level elections on Oct. 25. "Nobody is crazy enough to announce a tax increase before an election," said Luciano Dias, political analyst with Goes e Consultores in Brasilia. "They will try to win over a maximum of public opinion by phasing in the measures." Cardoso can cut costs either by presidential decree, by introducing new bills, or via longer-term reforms of the civil service and pension, tax and political systems, many of which have been lingering in Congress for years. Economists said most of the changes they expect the government to propose -- including wider federal power over receipts and changes to social security contributions -- must be cleared by Congress before they can take effect. "Even short-term measures will depend on the approval of Congress," said Jose Carlos de Faria, senior economist at ING Bank in Sao Paulo. "The market is already aware that it is going to be difficult." The onus is on speed after the Oct. 4 general elections left Cardoso's Brazilian Social Democratic Party and its allies with a slightly lower majority of 379 seats in the new Congress, due to take power early next year, from 393 seats now. The president was due to meet leaders of government-allied parties on Oct. 21 to secure backing for the fiscal steps, Liberal Front Party leader Inocencio Oliveira said Thursday. The austerity measures could be presented to Congress on Oct. 26, when the government is also due to submit a new, reduced version of the federal budget, Congressional officials said. "This time the sense of urgency is much greater," said Allain. "The current Congress should approve measures more easily, so the government will have to push through measures by the end of the year." Deputies who have not been re-elected may have to be sweetened with promises of future jobs, analysts said. "The government has to console the defeated, (offer) some political horizon in local or federal government," said Dias. He said most lawmakers were currently in the curious position of being asked to back measures which have yet to be detailed, noting: "It's a bit as if the executive wanted a blank check." joelle.diderich@reuters.com)) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9017)	10/15/1998 11:31:00 PM
From: Steve Fancy	Respond to of 22640

Brazil economic crisis seen hitting Indians hardest Reuters, Thursday, October 15, 1998 at 22:21 By William Schomberg BRASILIA, Oct 15 (Reuters) - Brazilian Indians smeared in black warpaint and wielding clubs protested on Thursday against a sweeping government austerity plan which has deprived their villages of essential medicine and food. About 150 warriors from the Kaiapo tribe gathered outside the headquarters of the Indian Foundation (FUNAI) in Brasilia where all spending has been frozen as Brazil grapples with its worst financial crisis in years. "The government has to understand...that FUNAI deals with lives, with our people," said Megaron, a Kaiapo chief, after meeting with FUNAI officials. "If Indians start to die, there will be trouble." FUNAI officials said they had no money to deal with at least 10 outbreaks of tuberculosis, malaria, pneumonia and other diseases affecting Indian groups across Brazil. Three members of the Kaxinauwa tribe died this week amid an outbreak of cholera in the Amazonian state of Acre, newspapers reported on Thursday. "Everything is on hold," said FUNAI spokesman Roberto Lustosa. "There's not a cent to be spent." Brazil has announced more than $5 billion in budget cuts and is preparing further austerity measures to fend off a crisis that threatens to wreck the country's four-year economic recovery. The plan has the blessing of the International Monetary Fund which is preparing to offer Brazil an emergency credit line, once the government comes up with a full belt-tigthening program. The Oct. 4 reelection of President Fernando Henrique Cardoso was widely interpreted as a sign that Brazilians are prepared to swallow austerity measures to keep the economy alive. Not even the country's cash-strapped health and education services are likely to be spared the ax, officials say. But so far, the most painful cuts appear to have fallen on the country's 320,000 Indians who depend on FUNAI for health and other essential services. "We believe that the government cannot put Brazil's 215 Indian nations on the negotiating table at the IMF," said Marcos Terena, a leader of the Terena tribe and a FUNAI employee. "We're talking about people who have nothing to do with the crisis." He said leaders of several indigenous groups were hoping to meet with Finance Minister Pedro Malan who, as "the master of the money", might be persuaded to free up some emergency funds. As part of a first round of austerity measures announced in September, government departments which had already spent 80 percent of the 1998 budget were prevented from making any new outlays until Oct. 31. That measure hit FUNAI. Officials say that even when the temporary freeze is over, most of their budget will be eaten up by debts, leaving FUNAI with less than $1 million until the end of the year. "We're in absolute chaos," said Alexandre Ramos Cristino, head of FUNAI's office in western Mato Grosso state, where even telephone lines have been cut to keep down costs. "I've got more than 100 Indians in our clinic and there's no money for medicine or food. If we don't find some cash, we're going to have to shut down," Cristino said. Copyright 1998, Reuters News Service