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

To: Bob Howarth who wrote (11433)	1/12/1999 9:56:00 AM
From: Tony van Werkhooven	Read Replies (1) \| Respond to of 22640

Is the Brazil crisis for 'real'? By Paul E. Erdman, CBS MarketWatch Last Update: 3:28 PM ET Jan 11, 1999 Columns & Opinion SAN FRANCISCO (CBS.MW) -- The latest reason/excuse/explanation of a renewed weakening of the dollar, and a temporarily faltering stock market, is the fear that Brazil is going the way that Mexico went a few years ago, and that it will drag all of Latin America down with it. The key to this is whether or not Brazil will be forced to devalue the real. More Erdman: Sour sake Man of the year China.com Pax Americana Impeachment Rich real estate Boomerang theory Boeing wake-up Germans coming? The W Theory Market timing Asia's prospects Chainsaw massacre Don't get crude Leaving Moscow Brazil & Japan Go home, Soros! Paul E. Erdman is the author of the recently published novel "The Set-Up." That, in turn, is a function of whether or not investor confidence in Brazil can be prevented from collapsing further. Should it not, Brazil could indeed go down the same route that Mexico went just four years ago. Then, as a result of capital flight, Mexico lost all of its currency reserves, was unable to service its short-term foreign debt ($30 billion in tesabonos), and had no choice but to devalue the peso and raise domestic interest rates to sky-high levels. Deep recession followed. Likewise today where Brazil is concerned. What ultimately stands between now and a forced devaluation are Brazil's foreign exchange reserves. They peaked at $75 billion early last year. Then, as a result of capital flight, plummeted to $35 billion by year's end. By now they are probably under $30 billion and still falling. One key to whether this process will end with a forced devaluation of the real depends on whether or not investors are convinced that the Brazilian government's austerity program will work, a program designed to create a domestic climate of low inflation and a stable real by creating annual fiscal surpluses of 2.6% of GDP in 1999, 2.8% in 2000, and 3% in 2001. Should this program succeed Brazil's debt-to-GDP ratio would stabilize at 44%, as compared US ratio of 65%, and Japan's debt-to-GDP ratio of over 100%. So from that standpoint, the situation in Brazil is not nearly as bad off as some observers believe. But it is tottering on the edge where international liquidity is concerned. How close is Brazil to running out of money? In searching for the answer to this, Offitbank, in a recent report, made a' detailed calculation of Brazil's total financing needs in 1999. It came to the conclusion the Brazil's net financing requirement will be $29.8 billion. Will it have the resources to cover that? Offitbank gives an emphatic yes. If you add the $37 billion which will become available under the IMF/G7 support program to the $25 billion of currency reserves which could be left after the current mini-panic subsides, it will mean that Brazil will still have double the amount of reserves necessary to cover its international payments in 1999. The real, then , will not be devalued. If this message sinks in, my guess is that the worries about Brazil going the way of Mexico in 1994/95 or Russia in 1998 will subside. Those speculators who live off of trouble will then have to look elsewhere. Economist and author Paul E. Erdman is a columnist for CBS MarketWatch.

To: Bob Howarth who wrote (11433)	1/12/1999 10:28:00 AM
From: David Petty	Respond to of 22640

Bob Hi!, Re: UBB - I can not find anything on Edgar... they apparently do not have to file anything public with the SEC and I find that implausible. Tony and Armin might can help regards info on UBB... Where does the insanity stop... Obviously I had not meant to get into some of this UBB "early" but I know we will be ok. Telebabies/UBB financials obviously right now do not seem to be worth a darn... with maybe 1 exception the dividends announced so far seem pretty good since they relate (are suppose to ) to at least 25% of earnings... DII

To: Bob Howarth who wrote (11433)	1/12/1999 11:21:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Bob, things look bleak cause the stocks are down...perfect recipe for congressional approval. I'm sticking by Cardoso and will be buying more...maybe yet today. 64 1/4 latest key support. I should have seen today coming because we knew there wouldn't be much news till end of the day and whenever there's panic and a lack of news in Brazil, rumors surface. If they blow one of these votes it's all over, otherwise we may be bottoming today or over the next few. Personally my first targets are to add to my July TNE options and start a TSP July position. My wait one more day in hope 17.5 options will appear. Things have changed in Brazil...just a slow process. I'd like to hear Cardoso or Malan restate the devaluation is not in the cards...seems we haven't heard that for awhile. I'll be watching closely around the 3:00 hour as Brazil comes to a close. They tend to know what's going on an hour or so before we do. David, ya buying yet? sf

To: Bob Howarth who wrote (11433)	1/12/1999 11:36:00 AM
From: Steve Fancy	Respond to of 22640

Bob, we have to look at what's happened. Late last year things started to roll as investors started becoming confident again. TBH hit somewhere in the 103 range. Then these lawmakers got cocky, voted themselves a raise and narrowly blew away the SS reforms. Confidence tanked. We started the year slow due to an injunction withholding payment for the extra sessions of Congress, continuing to dampen investor confidence. Then Itmar siezes the opportunity to try and create a political front revolving around himself. All indications are the government has ample support and the opposition strength is slowly fading over time. Cardoso has one last shot to turn this thing around on a dime and the news oughta start rolling this week...yet tonight and tomorrow. The tax vote last week was taken by a wide margin. Let's hope for similiar votes this week. The other key IMO is getting through these state debt talks with no changes. Sounds like he has support to accomplish that. Come the 18 or 20th we'll see if Itmar is just hot air as I suspect. We know that Rio has alternatives such as privatizing the water facility. I think they all have alternatives. It's a crapshoot, but especially at these levels, risk/reward seems exceptional to me. I think there's a ton of money ready to pour in with the right news. sf