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

To: Worswick who wrote (11595)	1/13/1999 4:41:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Clark, it's my still my feeling that a 60% plus devaluation was built in....therefore IMO there won't be a 1-1 relationship between devaluation and equity prices. I have a hard time seeing 25-35, but never would have thought we'd be talking 50 again. If they can make some serious headway on the fiscal package over the next 30 days or so, and assuming upbeat earnings start coming in, I'd like to think 40-45 will be the low. That's if it breaks 50. I heard the woman from ML (I think) talking about potential 3300 on the bovespa, but they didn't seem to be taking into account the depressed state of the market other than the last few days either. When you look at what I would have considered close to a fair value of around 14000 on the Bovespa, then factor in your devaluations, seems we have plenty of room to move up if and when investor confidence returns. That said, if if hits 25-35 you win the prize. The person with the most prizes when they die...wins.<g> sf

To: Worswick who wrote (11595)	1/13/1999 4:49:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Congress approves key Reuters, Wednesday, January 13, 1999 at 16:27 Brazil's government hopes to raise a total of $23.5 billion with the fiscal reforms and qualify for an international credit agreement secured last year. Approval of the measures, however, is also considered key to shore up frayed investor confidence in Brazil and shield it from an Asian-style financial meltdown. Earlier in the day, Congress also approved a less controversial measure that changes the way the government determines its long-term interest rates for loans to companies. Approval of two additional measures was expected later Wednesday, according to Senate President Antonio Carlos Magalhaes. Copyright 1999, Reuters News Service

To: Worswick who wrote (11595)	1/13/1999 4:51:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil forex markets seen losing net $2 bln on Wed Reuters, Wednesday, January 13, 1999 at 16:27 SAO PAULO, Jan 13 (Reuters) - Brazil is seen losing a net $2 billion through currency markets on Wednesday after the Central Bank devalued the local currency, the real, earlier in the day, traders said. The Central Bank on Wednesday widened the foreign exchange trading band, effectively devaluing the real. By 1810 local/2010 GMT, a net $390 million was pulled out the commercial forex market, while another net $200 million was pulled out of the floating market, for a total of $590 million. Traders said global investors were pulling money out of Latin America's largest economy after the Central Bank announced changes in the country's forex policy and Central Bank president resigned amid the changes. The Central Bank scrapped the traditional forex mini-band and widened the maxi-band to allow the real to trade between 1.2 and 1.32 reais to the dollar. The real dropped to the band's lower limit of 1.32 reais immediately after the announcement. The string of news from the Central Bank led investors to turn their back on Brazil, fueling the dollar flight, traders said. Brazil's currency markets lost a net $1.2 billion on Tuesday, and currency markets have accumulated a net outflow of $2.27 billion so far this month. sao.paulo.newsroom@reuters.com)) Copyright 1999, Reuters News Service

To: Worswick who wrote (11595)	1/13/1999 4:56:00 PM
From: Steve Fancy	Respond to of 22640

Salomon's Trebat on Brazil Currency Weakening: Economy Comment Washington, Jan. 13 (Bloomberg) -- The following is a comment from Thomas Trebat, head of emerging market research at Salomon Smith Barney in New York, on Brazil's decision to let its currency, the real, weaken at a faster pace: ''This isn't the end of the story, it's a welcome move to let off unsustainable pressure on its foreign exchange reserves,'' but more reforms and action ''must come urgently,'' Trebat said. The International Monetary Fund-led, $41.5 billion loan package for Brazil ''is not completely out the window, but it's likely to undergo significant change,'' Trebat said. Inflation is likely to emerge and thus the fiscal targets drawn up with the IMF for the budget deficit will have to be re-examined, he said. --------------------------------------------------------------------------------

To: Worswick who wrote (11595)	1/13/1999 4:57:00 PM
From: Steve Fancy	Respond to of 22640

Tendencias' de Pasqual on Outlook for Brazil: Economic Comment Tendencias' de Pasqual on Outlook for Brazil: Economic Comment Brasilia, Brazil, Jan. 13 (Bloomberg) -- The following are comments from Denise de Pasqual, economist at Tendencias Consultores in Sao Paulo, on Brazil's economic outlook after the announcement of the central bank's new foreign exchange policy. De Pasqual said the difference in the devaluation announced today is small, about 12 percent from about 7 percent, compared with what the government had announced earlier, so it wasn't a big change. ''There are many factors that will influence whether this new foreign exchange policy will be successful or not. Capital flows in the next couple of days, approval of fiscal measures in congress, etc. ''As for GDP perspective, it was for a 1.6 negative growth, but now the forecast is 2 percent negative growth. ''There was the devaluation today, but that doesn't mean it will keep on happening. It all depends whether this new foreign exchange policy is successful or not. ''As far as interest rates, it is hard to predict. Today there was a big change in rates, but that reflects still uncertainty about the announcement. ''The government will not be able to meet targets agreed with the IMF. There will have to be a renegotiation of the agreement. As the foreign exchange policy changed, the agreement will have to change. They will have to sit down and discuss.'' -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.

To: Worswick who wrote (11595)	1/13/1999 4:59:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Congress Approves $3 Bln Emergency Plan to Plug Deficit Brazil Congress Approves $3 Bln Emergency Plan to Plug Deficit Brasilia, Brazil, Jan. 13 (Bloomberg) -- Brazil's congress approved measures aimed at raising 4 billion reais ($3 billion) in taxes this year, trying bolstering investor confidence after letting the currency weaken at a faster pace. The bill was approved by 355 to 113 votes, with two abstentions in the lower house. In the senate, it was approved 61 to 11 votes. The bill widens the base of an investment tax, raising an additional 1.9 billion reais between February and July, and removes some income tax deductions for companies, brining in 2.1 billion reais a year. The measures are part of a package of spending cuts and tax increases aimed at raising 28 billion reais this year, helping ease a $64 billion budget gap. Concerns that congress wouldn't pass these measures contributed to soaring interest rates and capital flight, prompting today's move to accelerate the pace of devaluation. This sent stocks and bonds down across the globe. These emergency measures, often used by the government to leapfrog immediate approval by congress, are a response to lawmakers' delays in passing proposals aimed at slashing the budget deficit. The congress needed to approve the measures turn them valid until July. The measures which were announced last month and already in place. The bill make up for delay in voting of the so-called financial transaction tax and resulting reduction in tax collection. Congress still needs to approve a financial transaction tax, expected by March, and a bill to raise some 2.6 billion reais in taxes for state workers and retirees to make up the 16 billion reais in extra taxes this year. The tax increases and spending cuts are a condition for Brazil to receive $41.5 billion from the International Monetary Fund and other lenders. The approval of these measures is also considered essential for Brazil to lower interest rates which, at 29 percent, have choked the country's economy making it grow only 0.5 percent last year, analysts said. -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.

To: Worswick who wrote (11595)	1/13/1999 5:01:00 PM
From: Steve Fancy	Respond to of 22640

Lloyds Bank Abate on Brazil's Economic Outlook: Comment Lloyds Bank Abate on Brazil's Economic Outlook: Comment Brasilia, Brazil, Jan. 13 (Bloomberg) -- The following are comments from Odair Abate, chief economist at Lloyds Bank in Sao Paulo, on Brazil's economic outlook after the announcement of the central bank's new foreign exchange policy. ''The change in the exchange policy itself wasn't aggressive enough to disrupt economic stability. The 12 percent devaluation this year isn't so distant from the 8 percent expected before. ''This change creates a little bit more uncertainties because the fiscal adjustment is still expected. ''The government needs more than ever the fiscal adjustments in order to succeed with this new policy. ''Interest rates are reflecting a high point in this crisis we have now. Today is not a good day to base projections or expectations, the next days will give a better perspective on how the market has received the news.'' -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.

To: Worswick who wrote (11595)	1/13/1999 5:03:00 PM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Morgan Stanley's Francico Gros on Brazil's Devaluation: Voices Rio de Janeiro, Jan. 13 (Bloomberg) -- Francisco Gros, former president of Brazil's central bank and Latin American Chairman of Morgan Stanley Dean Witter & Co. discusses the Brazilian real and the resignation of Central Bank President Gustavo Franco. ''Anybody who put money into Brazil recently was made to look silly,'' Gros said in a telephone interview from his offices in New York. ''Gustavo (Franco) is a man of courage and is not afraid of a fight, and I don't believe he left because of a decision to devalue the real faster than expected but because of the objectives behind that decision were not what he believes in.'' ''Again, the government has underestimated the seriousness of the crisis and shown its disrespect for investors and the markets. They are sitting and whistling in the dark.'' ''Instead of floating the currency, they drew a new line in the sand. Nobody takes the new line seriously. The real has already hit the line.'' ''If they had floated the currency the real would have plunged even further against the dollar, but it would have come back. This isn't Mexico, Brazil has reserves, but now they are committed to spending them defending a line that no one takes seriously.'' -------------------------------------------------------------------------------- © Copyright 1999, Bloomberg L.P. All Rights Reserved.