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

To: Madharry who wrote (12343)	1/25/1999 1:32:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Financial Mkts Brace For Another Turbulent Week By STEPHEN WISNEFSKI Dow Jones Newswires SAO PAULO -- Brazil's financial markets are starting off the week with a much-needed respite Monday, as a state holiday in the country's business hub of Sao Paulo brings transactions to a near standstill. But continuing capital flight, a weakening real, rising interest rates and uncertainty over the government's next course of action amid the recent turmoil suggest local markets are in for another whirlwind ride this week. "By no means is the situation getting better," said Kevin Beck, an analyst at Fleming Graphus in Sao Paulo. Seven days ago, the central bank officially adopted a policy allowing the real to float freely against the dollar, abandoning the strict controls on currency movements that were the hallmark of the government stabilization plan introduced in 1994. Since the central bank widened the real's trading band Jan. 13 ahead of the full float, the currency has weakened roughly 30%. The central bank followed the exchange policy overhaul with a hike in interest rates. On Tuesday, the monetary authority set its interbank rate at 32.00%, up from 29.80% previously. The rate has since been bumped up to 32.25%. In spite of the depreciation and the higher rates, capital continues streaming out of the country at an alarming rate. Last Friday, $512 million fled the country, raising the cumulative total for January to $7.5 billion. Beck pointed out the burgeoning cost of servicing the domestic debt on about 200 billion reals (BRR)($1=BRR1.77) of floating rate bonds as rates edge higher. "With every rate increase, the debt stock is exploding," he said. "The positive fiscal adjustments that are being carried out will just be eaten away by debt payment." The Brazilian Congress has approved about 70% of a government fiscal austerity plan introduced by President Fernando Henrique Cardoso last October. The plan seeks to trim BRR28 billion from bloated government budgets in 1999 and helped Brazil qualify for an aid package, led by the International Monetary Fund, worth $41.5 billion. Some analysts have said the new foreign exchange reality and deteriorating market scenario demands that the government introduce additional measures. "It would be great news for the market if the government announced some new measures," said Jose Carlos de Faria, senior economist at ING Barings in Sao Paulo. "It's something that should be done, but I don't expect it will happen." A report in Monday's O Estado de Sao Paulo newspaper cited former Finance Minister Mailson da Nobrega and former Planning Minister Antonio Kandir, now a congressman from Sao Paulo, as saying new austerity measures were needed. "Everything that's been done up until now...is still insufficient to reform the current fiscal system, increase credibility and stabilize the economy of the country," da Nobrega said. Kandir, for his part, said that new budget cuts were vital. Finance Minister Pedro Malan convened a five-hour meeting at his home late Sunday with Central Bank President Francisco Lopes and other directors from both institutions, Brazilian news agency Estado reported. Still, Finance Ministry executive secretary Pedro Parente said Monday that the market shouldn't expect any new policy initiatives to be announced in the wake of the weekend meeting, Estado reported.

To: Madharry who wrote (12343)	1/25/1999 1:36:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

All: I don't know if everyone is having the same trouble, but SI is so irritatingly slow last night and today that I cannot justify the time required for more than an occasional post. Generally, SI has been a frustrating situation at best since shortly after it was bought out. In the three years I've used the system, I never knew it to throw errors as long as the system was accessible...this is also a frequent frustration, but slightly more tolerable. Hopefully this situation is being addressed. I will attempt a few more posts later today. sf cc: Webmistress

To: Madharry who wrote (12343)	1/25/1999 4:32:00 PM
From: Alfredo Nova	Respond to of 22640

Armin, thanks. These analysts somethings make you mad. However, I make my decision mainly on numbers. It helps me to read these reports to put the numbers in a context. I base my choices more on the long term trend of eps and revenues which you can get for example from S&P rather than on one optimistic analyst report. But it helps me to know that I can access 1, 2 or 3 stories on the stock if I need to. I often have a contrarian style. Wall Street will reward you handsomely if you think independently, once you are correct (and patient enough). Still, I like to read what these guys are saying, ciao Alfredo