Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
So, Where Is Gold's Corrective Upswing? - 7th Mar 21
US Treasury Yields Rally May Trigger Stock Market Crazy Ivan Event - 7th Mar 21
The Great Reset Is Coming for the Currency - 7th Mar 21
Gold Continues Declines on Bond Yield Jitters - 7th Mar 21
The Case for Inflation - 7th Mar 21
Dow Short-term Stock Market Trend Analysis - 6th Mar 21
Intel Rocket Lake EXPLODE on Launch - 11th Gen CPU's RUN VERY HOT Bad Cinebench R20 Scores - 6th Mar 21
US & UK Head for Post Coronavirus Pandemic Lockdown Inflationary Economic BOOM - 6th Mar 21
FED Balance Sheet Current State - 5th Mar 21
The Global Vaccine Race Against Time and Variants - 5th Mar 21
US Treasury Yields Rally May Trigger A Crazy Ivan Event (Again) In Stock Market - 5th Mar 21
After Gold’s Slide, What Happens to Miners? - 5th Mar 21
Racism Pandemic Why UK Black and Asians NOT Getting Vaccinated - NHS Covid-19 BAME - 5th Mar 21
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Brazilian Real The Strongest Currency in the World Today

Currencies / Brazil May 08, 2007 - 12:16 PM GMT

By: Money_and_Markets

Currencies

When I first went to Brazil, I was six years old.

A new Chevy cost $1,300.

Gasoline was going for 27 cents a gallon.

Harry Truman was still in the White House.

And my father wanted a second home in the tropics.


So he picked a beautiful spot in Brazil's interior state of Goiás — four days' drive from the bustling coastal cities of Rio de Janeiro and São Paulo; 30-odd hours on a Boeing 377 from Idlewild Airport (now JFK).

Dad, who worked for a Wall Street research and advisory firm, said Brazil was the land of the future and said he wanted to introduce the country to U.S. investors someday.

My mother's relatives said he was nuts.

So did most of his associates on Wall Street.

But not far from Wall Street, two of Broadway's most famous leading ladies — Janet Gaynor (in "A Star is Born) and Mary Martin ("A Sound of Music," "South Pacific," and "Peter Pan") — chose the same small town in Brazil that he chose. Mary Martin's son, Larry Hagman ("I Dream of Jeannie" and "Dallas"), also came.

And a few years later, a nearby plateau was chosen as the site of Brazil's new, ultra-modern capital — Brasília.

So one dry winter day in July, we drove out in our Willis jeep to take a look around. But all we saw were vast open fields and a hand-painted, misspelled sign " FUTURE CITE OF BRASÍLIA ."

People said a new city in the wilderness was crazy, too.

They Were Wrong

As it turned out, it wasn't crazy to go to Brazil … to introduce American investors to its amazing opportunities … or to build a modern metropolis on its central highlands.

It was just premature.

Indeed, for half a century, my family and I watched as Brazil struggled — through the most rampant inflation of any major nation in the postwar era … through two decades without democracy … and with some of the most corrupt leaders of its 500-year history.

But today, Brasília is a bustling metropolis with 2.3 million people. And suddenly, with growing momentum, nearly all of Brazil is finally shifting into high gear.

Just recently, Brazil's currency, the real, hit a six-year high against the dollar .

It's also gaining against the euro, the Swiss franc, the British pound, the Japanese yen, and eleven other most actively traded currencies tracked by Bloomberg.

In fact, this year, it's the strongest major currency in the world.

A pivotal driving force: Brazil's huge and fast-growing trade surplus.

Just last week, the surplus expanded to $4.2 billion from a revised $3.36 billion in March. And even if it shrinks a bit in the coming months, the long-term trend is firmly in place — more gushers of black ink and a still-stronger Brazilian real.

Look …

The Folks Who Used to Say We Were Crazy Are No Longer Around

But their descendants are quite vocal …

  • William Landers, a fund manager with $4 billion in stocks at Blackrock Inc., says Brazil is now "one of the most attractive countries" in the world for investors, with 20 percent earnings growth ahead.
  • Arthur P. Steinmetz, manager of the best-performing international bond fund in the United States, says Brazil is now entering its "golden age." His fund has $6.4 billion in assets. And among all the countries outside the United States, his biggest single stake is in Brazil, the only emerging market in his portfolio.
  • Even America's leading credit rating agencies are expected to add their vote of confidence: Sometime in the not-too-distant future, don't be surprised if they upgrade Brazil's debt to investment grade. Reason: Before interest payments, Brazil will probably have a budget surplus amounting to 3.8% of GDP this year.
  • Most important, countless investors are voting with their money. That's why …

Brazil's Stocks Are Outperforming the U.S. Markets by a Mile

Brazil's leading stock index, Bovespa, has just catapulted above the 50,000 mark.

Brazil's largest resource stocks are going through the roof.

The Brazil ETF is making new all-time highs.

And nearly all of Brazil's stocks are leaving the Dow Jones Industrials further and further behind.

As an illustration, look at some of the Brazilian stocks we've been highlighting in our publications:

  • Banco Bradesco, which trades on the New York Stock Exchange with the symbol BBD, is Brazil's largest private bank and has just made new all-time highs.
  • Companhia Vale do Rio Doce (RIO) , the world's second-largest miner, is leading Brazil's natural resource boom. And …
  • Gerdau S.A. (GGB), Latin America's largest steelmaker, has just issued a stellar first-quarter report, with earnings before interest, taxes, depreciation and amortization, surging over 17 percent.

Here's a brief scorecard: Over the past five years, while the Dow is up 33% …

  • Banco Bradesco is up 437%, or 13 times more than the Dow …
  • Companhia Vale do Rio Doce is up 852%, or 25 times more, and …
  • Gerdau is up 914%, or over 27 times more.

Think about it this way: Five years ago, you could have invested $10,000 in the average Dow stock at the close of trading on May 5, 2002. And this past Friday you could have sold it for a gain of $3,300, minus any commissions.

But suppose, instead of the average Dow stock, you invested those same $10,000 in Brazil's Gerdau. This past Friday, instead of $3,300, you'd have over $91,000.

Naturally, with 20-20 hindsight, it's easy to pick out the best-performing stocks. But even if you did no stock picking whatsoever, and even if you invested strictly in EWZ — an exchange-traded fund that holds all three of these stocks plus several others — you'd still have a gain of 369%, or 11 times the Dow's.

And there's more to come …

Ethanol Boom to Help Propel Brazil's Economy

When you mention the word ethanol to most North Americans, the first thing that comes to mind is corn-based ethanol, replete with inefficiencies, supported by subsidies, and now prompting a fierce worldwide debate.

Last month, for example, no sooner had President Bush and Brazil's president Luiz Inácio Lula da Silva signed a deal to expand ethanol production in the Americas than …

  • Venezuela's Hugo Chávez launched a series of venemous attacks against both …
  • Fidel Castro said it was a "sinister idea of turning foodstuffs into fuel" …
  • Many U.S. farmers felt President Bush had betrayed them …
  • And at least one U.S. newsletter editor was telling his subscribers that "ethanol is a hoax."

What these critics don't seem to understand, however, is that none of this has anything to do with ethanol made from sugar cane. Instead, the problems they're referring to are strictly related to the ethanol made from corn.

That's why, this Wednesday, at the United Nations headquarters in New York, the representative of the International Federation of Agricultural Producers (IFAP) will set the record straight. She will give a speech before the UN's Commission for Sustainable Development. And she will prove to them that sugar-cane based ethanol is a revolution that's barely begun.

How do I know?

Because she's my wife's sister, and I just helped her finish translating her PowerPoint presentation from Portuguese to English.

Here are the highlights …

First, right now, Brazil has a whopping 260 million acres of land available for cultivation. Plus, it has another 86 million acres that have been used for pastures, are now mostly fallow, and could mostly be converted to sugar cane cultivation. So the capacity to produce more ethanol is almost limitless.

Second, in almost any other situation, environmentalists would seek to block the expansion of cash crops like sugar cane to help protect the rainforests.

But in Brazil, the Amazon is not even a part of the equation. The largest sugar cane producing region is in southern Brazil, thousands of miles from the Amazon basin. And the second largest is in the northeast, also far from the Amazon.

This leaves the door open for massive expansion of ethanol production and an equally massive infusion of international capital into Brazil's ethanol industry.

Already, Brazil is the world's number one producer and exporter of sugar and the world's largest exporter of ethanol.

Already, last year, Brazilian ethanol makers produced 4.5 billion gallons of ethanol and exported 900 million gallons.

And already, in the current sugarcane season, Brazil expects to produce a record 5.34 billion gallons of ethanol, up 13.5 percent from last year's harvest.

Third, cars with flex-fuel engines — that run on ethanol, gasoline, or any mix of the two — are rolling off Brazil's assembly lines en masse.

Just four years ago, the overwhelming majority of autos sold in Brazil still ran strictly on gasoline. Now, flex-fuel cars have virtually eliminated gas-only engines from the new-vehicle marketplace.

So as you can see, the ethanol revolution in Brazil is not just a sideshow in a world dominated by fossil fuels. Quite to the contrary, the ethanol industry is quickly becoming the dominant player in Brazil's energy marketplace.

Results:

  • A sharp reduction in Brazil's crude oil imports … a substantial increase in energy exports … and an even larger trade surplus.
  • A marked reduction in greenhouse gas emissions.
  • Far less reliance on oil-producing nations and much reduced vulnerability to geopolitical risks.
  • More jobs: Already, with just 6.5% of Brazil's arable land, Brazil's sugar cane farmers provide one million jobs.

So now do you see a key reason Brazil's stock market is soaring? Now do you understand why I've been pounding the tables and shouting from the rooftops about this energy revolution?

Stand by. Because the real fun — and bigger profit potential — is still ahead.

Good luck and God bless!

By Martin Weiss

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jo
09 May 07, 00:52

Youve convinced me !

But that brazil graph looks scary, looks like the stocks have already been bid up, whats the markets PE ?


Seph
22 Jun 08, 16:00
Really motivating article.

Hello Martin,

I'm no investor but I am an optimist. Always have and always will be. I am now living in Seoul, South Korea teaching English but I will soon relocate to Brazil. I am looking at Rio de Janeiro or São Paulo. My background isn't in teaching but in graphic design. Before leaving the U.S. to change pace, I was a Senior Graphic Designer working for a small dotcom in Charlotte, North Carolina.

I just read your article this morning before I am to leave for work. Very exciting. I should arrive in Brazil by early 2009 at the latest. Você fala Português?

I look forward to hearing from you.

Bom dia!

Seph Callaway

scallawayiii@gmail.com


ef kay
07 Sep 08, 21:46
Brazil is the Future

Very interesting....alway wanted to live in Brazil but never really pursued that dream. Its convincing that Brazil is the coutry for the future....I'm attending uni at the Queensland University, Australia taking up a duel Degree in Economics and Law....hoping to apply for a job in Brazil...hope I see you there....

korakalif@yahoo.com


frank
08 Jan 09, 05:47
Brazil

The phrase "the country of the future" has been repeated so long in Brazil that it has become a well-known joke.


gl
15 Jan 10, 15:54
Brazzzzzzzzzil

What is writte here is 1000% true. I have lived in Brasil for the past 10 years and see this change. It does take some getting used to and is not what one could call "real safe" but unless you must have something good to eat...it is a great place to live and a better place to invest.


BRAS
04 Apr 10, 13:52
GREAT PLACE TO LIVE

I LIVE IN BRASIL AND I SEE THIS CHANGE , BUT IN LAST 4 MONTHS WERE IN MINE STREET KILLED 5 PEOPLE.BEFORE IN THREE YEAR TIME NO ONE WAS KILLED.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules