Subscribe via email, get all daily posts sent to you next day (and without all the annoying ads)

5/17/08

sneakydeaky quiztime (X)

It's Saturday, which means only but only one thing only;

(click to enlarge)


SNEAKYDEAKY QUIZTIME X

Wowsers! Is it really the 10th edition of the quiz already? Doesn't time fly...........

So the celebrate the nice round number ten, we have ten (YES TEN!) multiple guess..sorry, multiple choice questions this time around. "And the prize, Otto?", I hear you clamouring. Well oh well, got a beauty this week. This week's top prize is to be HUGO CHAVEZ'S MANICURIST FOR A WEEK. Yep, the big guy told me yesterday that his regular nailfiler dudette was taking a week off in June and he's fretting about what'll happen to his cute cutis already, so I just patted him on the shoulder and said "No worries, H man, Otto's got it covered."

So with that superduper prize up for grabs, you'll wanna see the questions with no further ado. Here we gooooOOOOOOOoooooooooOOOOOOOOoooooo.........

xxxxxxxxxxxxxxxxxxxxxxxxxxxXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

1. How much of the national currency reserves did the Argentine Central bank have to use this week in order to stop the peso from going to hell?
a) U$200m
b) U$450m
c) U$600m
d) U$750m

2. According to the announcements made this week in Lima, how much does Peru expect to attract in new mining industry investments to 2015?
a) U$6Bn
b) U$10Bn
c) U$15Bn
d)U$20Bn

3. Interpol announced that although there is no evidence that the FARC laptops had been tampered with, they had been in Colombian hands and outside of a legally correct chain of custody for two days (March 1st to March 3rd). According to Interpol, how many times had the computer files been accessed by Colombia in those two days?
a) Zero times
b) 500 times
c) 2,000 times
d) 48,000 times

4. Who are these people waiting for?


a) Hugo Chavez
b) Rafael Correa
c) Klishtina Fernandez de Kirchner
d) Alvaro Uribe

5. What's the name of Otto's dog?
a) Benni
b) Hugo
c) Muttley
d) Zoolander

6. Which of these four was the best performing stock index this week?
a) Brazil's Bovespa
b) US Nasdaq
c) Argentina's Merval
d) US Dow

7. Brazilian mining giant Vale (RIO) announced this week it would build a new U$1Bn iron ore processing plant. Where will the factory be built?
a) Venezuela
b) Oman
c) Malaysia
d) Panama

8. Brazilian petrochemicals giant Braskem (BAK) announced this week it would build a new U$800m chemical plant. Where will the factory be built?
a) Venezuela
b) Oman
c) Peru
d) South Korea

9. What is Ecuador's lowest basis point spread (aka "country risk rating") since Studmuffin Correa became president?
a) 602 points
b) 558 points
c) 762 points
d) 450 points

10. How much has the ADR share price of Petrobras (PBR) appreciated so far this year?
a) 15.1%
b) 22.9%
c) 41.6%
d) 51.0%

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxXXXXXXXXXXXXXXXXXXXXXXXXXXXXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And there we have it. All that's left for you to do is jot your answers down in a mail and send them to:

otto.rock1 (AT) gmail (DOT) com

Answers, as always, hit your screens Wednesday morning. So until then........

TOODLE PIP!

5/16/08

Venezuela, free markets, freedom of speech and human rights

This is a mural found near the presidential palace in Caracas.
It's still there.


Today I got a very nice mail from a reader (initials J.O.), who at the end of his mail asked;
"....What do you think about Chavez's government?? as you may know I live in the
US and I tend to favor free markets, free speech and zero tolerance for human
right violations."
That's what's called a good question, and rather than mailing him an answer, I asked if I could answer him via a public blog. It's worthwhile looking carefully at his question.

J.O. believes the USA has free markets, free speech and zero tolerance for human rights violations, so before looking at how Venezuela stacks up on these three counts, let's just consider exactly how the USA does.

USA Free Markets
The USA has a very simple and direct access to market forces, that's for sure. It's easy to set up a business, it's easy to buy and sell stocks, bonds etc on by far the biggest stock exchange system in the whole wide world.

On the other hand, this "free market" tends to become very socialist when the rich are about to lose all their money, as witnessed by the mindblowing amount of money Ben Bernanke has thrown at the economy in recent times when the greed of Wall St. bankers backfired on itself. Also, a truly 'free market' should also be free of pork barrel economic policies such as tax rebates for people that don't even pay taxes. Neither should it subsidize sectors of its economy (eg agro). Just a couple of examples there, you can add more I'm sure.

USA Free Speech
Undoubtedly, the USA scores well here. Freedom of speech is an enshrined principle in the US, as evidenced by the extremes of racist scum that exercises its constitutional right to propagate its filth via the internet, just one example of many others I could choose. Political debate is lively and happens on all levels of the socio-economic strata, from the New York Times to the New York Sun. Free speech in the USA? Undoubtedly YES, and a very good thing it is, too.

USA Human Rights Violations
There is currently only one nation on this planet that has repealed the right to habeas corpus. This is not a good start for today's USA, it has to be said. Then there's Gitmo, Abu Graib, and the assortment of secret detention centres that have been coming to light recently. Then there's the semantics of whether waterboarding is or is not torture, and if it has saved lives or not. Then there are the US "excursions" into Latin America these last few decades that include Panama, Honduras, Ecuador, Cuba, Nicaragua, Grenada, The Dominican Republic, Chile, El Salvador and Guatemala, as well as there being plenty of admitted black ops activity in Venezuela, Colombia, Uruguay, Argentina, Bolivia etc etc. Shall we start on the Iraq thingy? Nah, not worth it, I think you might see my point by now. Forrest Gump got it right with his "Stupid is as stupid does". One thing to note, though, is how the USA tends not to violate the human rights of its own citizens, but saves that honour for non-US peoples.

Ok, enough about the USA; let's see how Venezuela looks under the same microscope

Venezuela Free Markets
Well, starting a business and making a profit is easy enough in Venezuela; that one isn't an issue as the thousands of retail outlet owners, Venezuelan service industry owners, oil services industry owners etc will quickly admit (if you went to their homes in Miami and interviewed them).

The stock market is open for business, but since Hugo went on his nationalization spree and took stocks like CANTV away from the bourse, the action is pretty much all bonds. However there is plenty of buying and selling in them, and you can play them via any decent world broker just as easily as you can the US T-10 etc.

The restrictions come on the currency, of course. Venezuela put pretty strict limitations on the free market exchange rate and dictates (should I use that word?) the official rate to the world, amen. But all the same, there's plenty of profit and loss for José Ordinario to make on the parallel market, and people creep round the edges of the CADIVI rules to make an extra buck on their foreign currency allotment every year.

Venezuela Free Speech
This is the one that confuses a lot of people. If there were no free speech in Venezuela, TV channels such as Globovision would not exist. Newspapers such as Tal Cual or El Universo would not exist. The multitude of anti-Chavez radio stations would not exist. Students would not be allowed to protest against the government...I mean, these students were even invited into the Venezuelan parliament to make their case! Can you imagine the Sinn Fein being invited into the UK House of Commons in the 1980s? Or Cindy Sheehan invited for tea'n'buns with Dubya at the White House? Or Uribe and the FARC being able to sit down and debate right now?

The one that everyone points to is, of course, the close down of RCTV last year. But RCTV actively supported a Coup D'Etat against the Chavez government in 2002, and were allowed to continue broadcasting for another 5 years until their licence was up for renewal. Think about this one: Just before the tide turned against the coup plotters back in 2002 Vice-Admiral Ramirez Perez told a Venezuelan reporter, "We had a deadly weapon: the media. And now that I have the opportunity, let me congratulate you." RCTV still continues to broadcast, by the way...that one confuses people, too.

So does free speech exist in Venezuela? Answer, YES. Without a doubt. For sure things are not perfect, with a President and government officials who make rumbling sounds against this media outlet and that journalist from time to time, but the same thing happens in the majority of LatAm countries...it's kinda normal, people. Argentina has been getting rather ugly on this score. The relationship between Correa and the Ecuador media is strained at best. Uribe and the media have a real love/hate thing going on. Alan Garcia uses his main attack dog Del Castillo to make intimidating sounds to Peruvian media and has even closed down dissenting radio stations in the last 12 months.

There is plenty more to say on this subject, but as final thought, one important thing to note is that the organization "Reporters Without Borders" has noted the murder of journalists in Argentina, Colombia, Peru and most notably Mexico in the last 12 months. No deaths in Venezuela.

Venezuela Human Rights Violations
This is an emotive issue, of course. Right here right now I will admit that I chose to highlight the bad parts of the US human rights record in the section above just to show a bit of counterpoint to the argument. Of course I wrote a terribly biased passage about the USA, and gave no credit for the enormous amount of good work the USA does around the world via its Peace Corps, or food aid, or disaster relief packages just to name three examples in a thousand.

Do you get the point? It's easy to point to the bad stuff anywhere, and Venezuela has its own serious problems with crime, murders, female emancipation, poverty, and a whole bunch of other things. On the other hand, the basic human rights to an education, to water, decent healthcare, power supply etc have improved dramatically for the lower social strata in the Chavez era. Venezuela does not have the stigma of political prisoners or summary court-martial style execution hanging over it like Cuba does. It does not have Colombia's problem of far right paramilitaries murdering union reps either. As for the economic situation, I honestly don't know if a right-leaning government would have done a better job in these times of high oil prices, or a worse job, or perhaps the same job. But there is no denying that Venezuela's poor are not as downtrodden as they were in previous decades, and the middle class are still doing their middle class things.

Venezuela is a democracy, with a democratically elected president who savours his triumphs and (as illustrated late last year) concedes his defeats. Please be clear on this one. It matters not whether you agree or disagree with the political leanings and the policies enacted there; Venezuela is a vibrant democracy and anyone stating otherwise is lying. Period.

Bottom line: What do I think of Chavez's government of Venezuela? I think it's not much better and not much worse than any other government in Latin America (and probably the world). What it does have is an enemy in the USA, and that goes a long way to explaining what the outside world reads, sees and hears about Chavez and company.

The fact is that no-one is innocent. There are corrupt liars in power in every government around the world. Extrajudicial killings happen in the UK. Bribes get paid in the USA. Innocent people get thrown in jail in Germany. Powerful people avoid justice in Japan. The list is endless. But one thing that every single head of state around the world has in common (I think) is the desire for his or her country and people to progress. You can disagree with the rightist views of Alan Garcia (I certainly do) or the leftist views of Cristina Kirchner (I certainly do) or any other leader across the political spectrum, but they all mean well. Fact is that Chavez believes in Socialism. And after winning two general elections and a recall election, it seems that the majority of Venezuelans agree with him. So in the end the people that matter have made their judgement, and my view is supremely unimportant. And unless you live in Venezuela that goes for you, too.

EU-LAC disappoints Fox News, becomes productive summit meeting

The attending heads of state examine the lunch menu
carefully and unanimously agree on the fish


As scandal-scenes go, it's been as much of a letdown as the hyped-up Interpol FARC laptop thing to be honest. Hugo Chavez has so far meeted'n'greeted the Spanish head honcho Zapatero and said warm and cuddly things about Alan Garcia's keynote speech. Chile came saying glowing things about neighbour Peru and its economic development. Everyone is being awfully awfully nice to each other. All very, very touchyfeely and good for relations but it'll seriously miff the majority of the English-speaking press in attendance who only report the chaff and don't give a damn about the wheat, with notable exceptions of the serious newswires, of course*.

Talking of wheat, a smart idea has come from the conference, with the idea floated that all countries attending (a not inconsequential 58 in total) concentrate efforts to raise food production in each state by 2%. And as a nice touch, the new Environment Minister, Antonio Brack-Egg (great name) was sworn in to his new post. He is a long-standing environmentalist in Peru and has top reputation, so Alan should be applauded for his choice...credit where credit is due, even amongst the mediocre presidents. Only time will tell if the new ministry is just for show or whether he'll be given real teeth as the mining industry expands in Peru

*includes Reuters, AP, AFP, Bloomberg etc, but does not include the bunch of clowns known as Stratfor.

I'm not the only dude who says "buy Inca Pacific", by the way

Raymond James's metals analyst Tom Meyer has released an update on IPR.v this morning. As it's not fair to RJ clients, i'm not going to reproduce the inner contents of any Raymond James analysis note itself,but it is ok to paste up the covering mail that came this morning.

I'm not joking, people. This is a buy. Sorry, it's a STRONG BUY. Meyer sez so.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Inca Pacific Resources Inc. IPR-TSXV

RATING STRONG BUY 1

Target Price (6-12 mths) (C$) 4.00

Closing Price (C$) 1.90

Total Return to Target 111%

Event

We have updated our model for the recent equity financing. The company

raised gross proceeds of C$28.2 million from the issue of 17.6 million

common shares at C$1.60/share on May-8-08. We are reducing our NAV per

share estimate for Inca Pacific Resources to C$6.06 (prev. C$7.90) to

account for the dilution. Approximately US$18 to US$20 million of the

cash raised has been earmarked for the US$402 million capital cost of

the project.

Action

We reiterate our STRONG BUY rating and C$4.00 target price on Inca

Pacific's shares.

Analysis

Inca Pacific has recently completed a number of important steps in the

progress of its Magistral project: 1) submission of the ESIA, and 2)

securing incremental project financing. The Government of Peru (GOP) has

acknowledged the "bankable" feasibility study delivered by the company

on Jan-2-08. IPR now has until May-28-08 to respond to observations by

the GOP regarding "risks" identified by an independent engineer. In our

view, news flow on a number of data points and milestones should provide

positive catalysts for Inca Pacific's shares:

- Start of the access road upgrade - 3Q08

- Anticipated receipt of permits and ESIA approval - 4Q08

- Closing of project financing and the start of construction - 1Q09

- Start of production - 1Q11

Additionally, positive copper market fundamentals, the potential for M&A

activity, and Magistral's molybdenum exposure also add to the

attractiveness of the Inca Pacific investment case.

Valuation

In our view, Inca Pacific's shares are inexpensive and trade at a P/NAV

of 0.31x versus the peer group of copper development companies at 0.58x.

Our C$4.00 target price is based on a 0.70x P/NAV target multiple.

Tom Meyer, P. Eng., CFA

The battle of the beer money


After being rattled by his ignorance on previous days Gary from biiwii.com wrote this on Wednesday, which seems far too much like claiming premature victory to me.

So he must have been regretting his technically anal-yzed words yesterday when gold stormed back to 880+ and put my bet on the right track again. Remember that if gold $900/oz happens before gold $850/oz, that little whipper-snapper owes the mighty Otto a full ten US dollars.

With the USD fading overnight, he better be praying to his monetary gods.

UPDATE FRIDAY AM: Gold peaked at U$899.90 this morning before falling back. Consider it a stay of execution, garydood.

UPDATE 2 FRIDAY AM: Gold just traded at $904/oz. Cut it, print it, that's a wrap. The beer is mine. hmmmmmmmmmmmmmmmmmmmmmmmmmmm.....beer.... hmmmmmmmmmmmm

On a more serious note, I hope you filled your boots on this cheap gold. You can bet that I made more than 10 bucks on this move. BullionVault and its free gram of gold awaits you on the link above!

THE LAST WORD, FRIDAY PM: The fine upstanding fellow that he is, Gary from biiwii.com has just transferred the 10spotter into my paypal account. A true gentleman Cheers, dude!

5/15/08

A little light reading: the Interpol report on the FARC laptops

Here's the link to the PDF file, all 102 pages of it. Have fun and a good read through, but please note that amongst the 600 gigabytes of information found on the FARC hardware, including 37,872 written documents, 452 spreadsheets, 210,888 images, 22,481 web pages, 7,989 email addresses, 10,537 multimedia files (sound and video), and 983 encrypted files there is no mention of Hugo Chavez or any proof whatsoever that Chavez has ties with the FARC.

However, I'm pretty sure you'll be hearing a different spin on that story soon enough. Try your hardest to stick to the facts, please...yeah?

UPDATE: Speaking of "different spin", the Fox News headline of "Interpol: Chavez Supports Terrorists" isn't even subtle about it. Incredible, using the word in its most literal sense.

Hmmmm....I think, on balance, that KRY short was a good idea

Once again, Otto scrapes the bottom of the barrel with
the "Naomi-once-interviewed-Hugo" link to
get a nekkid photo on his blog....but she
does rock, and it's my blog...so tough

I took some profits on Gold Reserve (GRZ) before my original $2.20 target, but there's no rush there. If there's a panic sale Monday on GRZ I'll pick up more to lower my average. The reason (and to repeat for the very last time) is the U$2.36 minimum in residual asset value at the company. v It will also be able to fight Venezuela for compensation if things get legal, but it's quite likely that Chavezlandia will compensate GRZ on mutual terms, as it's been fairly straight and upstanding with the other foreigners it has kicked out of the country so far. If the market offers a panicky $1.50/share on GRZ Friday I'll take it happily, and then wait (though no farm betting, it goes without saying).

My KRY short at $1.13, on the other hand, can be put under the "successful trades" column. And as the company is debt laden, its present mines are loss making and running out of reserves rapidly and has also signed away its right to any foreign arbitration court hearing, it is royally royally screwed. I'll never have to mention that crooked company on my clean and tidy blog again.

Here's what Reuters has just published to push KRY down to under 0.70 in after hours trading. I hope you don't need any help in translating the word "no".

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

CARACAS, May 15 (Reuters) - Venezuela on Thursday shut the door to new gold projects and threatened other mining and logging concessions, in a new step by left-wing President Hugo Chavez to tighten control of natural resources.

The ban on mining in the mineral-laden Imataca Forest Reserve forest reserve and end to permits for open pits was a blow to Crystallex (KRY.TO: Quote, Profile, Research) and Gold Reserve (GRZ.A: Quote, Profile, Research). The Canadian companies have long been seeking environmental permits to exploit their concessions in the reserve.

Environment Minister Yuviri Ortega said the South American nation also was revising all mining and timber concessions.

"Venezuela will deny environmental permits for open-pit mine exploitation," Ortega told Reuters. "Neither private or public companies will for now explore Imataca's gold."

Imataca Forest Reserve, in the remote south-east of the Venezuela, contains what is believed to be one of Latin America's largest gold deposits.

(Reporting by Ana Isabel Martinez, Writing by Frank Jack Daniel)

A snippety post

The Interpol report on the famous FARC laptops is due out at 1pm local time today. Expect anything to happen in the next 48 hours, as for one thing Chavez and Uribe are both due to attend the Peru EU-LAC conference Friday. Honestly, anything could happen there.

Argentina's rural boyz look like they want to sit down with the gov't again. The two sides are certainly drawing closer to each other. As mentioned yesterday, Argentine bonds rallying nicely.

Hermes Binner, the governor of Santa Fe province in Argentine, is a bit bland but he's getting very positive reviews for the conciliatory stance he's taken during the agro strike. A name to watch.

I've bailed on my MELI short at $55. A slight profit, but not the trade I expected. It has been too strong for my liking, and it's time to reduce exposure.

FAN.to doing well today. TA suggests an 0.82 finish will open the floodgates next week.

The KRY short/GRZ long pair play is working nicely. I'll probably take a bit of profits on both sides of the play today and then let the rest ride.

Aurelian's 1q08 report is a model of open disclosure. Well worth a read. Find it at sedar.com.

Telecom Argentina (TEO) has put in a bottom today, I think (though I'm not the voice to trust on this stock). Still holding. Fundamentals are sound.

Los Andes Copper (LA.v) released more good drill results yesterday. This is a long term hold...very comfortable here.

Joseph Stiglitz's call for an end the inflation targeting is the talk of LatAm economists.

Today's best trading advice is boring and repetitive.....

.....but read it all the same cos that way you might start to give it a bit of thought. Inca Pacific Resources (IPR.v, IPRFF.pk), a damn good copper/moly junior in Peru. I recommend that you make it part of your portfolio. Here's the 5 day chart.....

...which shows that I'm not the only one thinking good thoughts about this stock. And here's the one year chart.......
...to give you a bit of perspective. You can see the importance of the $2 level in this stock, no? The rest is up to you, but you should know my feelings already. Remember one thing (something that is covered by hedgehog in his guest blog). I don't make my money by writing a free advice blog in the public domain. I make a living by knowing as much as possible about the region, and basing my investment decisions on that information. Reasons are for other places, but the bottom line is the same anywhere. Buy IPR. However, you gotta do your own DD, dudes. You know the one about the free lunch, yeah?

Don't Listen to Otto!

GUEST BLOG GUEST BLOG GUEST BLOG

Wowsers, people....it's my first ever guest blogger on site, what's more this dude
actually volunteered to do it! Strange world....

So what can I tell you about "hedgehog"? Well not much to be honest, as I have been
sworn to secrecy, but I can tell you the following:

He's male
He's in the finance world professionally
He is successful
He has an active interest in Latin America
He's a friend of mine

So here we go with his guest blog: It is long, but I say it's well worth
you taking 5 minutes of your life to read his words, as they may save
you a lot of money later.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Don't Listen to Otto!

by Hedgehog

A few of the readers of this blog are probably at big institutional
investment firms and are curious what this wise-ass Otto has to say
about his environs. Skip this post. This post is for the hundreds or
thousands of individual investors who see emerging-market stocks and commodities
going up and think, hey, the big guys are scared and dumb and racist
and falling for the lunacy on the Wall Street Journal editorial page, I'll
get in ahead of them and make lots of money just by listening to Otto!

I know where you're coming from because I've thought the same sort of
thing. That was before I spent a while around Wall Street and came to
understand just how screwed you are. I see you stopping your reading
right now. Nobody wants to be talked to like that. Especially if you've just
followed Otto's advice and bought Inca or Gold Reserve or a few ounces
of soft metal that allegedly exists in a vault somewhere. You've just put
down your money and if you are a normal human being you probably have
an emotional tie to this stock or metal just like you might to Manchester
United after buying their t-shirt and you don't want to jinx your luck
by thinking bad thoughts about Peru or the gold market or that goalie.

Problem is, you don't get rich by avoiding bad thoughts. You need to stare
bad thoughts in the face
. Including about your friends. And holdings.
When someone tells you that Hugo Chavez is nationalizing everything in
sight and you might want to avoid Venezuela, don't dismiss that, investigate it.

Sure, take Otto's statements into account as well -- he gives Chavez a
fairer shake than most bloggers and media folks, and that's fine -- but
don't pretend that Venezuela is just Canada with cleavage. You want to
know how the big guys do it? They pay lots and lots of money to find
out everything that can go wrong. When I say lots of money, I mean that
every month they spend more on data than you have in your portfolio. Trust
me.

If you are going to actively trade, you can't get your research from
ETrade and Charles Schwab. Picking a mutual fund for your retirement
plan? No problem. But stockpicking? You need a real-time trading system. That
means a Reuters, Bloomberg or Dow Jones terminal. Without it, you will
be minutes or hours behind the news. Here's an example from one of Otto's
favorite stocks, Aurelian. Bloomberg ran the first headline announcing
story May 9 at 1:54 p.m. Aurelian had been dropping on small trades to
$4.40 a share. That headline came out and at 13:58:26, someone traded
22,600 shares at $4.50 and another trade of 17,800 shares hit at the
same price. A few seconds later and it was at $4.65. And you, the individual
investor, might at that very moment have been hitting the "sell shares"
button on your E-trade. And why not? As far as you knew the stock was
still dropping, you could always get back in in a couple months before
the mining embargo ended. Even with "real-time" pricing these internet
systems don't give you trade-by-trade data as it comes. Nor, more importantly,
information.

So why not buy a Bloomberg terminal and get the data on your desktop?
It's just $1,700 a month for a basic terminal with no frills, if you supply
the hardware...no problem, right?

Of course you still need personalized research. Did you know that many big
investors hire private investigators to look into every nook and cranny
of a company before going either long or short? They want to know their
risks. Not what the company tells the public, but what they say in
their private conversations at the bar or gym and memos found in the trash.
They want to know who owns the vehicles that are driving on and off of that
mine property, and who owns the planes using that airstrip. Big buyout
manager showing up? Good sign for long, bad for short. Plane later
associated with cocaine trafficking? You can figure that out. Would
you, the individual investor, know about either of these turns of events?
Sure, if you pay an investigator $50 an hour plus expenses...probably $10,000
per equity is a good place to start for a small-cap.

Then you need the big-picture data. You need more than just Otto, you
need a full-time on-the-ground risk analyst who is going out and
interviewing government officials, visiting mine sites, checking everything from
road conditions to the local rumor mill. If you've never heard of the "risk
analysis" industry you probably shouldn't be investing in developing
markets. Let's take an inflammatory example. Crystallex has long been
doomed. Aside from a $1 billion arbitration case that may force the
government to take their mine away, there's the fact that every other
gold company -- including those with unfair advantages due to their lack of
anti-corruption rules back home -- is salivating over. Have you seen
their reps hanging out in Caracas? No? Why not? Oh yes, because you're in
Lake Havasu sipping iced tea and dreaming that this is your chance to Get
Rich Quick and turn the tables on those suit-and-tie bastards who stole from
you all your life. But unlike the bastards, you haven't hired one of
the half-dozen risk analyst companies who do have people on the ground
there, gathering data just for subscribers. The bastards knew what was coming.
How much is a subscription? I don't know -- their materials all but say
"if you have to ask, you can't afford us."

Now, given the sudden turn of events against KRY at the end of last
month, a lot of people are starting to pick up Venezuelan newspapers to try
and understand what's up. Nice time for the due diligence. By the time you
learn Spanish, that stock will be worth par value. Here's some free
risk analysis: Well connected finance folks in the Venezuelan government
tend to invest in Miami real estate. Follow their lead. Don't put more than
you can afford to lose into Venezuela.

Which brings me to the final point. A lot of individual investors
haven't even done the most basic reading that is available just by googling
"individual investor." The key part for Otto's type of stocks is this:
Only use your play money. Money you can afford to lose. Pick what
percent of your money you're willing to flush down the toilet and that money is
the only stuff that goes toward little-known, thinly traded, small-cap
international commodity plays. These stocks are risky. You may get rich
quick. You may lose it all. Be ready for that, even if you've done your
homework. Even your supposedly hard investment in gold -- have you seen
this gold at BullionVault? How do you know it's there? I'm not saying
it's not -- in fact I think Otto is a pretty good judge of these things
--
but I'm not going to put more than I can afford to lose into a company
that looks an awful lot like this. That's right, trust no one, even your friends.

There is good academic research about the efficacy of individual
investing, e.g., individual investors lose $2.8 billion a year in
Taiwan, as much money as everyone in the country spends on clothes and shoes.
The short of it is you are screwed. You will lag the institutional
investors. I haven't seen anyone break out all the reasons -- how much
is because of natural selection, people with Wall Street talent tend to
end up on Wall Street? How much is insider information? How much is it
that these people are psychopaths who live and breathe stock ticker sand you are a
regular human for whom this is all an addictive sideline, along with collecting
images of eyeballs on Flickr? How much is it access to information that
isn't insider, but just way more insider than you want to pay for?

For all these reasons, I just want to tell you to take care of yourself.
Don't be an idiot. If you dive right in, you will end up donating your
savings to a suit-and-tie bastard on Wall Street who will eat your
$20,000 nest egg as the noise in a trading pattern and then go home to the kids
without even thinking about it. I know these people, they pay my salary,
and it's all just business. You can pay them to make money for you (as in a mutual
fund) or you can educate yourself. A lot.

5/14/08

Argentina SoyaWars™ ...the latest rumour flying round is becoming stronger

Bang bang you're dead

This one is picking up steam, but it's still in the world of rumours so don't start thinking it's a done deal yet. Worth passing on, all the same.

Word has it that Klishtina is about to back down on the raising of the export tax. There have been some meetings with more moderate members of her still-faithful, and normally reliable sources are saying that Klishtina has decided to take a more flexible posture. The fact that the peso has been put under serious pressure via external bonds selling and internal demand for dollars over pesos is probably the deciding factor here.

Let's see how this one unfolds........

UPDATE 6:30pm: A very interesting speech by Klishtina at the inauguration ceremony of King Nesthor as President of the PJ (Peronist) party. Her tone was much more subdued, and without making any direct reference to SoyaWars™ she did say ask for "respect for the will of the people"*. Expect the rumours of a governmental climbdown to get more traction tomorrow.

The way to play the situation? Go long Argentine bonds is the obvious move, or perhaps take a position in my ling suffering Telecom Argentina (TEO), that has been a real sucky play so far this month (I previously reco'd it at $20...oops...can't win 'em all).

UPDATE 8:20pm. OK, things are now getting interesting and there is light at the end of the tunnel. Opposition senators have sent a draft law to the necessary Constitutional that will annul the export tax law on constitutional grounds. Here's a link to the story which makes sense on a number of levels:
  • Opposition senators put the proposal together, but government senators have backed up the planned law.
  • There was always a constitutional reason to block this new law, as according to the Argentine constitution, new taxes must be approved by the senate and not simply dictated by ministers (as was the case here). There is also judicial arguments that say any single tax cannot be over 33% of the gross amount on Argentina, and the soybean burden is as high as 44.1%.
  • If the new law is thrown out on constitutional grounds, Klishtina will be able to say "hey, not my fault it's not happening." At the same time the agro boys get the result they want.
  • All this senate initiative comes on the back of various closed door meetings between senators and agro boys, and then senators and the President herself yesterday.
All in all, if this happens, it will be a neat way for Klishtina to back down without losing face, something that seems very important to her.

* her exact words, "respeto a la voluntad popular"

understanding the stock market: lesson V

An occasional series: lesson I, lesson II, lesson III and lesson IV available on these links

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

A Mexican maid asked for a pay increase. The wife was very upset about this and asked: "Now Maria, why do you want a pay increase?"

"Well Señora, there are three reasons why I want an increase. The first is that I iron better than you."
"Who said you iron better than me?"
"Your husband said so."
"Oh."

"The second reason is that I am a better cook than you."
"Nonsense, who said you were a better cook than me?"
"Your husband did."
"Oh."

"My third reason is that I am a better lover than you."
"Did my husband say that as well?"
"No Señora, the gardener did."

She got the raise.

(thank you KR)

Are you watching Inca Pacific (IPR.v)?

Because I promise you that you should be. I mentioned it yesterday. Trust your Uncle Otto on this one, dudes.

Disclosure: looooooooooooooooooooooooooooooooooooooooooooong

Shorted KRY

At $1.13. Just thought I'd tell you.

This makes me long GRZ and short KRY. I think this pair play is the way to play this story (see previous posts on GRZ as to why, I'm not going to repeat myself here).

quick message to e-mail subscribers

The feedburner e-mail delivery service didn't work last night. I've checked with the feedburner support people, and they said that many subscribers are complaining about the same thing. They're on the case and trying to fix the problem. Hopefully all will be well later today.

Peru analysts know squat about the country they cover (part two)

Photo of Peru analyst on a recent mine visit

I've pointed it out before (like here one month ago); the analysts (read 'anal yeasts') that cover Peru really don't know Jack about the country.

Further proof of how much they know came yesterday. Let's leave it to Alex Emery of Bloomberg to explain:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Peru Economy Expanded Less Than Expected in March (Update1)

By Alex Emery

May 13 (Bloomberg) -- Peru's economy expanded at the slowest pace for two years in March as gold production, fishing and agricultural harvests dropped.

Gross domestic product grew 5.6 percent in the 12 months through March, compared with 11.9 percent growth in the same period a month earlier, the government said in Lima. The median forecast of 11 economists in a Bloomberg survey predicted 8.2 percent growth.

Peru, which is riding its longest......etc etc
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

So Bloomie surveyed 11 fools in suits who said 8.2%, and the actual result comes in a third less at 5.6%. But as the bloomberg note continues, you get to realize how much these people really care about their forecasts.

  • You read about the three extra days of holidays in April 2008 compared to 2007. That ain't rocket science to find out about, especially when you're paid to do it.
  • You find out about the low gold yields....well that's just plain obvious. Yanacocha is going through a low grades period. Again, not rocket science.
  • You find out about the low agro yields. Again, this is OBVIOUS, as the unusual freezing temperatures in the high sierra in February killed off a lot of crops at a critical moment.
So all in all, it really makes you wonder how much these stuffed suits care about their job. It seems to me that they just look at last month's figure, add a finger-in-the-air guess and throw whatever type of BS number to the world. No matter if they're lazy or stupid, you shouldn't trust the forecasts of the jokers any further than you can throw them.

From the department of "piss up in a brewery", Peru UE-LAC 2008

Hi honey i'm home....late

Total chaos in Lima today. The whole city centre went gridlock from 7am onwards, with "planned" (gotta use that word loosely) alternative routes collapsing under the weight of traffic that any sane person could predict, cars abandoned and people walking down the expressways (using express in its non-literal sense, of course). Bus routes were changed, and while the roads were chock-a-block with cars the buses circulated with virtually nobody on board as nobody knew where the buses were stopping to pick up passengers. Amazingly enough, with over 90,000 police officers put on duty for the EU-LAC conference, many drivers complained about a total lack of police presence to direct traffic away from the restricted zones.

The gov't eventually had to abandon its ridiculous plan of closing down the Javier Prado urban freeway. Quite frankly, my four year old could do better than this*

If this is what we can expect from the organizational side of the UE-LAC conference, well....we shouldn't be surprised, really. This pisspoor gov't can't even get the bonanza growth of the last few years to its own people, so why on earth should we think they can organize an international conference? I can't wait to see what happens when Hugo arrives.

By the way, Evo is in town tomorrow and will attend the shadow conference that is being staged in protests Then he's going to play football. However, his supporters are finding it tougher to attend, as police in Arequipa stopped them from travelling any further because the coach drivers didn't have the right licences. Welcome to Peru, world of pettiness.

*wanna see a photo?

sneakydeaky quiztime (IX): the answers

Hold on to yer sombreros, dudes. Its...........

click to enlarge (someone's gotta read it)

SNEAKYDEAKY QUIZTIME IX: THE ANSWERS

Arrrrrrrrrgh mi hearties, the moment of truth for all you game competitors. I'm also pleased to say this lil quiz is picking up a bit of a following, with a full dozen of you having a bash this week. If you recall, the idea was to match the blatant lie with the country that uses it. As a couple of you pointed out, there are sometimes more than one logical answer available so the trick is to anticipate my warped views. Let's get on with it. Avast, shipmates!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

1. We have rigorous screening procedures for bank account holders

Answer: Uruguay. Yeah, the Switzerland of South America and the nicest place possible to stash a few quiet dollars. Colombian drug lords have their own helipads.

2. We are giving our people the freedom they deserve

Answer: Cuba. Recently Raul's been giving it the "You can buy cellphones now....¡Viva la revolucion!", but there's a loooooooooooooooong way to go before he can look Dubya in the eye and tell him to STFU one time.

3. We are not dependent on copper.

Answer: Chile. Look don't pass this on to any Chileans, cos I got them really mad under a previous name by suggesting that 40% of their economy is directly dependent on copper. It would have been very embarrassing at the time if I hadn't been 100% correct. So forget all the fishmeal and IMF reserves and counter-cyclical baloney, cos copper craps out and so does Chile. The truth hurts.

4. We look after our poor.

Answer: Peru. It's shameful, disgusting, pathetic and every other badass adjective you'd like to throw at them. After 6 years of continuous GDP growth, Peru has 42% of its population under the poverty line. In a recent interview Garcia even lied about that, saying it was probably down to 41% by now. The only percentage he should be thinking about is 28%...his approval rating. Guess why?

5. We are significant

Answer: Paraguay. Look, I happen to like Paraguay. Asuncion has that faded glory thing going on, Filadelfia is one of the weirdest places I've ever visited (in a nice way, of course), Guarani is a great language to listen to (though impossible for a mere mortal such as I to understand) chipas are cool, and the side plate of mandioca that comes with everything you order totally rocks. But whatever might happen in the LatAm of tomorrow, Paraguay is not likely to be the one making waves. Sorry guys. Backwater, thy name is Paraguay

6. We are not shitscared of the USA

Answer: Panama. "Of course it's your canal, little tanned people. But if you try to prove it, we'll bomb the hell outta you and then make you into Colombians again."

7. We are not dependent on oil.

Answer: Venezuela. 90% of exports, 40% of direct GDP, and probably 65% of total GDP if you include indirect effects. Add the overvalued currency to the mix, and local industry can't compete with imported prices so why bother opening a factory anyway? Nah..it's oil. And oil.

8. We are serious people who prioritize economic development

Answer: Brazil. Sao Paolo is all busybusy and industrious, and basically gives the rest of Brazil a bad name. Economic miracle? Gimme a break! The western press makes it sound like Brazilians suddenly want to work like it's the new South Korea. THESE.... PEOPLE...DO....NOT....CARE. Period. If they make enough money to make tomorrow a free day with beer and football on the beach, than the day's labours are finished.

9. We are not totally dependent on the USA

Answer: Mexico. 80% of exports go to the USA, and the wages are paid by the USA, and the factories make US cars, and US whitegoods, and US computer hardware and and and....... Errrrr, got the point yet?

10. We do not have high inflation.

Answer: Argentina. Klishtina says 8.8%. Normal people say 25%. Thing is that Klishtina is beginning to see what a ballsup the inflation number really is...only beginning, mind you. Yesterday she claimed that poverty levels had dropped 3% to 20% in Argentina. But that's cos she uses the bullshit lies vomited out by INDEC. If you use a real inflation rate poverty levels have actually risen from 27% to 30% in the last year. The upshot is that nobody believes any of the Argentina macro figures any more, not just the blatant lie about inflation.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

So there we go, another quiz wrapped up with a bow and delivered by a young guy wearing a bow tie. And I'm pleased to say that long-time quizplayer Carlos G has finally managed to win this one with a sparkling 7/10. You totally rule Carlos...like totally. I'm just sorry that you have to suffer and evening with Alvaro Vergas Loser.

So until the next quiz coming at you Saturday, I wish you all godspeed and nice things on top.

Toodle Pip!

5/13/08

Was Dave Grohl a Crystallex shareholder?


I'm just trying to pick a spot to short this stock. Crystallex (KRY) is dead meat, and anyone betting on its future is better off in LasVegas; at least they'll serve you free drinks there. Without Las Cristinas this company is toast, and the rebuttal press release of yesterday is just so much hot air for the sheep. Are you seriously telling me KRY has legal recourse over Las Cristinas when the contract it signed gave it away? These guys have nothing left to pump.

So listen to the Foo Fighters' absolutely kickin' track "Let It Die" here and read the lyrics below. It's gotta be dedicated to Robert Fung and the other crooks at Crystallex.

A heart of gold but it lost it's pride
Beautiful veins and bloodshot eyes
I see your face in another light

Why'd you have to go and let it die
Why'd you have to go and let it die
Why'd you have to go and let it die
In too deep and out of time
Why'd you have to go and let it die

A simple man and his blushing bride
(Why'd you have to go and let it die)
Intravenous intertwined
(Why'd you have to go and let it die)
Hearts gone cold your hands were tied
(Why'd you have to go and let it die)

Why'd you have to go and let it die
(Why'd you have to go and let it die)
Why'd you have to go and let it die
In too deep and out of time
Why'd you have to go and let it die

Do you ever think of me
You're so considerate
Did you ever think of me
Oh so considerate

In too deep and lost in time
Why'd you have to go and let it die
Beautiful veins and bloodshot eyes
Why'd you have to go and let it die
Hearts gone cold and hands are tied
Why'd you have to go and let it die
Why'd you have to go and let it die

Do you ever think of me
You're so considerate
Did you think of me
Oh so considerate

In too deep and lost in time
Why'd you have to go and let it die
Beautiful veins and bloodshot eyes
Why'd you have to go and let it die
Hearts gone cold and hands are tied
Why'd you have to go and let it die
Why'd you have to go and let this die
Why'd you have to go and let this die
Why'd you have to go and let this die
Why'd you have to go and let this die
Why'd you have to go and let it die

UPDATE Thursday: I see my humble little blog has attracted the attention of Roy Carson, the most corrupt commentator on Venezuelan affairs known to man. The same person who stabs sponsors of his ludicrous website (now defunct) v-headline in the back when they withdraw sponsorship.
Carson orders lunch online from
Alan Garcia's fav pizza house


Get lost you creep; your secret agenda is disgusting, the way you use people is worse. People like you should be in jail, not spewing crap, rumour, and "secret inside info" and trying to pass it off as serious news. Idiots like Alek Boyd may be rabid and totally wrong, but at least they're honest about their position. You are a two-faced parasite. Don't bother to reply, as this will not turn into a conversation. I have said all I want to say. Go away and don't come back. Oh, and your Spanish totally sucks...learn the language for once.

Farallon PR this morning...very good news for longs

If you remember, I talked about FAN.to in this post last week. Today FAN.to has published some very good news which you can find on this link. Basically Farallon is selling its forward silver production to Silver Wheaton (SLW) at a preferential rate in return for the capital needed to totally finance the final stages of construction and commissioning at its G-9 project.

Check the PR for the full details and some of the key numbers involved, but be clear that this is a total win-win deal and smart of FAN to have gone this way instead of diluting the share base any further. When you can look the world in the eye and say, "There WILL be a working mine here, and very soon", it's a big moment for any junior mining company. I like this news today a lot.

I said "buy" at 0.74 last week.That advice hasn't changed, even though the price is up 5c. This thing is going to $1.20, Otto's honour. Enjoy the ride.

UPDATE: Just broken through 0.80. As a friend and long-time holder just said to me, if we get a close above or at 0.82 on high volume it's pure blue sky to come.

I'm sitting here wishing I had made my last gold trade with BullionVault and not GLD

Yesterday I took a position in GLD at $87.05, and this morning I was just waiting for the slapdown that has just happened. I'm cursing using GLD because if I had used BullionVault I could have sold out an hour ago as I wanted to do.

I'm going take two minutes to pump the site's sponsor service again here, because BullionVault is a smart way to trade gold and the website is pretty easy to use, too. It's free to join and the inscription is quick and relatively painless. What's more, if you join up via this link...

Buy gold online - quickly, safely and at low prices

...they'll give you a gram of gold to get your account going, and that gram is yours to keep (they gave me a gram and I've traded it amongst the rest of my subsequent deposits ever since). It's a good deal, for one thing it's a freebie worth about U$28 and for another it gives you the chance to get used to how the BullionVault service works before you decide to add real money to the account.

I recommend this service as a way of making gold a part of your investment life, because not only can you trade 24/7, you're actually buying, selling and owning real gold held in vaults in Zurich, London and New York, and not just an ETF promissory paper. After this morning, I'll be using BullionVault more often....mistakes are made to be learned from.

UPDATE: Check out main man Gary's COW (Chart Of the Week...like 'moo' dude) at biiwii.com. He's just updated his free service today with some top quality gold TA and short-term advice on trading the metal. Gary rocks.

Best trade

I highly recommend that you take a position in Inca Pacific (IPR.v).

The Fifth European Union - Latin America and Caribbean Summit (EU-LAC)

Here we go with a nervewracking week for Alan "more cake" Garcia and company. Peru is hosting the EU-LAC V summit this week (in Spanish ALC-UE, as in the official logo above), with most meetings and bigwigs concentrated around Lima but some other meetings being held in provincial towns and cities.

Find out the basic stuff at the summit website right here, but your diligent Otto will be keeping an eye on the news as it happens. To kick off, here's a few phun phacts and phigures to mark your card before things hot up.
  • The summit is based around discussions on the two main themes of poverty, inequality and social inclusion and sustainable development, climate change, environment and energy. All in all, Peru is a good place to chat about these things as it has been suffering heavily from all of them.
  • 94,500 police officers (yes, that number is correct, and I had to check to make sure, too) have been mobilized up and down the country to make sure things run smoothly. Expect a crime wave to hit any town without a summit meeting, cos all the police will have been moved out. 48 sharpshooters will be deployed in key points around the city of Lima.
  • What prime minister Jorge Del Castillo calls transit restrictions in "some zones in Lima" turn out to be 14 sizeable areas totally blocked off around hotels and conference halls in the middle class zones of San Isidro, Miraflores, San Borja and Surco. Limeños will particularly enjoy the blocking of a section of the main Javier Prado urban expressway. If you know Lima, you'll know what kind of chaos this will cause in the next 4 days.
  • Included in the list of attendees from 58 countries is Hugo Chavez who will surely be a centre of attention of his own making, as will the person he recently called a descendant of Hitler, Germany's Chancellor Angela Merkel. "¿Porque no te calles?", anyone?
  • The government is scared to death that protesters and marches ruin their hermetic show. In Arequipa, city of over 1 million people, a general strike has been called for the 14th an 15th May, coinciding with the main conferences there. Cusco is also set for protest marches and potential trouble. Expect a news blackout if things get violent. The words of Del Castillo just about sum up how this mediocre government is all about image and nothing about substance: "....It's not good to give Peru a disorderly appearance that these strikes would give it. When you invite someone important to your house you take them to the living room and show them your best and not the worst... the living room is clean, the furniture in its place, the bathroom is clean and you offer the best food...."
  • Other protests and shadow conferences have been called by opposition leaders in Peru. President Garcia has already made not very subtle threats of police repression if any of these unofficial parties get out of hand, asking the forces of law and order to use "energetic action" on anyone trying to spoil his show. The fear of that bad show is palpable in a statement made by summit head Ricardo Vega Llona when he said, "..Labor union leaders are trying to take advantage of EU-LAC summit to call people's attention and cloud it, but I am sure Peruvians will not support this type of opposition...." Yeah right....
  • Talking of parties, to try and keep the great unwashed from their pretty show, the government is laying on two ad-hoc fiestas, one in the North zone of Lima and one in the South. I wonder why...........
So let the games begin, and rest assured anything worthy of gossip and snark will find its way onto this blog.

5/12/08

Chile's Chaiten Volcano


You may have heard that a big Volcano named Chaiten is erupting in Southern Chile right now. Here are some shots taken by UPI photographer Carlos Gutierrez, as well as the pretty amazing satellite photo above showing the plume of smoke as it trails across Argentina.

Some great images that are worth sharing. As somebody who reads this blog wrote to me today (on a different subject) "puts things into perspective." No more comments from me. Enjoy the show, and click on the images to enlarge them if you want.




Dear King Neshtor; Your ex finance minister wants to make it clear how much of a dumbass you are

Lavagna points out the mistakes in
Nestor's mathematics homework

So what does the last successful Economy Minister think of the state of today's Nestor-ruled Argentina? Here's what Roberto Lavagna has to say on Argentine radio this lunchtime (all faithfully translated by your loyal Otto, cos this one is far too good not to share):

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
"Often, from the economist side and particularly among very orthodox economists, politics is totally ignored. Today the reverse is true; the world of politics wants to totally ignore economics...there are people that do not understand economics, and that includes the ex president (Nestor) Kirchner, who makes decisions that in the short-term may look innocent, but after a while accumulate and end up bringing us today's main problem, inflation."

Lavagna then uses the 'royal we' to say, "we would be blind if we didn't say anything."

And just for good measure, he says the government's inflation figures and calculations for the cost of living, "lack all worth".

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Now maybe Lavagna isn't as smart a politico, but he's forgotten more than Neshtor knows about economics and stuff like that. So when you hear the dude who managed to dig Argentina out of a very large hole during the Duhalde and Neshtor administrations say that Argentina is in the caca and the person calling all the shots on the economy is a financial dumbass, you'd better pay attention.

UPDATE 4PM: The story has now made the Argentine press.

Trading Post

Geddit?!?!? (Sigh...never mind)

MELI at $51, and the short is going the right way this morning. Still looking for $45 or so as a cover point, but might take partial profits today. This stock is a real rollercoaster.

GRZ popping on the Bloomie report mentioned here. I'm looking for $2.20 or so and will take profits on half the trade block, but it flopped back to $2 just now after touching $2.11. Volatility, step this way. Remember GRZ is by far the safest way to play this saga (residual assets etc etc).

Not a trade, but a headsup. CGK.v is off a whole bunch at $0.245 on this news, which is not good but likely to be a temporary glitch more than a company killer. This is the time to buy a few shares and hold for a while.

MDR.v trading 6% lower today for no real reason. The current $2.37 level seems to be a floor. Buy here, and sell ST at $2.55 or so (though I really like this stock long-term).

The US dollar tried its hardest to rally, but there's no fundamental reason for it to hold. Back to 73 on the USD index. Copper spot rallied in about a minute from $3.74 to $3.80. Trade gold, dudes!

Please remember the difference between trades and long-term investments, and do your own DD.

How long before Venezuela gets into the USA's axis club?

Thursday, I reckon.

On Thursday, we have the much-hyped Interpol report on the much hyped laptops recovered from the Colombian operation in Ecuador that killed a few FARC and a few civilians. From what we've been led to believe by leaks to the press (gosh...I wonder where they came from?), the evidence will be used to turn Hugo Chavez into a terrorist-loving warmonger who is a danger to the future of the whole human race. Or in other words, the same message as always from the USA, but this time we got evidence!

So what are the chances of a black ops move by the USA to 'take Chavez out'*? Well right now it's 'possible', not probable. The BS rhetoric from the USA has been upped a few notches in recent weeks, and then there's all this thing about the USA deciding to patrol LatAm waters (i.e. Venezuela) with its 4th fleet for the first time since I-dunno-when can only be called coincidental by total damnfools. The boats start touring July 1st. We also have reports of Chavez going to Moscow next months to buy U$2Bn (with a "B") of armaments, including submarines (of the diesel variety, but would represent a substantial upping of Venezuela's defence capacities). Then you have a Bush admin in its last months that has little to lose and a Bush Sr./Panama/Noriega-like victory against the forces of evil and drug nastymen to win.

A full on invasion/war with Venezuela is extremely unlikely; for the most basic point, the USA would not want to risk turning off 12% of its oil supply. But some kind of aggression between Colombia and Venezuela in the territories currently controlled by the FARC? Yep, that's possible. Then comes worldwide condemnations, embargoes etc etc and civil uprisings in Venezuela due to the sudden deterioration of the economy? Yeah...all that's a possible.

Like I say, all the above is just in the "possible" column, not the "probable" one. This Otto is going to see how things develop before stoking his own paranoia any further.


*In the words of Pat Robertson, and he wasn't talking about taking Hugo out to the cinema and then a pizza and a cold brew later.

Argentina SoyaWars™ continues, so does the stupidity

You'd be mad, too

Hector Huergo is the author of a blog at Clarin dot com, and he's perhaps the fairest and most intelligent voice out there on the current situation in Argentine agro. Here's his latest article out today and it's a highly recommended read. Huergo captures the frustration of all concerned with the current agro strike. Some of the points made (not all...you need to read it yourself to get the better picture):

1) With soybeans and corn at record prices, any normal country that exports large quantities of these two products would be celebrating. Not Argentina. It manages to antagonize everyone and its government manages to help no-one.

2) The government should be enjoying the fruits of U$30Bn in export taxes from these two products alone, that would be the equivalent to 70% of total 2007 exports.

3) The agro sector are willing to supply the urban populations with food as normal, which will keep the larger population on their side (they hope). This implies the agro sector is aiming to upset the government via its own coffers and by definition implies a longer, more drawn out struggle against the tax hikes announced on March 11.

4) The gov't, via its lapdog statistics agency INDEC, continues to ignore reality and continues to obfuscate with irrelevant statistics to prove the wellbeing of the Argentine agro sector.

He also neatly sums up how the strike will affect the national economy in the short term. But Huergo leaves his best line til last, and this is how he wraps up his all round excellent article

"...The INDEC will say something different, but the factories in the interior (of the country) are already at a standstill while the government thinks it is winning."

It just about sums it all up. Klishtina and King Nestor seems to be incapable of admitting their basic error. Image is everything with the fools running the country, and they would prefer Argentina to go to hell in a handbasket than reach an agreement with the very people who have fuelled the economic growth of the last 5 years. But as usual in Argentina, if it doesn't happen in Buenos Aires it doesn't matter. This whole sorry episode will, if possible, be swept under the carpet by the current gov't, as evidenced by the way Argentina is currently negotiating yet another $1bn loan from 'Uncle Hugo' that will tide the economy over while the dispute drags on, and a wildcat strike called today on the Buenos Aires subway system will capture far more headlines amongst porteños than the real bad news from the provinces.

Argentina; the country that refuses to learn from its own mistakes, the country that is condemned to live its mistakes again.