A Happy New Year for Brazil Bulls

01/07/2010 9:32 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

So much for the notion that debt problems in Dubai and Greece might wreck the global economic recovery. China's factories have since turned up the heat, and it would take a huge momentum shift in the year ahead to run the boom into the ground.

Brazil's revved up like it hasn't been in two years; debt-laden, violence-ridden Mexico has watched stocks round-trip back to their 2007 highs.

The story's no different in India or South Korea: throughout Asia and the Americas the trend is up, as it has been for nine months.

Money may not solve all problems, but it can paper over most of them, for a time. Dubai's monument to chutzpah, the half-mile high Burj Dubai tower, opened as Burj Khalifa, renamed for the neighboring Abu Dhabi sheik who rescued Dubai with a bailout.

They won't be building much of anything in Greece any time soon, but if they did they certainly wouldn't name it for Juergen Stark, Germany's man at the European Central Bank. "Markets are deluding themselves if they think that member states will open their wallets to save Greece," an Italian newspaper quoted Stark as saying. He added that Greece's problems were the result of profligacy, rather than fallout from the financial crisis.

Hours later, European bureaucrats arrived to review the government's plans to slash its budget deficit from 12.7% of GDP to 3% within three years, in the teeth of a renewed credit crunch and economic stall. No one really believes Athenian stables will really smell so sweet by then, if ever. But many also don't believe that Europe will sacrifice Greece if the worst comes to pass.

Wrestling with intractable deficits can damage people’s health, too: Japan's finance minister has quit on health grounds, depriving the untested new government of one of its most experienced hands. His replacement is seen favoring a weaker yen—music to the ears of Japanese exporters.

UK Prime Minister Gordon Brown looks in need of several consecutive vacations, and now some of his own party's grandees are arguing that he deserves an early one. Adding insult to injury, Brown topped GQ's worst-dressed list. Perhaps it's time to try a leopard skin.    

Political change often marks turning points for financial markets, writes Carlton Delfeld in a common-sense list of new year's resolutions for global investors. It can also make a big difference for companies: In a new Global Q&A, fund manager Lisa Myers describes how closer integration between Taiwan and China has made Compal Electronics (Taipei: 2324) an even more promising investment.

Paul Goodwin points out two New York-traded Chinese ADRs that should continue to benefit from rapid growth in Chinese consumer spending. Meanwhile, Tom Slee warns income investors to beware of credit risk, and recommends the floating-rate securities of Canada's top telecom. These offer a tax-advantaged 3% yield that's likely to rise with interest rates—hardly enough to make anyone rich but probably a better bet than a fixed-rate five-year loan to Uncle Sam, which yields still less. And BCE, which earns $11 billion a year, is on a sounder fiscal footing as a bonus.
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