The squealing is coming from all sectors and all countries this morning.
So it occurred to me to look at a few stocks that cover both LatAm and commodities of various shapes and sizes. What I saw was a real eye-epener:
Oil down (Therefore Venezuela, Ecuador and Brazil are toast)
Metals are down (Therefore Chile and Peru are toast)
Soft commods down (Therefore Argentina and Brazil are toast)
Metals are down (Therefore Chile and Peru are toast)
Soft commods down (Therefore Argentina and Brazil are toast)
So it occurred to me to look at a few stocks that cover both LatAm and commodities of various shapes and sizes. What I saw was a real eye-epener:
This chart compares the ten day stock price performance of Southern Copper (PCU, the black line), soybean play Bunge (BG, the red line), iron ore and other metals play Vale (RIO, the blue line) and Brazil's Petrobras (PBR, the region's biggest traded oil play).What this shows is that current share price action has nothing repeat nothing to do with real market forces like supply, demand etc. It shows that political risk factors are being totally ignored. It shows that the market has no idea about what it is truly buying or selling. This because the only thing that can be concluded from this chart is that all commodities are but one thing, and according to the crazy price action and the crazier people that drive it, all the LatAm states involved with their production are just one big, homogenous risk.
You telling me that chart up there is logical? Because if so, my investment recommendation to you is simple. Don't trade stocks ever again. Put your money in a time deposit fund and learn to surf, or play piano, or join a salsa dance class or something. You need a different pastime. However, if you agree with me and see the asinine way in which commodity stock are being treated right now, maybe you'll think about finding the arbitrage advantage amongst all that mess.
Personally, and as an example, I think PBR at U$28 is a great price now (if you take a medium-term perspective); It may go lower (re-test $25?) but oil has a profit floor these days, thanks to things like Canadian Oil Sands. And when Obama gets in, do you really think OPEC will keep the spigots wide open? Think about it.....
Personally, and as an example, I think PBR at U$28 is a great price now (if you take a medium-term perspective); It may go lower (re-test $25?) but oil has a profit floor these days, thanks to things like Canadian Oil Sands. And when Obama gets in, do you really think OPEC will keep the spigots wide open? Think about it.....