Tag Archives: World Cup Fever

Basic Strategy For Hyping An Investment Trend

2013.03.11.PlanetHypeI’ve seen this happen so many times, I could teach a class on it:

  1. Take a small data sample of something that confirms the view you’re determined to promote;
  2. Regardless of how rigorous the methodology or how representative the sample size, declare that this is indicative of a broader trend–forest for the trees or some such thing;
  3. Willfully ignore any aspects of this declaration that remotely contradict your view;
  4. Deny/insult/discredit/lash out at anyone who tries to take an even-handed view on it;
  5. Begrudgingly concede that nothing is perfect but that a positive attitude is what counts;
  6. Neglect to make clear the very pertinent fact that you have a vested interest–financially, politically, reputationally–in a positive outcome which therefore inhibits your own objectivity;
  7. If your lawyers insist, loosely outline the caveats to your opinion and bury them somewhere where they are least likely to be noticed (“past performance is not indicative of future results” is the boilerplate here);
  8. Debunk the caveats by paraphrasing points 1 and 2 and emphasize the probability your forecast will prevail;
  9. Lather;
  10. Rinse;
  11. Repeat.

Now, let’s consider a brief list of where we’ve seen this template applied in the recent past:

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US Sports Market Segmentation and the Insurgent Armchair Quarterback

Anyone even remotely conscious of the US sports market knows that football long ago surpassed baseball as the national pastime. How far ahead has it pulled? From Hambrecht’s recent US Professional Sports Market & Franchise Value Report:

According to Hambrecht, national TV rights fees are the big growth driver here.

Here’s a longer view: Continue reading

Olympics and World Cup effects on Brazil’s economy and FX

This is an impossible question to really ever answer definitively but I’ve been wanting to try for a while now. And it seems that Goldman Sachs has beaten me to the punch, at least partly—they’ve published a report detailing the relationship between hosting the Olympics and variety of economic performance indicators. After reading the report I appreciate how unrealistic it would have been to attempt something like this on my own and there’s a lot in there that makes for a good rainy day read. What I was most drawn to was the blurb on correlation between the Olympics and the local FX market as expressed through the host country’s real effective exchange rate.
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Run for Cover: Brazil’s credit blowout has officially begun

Moody’s downgraded eight Brazilian banks, bringing them in line with the country’s sovereign rating. The broad problem they all share, in a nutshell, is twofold: slowing economic growth and lower interest rates, the latter driven almost exclusively by the country’s own central bank and President Rousseff. The idea behind forcing lower interest rates was nominally to make credit cheaper to Brazilian consumers, but apparently there hasn’t been enough of an increase in lending to make up for the profit margin squeeze. Not helping the situation is a spike in household debt.

Also, Eike Batista’s oil firm lost 25% in market value after the company said its first two wells would produce less than one-third of anticipated estimates.

Also, the real is swiftly heading for 2.10 against the dollar for the first time since 2009.
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Latin America Infrastructure Project Finance: the top 100

Brazil, Mexico, Peru and Colombia account for two-thirds of the top 100 infrastructure finance projects in Latin America this year, which collectively will total nearly US$200 billion, according to a report by CG/LA Infrastructure, Inc. By sector, the favorite is transportation, accounting for US$90 billion, half of it in Brazil. The obvious indication here is that this is Olympics and World Cup preparation. I’ve refashioned the data in the following graphs to give a more (to me, at least) comprehensive visualization of these numbers:

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The other currency war: Mexico vs. Brazil

Is uncertainty better than negative certainty? This is the basic premise behind some rather unsettling charts that Business Monitor International recently put together showing the Mexican peso-Brazilian real cross rate. You know, it’s funny, for all the bellyaching that Latin Americanist geeks do about these two countries, very rarely does anyone bother to compare their currencies. And as the two countries in the world where I’ve spent the majority of my time since the millennium (does anyone even use the phrase “Y2K” anymore?), I’m finding these charts very thought provoking.

To begin with, so that we’re clear on biases, Continue reading

The Brazil Risk Checklist: Questions Nobody Wants to Answer

economyLet’s get straight to brass tacks. Everyone loves investing in Brazil’s economy, everyone loves Brazilian Samba, everyone  has World Cup Fever. How can it go wrong?

What if World Cup infrastructure progress remains behind schedule?

How will Brazil’s infrastructure buildup generally compare to South Africa ’10 or Greece ’04? Oh, those comparisons aren’t fair? Then how ’bout Germany ’06?

Will any more cabinet ministers resign due to corruption allegations or is 6 the final tally? Either way, should we take these resignations as evidence that corruption in Brazil is improving or that its standing as a country more difficult to do business in than Russia, Pakistan or Egypt is indeed deserved and accurate?
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BTG Pactual IPO = World Cup Fever

Can you feel the excitement? Don’t kid yourself, this has World Cup Fever written all over it–BTG Pactual is going for the gold. Here’s an exercise: drop “André Esteves” with the word, “star” into Google and see what comes up. I’m serious. Or you can just take my word for it. Reuters refers to him as a “wunderkind” while Forbes prefers “swashbuckling”. I don’t doubt the man’s savvy, but really, media people, get a grip. And you wonder why the public holds you in such low esteem?

Anyway, this analysis compares it to Goldman Sachs’ IPO, which is a comparison I would court if I were Esteves, but I’m not sure how instructive that is for the rest of us. My knee-jerk reaction was how it will compare with the IPOs of some of the Chinese banks a few years back, but let me think about this some more. The more relevant point, as mentioned in the wunderkind article, might be about return on equity. In the meantime, seriously: World Cup Fever.