Dear rss free blog,
Dateline: Sailing down the Amazaon
The rush to get into safe assets has zapped gold and pushed up the dollar. These combined to push down our portfolio last week. I will not be updating the Model Portfolios because ship-to-shore Internet is painfully slow and costly. But I am pretty sure the animal spirits of investors will rise again if not in the remainder of 2009 (when Window Dressing dominates) then in 2010.
Let me share with you the remarks of David Kotov (of Cumberland Associates) in an interview with CNBC:
“Everybody points at Greece and looks at the Eurozone and says ‘look at the problems’. Greece and California have the same credit rating.
“Greece is 3% of the Eurozone GDP. California is 13% of U.S. GDP.
“So before we throw stones we need to look at both sides of the issue.”
The flight to safety has boosted the dollar from clearly oversold levels. But I do not think this will result in a longer-terms boost for the Greenback, any more than last year’s similar panic buying. The dollar will start to fall if it gets too strong again.
Currencies do not achieve equilibrium. They fluctuate in our floating rate world. That is one reason I do not bet on exchange rates except if I am certain that there will be a push in a certain direction.
For the dollar I see no immediate likelihood of a resumption of its depreciation, but longer term it will go down among other things because this is in the U.S. interest. Being abroad I do hope that the dollar will remain high until I stop spending reais (Brazil); and euros (French Guiana and St. Barts).
As I write this I am sailing about where the Rio Negro, a tributary, has flowed into the main Amazon River. I can see the meeting of waters of different colors from my posh stateroom. POSH goes back to the British who traveled to India: it originally stood for “port outbound; starboard home.” We are on the port side and sailing eastward. Life jacket drill was a breeze as your editor’s cabin has a virtual private staircase to the cabaret lounge where passengers assembled. We never got “past muster”, an term I use without thinking. Had we done so we would have been filing into lifeboats.
This is the second triumph of my trip. The first was finding my suitcase at Miami Airport after it had gone off in a separate direction from its owner on the American Airlines leg from New York. The cruise company rep at the airport, Hector, was supposed to find the case amongst more than 700 pieces of stray AA baggage accumulated in just on very busy day. I told him it was a distinctive and almost unique Burberry check soft roll-on case. This he did not understand so I explained that it was beige plaid. And then called him and the AA lost baggage department (in Texas!) virtually every hour.
Hector has lived in Miami for 14 years since emigrating as a child from Nicaragua and has no accent in English. But, alas, he misunderstood thinking my suitcase was “gray-black”, an interpretation of “beige plaid”. So he could not spot it and too proud to ask. Luckily I did find it in time to schlepp it with me to the next flight from Miami to Manaus.
Manaus is the leading port on the great river, and we had a frantic weekend in the hot, humid sun a few miles from the Equator. Thank goodness I did not have to replace my clothes. The shopping was frantic on the last weekend before Natal as Amerindians hit the town by boat and ferry with their gift lists. Manaus’s hot streets were nearly impenetrable with shoppers. Tackily decorated stores were played the usual carols, top volume, interrupted by the odd firecracker. Pitchmen helped me practice my Portuguese by shouting out news of the bargains and easy payments they were offering, a chorus line of T-shirted young people touted cellphone offers in word and song, and the chaotic mingling cars and taxis tried to warn off jaywalkers with their horns.
Notable sites are mostly from the rubber baron era, before the British figured out how to grow rubber trees in other parts of the world. One must-see is the Teatro Amazonas, the opera house where the nouveau riche gathered in the 19th century to seek culture. While his lady could wear a low-cut gown, your 19th century rubber magnate had to sport a frockcoat, white tie, and starched shirt, in an era when there was no air-conditioning. His exploited workers were revenged by what he went through to listen to Melba or Caruso.
The opera house was shipped in prefabricated chunks from Europe up the great river: steel for the structure and staircases from Scotland; marble columns and Murano glass lights and chandeliers from Italy; roof tiles, the theater curtain, and ceiling murals from France. Brazil’s contribution was the wooden parquet floors and the wooden seats.
The other great Manaus site is the Baltard-style Mercado Municipal, also shipped pre-fab from France, the only Les Halles variant left in place. (During his Mayorality, Jacques Chirac had Les Halles torn down to build a shopping mall.) Both the Teatro and the Mercado are being, slowly, restored by the Brazilian government. They are also building a bridge and gas pipeline across the Rio Negro there, quite a task. (I can see them flaring the gas as I write; better to use it.)
News about our companies will follow but first a note about some other developments in the southern hemisphere. Australia’s Competition and Consumer Commission (ACCC) surveyed competitors to make sure there would be no monopolistic growth in bank offerings of wealth management services after National Australian Bank won AXA Asia Pacific with a high bid. Canberra fears that too-big-to-fail banks will dominate financial services in competition with insurers and specialized firms.
This may mark further zeal to regulate banks, and not just in Oz. Unlike the situation elsewhere, the Australian banking sector did not receive a penny from bailout funds. But the regulators are ready to regulate, if not for the sake of solvency for the sake of consumer protection.
