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September 26, 2006
SouthAmerica: Yesterday I was watching CNBCâs Power Lunch program when they mentioned the collapse of some ethanol stocks in the USA and they did show a chart of a few stocks from that industry.
One stock had been trading at $ 45 per share in May 2006, and yesterday the same stock was trading at $ 13 per share. The other stock was the same story â down drastically.
Then they mentioned the article published over the weekend by Barronâs newspaper â âThe Bad Brazilian Exampleâ by Thomas G. Donlan.
I decided to check that article since they had mentioned on CNBC for the entire trading world to see it. I got a copy of the article last night and after reading it I realized that a better name to that article would have been: âA Very Bad Article Published by Barronâs.â
The information given in that article about Brazil was completely inaccurate. I was very disappointed by the quality of the information used on that article and I would expect something better than that from a newspaper with the reputation of Barronâs.
It seems to me that some of the information used on that article regarding the Brazilian economy was lifted from the CIA The World Factbook which I listed below. But many of these figures are out of date and have not been up dated with the latest data available from the Brazilian government and various other sources of information in Brazil.
They used a poverty rate from 1998 on that article. They used an inflation rate that is double than the actual inflation rate in Brazil in 2006. (See Bloomberg news info below)
When the author of the article on Barronâs mentioned the breakdown of energy sources in Brazil â he never mentioned that Brazil gets 4 percent of its energy from its nuclear power plants. He did not mention also that billions of dollars are being invested to develop natural gas production in Brazil and that will bring energy from natural gas up to 15 % of total energy consumption.
The Barronâs writer made the point to say that Firewood is 8 percent of total energy consumption in Brazil. I guess he came to that conclusion as follows: Half of Brazil is the Amazon jungle. There are thousands of native Indians living inside that jungle, since they still live on the stone age and they must use firewood to cook their meals. We know that these native Brazilian Indians are not using, oil, natural gas, ethanol, and electric power from the various sources - in conclusion they must be using firewood instead which is a source of energy that is readily available around the jungle.
I just hope people who heard the CNBC report yesterday, did not read the article on Barronâs and decided to dump their investments in the ethanol industry based on that article. The information about Brazil was so poorly researched that it takes any credibility from the entire article.
I hope CNBC will bring to the attention of their audience that the article that they mentioned on the air was inaccurate and that investors should do further research on that subject before they decide what to do regarding their investments on the ethanol industry.
Since CNBC has the resources and the responsibility to its audience of providing accurate information when people are using real money to invest when they see information provided by CNBC on their television programs â I would suggest that CNBC spend a little money and send one of its main reporters to Brazil to do a full analysis of the energy policy and its implementation in Brazil, covering the ethanol industry, flex-fuel cars, all the other vehicles such as police, ambulance, fire truck engines, busses and so on that use natural gas as its source of energy.
I know that there are many lobbying groups that want to give misinformation to the American consumer including the oil and gas industry, the corn industry, and so on â these groups want the US energy industry to keep going on its current path as long as they can get away it.
The author of the Barronâs article did not mention that Brazil had to import 40 percent of its oil needs only ten years ago, but today because of these many changes in Brazilian energy policy today Brazil for the first time on its history will be able to export oil to other countries instead of importing it.
He mentioned on his article that: â Brazil has always been something of a disappointment.â But right now the biggest disappointment it is that Barronâs has published such a poorly researched article, and basically for all practical purposes that Barron's article is useless information.
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CIA â The World Factbook - Brazil:
Population: 188,078,227 (July 2006 est.)
GDP - real growth rate: 2.4% (2005 est.)
GDP - per capita (PPP): $8,400 (2005 est.)
Unemployment rate: 9.8% (2005 est.)
Population below poverty line: 22% (1998 est.)
Inflation rate (consumer prices): 6.9% (2005 est.)
Industrial production growth rate: 3.4% (2005 est.)
Electricity - production: 387.5 billion kWh (2004)
Electricity - consumption: 359.6 billion kWh (2004)
Oil - production: 2.01 million bbl/day (2005 est.)
Oil - consumption: 1.61 million bbl/day (2004)
Source:
https://www.cia.gov/cia/publications/factbook/geos/br.html
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Since the 1970âs Brazil has continued to receive West German nuclear technology.
Nuclear Power Plant Information from International Atomic Energy Agency- (IAEA)
Nuclear Power Reactors:
ANGRA â 1 in Rio de Janeiro
ANGRA â 2 in Rio de Janeiro
Source:
http://www.iaea.or.at/programmes/a2/
Nuclear Power represents about 4 % of total Electrical Power Production in Brazil (2005)
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Nuclear Power in Brazil
June 2006
· Brazil has two nuclear reactors generating 4% of its electricity.
· Its first commercial nuclear power reactor began operating in 1982.
Electricity consumption in Brazil has grown strongly since 1990. Per capita consumption is 2235 kWh/yr. Nuclear energy provides 4% of the country's electricity - about 13 billion kWh per year.
About 40% of Brazil's electricity is produced by the national Eletrobras* system. About 30% of electricity is from state-owned utilities, and 20% from the 12.6 GWe Itaipu hydro scheme on the Paraguayan border. About 9% is from autoproducers and private generators.
Source: World Nuclear Association
http://www.world-nuclear.org/info/inf95.htm
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Bloomberg News â September 25, 2006
âBrazil Economists Cut 2007 Inflation Forecast to 4.3% â
By Fabio Alves
Sept. 25 (Bloomberg) -- Brazilian economists lowered their inflation forecasts for this year and next, helping pave the way for the central bank to cut the benchmark lending rate more than previously expected.
Economists reduced their forecast for 2007 inflation for a third week, lowering it to 4.3 percent from 4.34 percent a week earlier, according to the median estimate from about 100 financial institutions surveyed on Sept. 22 by the central bank. Economists reduced their 2006 inflation forecast to 3.03 percent from 3.23 percent.
The economists' forecasts -- a report central bankers have indicated they follow -- are below the government's 4.5 percent annual target. That widening gap between economists' forecasts and the government's target will prompt the central bank to cut the benchmark lending rate another 75 basis points, or 0.75 percentage point, in its last two policy meetings this year, said Italo Lombardi, a Latin America economist at IdeaGlobal.
``As inflation expectations for this year and next show continued improvement, the central bank may cut rates more aggressively,'' Lombardi said in a telephone interview from New York. He said a decline in international oil prices will help push Brazil's inflation rate down to 2.8 percent this year.
Inflation slowed to 3.8 percent in the 12 months through August, the lowest annual rate since 1999, as a currency rally pushed down the cost of imported goods.
Growth
The central bank has cut the benchmark overnight rate 5.5 percentage points since September 2005 to 14.25 percent, the lowest in at least 20 years, to bolster growth in Latin America's biggest economy.
In the survey, economists also reduced their year-end forecast for the overnight rate to 13.5 percent from 13.75 percent the previous week. They now expect central bankers to lower the benchmark rate a half percentage point at the next policy meeting on Oct. 17-18, compared with a quarter-point cut forecast the previous week, the survey showed.
Economists held their year-end 2007 forecast for the benchmark rate at 12.5 percent. Lombardi forecasts a year-end 2007 rate of 12 percent.
The economists also lowered their 2006 economic growth forecast to 3.09 percent from 3.11 percent a week earlier, the central bank survey showed. Brazil's economy expanded 1.15 percent in the second quarter from the year-earlier period after growing 3.3 percent in the first quarter.
To contact the reporter on this story: Fabio Alves in Brasilia at
Falves3@bloomberg.net
Source:
http://www.bloomberg.com/apps/news?pid=20601086&sid=a8Vl6PBumceY&refer=latin_america
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Unemployment in Brazil for year 2006 has been going up from 8.2 % in Janâ06 to the current rate of about 8.8 %.
Source:
http://www.latin-focus.com/latinfocus/countries/brazil/braunemp.htm
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