BlackRock boss questions eurozone solutions

Great interview of Larry Fink, the chief executive of BlackRock, the largest asset manager in the world. He tells the FT’s Gillian Tett that the outlook for the eurozone is troubling and some proposed solutions could make the situation even worse.

http://video.ft.com/v/1231242136001/BlackRock-boss-questions-eurozone-solutions

Argentina and the Paris Club

Argentine officials have been negotiating a repayment plan with the Paris Club over the outstanding debt, one of the last remnants of Argentina's $100 billion debt default in 2002.

Members of the Paris Club group of creditors want Argentina to repay roughly $9 billion in defaulted debt within three years and to make a big initial payment, a local newspaper reported this month. This would be needed for creditors to reopen credit lines for the purchase of capital goods and medium-term investments in Latin America's fast-growing No. 3 economy.

BUT, what is tthe Paris Club and why the Argentine officials are negotiating with them?

The Paris club is an group of financial officials who meet monthly in Paris attended by creditors to discuss debt issues. Among other things, the Paris Club addresses the issue of coordinated debt relief for developing countries that cannot service their debt.

The two major events that the Club intervened were the Iraq write-off in 2004 and the Argentine partial default of its external debt in 2002. 

Talking about Argentina, this default was caused by an economic crisis in the mid-1990s and recession between 1999 and 2002. In 2002,  Foreign investment fled the country, and capital flow towards Argentina ceased almost completely. Besides, the local currency was floated, and the peso devalued quickly, producing higher-than-average inflation.

In 1990 the country was suffering from a hyperinflation and the peso was fixed to USD and also a convertible currency (Russia also had a convertible currency. It fixed at artificially higher levels - a recipe for disaster). To secure this convertibility, the Argentine Government needed to have USD reserves at the same level as the cash in circulation. This measure lowered inflation and stabilised prices. Because of huge external debt, investors lost confidence and there was a flight of dollars away from the country, resulting in reduced competitiveness, increasing unemployment. Political issues also increased the problems of the Argentine economic scenario (Debt ballooned - high government spending, corruption, tax evasion).

In 2001 as I said earlier, the recession has created a fear among people and the banks started to see the cash disappear. People withdrew money and turned pesos into dollars and sent them abroad (USD up - so government had to keep buying USD to keep pesos fixed!). 

On December, after the riot, Adolfo Rodriguez was appointed as president but resigned and was replaced by Eduardo Duhalde that made decisions like giving up pegging peso/USD that had been in place for 10 years! Also, Eduardo and the Government decided that the banks had to convert all USD savings to pesos, causing higher inflation due to the currency devaluation.

The recovery came in 2003 because of a series of factors such as: devalued peso made Argentine export cheap and competitive abroad, high soy prices producing massive surplus (China major buyer), improve in tax collection and huge trade surplus due to government intervention.

9 Reasons You Should Blog

I think everyone should blog, especially entrepreneurs, so here are my top 9 reasons why you should be blogging if you aren’t already.

1. It’s your new resume. I had a recruiter call me once out of the blue. She said, “Hi Dan, this is Emily from a recruiting firm. I just finished reading your blog and I don’t really have any questions for you. I just wanted to let you know that you are perfect for a job I’m trying to fill and I wanted to see if you would be interested.” Wait, what? I was stunned. I had never met this woman before in my life and she already knew that I was a great fit for the job she was trying to fill. It was actually a very good position at a great firm. Make your resume dynamic. We are no longer in the world of 1 page resumes.

2. It’s your new hiring tool. As an entrepreneur or hiring manager, think about #1 in reverse. If you are trying to hire for certain positions, people will want to know who you are and what you are about. Show people why they should be a part of your endeavor. Why they should be on your team. Blogging is a great way to do this.

3. Network with new people. I tried making music once with some fancy DJ software. I didn’t know what I was doing so I googled, “how to make house music” (that story for later). I was curious. I stumbled upon a few blogs, left a few comments and questions and before I knew it I had a new friend. This was a person I had never met before but it was a person that took special interest in my questions and helped me understand what I was trying to learn. After some back and forth, I was able to create some solid tracks. Now I listen to his tracks whenever they are released. New friend in the music world.

4. Turn messy ideas into neat ones. Ideas are a dime a dozen. They exist as some lofty, grandiose thing that lives in your head and your head alone. When you talk about those ideas they begin to make more sense. When you write about those ideas they make even more sense. This is often the reason why people write business plans. Having a blog is a great outlet to force your brain into a laser-focused state of mind. Sure, you could do this in some private notebook but what fun would that be? Furthermore, it might help you with point #1 or #2. It might even help you find business partners.

5. Reflect on your past to improve your future. When you blog, your thoughts and ideas are documented over time. Sometimes you may take certain stances on topics that may prove to be right or wrong later. By documenting your ideas in sequence, you can look back and reflect on how your ideas and opinions evolve over time. Looking at the past is critically important in understanding how to improve the future. This is why students at Harvard Business School review hundreds of business case studies. Learn from the past.

6. Get some peace of mind. As I write this post I have 15 different tabs open in my web browser, all of which require a different mindset (e.g. music vs. email, Facebook vs. Google docs spreadsheet). However, as I write this post I’m able to momentarily focus my mind on one stream of conscious thought. Doing this can be particularly hard in today’s world considering how many distractions there are. Just like the blinking Gmail tab telling me to check the 9 new emails I have waiting in my inbox. But for now I’ll ignore those and continue on with the post.

7. Create your own PR machine. If I was working on my own project or business my blog would be the first place I’d talk about it. It’s your own Public Relations soapbox. It also helps surface your views on a specific topic or industry. Views that might help you win new business. In the past, we needed radio and TV to get our messages across. Not today.

8. Juice up your writing skills. I suck at writing. I’ve maybe taken 3 writing classes throughout my life. But just like anything else, practice makes perfect and the more I write on my blog the more I find my skills improving slowly but surely. And when you consider that most work and sales today is done over email, you quickly realize that it’s much more critical to have good writing skills than ever before. 

9. Produce more, consume less. It’s very easy to get caught up with media consumption. There are many days where I feel as if I’ve achieved nothing because I spent my entire day consuming other people’s content. This is a very dangerous road. I believe that by asserting yourself as a contributor instead of a consumer, you will realize huge payoffs down the road. Be a builder. Be a producer.

Source: Forbes

U.S. historic downgrade

Last week, Standard & Poor's reduced the national AAA credit rating one notch to AA+, while maintaining the negative long-term outlook.

The downgrade means the U.S is no longer default risk-free but some analysts have noted that the new default setting for the risk-free may become AA+. One example of this can be the response from finance ministers from the world's largest economies affirming their support for the U.S. Treasury and reinterating that they wouldn't change their investment policies in regard to U.S. debt.

Another example that we have seen this week is the run for safe assets such as the 10 year US Treasury (chart below). Despite of the downgrade, investors are migrating to the US treasuries.

The long-term consequences of U.S. unsustainable federal budget picture are now staring straight in the face and tough decisions will need to be made soon on how much they can afford to spend on Social Security, Medicare, Medicaid and other social programs. Tax structure and non-entitlement structure may also need to be reformed.

“Boldness has genius, power and magic in it.”

This phrase attributed to Goethe is driving my way right now. That's why I'm not writing so often here. I'm glad for the growing visits but I received a great opportunity a few weeks ago and I'm devoting all my free time to it. All that I wanna say is: "if you want something, go for it no matter how long it takes to reach."

Well, I'm already posting something personal so I'll continue it and share with all the visitors a great master piece written by Antonin Dvorak, my favorite artist related to classical music.

I believe every composition made by Dvorak is very powerful, I mean, when I listen to this I feel alive, willing to do everything that I wish to do but I also feel calm, thoughtful and serene...enjoy it. One more detail: I guess this record is not the best one, the one that I have is played by Prague Philharmonic and I believe the spalla is Isabelle Faust.
Finnaly, I would like to share a speak of Jack Abramoff in 'Casino Jack' movie:

"You know, I do a shit load of reading, and studying, and praying, and I've come to a few conclusions i want to share.

People look at Politicians and Celebrities on the TV and Newspapers, glossy Magazines and what do they see? “I'm just like them”. That’s what they see. “I'm special. I’m different. I can be just like them.” Well guess what? You can’t!

You know why? Because in reality, mediocrity is where most people live. Mediocrity is the elephant in the room. It’s ubiquitous. Mediocrity is in your schools, in your dreams. It’s in your family.

Those of us who know this, those of us who understand, the disease of the dull, we do something about it. We do more because we have to, the deck was always stacked against us. You’re either a big leader or a slave, clawing your way onto the seed train.

Some people say Jack Anderson moves too fast, Jack Anderson cuts corners. Well I say to them, if that’s the difference between me and my family having a good life and using public transport everyday then so be it! I will NOT allow my family to be slaves. I will NOT allow the world I touch to be VANILLA!

You say I’m selfish? Fuck you! I give back…I give back plenty.

You say…say I got a big ego? Fuck you twice!! I’m humbly grateful for the wonderful gifts that I’ve received here in America, the greatest country on this planet!

I’m Jack Anderson, and oh yeah, I work out every day."

It is the second time I watch this movie. It is very interesting to see how they persuade people and why it is important to have networking.

Euro Zone GDP Growth - Good or bad news?

Eurostat, the European Union statistical information service released this week a report saying that GDP increased by 0.8% in both Euro Area and the EU27 during the first quarter of 2011, compared with the previous quarter. In 2010, growth rates were +0,3%  in the Euro area and +0.2% in the EU27*.

But, when we look the details at the data, it's possible to see some problems around Europe. Here are some GDP data in some countries:

Portugal: -0.7%

Spain: 0.3%

Ireland: N/D

Greece: 0.8%

Still on Eurostat website we can take a look at the some Long-Term Government Bond Yields:

In spite of Greece had a significant growth in this quarter, the country long-term bond yield is still increasing and it is happening with Portugal as well. Greece is at a difficult situation right now due to 2 main problems. One, how can a country have more austerity if it have to pay almost 13% for an investor (not counting other expenses)? Second, How can a country pay its bills if the economic outlook is now not one of the most attractive? Why do I say that? Jean-Claude Trichet gave signals that may have a rate hike around June. When interest rates goes up, it slows down the economy and it means less economic activity, afecting Greece and Portugal directly. 

We can see at the EUR/USD chart below that this announcement has made euro slide against dollar:

So, if the EUR is getting weak, it means US dollar is getting stronger. In an appreciating dollar environment, issuance of yankee bonds will increase as issuers take advantage of the dollar's increasing purchasing power. Yankee bonds are bonds issued by international companies and sold in the United States.

*EU-27: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

Ireland Downgrade and ECB interest rate

Nowadays I've been writing about the Euro Zone and how their government decisions impacts on the commodities prices and currency appreciation/depreciation. Today I would like to discuss about another impact, specifically about the Ireland Downgrade to Baa3 from Baa1. First of all, it is necessary to explain what are those notes. There is a table below that is very didactic to learn. Note.: U.S sovereign debt is a triple A.

Moody's		Standard & Poor's		Fitch Ratings		Commentaire
Long terme	Court terme	Long terme	Court terme	Long Terme	Court terme
Aaa	P-1	AAA	A-1+	AAA	F1+	Prime. Sécurité maximale.
Aa1		AA+		AA+		High Grade.Qualité haute ou bonne.
Aa2		AA		AA
Aa3		AA-		AA-
A1		A+	A-1	A+	F1	Upper Medium Grade. Qualité moyenne.
A2		A		A
A3	P-2	A-	A-2	A-	F2
Baa1		BBB+		BBB+		Lower Medium Grade. Qualité moyenne inférieure.
Baa2	P-3	BBB	A-3	BBB	F3
Baa3		BBB-		BBB-
Ba1	Not Prime	BB+	B	BB+	B	Non Investment Grade.Spéculatif.
Ba2		BB		BB
Ba3		BB-		BB-
B1		B+		B+		Hautement spéculatif.
B2		B		B
B3		B-		B-
Caa		CCC+	C	CCC	C	Risque substantiel. En mauvaise condition.
Ca		CCC				Extrêmement spéculatif.
C		CCC-				Peut être en défaut.
/		D	D	DDD	D	En défaut.
				DD
				D

Markets around the globe got concerned this week due to some sovereign problems in Portugal and Ireland. In the beginning of April Moody's downgrade Portugal sovereign debt and now was Ireland's turn. Is there some correlation between Ireland downgrade and ECB interest rate increase? For Moody's, yes.

Moody's says that Irish government's financial strenght may suffer as a result of what may be the first of a series of policy rate increases by the European Central Bank to contain the inflation in euro area. The increase can mean less consumer spending and a strengthening of the euro may negatively affect exports.

Inflation is a big problem for every country around the globe. There is a well-known trade-off. "Do I keep the interest rate low and stimulate the economy or rise interest rate, slowing down the post-recession economy in order to contain the inflation?" Especially after the mortgage crisis this trade-off has been experienced by many countries such as China, Brazil, Euro Zone and some countries in Asia. This is a hard problem to solve and that's why in the previews post I wrote that gold will reach $1.500,00 in the coming months...

Silver and Gold at a new all-time high

When Jean-Claude Trichet reported a quarter-point increase at the benchmark interest rate in Euro Area, gold and silver price reached a new all-time high - silver pushed above $40 a troy ounce for the first time since 1980 and gold to $1474,19. Why did this happen?
Gold and Silver are well known among investor as the safe haven to curb inflation efects. So when the European Central Bank President announced the increase, investors got concerned about the inflation and migrated to those assets.

Country	Interest Rate	Growth Rate	Inflation Rate	Jobless Rate	Government Budget	Exchange Rate
Euro Area	1.25%	0.30%	2.60%	9.90%	-6.30	14200

Furthermmore, the hike on those commodities price this week has also to do with the potencial shutdown of the US Government due to some divergences between Republicans and Democrats. The deal was to cut $100 billion in fiscal spending in 2011 BUT the agreement cuts $39 billion in atual spending, which is $22 billion less than bill the House passed in Feb by President Obama's fiscal 2011 budget request - $78.5 billion.
Analysts and investors now see $1,500 gold and $50 silver as likely to be breached in the coming months, as the potential for looser monetary policy for longer in the US weighs on the dollar. Why?
Commodities are usually priced in dollar, so a weaken dollar boosts raw materials prices and can valorize other currencies such as Real, the Brazilian Currency and the Euro.

Black Swan Events

Hello,

I haven't been posting for a while due to some events that I had to prioritize and unfortunately, but not least important, I had to step the blog aside for a bit. However, it was worth it. I'll start to work for a big brokerage firm here in Brazil in the beginning of April and I'm so happy and excited to start this new path in my career.

In the interval between the last post and this one, a lot of events happened in the world that affected the economics, politics and social fields.

One example of those events are the earthquake and tsunami in Japan a few days ago, an event very difficult to predict because deviates beyond what is normally expected of a situation. Another example is the unrest in the Middle East starting in Egypt spreading to Libya, Tunisia and so on that drove a climb in the oil price above $100 a barrel.

Those unpredictable events are called Black Swan events. This term was popularized by Nassim Nicholas Taleb, a finance professor and former Wall Street trader. According to the New York Times, black swan are events with the following attributes.
First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

Here you can see a series of black swan events and the impacts on the stock market.

Unrest in Egypt

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View the full EGPT chart at Wikinvest

Since Feb. when the riot started to become significant the stock market plunged.

Nikkei 225

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View the full N225 chart at Wikinvest

March 16 - Earthquake and tsunami.

VIX (Volatility S&P500 index)

See the VIX explanation here. 

Currency Carry Trade in Brazil

In the end of 2010 I wrote about the tax on capital inflows here in Brazil. Our country imposed a 2 percent entry tax (the IOF) on inflows to domestic bonds and equity markets on October 19, 2009. Moreover, I was taking a look at the stats of this blog and surged more than 50 search keywords related to "onshore offshore spreads Brazil", the so called carry trade. But, what is that? What are the advantages for the foreign investor? How they do that?

According to Investopedia, Currency Carry Trade is a strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.

For example, a trader borrows $10.000,00 US dollar from a American Bank, converts the funds into BRL (Brazilian Real) and buys a bond for the equivalent amount here in Brazil. Let's assume the brazilian bond pays 11.25% and the american interest rate is around 0.25 percent. The trader stands to make a profit of 11% (See, I'm not adding the 6% entry tax, If I did that, the trade still can make a big profit) as long as the exchange rate between the country does not change (USD/BRL). 

The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Brazilian Real, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless the position is hedged appropriately. Still, this trade nowadays has been advantageous for the foreign investor that invest in dollar. Why's that? Brazilian economy growing fast, economic and political stability, government spending is almost under control comparing to developed countries are some indicators that keep the U.S. dollar in this range of 1.60 - 1.70, drecreasing the chances of drastic losses.

Another example of Carry Trade

Below is a chart illustrating a typical example where the carry trade strategy could have been best applied. The chart shows a steady increase of the GBP/JPY pair in 2005 and 2006, spawned, among other things, by carry traders going long to obtain the interest rate differential. 

A carry trader who took advantage of the interest rate differential in the GBP/JPY would have had the following profit, had he/she bought one standard lot of the GBP/JPY at about the same time last year, and decided to sell a year later. 

 

Sources: Fxwords, Investopedia, Brazilian Central Bank.

Warren Buffett's secrets revealed : Buffett & Clark

Mary Buffett, the former daughter-in-law of billionaire investor Warren Buffett, and David Clark, one of the earliest 'Buffettologists', say they revealed Mr. Buffett's investment secrets in their recently published book Warren Buffett and the Art of Stock Arbitrage.

The billionaire Omaha investor returned about 39 percent annually from 1980 and 2003, which is an 

astounding investment feat. However, these numbers look shabby compared to the 81 percent annual returns he achieved with the 59 stock arbitrage deals he did between 1980 and 2003. Clark and Mary Buffett claims this is the secret to Buffett's success.

Stock arbitrage, also known as merger arbitrage, involves buying the shares of companies that are expected to be acquired by another company.

Usually, after an acquisition is announced, the price of the stock jumps close to the acquirer's proposed purchase price. Stock arbitrage, then, is buying those shares and gaining from the eventual convergence to the exact announced purchase price.

The downside risk, of course, is if the deal doesn't go through and the prices drop all the way back to pre-merger announcement levels.For this reason, investors must be very "choosy" when doing these deals, said Mary Buffett, in a phone interview with IBTimes. Warren Buffett was certainly "choosy"; all 59 of his stock arbitrage deals went through.

Mary Buffett said the billionaire investor forgoes the greater returns of buying early in the speculative phase of the potential merger. Instead, he waits until the deal is "certain" to happen before he acts.

Buffett and Clark list the following as the characteristics of the deals that are likely to go through:

*The takeover must be friendly and no large shareholder should oppose it. 

*The acquisition should be made for strategic rather than financial reasons, i.e. a company buying another one because there is synergy rather than a private equity firm buying a company it thinks is undervalued.

*There may also be regulatory considerations. For example, if the two companies together control a large enough portion of a  certain market, regulators may oppose the deal on anti-trust basis.

Buffett and Clark insist stock arbitrage is a good strategy for retail investors. Years ago, it was impractical because of the high trading costs involved. 

Now, with the advent of electronic trading and lower commissions, it's more feasible.

Moreover, to follow the mergers market, one just needs to pay attention to general financial news.  There are also a number of websites that specifically track mergers, so keeping abreast of this market is easier now than ever, said Mary Buffett.

Also, mergers still happen in recessionary times. For example, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) bought Burlington Northern in late 2009. However, it is not possible for retail investors to achieve Buffett's 81 percent annual returns because they typically can only leverage two times 

for stock purchases.

Warren Buffett returned 81 percent annually by doing about 2.5 deals per year. Assuming each deal returned on average three percent, his leverage was at least nine times. Still, with just two times leverage, investors can make some pretty decent returns.

Assuming Buffett's figure of 2.5 deals per year, with a 3 percent return per deal, and two-times leverage, the expected return would be about 15 percent per year.

Assuming (optimistically) investors do four deals per year (each deal takes several months to finish), leverage two-times, and capture three percent per deal, they would return 24 percent, or about twice the historic return of the U.S. stock market and trumping the performance of most fund managers. Not a bad deal, especially for retail investors.

Incidentally, billionaire hedge fund manager John Paulson and many of the "big guys out of Goldman Sachs" (according to David Clark) started their career in stock arbitrage

by IBTimes

The Interconnected World

The Interconnected World is a film in four parts about the International Monetary Fund and the global economic crisis.

We need better multilateral governance. And if we don’t get it, our children and our grandchildren are going to pay the cost of that.— Mohamed El-Erian, CEO of PIMCO

The four videos discuss how the world economic order is being shaped by the global crisis, the rise of Asia and the implications for the rest of the world, how the discovery of oil is affecting a low-income country in Africa, and the transition of a country in Eastern Europe from communism to a market economy and membership of the European Union.

The IMF was established to foster economic stability and promote peace following the devastation of World War II. This global financial institution has been undergoing rapid change to meet the challenges of the 21st century, and played a vital role in helping countries deal with the international crisis.

Watch here the movie:

The Interconnected World

The Global Outlook in Summary

You can read the full report here.

Repeal Obamacare

REPEAL OBAMACARE (iq2us.org) from Intelligence Squared US on Vimeo.
Watch this debate on Bloomberg Television starting Friday, January 14th at 9PM ET.

In March 2010 President Obama signed into law the Affordable Care Act, the biggest overhaul of our health care system in decades.  According to a November poll from the Kaiser Family Foundation, 40 percent of the public would like Congress to expand the new health reform law or leave it as is, while 49 percent are in favor of repealing all or parts of it.  Can the new law reduce the deficit and expand coverage to millions of uninsured Americans, or, as its critics warn, will it actually increase the deficit and fail to control costs that are spiraling out of control?

Hello everyone.

Today I was watching an interesting debate related to the Obama's health care reform and it was worth watching. There is a predefined theme and there are two groups that one is favor and the other one is against and the mail goal is to try to convince the public of their position.  Although there are a lot of things I could say about this debate, I would like to focus on a question asked by the audience about the government on the influence on people's behavior in relation to change eating habits.
Both of the groups weren't in favor about that question and I almost hit the computer screen. How can they say that? They were just worried about the economic issue of the health problem...
I believe that government must have the obligation to change the people behavior (for better) to improve their quality of life, through this we can prevent a lot of diseases that could happen some day! For example, if the government through the law imposed on business that junk-food enterprises encouraged people to eat a better food, if the government encouraged those business to build a better menu, on the long run I believe that the goverment would spend less on health care because the quality of life would improve and the percentage of some diseases related to bad eating habits would reduce to lower levels. Don't you think we (the entire society) are able to change things?

The Economist Debate: Cities

Today at the The Economist website I was reading a debate related to the growth of cities and 'the house' were saying that resctricting the growth of cities will improve quality of life. However, I don't agree on some parts what the house is saying because I believe that people nowadays fear drastic changes and opt for a quick and a feasible decision like this one; I believe that if we control the growth of cities we can keep some things under control and enphasize what is missing to improve people's lives. Nevertheless, if this works, how can we manage the newborns? How can we say to people that are able to enjoy good quality of life, good jobs and health care for example,  that they can't have kids? How can we say no to those people who lives in a city with a slightly worst quality of life and would like to move to another city better than they are now? I think this goes against the right of freedom and may cause another problem in the future. So when this problem happens we will look foward to find another solution and so on.

So, the disagree part comes so deep in my mind because I believe that we are able to make drastic changes, breakthroughs or revolutions when we want to; we just need to leave aside our fears, perceive what need to change,  be creative and open-mind all the time. For cities to grow without losing quality of life I believe the government, whether local, state or federal need to put aside the partisan issues to govern on behalf of people today and tomorrow; they need to build things not to boast themselves, but rather to serve the interests and welfare of people. When the parties work together I can assure that there will be a more efficient work, in which the population will be benefited.

Simon Sinek: How great leaders inspire action

Simon Sinek has a simple but powerful model for inspirational leadership all starting with a golden circle and the question "Why?" His examples include Apple, Martin Luther King, and the Wright brothers -- and as a counterpoint Tivo, which (until a recent court victory that tripled its stock price) appeared to be struggling.

Brazilian Economic Outlook in 2011

Always at the beginning of the year the market is reached by a storm of predictions about how the year should be. To confirm this phrase I will begin this post with an interview that I watched yesterday with Eike Batista @ RedeTV where he talks about the Brazilian economy.

The interviewer start asking about what are the scenario for the brazilian economy for 2011 and what would be the good and bad news. "The positive part I think that the Brazilian economy will keep growing above the american and european standards, this is very important. However, there are several points that we need to control. I dare to say that the GDP would grow between 4 to 5% in 2011 (...). Obviously this several points such as infrastructure and skilled worker are pressing the inflation up." says Eike Batista. As businessman, the market also predict that Brazilian GDP will grow less compared to 2010 from 7,5% to 4,5% in 2011 due to a  number of factors including the increase of the SELIC benchmark interest rate to hold the inflation in its target defined by the Brazilian Central Bank. Speaking of Central Bank, Alexandre Tombini,on his first speech as the new president of the institution said that the current inflation target of 4,5% for 2011 and 2012 should be reduced.

Back to the interview, the interviewer asked Eike about the valued local currency against a basket of currencies especially the dollar and Eike answered: "There are a few industries in our economy that need sort of a help such as lower tax; on the other hand the valued currency can help companies to become more efficient because they can buy for a cheaper price machines and tools that are just fabricated abroad (....)".

If you would like to watch the full interview, please click here.

It is impossible to talk about scenario without citing the Public sector net debt. Tulio Maciel, Deputy Head of Economic Department of the Central Bank announced the increase in the forecast for the level of net public sector debt relative toGross Domestic Product (GDP) in 2010 but he also point to the fact that the trajectory of the indicator has been falling over recent years. For 2011, thecourse must be repeated, since theofficial forecast for Central Bank is that the debt will drop to37.8% of GDP at the end of next year.

I will keep updating the brazilian economic outlook for you readers.