and could be the next China-like miracle
By Martin D. Weiss
Money and Markets
Take a quick look back to
recent history: In the 1970s,
The primary difference today:
• In his first term, which just ended ...
• He reduced consumer price inflation from 12.5% in 2002 to under 3% in 2006.
• He paid off every penny owed to the IMF.
• He boosted the value of the real from $0.28 to $0.47.
And he transformed
This past week, while the Dow tumbled, the Brazilian market fell in tandem. That’s natural and to be expected.
But the country is just warming up. In Lula’s second term in office, which began in January, he’s helping to kick off a whole new series of economic reforms.
• Until now, for example, Brazilian entrepreneurs had to plow through endless amounts of red tape to start a new business and then pay at least eight different taxes to operate one. But starting this year, they will enjoy vastly simplified rules for incorporation ... just one, lower tax instead of eight ... plus double the supply of credit.
Also starting this year, investment in
Investments in new Brazilian projects will reach 25% of GDP this year,
similar to the levels that have prevailed in
• And all this is before the impact of the deal Mr. Bush and Lula will sign this week.
Your next steps
No investment is without
Embraer (ERJ) is a $7 billion company that has steadily risen to the #3 spot among the world’s largest aircraft manufacturers — ahead of Canada’s Bombardier and surpassed only by Boeing and Airbus.
The company is especially strong in the fast-growing market for regional aircraft — like the 50-passenger twin-jet ERJ 345 and the 37-passenger ERJ 135.
And it makes military
aircraft for transport, training and light attack — sold not only to the
Brazilian Air Force but also to 16 countries in Europe and Latin America,
Since January 2002, while the Dow Jones Industrials has risen by 24.7% through last Friday’s close, Embraer is up 102%, rising four times faster than the Dow.
Petrobras (PBR) has done even better, rising twelve times faster than the Dow in the past five years.
The company has achieved
It supplies oil and natural
gas to refineries in
But Companhia Vale do Rio Doce (RIO) puts both Embraer and Petrobras to shame:
Its shares have skyrocketed 591% over the past five years, rising twenty-four times faster than the Dow.
It recently bought
It is the world’s largest producer and exporter of iron ore and pellets, the world’s second largest producer of nickel, manganese and ferroalloys, and one of the world’s lowest-cost integrated producers of aluminum.
When I was growing up in
Or you can use the widely
traded Exchange Traded Fund linked to
Corrections are natural, but the opportunities are vast.
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.