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Sunday, August 30, 2015

BRIC? not really; MINT

BRICs remember that?
Ten years ago Wall street pundits argued that Brazil had everything going for itself. Talks of becoming a developed country were published daily. It was its industry, manufacturing, tourism, internal demand, raw materials, food production... what could wrong?

Mexico...  well it was doomed... China made Mexico irrelevant.

look at this table

Greenfield FDI investments by country in $M
YEAR Brazil Mexico
2005 24,092 3,431
2006 4,357 9,743
2007 10,926 6,472
2008 27,958 21,463
2009 13,309 15,536
2010 25,355 10,412
2011 24,823 13,272
2012 13,809 9,253
2013 9,330 13,728
2014 5,917 16,025
2015 2,025 8,113
Total 161,901 127,548

Now nobody talks about BRICs in fact we talk MINT


Cool... for how long?

Thursday, August 20, 2015

A brand new FX world

I used to teach (even this morning, 8/20/2015) that a devaluation was a good way for countries to increase their exports and get out of debt...

I guess it is still true, however... (a big one)...

Our supply chains are now so interconnected that depend on a group of currencies. Only a portion of any good is made in one country. Much of many products is simply transportation.

In this line, a new study from the World Bank concludes:

"Intuitively, as countries are
more integrated in global production processes, a currency
depreciation only improves the competitiveness of a fraction
of the value of final goods exports. "

The authors claim that depreciations are only 1/2 as effective as they were 20 years ago.

Thursday, February 5, 2015

My un-scientific good gews for Bitcoin

Much seems to be going wrong for Bitcoin... Not all is lost.

The thing is that awareness does not equal adoption.I asked my students (today) how familiar they were with a number of mobile payment apps and some crypto-currencies. The list included Google Wallet, Bitcoin, Lemon Wallet, Ripple and Litecoin. Highlights below. N=25 sample of senior International Business Students.

Bitcoin seems to be on the minds of young people. A respectable 52%  (13 students) reported being familiar or somewhat familiar with the currency. The figure was very similar to Apple pay where 56% (14 students) reported familiarity.

Regarding adoption/usage, Only one student reported having used Bitcoin, and in his words, it was "to try it out"... The surprise came from the usage of Apple pay... (I was expecting a slam-dunk) Despite name brand,,fanfare, trust, halo, etc.. only two students report usage... (the Starbucks app seems to be what does the trick for Apple)

Takeaways?  The way I see it:
a)It is still time for Bitcoin or other crypto-currencies to get in the game! or
b) It is time for New England students to get more tech-savvy.
you choose

Friday, May 9, 2014

A tale of two Latin Americas

Argentina & Venezuela versus everyone else. This is the tale that keeps on giving. How different are they!

Picture 1;  Foreign exchange. Over the last five years the price of the USD has gone up 200% in terms of Venezuelan Bolivares and over 100% in the case of the Argentine peso. The rest of Latin AMerica has remained very stable. Chile, Peru and Brazil exhibit changes of less than 10%. (Data from Stable FX=> stable prices and volumes of international trade. A depreciating peso means cheap (and very good) Argentinean wine for USA but expensive CAT tractors for Argentine farmers.

Picture2; Sovereign Spreads. Sovereign spreads measure how much (above US treasury bonds) do countries have to pay to borrow money. Low spread = good, high spread = bad. Spreads are measured in basis points. For example, If the governments of Chile, Brazil or Peru need money to finance short term programs, or any other projects, they can borrow for 1 year at less than 30 basis points of spread. If the US treasury is say 3%, this means that the total cost for the above countries would be around 3.3%. For Venezuela and Argentina the same borrowing would cost them 10% and 25% respectively.  Data from Factset.

Tuesday, August 27, 2013

On why Finance must be combined with IB and political science..

or any other similar degree...

M&A used to be easier... the era of domestic deals is over. Nowadays many small and medium sized firms have a global footprint. This makes any deal very like to touch upon different legal and political systems.

Targets are ever more likely to be global. We now seem be in the era of "born global" firms. These are firms that from their inception have their "eyes" on foreign markets.

Consider Warren Buffet's (plus Brazilian Mr. Lemann) offer to take Heinz private. A recent article in the Financial Times shows how much red carpet needs to be covered from a number of countries to secure regulator's approval... In their case, they need Russia and China... Not easy

Don't know about you... I will be looking at GRE scores for law school

Tuesday, August 20, 2013

How hard should you work in an internship?

I am not one to post sketchy topics, but this very tragic one one caught my attention.

Apparently (cause not clear) an intern at BofA died after pulling one too many all nighters...
See article here

As a professor and supervisor of many internships I have to ask my self
Can this be true? I mean does this reflect a hidden trend?
Are students so desperate to impress that would risk their health?
What should companies do?
What should universities and professors do?

Tuesday, August 13, 2013

Adult Diapers

OK. I get it. Not precisely dinner table topic. Japan's largest diaper maker already sells more for adults than babies... I am not making this up...It gets worse... See this Huffington Post article if you don't believe me.

The World Bank estimates that fertility rate (births per woman) needs to be around 2.2 to simply "replace" the current population. Any number below means negative growth.

Highly correlated is the issue of age dependency*... Do you have a clue about what any of this means for the future?
All I know is that Japanese workers will have to work a lot harder

*Age dependency ratio is the ratio of dependents--people younger than 15 or older than 64--to the working-age population--those ages 15-64. Data are shown as the proportion of dependents per 100 working-age population.