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While the Brazilian central bank has lowered interest rates to an historic low to stimulate economic growth, the government’s policies seem to be a weak patchwork of support for favored industries.
More than 300,000 Argentines took to the streets of Buenos Aires recently to protest the administration of President Cristina Fernandez de Kirchner. It was the second major protest in two months against high levels of crime and inflation.
As the 30 year anniversary of the invasion by Argentina (ARGT, quote) of the Falkland Islands approaches on April 2, rhetoric from the Argentine government over foreign oil exploration in the area continues to grow louder. Yesterday, Argentine Foreign Minister Hector Timmerman proclaimed that the government will look to sue foreign oil companies operating around the Falklands in both domestic and international courts to ensure that this supposedly illegal drilling is halted.
Farmers in Brazil have overcome many obstacles in the past but rainfall has not been one of them until the drought that began in Argentina spread, severely damaging both corn and soy bean crops. With no rain for the entire month of December and only one rainy day in January, farms are hard-pressed to remember a worse season.
Corn has been in a steady climb since last week Thursday as traders focus on a stretch of dry weather in Argentina. Commodity traders are concern that drought in Argentina, one of the world’s biggest corn exporters, will lead to smaller harvests.
Mark Mobius, executive chairman of the $45 billion Templeton Emerging Markets Group, is buying into Argentine stocks with attractive valuations.
As 2012 looms, the situation in Latin America is different from that of China. Even Brazil, the regional powerhouse, does not have the economic resources for a massive stimulus program. So will the new year bring disaster or continued growth?
The Argentine government seems to be borrowing from the Venezuelan playbook as of late and investors would do well to continue the analogy in their analyses of possible investments in 2012, if not beyond.
