Welcome to the Revolution: Neo-coms are renationalizing resources
By J. Christoph Amberger
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Welcome to the Revolution: Neo-coms are renationalizing resources
by J. Christoph Amberger
“Investors are going to the dollar as a safe haven.”
That’s not a sentence you hear these days, when everyone and his grandmother is predicting doom and gloom for the greenback. But according to Enrique Alvarez, a Latin America economist at the research firm Ideaglobal in New York, this is exactly what is going on in Venezuela, now that Exxon Mobil Corp. and ConocoPhillips have abandoned operations in the country.
The withdrawal of the oil multis from Venezuela occurred as a consequence of Hugo Chavez's neo-communist nationalization campaign of the country’s oil assets.
While Chavez now controls Venezuela's oil fields, it would appear that he is falling short of the markets’ confidence that the departure of the big guns with the deep pockets and the expertise will have no effect on the country’s ability to pump oil efficiently and profitably… at least in the short term.
These concerns can't be dismissed lightly. Sure, Venezuela is currently making a mint on crude oil exports. But oil revenues alone do not guarantee stability, growth... or even a positive trade balance. Look at Iran, which just, with two hours’ notice, limited private drivers to 26 gallons of fuel a month.
(That’s because, despite large oil reserves, Iran lacks refining capacity and has to import 40% of its gasoline -- which needs to be subsidized to such a degree it retails at about a fifth of cost. Which has resulted in a huge budget deficit largely caused by fuel subsidies. The Iranian inflation rate is currently estimated at 20-30% -- and Venezuela is catching up as the bolivar is plummeting.)
Under the radar, neo-com Bolivia, too, has renationalized two oil refineries owned by Brazilian Petrobras. At just $112 million, the “buyback” was certainly a steal. The refineries process about 40,000 barrels of crude oil per day.
Given the proven lack of effectiveness of state-run oil companies to maintain investment and technology levels in the exploration and expansion of new and existing pumping capacities, I believe it is safe to assume that doubts about production capacities in Venezuela may soon rival supply fears due to strikes in Nigeria. At the same time, look for exponential growth in inflation pressures on the Venezuelan and Bolivian currencies.
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Earnings Announcements
99 Cents Only, A. Schulman Inc, AZZ Inc, and Investors Real Estate Trust are releasing earnings.
Unlock Dates for July 2007
7/23/07 - Aeroenvironment Inc is unlocking 6.7 million shares.
7/24/07 - Oculus Innovative Sciences Inc is unlocking 3.025 million shares.
7/30/07 - Employers Holdings Inc is unlocking 26.75 million shares.
7/31/07 - Information Services Group Inc is unlocking 28.12 million shares.
7/31/07 - XTENT Inc is unlocking 4.7 million shares.
Upgrades and Downgrades
Build-A-Bear Workshop upgraded by Susquehanna Financial from Neutral to Positive.
UAL Corporation upgraded by JP Morgan from Underweight to Overweight.
Capital One upgraded by Friedman Billings from Market Perform to Outperform.
Greif Brothers upgraded by Matrix Research from Buy to Strong Buy.
EW Scripps upgraded by JP Morgan from Neutral to Overweight.
Trump Entertainment upgraded by Bear Stearns from Underperform to Peer Perform.
AMR Corporation upgraded by JP Morgan from Neutral to Overweight.
LSI Logic downgraded by Wedbush Morgan from Hold to Sell.
Foot Locker downgraded by Matrix Research from Buy to Hold.
Brought to you by Taipan Financial News
http://www.taipanfinancialnews.com
Today’s Exclusive TFN Video
60-Second Buzz
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Quote of the Day
“The New York Times says Ralph Nader is thinking about running for president again. Nader says he rejects the term ‘spoiler.’ Still a lot better than ‘loser.’”
- Jay Leno, June 25, 2007
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