Latin America guide


Global Markets Re-adjust To a Normalization of Spreads

Spreads are the differences that financial·  Availability  of  low  cost  labor
institutions get between their cost of money
and the price they demand for loans. Spreads· Availability of raw materials and energy
in effect reflect evaluations of current and
expected risk. Clearly, the current bond· Availability of capital in the local
market problems are due to a verymarkets
over-optimistic evaluation of risk by many
lenders. The lenders have realized theirThose in the positive category are: China,
mistakes and are rapidly adjusting their riskIndia, Norway, Canada, Brazil, Hong Kong,
premiums back to the historical levels ofSingapore, and Korea. Much of Latin America
risk premium that have prevailed for theand Eastern Europe are on the fence with some
better part of 30 years. As we wrotepositives, but they also have some negatives.
recently, every type of loan from government
paper to all types of mortgages and corporateNEGATIVES
and consumer credit will become more
expensive. This will reverberate through theSOME  COUNTRIES  SUFFER  FROM:
U. S. and global debt markets and raise the
cost  of  borrowing  for  everyone.·  Rising  interest  rates
GOOD  FOR  STOCKS  AND  COMMODITIES· Lowering of P/E ratios as interest rates
rise
This will also make investors more cautious
about future commitments to debt.·  Slower  economic  growth
Historically, when interest rates were
rising, investors shunned long-term debt in·  Weakness  of  the  financial  system
favor of short-term debt and moved more into
equities  (stocks).· Lack of availability of capital in some
markets
Many aggressive investors have been using
leveraged debt instead of equities to· Threats to corporate profits from tax
maximize returns..We believe that many ofpolicy  after  2008  [U.S.]
those seeking high returns will return to
stocks and commodities in order to maximize· Increasing restrictions on global trade
returns.(potentially  the  biggest  problem)
In this area, there are statistics suggestingGLOBAL  INVESTING  EXPERTISE  A  MUST
why base metals and energy remain in demand.
We have stated these things before inIn our opinion investing solely with a U. S.
different ways in hopes of capturing your(or for that matter any one country centric)
attention.strategy will become more difficult in coming
years. We further believe that expertise in
From an economic point of view, worldglobal investing will become an important
economic growth determines the demand for rawattribute for investment success in a
materials  to  build  economies.increasingly globalizing world. We have
worked very hard over the past few decades
The estimated GDP growth for the last fourdeveloping such expertise. We look forward to
years and the coming four years is asthe changes taking place in the global
follows:economy as we expect they will create some
very profitable opportunities in coming
·  India  8-9%years.
·  China  10  %  +Thanks  for  listening.
· Developing world other than India andGuild Investment Management, Inc., a
China  6-8%registered investment advisor. All material
presented herein is believed to be reliable.
·  Developed  world  2-3%Investment recommendations and opinions
expressed in these reports may change without
If the developing world contributes about 40%prior  notice.
of the global GDP as many economists think,
and the developed world is contributing aboutYou can also read our past periodic market
60%, then the blended world growth rate isand economic commentary articles by going to
roughly  5%  per  annum.the  Commentary  Archive  on  our  web  site
We believe, based upon the research ofThese articles are for informational purposes
economists from many parts of the world, thatonly and are not intended to be a
global GDP growth has been about 5% a yearsolicitation, offering or recommendation of
for the past few years, and will probablyany security. Guild Investment Management
continue at about that rate for the next fewdoes not represent that the securities,
years.products, or services discussed in this web
site are suitable or appropriate for all
LONGER TERM GLOBAL ECONOMIC GROWTH LIKELY TOinvestors. Any market analysis constitutes an
BE  STRONGopinion that may not be correct. Readers must
make their own independent investment
We further believe that world economic growthdecisions.
will remain strong for two or more decades as
the current 6.5 billion world populationThe information in this article is not
grows  by  more  than  50%  by  2050.intended for distribution to, or use by, any
person or entity in any jurisdiction or
TO GROW A WORLD ECONOMY BY 5% PER YEAR..youcountry where such distribution or use would
must consume resources at the rate of aboutbe contrary to law or regulation, or which
3%  per  year.would subject Guild Investment Management to
any registration requirement within such
In today's tight markets for oil andjurisdiction  or  country.
minerals, the supply of many commodities is
growing at about 1% a year or less. If demandAny opinions expressed herein, are subject to
is growing at 3% per year PRICES MUST RISEchange without notice. In addition, there are
SUBSTANTIALLY for energy and for many othermany market, currency, economic, political,
commodities.business, technological and other risks that
are beyond our control. We make reasonable
AS WE HAVE SAID, WE ARE OPTIMISTIC ABOUT THEefforts to provide accurate content in these
OUTLOOK FOR SOME STOCK MARKETS AND THEarticles; however, some content and some of
MARKETS FOR ENERGY, BASE METALS AND PRECIOUSthe assumptions, formulas, algorithms and
METALSother data that impact the content may be
inaccurate, outdated, or otherwise
LET'S MAKE A LIST OF WORLD NEGATIVES ANDinappropriate. In addition, we may have
POSITIVES..THEN LET'S DECIDE WHO IS HURT BYconflicts of interest with respect to any
THE NEGATIVES AND WHO IS HELPED BY THEinvestments mentioned. Our principals and our
POSITIVES..THIS WAY WE CAN DETERMINE WHERE TOclients may hold positions in investments
INVEST  AND  WHERE  TO  AVOID  INVESTING.mentioned on the site or we may take
positions  contrary to investments mentioned.
POSITIVES
Guild's current and past market commentaries
SOME  COUNTRIES  ENJOY:are protected by copyright. Apart from any
use permitted under the Copyright Act, you
·  Rapid  economic  growthmust not copy, frame, modify, transmit or
distribute the market commentaries, without
·  Rapid  growth  in  corporate  profitsseeking the prior consent of Guild.



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