Bear, Stearns: "What’s Up With the Peso?"

[frederic]

Sovereign Debt Research (abstract)

• As we have been reporting, the Dominican peso continues to be under pressure due to a combination of a relentless and ongoing terms-of-trade shock (the same one that has hit all non-oil exporting countries) and local speculative forces.

• We continue to believe that the credit fundamentals of the sovereign are not threatened by this currency weakness, but we recognize that the policy response thus far has been too timid to produce currency stability.

• We believe that the monetary policy measures announced yesterday, February 6, represent a more forceful policy response than we have seen in the past, and these are to be followed by fiscal measures to be announced in the coming days.

• We see some trends in commercial banks’ balance sheets that leave them vulnerable to more currency weakness, making currency stability in the coming months more important—which may explain the renewed policy effort.

• We would view any “panic” selling of Dominican Republic bonds to be a buying opportunity, because we do not see the elements of a major credit or financial crisis. In fact, the message being sent to the government by the private sector is that it wants the government’s spending and borrowing program curtailed—not a bad thing from a credit perspective.

------------------------------------------------------------
Do you want to read/have the whole report?
email me requesting it and I'll send it to you ASAP.

Frederic

[Ken]

Originally posted by frederic
• We believe that the monetary policy measures announced yesterday, February 6, represent a more forceful policy response than we have seen in the past, and these are to be followed by fiscal measures to be announced in the coming days.

• We would view any “panic” selling of Dominican Republic bonds to be a buying opportunity, because we do not see the elements of a major credit or financial crisis. In fact, the message being sent to the government by the private sector is that it wants the government’s spending and borrowing program curtailed—not a bad thing from a credit perspective.

Interesting, but does it mean anything in the real world of the Dominican Republic? ¿Vamos a ver?

[sjh]

If you think Dominican Politics is corrupt, wait until you see these guys on wall street, and Bear Stearns is on of the worst... They are just trying to buy more time to unload the bonds they have ...

[mondongo]

amen, shadley....what Bear Stearns is really saying is "Mr Mejia, do you need consulting services for your next bond offering?" They are just jealous of the fat commisions their buddies at ML got from the last offering.

These are some the the guys who helped architect the trillion dollar heist of the US equity market. I remember analysts touting Juniper Networks at $200, even after Cisco had announced faltering revenues. Relative to US$ GDP, the fraud committed by Wall Street and its Big Business conspirtors is even bigger, in a relative sense, to what Mejia has done to the DR so far.

I would trust Mejia before I put any faith in Wall Street "analysts".

[andy a]

Being OPM (other people's money) certainly changes attitudes toward it - whether Wall Street brokers or politicians/bureaucrats.

The only acceptable attitude in the Wall Street herd is a bullish one. In the early days of the bull market, Robert Prechter was the god of Wall Street and could say no wrong - until he turned cautious. Suddenly, he was just a kook. Then Elaine Garzarelli took over until she, too, became cautious. Still undaunted, Wall Street then turned to Abbey Cohen. As far as I know, she remained bullish until the bitter end.

Don't expect repentence.

[Criss Colon]

Why?,The "Clap" is easier to get rid of!!!!!! CRIS

[Golo100]

That Banco Central is asking Bears Stearns for an explanation of their report. What is there to explain? B.S. simply read the same information provided by Banco Central and the actions taken by the government and could not come out with a different conclusion.

TW

[Alev]

Please read F.I.A.S.C.O by Frank Partnoy-ex Morgan Stanley salesman. It is a shocking education and you will understand the games being played on Wall Street. It is a funny business!

[Amber]

I think the situation with the peso's drop might turn even nastier after the new economic measures are put into effect this week. The importers that I know are refusing to pay the new tax and the owners of the gas stations that I know are talking about refraining from buying as a form of protest and to cause a further raise in the prices. These are just rumors so far. Sales have plummeted and most busninesses here are preparing for the worst, includiing us. Hopefully, we'll ride out the storm and the authorities will change their tactics to increase their revenue through more taxation before it gets any worse.. Meanwhile, I have a feeling the peso will be have to used for fuel.
Amber