The BarkerLetter

Greetings investors

Don’t you love the doublespeak we get from Washington?

Last year President Bush made a scarcely publicised trip to South America, visiting Brazil and Colombia while studiously avoiding Venezuela. We were told he was there to talk about ethanol production, remember?

Yeah, and another purple cow just flew by!

We haven’t heard much about ethanol, but Brazil announced this week it was establishing a  sovereign fund in U.S. dollars.

Isn’t that nice?

Finance minister Guido Mantega said the move would stem a five-year rally in the Brazilian real and help rein in the country’s galloping GDP, now the highest in the Americas after the United States. He called it a piggybank of indeterminate size.

The decision surprised investors, who fear the fiscal impact will be huge and unpredictable because the government hasn’t said how it plans to buy dollars.

But it should crank up demand for the greenback — just in time for the U.S. elections, I’ll wager.

Oh, and here’s another little thing …

On the heels of that, Brazil’s state owned oil company, Petrobras, announced it has tied up 80 percent of the world’s deepest-drilling offshore rigs, ostensibly to explore the Tupi discovery, which has been described as the Western Hemisphere’s biggest potential offshore oil field.

Well whaddya know?

That puts the backs of the majors like Exxon Mobil up against the wall, and Petrobras is still negotiating for as many as 17 more vessels.

The company said it began signing multi year leases as far back as 2004, because it foresaw a shortage of deepwater vessels.

That’s some crystal ball they have over there at Petrobras, wouldn’t you say?

No word so far on the ethanol deal, though.

I wonder how that’s going?