Monday 31 March 2014 

Travel to Brasilia 

At the gate at Charles de Gaulle airport, there is a pleasant surprise: Air France has its inaugural flight to Brasilia. There’s samba music and dancers. Quite entertaining. I spend a good part of the 10-hour flight reading research papers on how western markets and economic policy influence emerging markets. This is background reading for a speech I will give later this week in Colombia. Having landed, I join the queue for a taxi. There must be a line of about 100 people. The taxi ride to the hotel is quite an experience: roads are very bumpy, it had rained a lot, it was dark and street lights are less intense than in Europe, but the driver, one hand on the steering wheel, only used the left lane at 100km/hour. I was happy to arrive at my hotel. 

Tuesday 1 April 2014 


Looking at the data released yesterday, when I was on the plane, and this morning, it appears that some countries could do with some stimulus: Japan had poor capex growth responses in the Tankan survey, eurozone inflation has fallen to 0.5% and China PMI data is moving sideways. Fortunately, Janet Yellen’s statements last night that Fed policy support would be needed for some time yet was greeted positively by markets. Anything which masks the harsh reality that at some point policy rates will rise is met with applause: having used the punchbowl for so long, switching to water is understandably difficult.

After a long institutional investor meeting in the afternoon, I take a taxi to the airport. It is pouring with rain so the speed is less frantic than yesterday. The airline does a great job in getting me on an earlier flight to SĂŁo Paulo. During the flight I read “The hour between dog and wolf – risk taking, gut feelings and the biology of boom and bust”, written by John Coates. He knows what he’s talking about, being a former Wall Street trader who then became a neuroscientist. His thesis is that success triggers physical reactions which in turn increase the willingness to take risk, until one hits the wall. I’ll never look at bull markets again in the same way. An interesting read.

Wednesday 2 April 2014 

SĂŁo Paulo 

I speak at the Bonds, Loans and Derivatives Brazil conference. The room is packed with about 300 people. Together with the other panellists we discuss the impact of Fed policy and local factors. Tapering was last year’s issue. Today the focus is on whether the Fed will be forced to accelerate its first rate hike (which would be bad news for risky assets, including emerging bonds) and on country-specific fundamentals. Emerging debt in general is attractive from a valuation perspective, although Brazil is facing cyclical challenges (cooling inflation) and – even more so – structural ones (raising potential GDP by investing in infrastructure).

I have lunch at our office with our head of fixed income and head of investment solutions. They explain that foreigners are buying into the equity market on the back of surveys showing that the popularity of president Dilma Rousseff is declining. It’s a long shot: elections are only taking place in October and opinion polls show that, despite declining popularity, she will be re-elected in the first round.

Thursday 3 April 2014 


After a stop in Bogotá I land in Cartagena (Colombia) at 1:00 in the morning. After a short night’s sleep I go to the annual conference organised by the International Federation of Pension Funds (FIAP) and the Columbian Association of Pension Funds (ASOFONDOS). There is a large audience of about 500 people. From the opening session it is clear that the issues are no different from those we have in Europe: unfavourable demographic evolution (ageing population), longevity risk, low returns, risk aversion, need for financial training, need to diversify globally, etc. My speech is devoted to the impact of accelerating growth in the developed economies on emerging markets. I have opted for the title “A mixed blessing?”. Mixed because the impact via trade flows is undeniably positive but the question is whether investors will become nervous and demand higher risk premiums (for bonds: higher spreads) or not (hence the question mark in the title). My closing comment is that there is little that can be done about the ebb and flow of international capital but that countries should nevertheless get ready for when the waves hit by improving their domestic fundamentals (inflation, government deficit, current account).

After having seen on Twitter during a coffee break that the ECB, as expected, kept its policy unchanged, I present during lunch what’s happening in Europe to a group of Colombian institutional investors. Their questions reflect some concerns about the AQR conducted by the ECB.

My hotel is in the old part of Cartagena and in the evening, as I walk to the conference dinner, I admire how beautiful and authentic it is.

Friday 4 April 2014 

Travel home from Cartagena 

After a flight from Cartagena to Bogotá, I get on the plane to Europe. It has been a very interesting week. Latin America is a very diverse group of countries. Colombia is doing very well, with good growth and low inflation, whereas Brazil has slow growth and too much inflation, hence the official rate hike last Wednesday, the ninth in a row. However, the indication that this could be the last one can give some hope to investors. On the plane I read an article in Le Figaro on the balancing act of the Chinese leadership to come to grip with the many economic challenges. Afterwards I watch “Casse-tĂŞte chinois”. Directed by CĂ©dric Klapisch it shows the balancing act of Romain Duris, the main character, to come to grip with his private life, having moved from France to New York. 


William De Vijlder

Vice – Chairman of BNP Paribas Investment Partners