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If It’s Raining in Brazil, Buy Starbucks by Navarro

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CHAPTER 1RIPPLES AND MACROWAVES

Despite excellent management and a solid fundamental outlook, Starbucks’s stock has dropped more than 8 points in the last several months. At this point, the savvy macrowave investor notices a small article on the back pages of the Wall Street Journal indicating that the rains have come to break a deadly drought in Brazil—the world’s largest coffee producing nation.

On this news, the savvy macrowave investor buys several thousand shares of Starbucks. She’s betting that the rains will save the Brazilian coffee crop, that this will cause coffee prices to fall dramatically, and that this, in turn, will drive up Starbucks’s profit margins as well as its stock price.

Over the next week, Starbucks’s stock falls 2 more ...

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