The forecast was not made by an unorthodox consulting firm, but by the broker agency. Bull Marketfounded by the father of Ramiro Marracandidate for La Libertad Avanza.
The perspective maintains that if the libertarian triumphs in the first round, there could be a scenario of hyperinflation for a couple of months, according to a presentation that Bull Market specialists made to representatives of the City of Buenos Aires.
Dollarization: what will the first months of the Government be like?
Milei has been maintaining that the higher the exchange rate goes “the easier it will be to dollarize,” and it seems that the financial market agrees.
“If Milei wins in the first round, Mondays, Tuesdays and Wednesdays will be hard,” the economist anticipated. Mauro Mazza, responsible for the Bull Market research area.
It was during a presentation made on Friday and posted on YouTube. “They will need transition meetings and, probably, the market floor will be marked for the next decade,” Mazza said regarding the magnitude of the devaluation that could occur.
Bull Market It is the stock market firm that founded Daniel Marra, father of Ramiro, candidate for head of Government of the City of Buenos Aires for the space of Javier Milei (La Libertad Avanza). It is a stock company and broker. They are firms that buy and sell stocks and bonds.
Mazza clarified, in dialogue with a newspaper, that the difference between Milei’s plan and that of Carlos Melconian (Together for Change), is that the dollar rise with the libertarian it would be of such magnitude that the “dirty work” It would be done not only more quickly than with Together for Change, but also definitively.
“It’s about analyzing the horizon and giving the best advice to our clients. If you win Milei it would be about the last devaluation, and make transparent what there is. It is the latest inflationary shock, and in 36 months inflation would be in single digits. On the other hand, with Melconian it is not clear that the first devaluation would be the last,” he explained.
Bull Market closely follows the libertarian’s plan. Friday’s talk lasted two hours and started with the definition of the economic plans of Milei, Patricia Bullrich and Sergio Massa.
The presentation was given by Mazza, an economist from the University of El Salvador, with extensive experience in the markets.
Mazza estimated that the exchange rate liberalization proposed by Milei would be applied a few weeks before an eventual inauguration: “Do dollarization with an exchange rate of $1,300/1,400 that would lead to monthly inflation of 50% and parity at that level,” he indicated.
Who would be Milei’s “colonels”?
According to the projections managed by some market operators, Guillermo Nielsen and Pablo Guidotti – two economic advisors of Milei – would have part of the leading voice in the application of an initial shock plan.
It would consist of the price of dollar reaches high enough for the approval of the parliamentary procedure be attended to urgently.
During the week, during the presentation he gave to bankers and key men in the financial system -in parallel to the IDEA Colloquium-, Milei said that “the higher the price of the dollar, the easier it is to dollarize.”
The stability fund prepared by Milei
The technicians of Bull Market They said that the structure of what Emilio Ocampo and Nicolas Cachanoskyintellectual authors of the Milei project, call FEM (a monetary stability fund where the liquidation of the Leliq will take place over several years) would be established under Luxembourg legislation.
And apparently then the decision to rule out establishing the FEM in the United States would be being studied, due to the trials in New York, such as the US$1.6 billion against Argentina for the nationalization of YPF.
According to specialists, the FEM It is a kind of trust that issues debt securities (guaranteed with flows of Argentine assets, such as the new 5G cellular band, or the SDR of the IMF), which will replace the Leliq and which, in Ocampo’s plan-
Cachanosky, is a key piece. Near Ocampo they explain that the FEM would not be managed by any Argentine and it would be a robot or algorithm that operates the fund.
In the negotiations on the WEF, the institutions that could contribute fresh resources, according to the libertarian circle, would be Bank of America, highly speculative investment funds – the well-known “vulture funds” – and even some contribution from the IMF.
What would dollarization be like?
If progress is made along this path, Milei’s plan to dollarize would have as its axis honesty a situation that Argentina is going through today: the country ran out of dollars.
It would be necessary to admit the real market price of the dollar and face a period of revaluation in dollars that could extend for more than a decade, Mazza said.
He increase in dollar prices that would be recorded would be offset by the starting location: wages in dollars would be left behind. This start of the Milei economy, according to Bull Market projections, could be closer than many believe.
Source: Ambito
