For the people of market The summer break ended a long time ago and today they have their eyes set on the March-April horizon. They closely followed the legislative fray in a year that began with extraordinary activity in Congress, the epicenter of the debate of a omnibus law of tons of articles that promote innumerable changes, and they have already digested the first economic measures that the government launched with their implications.
Of course, some like the investor Eduardo Costantini (Consultatio) who, to put an end to the real estate vice, would be building a new house at the end of La Mansa de José Ignacio, and other habitues of said spa and its emblematic new residents such as Pierpaolo Barbieri (Ualá) take advantage to extend the summer by giving talks about their vision for 2024 on the neighboring shore of Rocha, in Las Garzas.
What did they say?: that the global economy remains strong, driven mainly by consumption; that there is always uncertainty, and half of the planet has elections this year, we will have to see what decisions the world makes in electoral terms; that Javier Milei He is an extremely radical and idealized person, but it is a change since we could not continue with populist governments; that people want there to be a adjustment and it is the first time that the presidential candidate said that he is going to adjust but we have to see if the Argentine bankrolls the recession and if Milei bankrolls the drop in popularity that every government has in crisis.
Without a doubt, the season at the emblematic José Ignacio was a good thermometer of the Argentine crisis, only regulars and owners with Argentine badges, the rest almost all Uruguayans, Brazilians and many Chileans, and well-known Europeans and North Americans who arrive more and more frequently. to the east coast.
By the way, new proof that beans are brewing everywhere is the “scandalete” that has its epicenter in La Juanita, José Ignacio’s new real estate boom, where a country hotel is planned to be built right on the beach, for those in the know. , in the front line, without respecting the distance from the hair of the water. It is worth remembering that there is already an El Secreto venture of several mega-houses, which was the failed Setai, which also borders the La Susana parador-restaurant, owned by Norwegian businessman Vik, next to the future project. Several millions at stake, and apparently, when not, some Argentines involved in the business.
In this crazy summer where some analysts wonder if freedom is advancing? or if the only thing that advances is the liquefaction of the pesos, they continue to assess the surprising fiscal shock program, but there is a lot of caution, they doubt whether it also advances or not, it involves many chips to discipline expectations and that The market believes that the government is pursuing fiscal balance without shortcuts. It is a sign for the market that fiscal discipline is not negotiated, but how much is not negotiated? they question.
And as proof that the summer is over, are the calls for virtual and in-person meetings that managers and consultants send to clients and colleagues. What they are seeing is that the devaluation and inflationary acceleration are now slowing down. They say they are coming 3 very hot months so it must be defined, and with a lot of liquefaction. In this regard, the most experienced emphasize the issue retirements and they say be careful not to continue blending them because the oven is not for buns. There is disagreement on the issue inflation, Some see it slowing down, others seeing it increasing.
Much fear with the impact of the recession. The latest reports from abroad, including local ones, predict a drop in GDP of 2 to 3% this year, which will have an impact on revenue and therefore on fiscal goals. What works best is the BCRA window that buys foreign currency as it has not done for a long time, in reality recomposing the position of net reserves, which are still negative, but instead of going to -15,000 million, the measures of the economic team They have already taken them to -7,000 million. How is it explained? They say it is due to the strong trade surplus liquidated, where 30% is more expo but the rest is recession and the new import payment scheme. What is being seen is that it is not agriculture that is the source of foreign currency but rather the rest of the sectors that with the new real exchange rate export and liquidate more.
Speaking of liquefaction, If the BCRA continues with the interest rate at 10%, everything indicates that the adjustment is made by the recession to maintain a positive real rate.. There is also concern about the projected exchange rate delay according to the crawling peg and estimated future inflation, so they pray that common sense prevails and the devaluation accelerates before it is too late. Today the economy is purging the Platita Plan so the GDP will fall more. According to 1816 calculations, if the Pass rates are maintained and assuming the projected inflation of the REM, towards the end of May the BCRA liabilities at constant prices would fall to 2003 levels. We will see.
While the echoes of the interesting IIF Annual Global Outlook Conference still resonate, which sparked an insightful debate on the economic outlook for 2024 and beyond, traders and investors specialized in emerging markets are preparing for upcoming international events, which include the EMTA Winter Forum in London in a few more days, organized by JPMorgan, which will have, in addition to Luis Oganes (JPMorgan) and Brett Diment (Abrdn) as moderators, presentations by Gustavo Medeiros (Ashmore), Trang Nguyen (BNP Paribas), Luis Costa (Citi), Ed Parker (Ficht), Ishitaa Sharma (JPMorgan), Vicente Mira (Marathon), Rob Drijkoningen (Neuberger Berman) and Phoenix Kalen (Société Générale) who will offer their vision on the direction of the emerging markets.
The vision of economist Alberto Ramos of Goldman Sachs on the Argentine case also had a lot of impact, who quoted the philosopher Socrates saying that “The secret of change is to focus all your energy, not on fighting the old, but on building the new.”
Regarding whether the new Argentine administration will be able to fulfill its ambitious agenda of rebalancing and macro reform, he said yes, but only partially because the macro and financial imbalances are very large. While the new government has put forward an ambitious macro adjustment agenda, weak governance conditions will likely limit the Milei administration’s ability to deliver on its bold policy agenda.
He also referred to the danger of hyperinflation and whether there will be dollarization. In this sense, he pointed out that it will not necessarily be like this but he expects very high three-digit annual inflation for a while. The risk of a wage-price devaluation spiral is not negligible.
Source: Ambito
