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market celebrates the idea but warns of recession and lack of consensus

market celebrates the idea but warns of recession and lack of consensus

Announcement of dollarization, implementation of the currency basket, disruptive political message and speech with a surprise ending. All the speculation surrounding the speech made Friday afternoon an uncertain day of speculative movements.

On the one hand, the blue dollar, which closed at $1,050with a drop of $15 daily. There was also an increase in the quotes of financial dollars, with the MEP reaching $1053an increase in 2%, and the cash with liquid in $1087.8an increase of 1.6%. However, the spotlight went to future dollar contracts, which rose around 5%until $930.

The market moved in line with the speculation and rumors that had spread on the social network X (formerly Twitter) since Thursday afternoon. “On Friday the amount of rumors about economic measures was unbearable“, says the director of Investing in the Stock Market (IEB), Norberto Sosain dialogue with Ambit.

Lots of expectations, but few announcements

As no transformative announcement was made, Sosa understands that the dollar “should start calmly“, that is, continue with the exchange rate that is framed in the approval of the market of the fiscal and monetary adjustment and the recomposition of reserves.

The same line holds Salvador Vitelli, who holds the position of Head of Research at Romano Group. “It was a good speech that will have good repercussions in financial terms” and focuses on the perspective on sovereign bonds, which were declining as a result of the tension between Milei and the governors and the Riojan restructuring process with bondholders in dollars until 2028. At the same time, it considers that the rise of the future dollar will be reversed prior to the official speech.

Vitelli attributes this dynamic to the proposal of an event “conciliator”. The specialist refers to the “May Pact” that the President extended to the provinces to take part after his signature on May 25 in Córdoba. However, he warns that, in detail, “It seems that Milei invited politics to agree with him, basically”.

Milei Congress Ordinary Sessions

The President called for a national refoundation pact during the opening of sessions in Congress.

Mariano Fuchila

What the markets expect

For that very reason Pablo Repetto, Head of Research at Aurum Valoresa further reflection is encouraged: although it agrees on the positive impact on bonds and stocks, it assumes that “A closed book agreement would not seem to be the best way to achieve broad consensus”.

The investor also did not attest to the release of the stocks or relaxation of exchange restrictions in the short term.. “They released almost nothing and that is useful for them to continue using BOPREAL as an instrument to try to resolve the inheritance, while they continue to expand debt for imports,” he maintains.

Under this dynamic, where the stocks remain, the gap “will range between 20% and 50% and will average 35% with its valleys and peaks”, estimates the professional. In any case, it is true that the combination of the limitations to the MULC, the supply generated by the 80%-20% export program and the deferral of payment for imports allowed the Central Bank (BCRA) to accumulate almost US$9,000 millions.

Although the market makes a positive balance of the first quarter of governmentnot only in terms of profits but also due to the economic course adopted and the fiscal and monetary measures as a result, continues to observe the situation of the microeconomy and activity with some caution.

The real economy, a concern

This is what the head of IEB stated:What worries me about talking to companies is that I hear about plants that stop, lay off people”. The analyst understands that the “V” model should be driven by investment, but the withdrawal of the Base Law not only represented a “failed political test”, but also a fact unfavorable to this end.

Likewise, Sosa considers that Friday’s message will be interpreted by the market as “good news about trying to rebuild relationships with governors and political forces in general”, since political noises make people uneasy.

”If society continues to support, Milei will have the ability to maneuver on politics. Otherwise, the scenario becomes complex,” concludes the specialist. A key piece of information will be inflation February, which will be around 15%according to private consultants.

The concerns of a sector of the City

Along the same lines, a trader admits in dialogue with Ambit that “The arrogance and treating us like fools on the part of Milei, Toto Caputo and the team overwhelms us by explaining that we don’t see it.”. The Government’s extreme conviction of a classical-orthodox model that could jeopardize the very stability of the program is worrying. The answer is simple: “They affirm that they are in a change of era”, although the IMF itself asks them to be more moderate.

Finally, Ignacio Morales, from Wise Capitalalso understands that Milei’s speech will have a positive impact on the price of the bonds, since the call to the provinces “It means that the Government prefers dialogue to confrontation“, but so far the only ones who expressed their support were leaders “allied to the ruling party.”

As a prelude, On Friday the Buenos Aires stock market registered an advance of 4% and quoted at 1,054,958 units. In the main panel, energy, financial and services stood out. In turn, the Bonares registered increases of 1.87% (AL41D) and the Global the same, with 2.07% (GD30D). He risk country went down to the 1635 points, with a decrease of 70 units.

Source: Ambito

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