The market wants to know how the story continues
The creation of cracks already seems like a national sport, given that in recent weeks a new one has emerged among those who maintain that we should now get out of the trap and those who do not yet have the minimum conditions in place. Although the most ridiculous thing is that it occurs, with greater intensity, among those who are considered compatible with the libertarian government. The truth is that the tenor of the debate, which obviously ends up transferring, in part, to social networks, wreaks havoc on all face-to-face and virtual meetings between consultants, clients and market men. The climate that is breathed, while the good progress of the Base Law and the fiscal package is discounted – although there are some doubts and concerns about this one about how it ends up turning out – is that with what we have seen so far, it is enough, it is enough, no gives for more, The market wants to see how the story continues. It is then expected that the current state is one of an economy in transition, from a model, already exhausted, towards something new, but about which little is still known.
In this regard, it was funny how a conspicuous media duo sent to the front a director of the BCRA, very close to Minister Luis Caputo, due to his limited knowledge of what the new exchange rate regime, proposed by President Milei, will be like. There is no doubt, they recognize on the trading desks, that the market has already put a price on this new economy of the second half of the year.. Above all, since the recent exchange rate dynamics that injected a new dose of concern that raises doubts about how it will be without the cepo. It happens that the reading that analysts make about what is happening in the exchange market is that, unlike what the Government maintains, the irrelevant purchase of reserves by the BCRA this month is not temporary but the normalization of a situation framed by the claims about the cepo, the real exchange rate, etc. etc. The panorama shows that in the middle of the uproar between the reviled “widows” of Milei, several of them economists and academics of stature, and the libertarian cronies related to Sister Karina and the successor Santi Caputo, in the middle the investors, Funds and managers are watching the exit from the recession with concern.
With the ticket in hand to see Messi
Despite the bad mood, many financial market operators and executives made time for a quick trip to the America Cup, after closing positions amid the escalation of financial dollars, and some even gave free rein in the midst of the celebrations of the 40th anniversary of NYC Pride after the Argentine victory in New Jersey. Those who still remained in the United States were awaiting the presidential debate between Biden and Trump along with Wall Street colleagues eager to see the performance of both candidates.
In the run-up to the presidential debate, in an exclusive restaurant in lower Manhattan, the exhaustive analysis of the EcoGo consulting firm by economists was much discussed and praised Marina Dal Poggetto and Sebastian Menescaldi about what comes after Bases and China. Regarding inflation, they anticipated that June will give them approximately 5% due to the tariff issue, above May, and that it would be repeated in July and August, more or less. They explained the noises linked to the “crawling” pattern of 2% and the dollar blend. One of those who participated, virtually, in the meeting also pointed out that they noticed the “trick” of lower interest payments while the stock of public debt continued to climb. What did they recommend looking at? Four things: how inflation, the purchase of reserves, the fiscal surplus and opinion polls will continue to fall.
In this regard, a recent study by Sebastian Perera showed that the strength of the Government is still based on hope, that “this” will go well, hence the tolerance of the people to the recession and the adjustment. Of course, the intrigue that everyone is brandishing is how long the desire will last. When it comes to the images, the ones of the brother sun and sister moon are still good, although in the case of Karina a certain rift is perceived between the voters of PRO and LLA, also stable is that of the vice president and the Minister of Security. The one of the “Toto” and above all that of Franks who is praised for his pragmatism and ability to govern. The one who doesn’t seem to get the bullets is, according to the survey, the minister Pettovello which has not been greatly damaged by the dining room scandal. The one who is punished is the new radical pancake of Lousteau who they see as a “K”. Others with a bad or low image are Rodriguez Larreta, Lopez Murphy, Pullaro and Llaryora while Kicillof is maintained and Mauricio Macri and Cristina Kirchner continues to decline.
At another financial meeting, in a Greenwich venue, they also discussed the analysis of Cohen’s people, who consider the PAIS tax as the wildcard of fiscal income and, as a reference, recommended monitoring that the difference between the increase in income and expenses should not fall below 17% to measure fiscal health. According to what they commented at the dinner, the economists and managers of the firm pointed out that there were signs of certain fatigue with the model implemented by Milei-Caputo and they ironized about the dismantling of the BCRA’s Pases. Both on the side of those who stayed in the country and those who traveled to the US, arguing visits to investors, but with tickets in hand to see Messi, the feeling is that with the dollar blend, the cepo, the PAIS and the BCRA’s balance sheet, it was enough. If in these months there are no net purchases of reserves, how does the movie continue, what else is there on the libertarian menu.
After New York, forums and royal celebration
Although attentive to the Euro Cup, in London they also followed Argentina, but not only Scaloni’s team but also the changes in macroeconomic policy, which also included Turkey. It was in the EMTA Annual Summer Forumin the middle of the City, where the Implications of the US presidential race for China, Mexico, Ukraine and other emerging markets. Edwin Gutiérrez (abrdn), Tufan Cömert (BBVA), Walter Molano (BCP), Emre Peker (Eurasia) and Paul Gamble (Fitch) were present. While David Hauner (BofA) together with Michel Aubenas (BlackRock), Luther Bryan Carter (HSBC), Guillaume Fonkenell (Pharo) and Razan Nasser (T. Rowe Price) discussed the state of asset class flows, the global macroeconomic context and its implications for emerging markets, the effects of the wars in Gaza and Ukraine, and the possible ramifications of the US elections.
Also much talked about among operators and analysts was the debate organized by the FHC Foundation with those who carried out the most successful stabilization program of the Brazilian economy, the Real Plan, which turns 30 in 2024. The guests were the economists André Lara Resende, Arminio Fraga, Edmar Bacha, Gustavo Franco, Pedro Malan and Persio Arida. One attendee said that one of the lessons he took away from the event was that The three decades of Real showed that good technique and good policy are inseparable to explain the success of the plan, and that learning from the mistakes of previous attempts, Real put an end to a long history of high inflation, inflationary outbreaks and failed plans. In Brazil, they also celebrated that with 30 years of life, the real is already the oldest currency in Brazilian history, an achievement that must be preserved and copied by some neighboring countries.
New York was also the venue for the BBVA Latin America Conference, which brought together more than 200 institutional investors and 100 corporate clients. There it was learned that the bank plans to expand its teams and the offer of wholesale banking products in Brazil and Chile, and to promote Structured Finance Transaction (repos) activity in the region. At a local level, one of the most lively meetings was one reserved only for members of the CFA Society Argentina with industry leaders, where the participation of former BCRA and former Deutsche (now at CMF), Gustavo Cañonero, stood out. And speaking of local issues, as in every merger, there were changes and transfers in the market, one of the latest being that of Sigrid Tolaba from Southern Trust, who now heads the Latin Securities group’s Delta management company.
In a New York after-party between Creole managers and local peers There was a lot of talk about the end of the party on Wall Street upon detecting that hedge funds had sold record amounts of technology stocks to retail investors. Despite the relative weight, the attempted coup d’état in Bolivia was also monitored, closely followed by Washington, where the goalkeepers of the Devil’s Caldera say that the fact that the first debate was held so early in the year (they normally begin in September or early October) shows that Democrats are desperate to change the electoral dynamics since since September 2023, Trump leads the polls and his legal conviction in the Stormy Daniels case only slightly affected his prospects. In any case, expectations also focus on the vice presidential candidates given the age of the opposing pair. Regarding the Copa America in the US, in New York, the best bars and restaurants to follow the games, including the Euro Cup, seem to be in Brooklyn and the Bronx, according to the men in the local market, in addition to the offerings in Manhattan. Many recommended Chocobar Cortés and its chocolate restaurant in the Bronx, from a century-old Puerto Rican and Dominican family.
Source: Ambito
