The final numbers of Sunday shook young and veterans of Wall Street. While they had been preparing for a not -so -favorable scenario, the overwhelming defeat kicked the board of the operations tables. The diaspora has already occurred, now there is some “door 12”.
Undoubtedly, Buenos Aires’s electoral results surprised their own and others. Needless to tell foreign investors that, like any terrítricla they had as a lighthouse the melting pot of local surveys and therefore the three base scenarios that they all had. But there was only the worst scenario, for the market.
After all, all guided by the misguided surveys, reacted as expected. The youngestbut with remembrances of the decay of the Government of Cambiemos, which do not differentiate the slaughter of the South African Gueto of Soweto or the Carioca de Rocinha favela, They launched orders for sale of all active with Argentine color, while the most veterans had already “collected the kite”, as they say in the market, having won a succulent return since last year. Thus were, on the one hand, the undecided who expected any yellow signal, as an excuse to leave, like Sunday’s, while others, guided by greed still continue with their feet on the plate betting on the rebound.
Decision making abroad is simpler, they do not look too much, they prefer to see to believe and wait outside to re -enter if the conditions occur. They know that the final game is at the end of October, but the government has already lost the first leg and the goal difference is worth. But everything is still said. That is why foreigners better look out and see how the government reacts to this “clear defeat”, as they described abroad. Of course there is everything in the Lord’s vineyard, but those who already made the difference, do not want surprises already have enough with what happens in France, with the Fed, and other geopolitical conflicts. Moreover, some began to speak, perhaps remembering some bittersweet experience, of the Lacunza syndrome in allegory with the end of 2019. But The surprise has been such that some Wall Street investment banks, which until a few days ago issued reports in favor of taking position in Argentine bonds and actions, today came out to disdain. There was nothing to do, 13 differences broke any more unfavorable prognosis and scenario. It is worth remembering that the negative scenario was a difference of approximately 5 points.
They provide for financial turbulence
Among the emerging market fund managers, they highlighted the “hard defeat” of President Milei in the province of Buenos Aires, where a more at odds contest was expected, which would give impulse for the medium mandate elections in October. But the Peronist Coalition Patria had obtained 47% of the votes against 34% of Libertad Avanza, said the British newspaper Financial Times. Even old known as the economist Alberto Ades, former Bank of America, Merrill Lynch, Citi and Goldman Sachs, today in Nwi Management, said that the province of Buenos Aires is traditionally very Peronist, but this margin is even worse than expected, so they would suffer bonds and actions and climb the country risk.
Financial Times commented that this electoral setback occurs in the midst of Milei’s difficulties in Congress, where its veto was recently canceled, and A corruption scandal related to filtered recordings and alleged bribes linked to his sister Karina, registering a drop in the level of approval below 40%.
The most veterans of Wall Street warned that beyond the bad result for the government, it should not be avoided was that The probable financial turbulence could deepen the discontent of voters in October. In this regard, according to the expert reading abroad Walter Stoeppelwerthformer Balanz, today in Capital Grit, aimed to explain that The government had designed a strong recession with high rates to defend the weight, but the voters of Buenos Aires replied that employment matters more than containing the last drop of inflation. Others, perhaps more optimistic, such as Fernando Marengo From Blacktoro, they stressed that the result of Buenos Aires responds to the fact that it is the bastion of Peronism and that the national elections will be different, so the government must focus on building agreements; since the reforms that could be made by decree are already made.
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Electoral result magnified concerns
The truth is that Investors still positioned in Argentina had prepared for a holding of holdings if Milei lost more than 5 points, so the margin of 14 points magnified the concerns before the October elections.
Some analysts, a little more interested in national politics, described Milei’s defeat as “overwhelming” highlighting the triumph of Governor Axel Kicillof, and awarding, from a distance, the influence of the filtration of the audios that allegedly accused the sister of the president, Karina Milei, of receiving bribes in exchange for political favors, since the house prison of Cristina Kirchner The official plans to present the elections as a fight between Milei and her, since they left her out of the electoral fight. The filtered audios stole the narrative to the milei campaign plan, staining their own party with the accusation of corruption that it intended to use to do “Shadow Boxing” against Cristina. And not even the attacks of alleged Peronist militants could take advantage, leaving an image of weakness.
So, what the result of Sunday implies: that the province of Buenos Aires will no longer be a battlefield for the growing agenda of Milei reforms to face the establishment, but will be a redoubt of aggressive opposition to the libertarian government and a laboratory for a new peronist alternative project to replace it, today, at Kicillof’s head. They believe that, in the month and a half of the campaign to the national elections, Milei must reverse the Buenos Aires defeat and recover the impulse to confuse their critics again and remain firm in the political game, although the new electoral map is a bad omen.
Now the challenge also has Kicillof to change public opinion on Milei’s experiment, and if he achieves another Peronist victory in October, it would be the greatest proof of his success.
The managers, for the time being, in addition to seeing the negative reaction, especially of the global shares and bonds in dollars, it will be crucial for the local bonds and the dollar how the Central Bank (BCRA) and the Treasury will react with respect to the management of the exchange rate.
Perhaps, because they are still positioned in Argentina, some lower the price to the Buenos Aires result because they are provincial elections. Along these lines of Vontobel, he considered that the economic achievements of the government and their still acceptable approval rates allow us to bet that they have time to recover some impulse before October. But they emphasize that the Government must recover the support of the center legislators beyond the result of October. Of course, the people’s moody for vetoes at the initiatives of the Congress either ignore to increase social benefits, nor the impact of the bribes scandal, different from the Libra case, since it would cause deeper and more lasting political damage. Another risk that they contemplate is that if the defense of the peso against the dollar implies deepening the slowdown in the activity level, it could enhance people’s discontent.
Source: Ambito
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