This section has been pointing out for a few months now that the prevailing consensus, especially at an external level, is that “the end of the bargain,” the little financial model had run its course, and it was better for the Government, and in particular, the economic team to react and take the initiative because otherwise investors and funds would thunder the warningAnd so they did, starting in May and with fury in recent weeks.
The truth is that the dollar and risk premium have risen one more step and from there they look at the rest. The market is adjusting to the new reality. Neither the passing of the Bases law nor the fiscal package were enough to crown a political success that vanished like the Pact of May itself, which seems to be signed in July, as is the Argentine style. The same doubts persist.
But official paralysis disregards calls for a roadmap. The week was a hive of urgent virtual meetings, outside the agenda and schedule, furtive meetings and several “conference calls” with clients and colleagues from abroad. And if the market was “hot” with the new turbulence, let alone the cream of the crop of the local economists with the latest attacks and insults from President Milei, which have left consultants who are friends of the libertarian leader, frequent visitors to Olivos, uncomfortable with dear colleagues. The most unexpected crack, which was already discussed weeks ago.
Today, perhaps, the best definition to understand “outsiders,” in the words of a Wall Street banker, opening up to an influential economist, is: If the BCRA buys dollars, then we are calm. That’s it, the rest will be seen. Therefore, in addition to the fact that the general is finally arriving, “Alais” Sturzenegger Much more is needed to rebuild trust and dispel the prevailing uncertainty, they warn on the trading floors.
The most naive readings of the market indicate that now they are counting the ribs of the Minister of Economy, but The truth is that the inside information The President does not hide his discontent with Toto’s performance“Javier is very unhappy,” commented a libertarian friend in an orthodox zoom.
For now, the market is settling back one step higher until confidence revives. Meanwhile, attractive CER papers and longer-term Treasury bills are viewed favorably. But with caution and moderation. Very little of the behind-the-scenes of the aforementioned meeting with the banks that was for the galleryknowing that these things are previously cooked up in furtive meetings in the northern zone, as it was in the not so distant past, in the homes of repeated officials. Today, everything seems to be a bit disappointing for investors and operators.
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For now, there has been much talk about the exclusion of the Lecaps purchased by banks in the secondary market from the public sector exposure limit -against the reduction of passive repos- which was dictated by the BCRA, which is keeping the market in suspense regarding the regulation of the now new vedettes, the Letras de Regulación Monetaria or Leremo. According to experts, this measure will allow the Lecap rates to influence the rates offered to depositors.
Although, according to the Caputo-Bausili binomial Leremo will be the new reference rate for the market. Today, attention will have to be paid to the conditions of the next auction with maturities of more than one trillion pesos. Call money operators believe that the market does not seem to anticipate an increase in the minimum rate in the next auction, judging by the performance of the Lecap in September.
Investors are also looking to see whether the Treasury will simply roll over the maturities or continue to take net financing, i.e. a rollover of more than 100%. Meanwhile, banks are continuing to exercise their puts, and the stock is said to have fallen by more than $2 trillion. As for inflationary expectations, the consensus indicates a slight deceleration always above 4.4% monthly, which is why they project an acceleration of the crawling peg starting in September.
At one of the most lively and spicy dinners among men in the market, the purchase of the Columbus agent by Banco de Valores continued to be much talked about. Banco de Valores was very active in organizing meetings with agents to explain the reasons for the operation. Because it is a listed bank, it is not easy to digest paying a million for a competitor of the ALyCs such as Allaria, Balanz, etc. Speculations continue to be the order of the day and it is believed that Columbus, which is an agent with corporate clients, may have some large clients from abroad and that may be an attraction for the bank, which with this purchase acquires a management position, perhaps, betting on business with privatizations and thus expanding its portfolio of operations. As in all business, there are feelings, suspicions, jealousy and rumors, even more so after the President’s tweet.
And when it came to talking about acquisitions and mergers, there was also talk about Ortiz Fragola-Terra-Baigorri-Cavalli’s Parakeet Capital, which acquired Quirón AM from Marcelo Bastante.
In another private event, attended by several executives from Wall Street and the City of London, the financial challenges facing Argentina were discussed and the government was predicted to seek external financing to meet its quarterly target of US$8 billion. They also expressed concern about the future of Congress and Milei, given their different opinions and possible veto powers. They anticipate greater confrontation between Congress and Milei, which could make it more difficult for the Executive to function in Congress. To which an expert on “the caste” pointed out that “everything is negotiable.”
They said that the Ministry of Economy will explore alternative sources of financing, potentially reactivating Repo with the BIS or creating new structures to increase reserves. In this context, the debate on the occasion of the 30th anniversary of the Brazilian Real Plan, organized by the FHCardoso foundation, was highly celebrated, with the participation of the five economists who are the fathers of the real: Arminio Fraga (ex BACEN), Edmar Bacha (ex BNDES), Gustavo Franco (ex BACEN), Pedro Malan (ex Minister of Finance), Persio Arida (ex BACEN, ex BNDES) and Rubens Ricupero (ex Minister of Finance).
The creators of the remembered economic plan, whose currency endures today, explained that it was an intellectual, economic and political construction that was only successful due to the double capacity of the then minister. Fernando Henrique Cardoso being both an intellectual and a politician. “These two qualities are rarely found in one person. As an intellectual, he brought together a team of economists who had worked together for years at the PUC in Rio de Janeiro and created a totally original plan, something that had never been done in any other country. As a politician, he managed to convince President Itamar Franco, negotiate with Congress and explain the plan to the population, thus guaranteeing the support essential for its implementation,” Arida explained.
As it could not be otherwise, in the middle of so much academia, the e snuck inAmerican lessonsA banker recently arrived from Washington, after visiting clients, commented to colleagues that Following the debate, Vice President Kamala Harris had overtaken President Biden in some betting markets on who would be the candidate to face Republican Donald Trump in the presidential election. and mentioned that on PredictIt he was ahead of Biden for the Democratic nomination at 48 cents on the dollar, while the President was at 32 cents on the dollar while on Polymarket, his price was 48 cents, compared to Biden’s 31 cents.
In this regard, a manager provided the data that the betting markets followed by RealClearPolitics estimated that Biden’s probability of winning the November elections was 12%, below that of Harris, with 16%, and that of Trump, with 56%.
Over coffee, the banker highlighted the move by billionaire Jeff Bezos (Amazon) who is going to sell up to 25 million shares of the technology giant (about US$5 billion). According to the interviewee, it seems that Bezos is continuing with the asset sale plan that he started in February and that has already brought him profits of US$8.5 billion. He also recalled that Bezos’ intention was to sell about 50 million shares before the end of the year, while maintaining control over 900 million shares (US$180 billion).
Source: Ambito
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