In this regard, the expert pointed out that Trump, before taking office on January 20, will want to have the Russian-Ukrainian conflict and the Middle East, which is why it will put pressure on kyiv and Moscow, with the exception that it will give Israel a little more time to finish its operations. That is Trump’s agenda.
Fierce fight for the Argentine embassy in Washington
In another reserved meeting, a legendary analyst, conspicuously familiar with the corridors of power, including those of the Foreign Ministry and those of Washington, commented on the details of Mondino’s departure and the mistake the Government made by putting in an unprofessional and inexperienced team. above all, at this moment in international politics. He emphasized the fierce fight, today out of control, to keep the Argentine embassy in Washington after Werthein’s departure. In any case, those who know recognize that Trump is an opportunity for Milei, above all, in political terms, who can aspire to be a regional reference, no more than that, since the regional agenda is led by Mexico.
Therefore, expectations, especially official ones, are that the strong bet that Milei made on Trumpeven at times when many believed that the former president was going to go to prison, allowed us to reap some economic benefit, whether with or without the IMF. The market will now want to see what cards are played from the Casa Rosada, the White House and the Fund, and if all that support and ideological identification translates, finally, into a better agreement with the organization and/or some financial bridge with the Treasury. from the USA for example. The most seasoned analysts advise the Government to reduce anxiety, both in person and by telephone, with the president-elect, and to professionalize the leadership of the Foreign Ministry and the DC embassy, waiting for some signal from the Republican.
Adjustment of 2025 projections
But, apart from the advent of the so-called Trump 2.0, in the talks, gastronomic and virtual meetings between men from the local market, we have been witnessing an improvement in the climate, which translates, for example, into a recalculation of 2025 projections. In general, the main consultants recognize signs that the level of activity has hit a floor and is rebounding heterogeneously, and although they maintain doubts about the external sector, perhaps the Achilles heel of the Argentine economy 2025, they were moderately more optimistic about what’s coming
Of course they continue criticism about the “blend” dollar, and the exchange rate pattern, and even more so about the interventions of the Central Bank (BCRA) to reduce the gap. Celebrations for the results of the money laundering, which surprised even the most optimistic, and a big question whether the BCRA’s foreign currency purchases in October is a turning point or just a swallow that does not make summer. Likewise, the most critical say ironically that to evaluate the results and 2024 performance of the economic plan you have to “put in the VAR.”
In another stronghold, which was used to celebrate, in the midst of analyzing the situation, the birthday of a renowned economist and former official, they also focused on the “trade-off” between the next tariff adjustments and the inflationary slowdown and in the debt maturities of 2025, which are the highest since 2019. There was also a lot of talk about the real economy, given that there were several businessmen and importers, and what was perceived by comments collected, especially in the interior of the country, is the great concern that businessmen and industrialists have about Chinese competition. . A representative of the Creole “private banking”, capable of being fed up with the media, raised why the “analysts-spokespersons” did not swear like the officials by “God and the Country demand it of you”, above all, those who in each government pay homage by advising betting on pesos and in the long run they never pay off.
“Trump trades”
Meanwhile, in the world market we only talk about “Trump trades” to the reaction of stocks and bonds. On Wall Street they consider that the clear and quick result of the presidential election, which avoided any turbulence in the market, allowed the Fed to carry out the planned rate cut of 25 basis points, and although Powell – who said he would not resign if Trump asked – did not give any future guidance for December, They expect the cycle of cuts to continue in December and January with 25 basis points per meeting.
They also bet on a rebound in inflation once a universal tariff is imposed, which for the Fed will mean pausing the cycle of cuts. Therefore, they do not expect any further rate cuts after January. As John Keynes said, a global manager explained, “markets are moved by the animal spirit, not by reason” to explain the momentum to which a colleague threw the phrase of the speaker Werner Erhard, “ride the horse in the direction “What’s going on?”
They all highlight the level of institutional power that Trump will hold when he takes office since he not only won by votes and voters, but also controls both legislative chambers, has the majority of governors and as if that were not enough, he has the Supreme Court on his side. . According to a Republican investment banker who is running for office, No American president has had as much power as Trump will have since Roosevelt’s second presidency in World War II. Questions now remain about the implementation of future policies.
In a conference call they explained that US stocks remain supported, particularly by solid growth and earnings expansion, however, risks around higher long-term yields and tariff implications do not appear to be reflected in stock prices. market and could generate volatility in the future. They considered that US Treasury yields were likely to remain volatile and elevated due to fiscal concerns, while Trade uncertainties contribute to the strength of the dollar and exchange rate volatility. That is why they recommended diversifying to help balance portfolios against unknown risks.
In any case, although the focus was on the fact that Trump’s presidency would bring a rising yield curve, more expensive stocks and a stronger dollar, They warned that less debated operations could have better results, particularly mergers and acquisitions and the defense area. And regarding momentum, they explained that investors were not prepared for a significant rebound, the majority positioned themselves for a longer electoral result and more volatility. Instead, the speed of certainty of the electoral result ended up detonating the impulse factors: the fear of losing opportunities was what dominated the operations.
Of course The situation of the US bond market is more problematic, as the Fed’s monetary easing and demand for duration stagnated and were not reversed. The risk of a steepening of the yield curve was not the central expectation of investors, given the predominance of Fed rate cuts as the main concern for 2024. Furthermore, dollar holdings are negative and that reflects the hedging of US assets by offshore investors.
As money does not sleep, and greed dominates the spirits, at this conference there was a lot of comment about the rumor involving two giants of Wall Street. It is the largest fund in the world, BlackRock, which is said to have started talks with Izzy Englander’s Millennium Management to acquire a minority stake in the $70 billion hedge fund. It would be the first time that Millennium, one of the world’s largest hedge funds, has agreed to sell part of its business to a third party. Those who follow this type of business remember that in 2023 Millennium negotiated a partnership agreement with Schonfeld Strategic Advisors but it never came to fruition. While Larry Fink’s BlackRock has been aggressively expanding into alternative assets over the past year. Still, private assets and alternative hedge funds still make up a small fraction of BlackRock’s $11.5 trillion in assets and US$4.2 trillion of exchange-traded funds.
Millionaire swindle Montevideo’s “high society”
A kind of financial brunch was the epicenter of interesting counterpoints, data, clues and rumors about the financial market, which even reached the other shore. In this regard, the habitués of Punta del Este They have already scheduled in mid-January to go to the Tel Aviv University event that promises international speakers. Continuing on the neighboring shore, the case involving a former Uruguayan rugby player nicknamed “lettuce” accused of a million-dollar scam against Montevideo’s “high society” was highly commented on.
According to what they say, Lettuce, a former national team player, would have swindled more than US$65 million in what became the summer novel, which would be associated with investments in cryptocurrencies that promised sky-high returns. From what is rumored it would be another Ponzi scheme, but one that not only involves Uruguayans but also Argentines and Brazilians. The most memorable bring up the case that involved the Swiss-Uruguayan bank Heritage in 2018 where an executive defrauded all of her Argentine clients of more than US$20 million.
Macro improvement and CFK risk
Leaving the financial scandals aside, the conversations focused on the fact that the macro numbers were now better for the Government, underpinned by the success of money laundering, and therefore, the only major idiosyncratic risk that remains is the electoral one where the improvement Cristina Kirchner’s image worries investors, along with the positioning of Governor Kicillof.
The only thing that is viewed with suspicion is that sales of emerging market assets intensify, because Milei and Caputo’s libertarian plan is based on the appreciation of the real exchange rate, hence the concern about the fall of the Brazilian real and the weakness of soybeans. There was talk of the last Treasury tender that did not cover all maturities (rollover 55%) but the cut-off rates were adjusted down between 140 and 435 points while the adhesion to the exchange was 38%, and they are already preparing for the next auction with maturities for $5.2 billion ($4 billion from Lecap S29N4 and the rest almost all from TG25).
One of the diners closely linked to politics advised monitoring the legislative battle that is coming over the DNU issue. He explained that it was an important issue in terms of power and although Milei anticipated that he would veto the opposition initiative that limits the DNU, there would be three vetoes in just a few weeks, something unprecedented in Argentine institutional history. Of course we have to see, he pointed out, if the President maintains the third of Deputies to support another veto.
On the other hand, They welcomed the relaxation of the stocks via the BCRA, which authorizes companies that issue ONs that pay cable to be able to access the official market to pay the capital after at least one year from the issuance. This is relevant after some short ON broadcasts that paid for cable. Regarding the Trump effect, it was said that it strengthened the dollar and caused the rates of “Treasuries” and emerging bonds to jump, but Argentina continues to travel another level with a firm peso and the country risk breaking 900 points.
In this context, an operator exemplified the good moment in which today A GD35 bond promises a total return of 29% between now and the 2025 Primaries if by that time the bond yields 10% (country risk at 550), while in the same period a Lecap at 41.5% annual effective rate would yield the same in dollars (29%), only if the CCL dollar is worth the same at the time of the PASO as it is today.
Other highly commented meetings were those of Latin Securitiesthat of BT VALO with Arriazu and Marengo, and the next conference by the famous emerging market investor, Mark Mobius. In these meetings between market people there were also references to the latest passes: Félix Frías (ex ICBC, ex Puente) to Balanz, and Eduardo Levy and Federico Filippini to Adcap.
Source: Ambito
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