Casa Rosada: Unexpected defeat and fear of market reaction

These statements, presumably, will not be enough to calm the markets, according to international experts consulted by domain.com. And they argue that the ideal would be that Macri announced Monday concrete steps to restore confidence in his government.

This negative result – which some have described as "Beat" – This was not in the head of any official. Moreover, last Friday, at Casa Rosada, the ruling party was expected to reach a tie – the most optimistic even believed in a close victory – while the majority was inclined to the possibility of a defeat but not bigger than a few points

The results of the primary elections clash with these forecasts and lead Cambiemos government members to wonder why they were wrong.

"The government underestimated the importance of the economic crisis", Stress the political badysts. The economic results are clearly unfavorable to the official administration. Poverty has risen, wages have lost 15% of the purchasing power that he had at the end of the previous government and rates have exceeded inflation by more than 80%. According to more recent figures, mbad consumption declined in the second quarter between 7% (in the highest income segment) and 12% (on the lowest scale), compared with the same period. last year, according to data from Kantar Worldpanel.

"They believed that with the fear of a return to authoritarian populism or with abstract messages such as the consolidation of a republican democracy and integrated in the world, it was enough to win, and they did not realize that many people ended up voting against them, often with anger, because the salary was not enough not to reach the end of the month. month ", as badessed by other badysts.

Some people think that the Front of All's message has been more effective in appealing to specific events such as paying for medications to retirees or the promise that people will be able to eat roast again.

Instead, the communication of Together for change He has repeatedly pointed out the need for labor and pension reforms, a perspective that is hardly useful for gathering votes. All this in a context where the presidential speech is devalued by unfulfilled promises (reactivation, decline in inflation, poverty).

In light of the results, the polarization strategy adopted by the government also seems to be wrong. "They have so encouraged the ghost of Cristina (Fernández de Kirchner) that they are about to shoot themselves in the foot because of the possibility that Kirchnerism will come back to power", point out that they are close to the ruling coalition that does not share the line chosen by the presidential advisor Jaime Durán Beard.

We will have to wait for the October elections, but the reality is that, for the time being, the situation is complicated for the government of Mauricio Macri, among other reasons for the reaction of the markets.

Among economic badysts, a difference from macrism up to 5 points was deemed acceptable for investors. Overcoming this barrier, It is not surprising that stress returns to the foreign exchange market.

To make matters worse, the week ended on a very favorable wheel of the Buenos Aires Stock Exchange – with an 8% rise – encouraged by various surveys that yielded favorable results for the government, both at the only in the region. province of Buenos Aires.

And also the international context does not help. About, A tweet from US President Donald Trump over the weekend has once again made the markets nervous. Trump argued that "China may be hoping for a democrat to win in order to continue its big scam towards America (USA) and stealing hundreds of billions of dollars."

How will the economy continue?

In this context, the economic question (no matter how much you do not like the party in power) comes back to center stage.

In the case of the formula Alberto Fernández and Cristina Fernández The pressure will surely increase because it will define more precisely the content and the names of those responsible for taking charge of economic driving in the event of contact with the government. But they work with advantage, promising measures that improve the lives of citizens because they do not have the immediate opportunity to put them into practice. In addition, data on consumption, wages and inflation in 2015 were better than the current ones.

In the case of the government, appealing to the fear of becoming "Venezuela" is apparently far from being a reality for a large percentage of the electorate and therefore, according to international experts, concrete steps should be taken.

The chief of staff himself, Marcos Peña, expected that Surely there will be uncertainty in the markets. The statements of the candidate Alberto Fernández that a strong dollar is necessary also contribute to generate tensions in the currency markets and financial markets.

Like this It is believed that a campaign encouraging fear of instability could become a playing card for macrismo in order to get voters in October. If so, it would be a movement risk, as the deterioration in expectations tends to worsen the economic situation (buying dollars for precautionary reasons, raising prices, increasing economic stagnation) and thus compromising the electoral chances of the ruling party.

Not less surprised that local and international market badysts with early results point out that it is necessary that the Macri management "Bet on other things that only sow fear, if you want to keep the government."

In this sense, they believe that it is desirable to rethink the campaign. They stress the need to take action, for example: "Change some cabinet members (in particular the economic zone) with the intention of recreating expectations; an increase in the minimum wage or the establishment of credit lines so that a slight recovery actually begins to be perceived.

For some, it is a question of continuing the path begun with the incorporation of the Peronist society Michelangelo Pichetto which meant an improvement in the government's image. "Perhaps more progress would be needed to show that the incorporation of other forces would also involve their incorporation into the future cabinet" and expand agreements with other political forces to broaden the support base for Together for Change.

The government and the opposition will now be forced to make progress by specifying what they will do with the economy.

The government presents a certain disadvantage since it must promise that things will improve in the near future (the bet is in October) although economists agree that this improvement will be hardly perceptible for the majority of the population.

In addition, he has the problem of a devalued word when he makes a call: the road was the right one and that's only now that we have to go faster, as Macri affirmed himself.

On the side of the Front of all, they will also have to be more precise in economic matters because the government attributes the instability of the markets to the fear of the return of Kirchnerism to power.

In addition, the government knows that, given this result, the peronism of these two months will tend to gather even more around Alberto Fernández, which will weaken the chances of the party in power. There is hope "The STEP ended up being an excellent investigation" commented on the proximity of the presidential environment and maybe part of society wanted to give a message but in October "What are the elections really" The result is not so unfavorable. Inner fear is that "Electoral strikes lead us to give up"he finished.