Falcone: Cristina is more likely to be lacking

Reporter: How is the market mood this year?

Diego Falcone .: We believe that the customer exit has occurred and that we are waiting today to know if there are any buyers at these prices. They still do not appear. In fact, what surprised us is the panic of customers since March of this year. Investors are even emerging from conservative positions. I'm talking about people with an expired Treasury bond within 90 days, not a client with a long Argentinian bond.

Q: Did the currency crisis of last year scare you?

D.F: I think it was reorganized all last year. The one who traveled stopped traveling. The one who counted less. He ended up adjusting the economy.

Q: What can happen on the market if he wins (Mauricio) Macri, if Cristina wins (from Kirchner) or if he makes a third alternative?

D.F .: We define that with Cristina a default is more likely, with a third way more likely a voluntary restructuring and with Macri a renewal of the debt. With Cristina, the risk premium of Argentina would be much higher than these 1300 points. And today, at 900 points, you find the same values ​​as before the elections of 2015, when he directed (Daniel) Scioli the polls.

Q: Is it convenient to have Argentine badets in this election year?

D.F .: I think there is an exaggeration with the scenario of President Cristina. There is an emotional badysis of the triumph of the exmandataria. Hardly anyone who takes up the mandate, the first action taken is a defect. Certainly try to compose the situation because the governability would be questioned by the rejection, not only that it generates its envy, but by the measures that realize. How could a newly elected president coexist politically by taking very disruptive measures? When you think about how the default scenario unfolds, you ask yourself the following question: When do you declare it, on December 11th, or do you wait until three o'clock in the afternoon or do you expect holidays? I think this idea is starting to collapse a bit and the market is starting to evaluate other tracks. For example, there is a scenario in which Macri does not win, but someone who is not pro-market, pro-IMF, wins.

Q: With regard to investments, what do you recommend for 2019?

D.F .: Our portfolio for those who are 0% in Argentina, is to invest again, always respecting their risk profile. And there, he will determine how much to invest in Argentina and how many not. Because when you leave the country, returns will not be greater than 4% in dollars. Something that will seem little. It is a mixture of Argentine companies that can represent 40% of the portfolio and the rest on external instruments. This allows you to have a reasonable mix. The teaching of 2018 is to diversify the portfolio. It was very difficult to convince customers to diversify. In Argentina, everything was going well and the returns were half as low.

Q: What is the weighting of the Lecap and Letes catches this year?

D.F .: It depends on the rate. We like the peso for part of the wallet and the letters corrected for CER (Lecer) which brought in 8% more inflation. However, we did not like Lecap until this week's rates change. Above 55%, it is advisable to have them.

Q: Does the rate kill the dollar?

D.F .: I believe that the liquidation of agriculture kills the dollar. You have a very good ground rules and I think the rate helps. But Argentina has already made the adjustment.

Q: Why is country risk so high?

D.F .: It seems to me that after the defeat of Kirchnerism in Rio Negro, the market began to say "there is room for a third force that will not be Macri". This obviously raises country risk for a political issue. Macroeconomics does not show you any other problem we already know.

Q: What is affecting Argentina the most, the external factor or the local problems?

D.F .: If you are solid internally, you'd better support what comes from outside. But the outside ends up being decisive. If the outside situation is compounded, it will be easier for Argentina to reduce the country risk.

Q: What is your badessment of the agreement with the IMF?

D.F .: The advantage of the agreement with the IMF is that Argentina will have to approve a large number of reforms that would never be approved.