After a black Monday for Argentine badets in New York, with stocks and bonds falling to 15%, the dollar will be contagious. What will Sandleris do?
If there is something that will cost you dearly and much, a prospective government of Alberto Fernández must recover the credibility of the markets. Investors have already dropped their thumbs in advance (the wheel from August 12 is a true reflection) and, even worse, the unfortunate statements of the presidential candidate by the Front of All are just throwing more money. essence on fire.
The result is obvious: Monday's collapse in New York stocks up to 16% and the country would risk an escalation of 13.6% (up to 1,883 points), which will infect the company. Opening of the dollar on Tuesday.
Candidate K's statements over the weekend triggered another day of panic with Argentine badets, almost preventing a debt restructuring..
More specifically, Fernández told Clarín newspaper: "I will talk to the creditors to see what we can do, those who have an Argentine title, but it is a bargaining task." We have to sit down and discuss one by one. one, as we have done before. " Remember that we asked bondholders to accept a 75% takeoff and it was a one-to-one discussion. "
On the international market, it was a statement of near-default obligations and, as expected, they acted accordingly. Country risk returned to 1,900 points (+ 13.6%) while one of Fernández's advisers, Guillermo Nielsen, had denied the Bloomberg agency that they were considering restructuring the bonds. ..
They did not convince the words of the former debt negotiator, Néstor Kirchner, nor what another "orthodox" said in the candidate 's club advisers, such as "no money". Emmanuel Alvarez Agis. It turns out that, beyond what these economists had promised, Fernández is responsible for fear in the market.
Will you do this because of a fundamental ignorance of finances or because, precisely, you want bonds to have less and less value to ensure successful negotiations with creditors? This is what several investment banks in Manhattan have asked for this Monday. "Is that or is it done?", Summarizes one of them in iProfesional.
The market is also looking forward to relations between Argentina and the IMF. It is not confirmed whether the delegation of the agency will finally come this week as planned. Agency spokespersons can not confirm whether there will be a mission or not. The crisis is displacing everyone.
What will Guido Sandleris do on Tuesday when he will open the forex market? Operators worry a lot of the drag effect left by the country. The bad mood with the bonds extends to the dollar market that Monday was closed by the party.
It is expected that this will open up under the pressure of the purchases and that the plant, which could refrain from selling its own reserves or its treasury dollars – thanks to the modification of the regulation of the banks – should now go out to make an offer on the spot.
Argentina, under the gaze of "bulls" and "bears"
In the meantime, and despite each other's statements, it is impossible for investors not to start calculating the default scenario. From Europe to the United States, investment banks are already doing accounts and are wondering whether the result will be similar or not to that of 2001-2002.
Ashmore Group, one of the largest funds in England, recently raised this amount.
"Investors are much more worried about the political transition in Argentina.The country's stock of debt is large but not unmanageable, with a solution to avoid failures and stimulate growth.This path requires a strong commitment on the part of politicians and continuity in tax matters, "he says.
And that raises two scenarios, an optimistic (bullish, as we say in jargon) and another pessimistic (bearish, as they say on the market):
–Optimist: "Fernández has all the reasons that push his economic advisers to sit down with the IMF and agree on a strategy to stabilize the markets. This must be followed by public announcements showing that politicians and the IMF are committed to the country's sustainable development. This would pave the way for a new profile of IMF payments. Over time, in addition to trust. "
–Pessimistic: "If Mr. Fernández turns out to be an ideology, as some fear, he can transform Venezuela.In this scenario, populist policies would go hand in hand with a prolonged confrontation with the IMF and the country's creditors. .. The peso would depreciate and the prices of the securities would sell even lower. Inflation would come back more strongly to the Argentinian population that suffers the most. "
Another, but similar, look is that of XP Investments, a financial company that had good relations with Mauricio Macri's government and is now one of the most "disappointed" in the results of the primary.
"The relevant question is now that the market has already internalized the eminent possibility of a debt restructuring"The conversation between President Macri and Fernández was a good start in trying to calm investors and give some visibility to the next administration, followed by Fernandez's comments that revealed more details about his positions on economic policy. ". thick headed.
Nevertheless, they emphasize, much remains to be done to put an end to the ongoing deterioration and avoid "the dreaded self-fulfilling prophecy with total financial implosion".
The XP Investments report, released as Argentine badets collapsed Monday in New York, notes that "if Argentina remains a reputable partner of the IMF, the market overestimates the risk of an aggressive restructuring of the debt. , in the event of a possible administration of Fernández which remains in good relation with the Fund, a possible restructuring of the debt would not involve a capital reduction but an extension of maturity, which would probably result in a net present value loss (VPN). "
"The good news is that the market has already fully leveraged a VPN loss transaction, so current and future authorities can send an unequivocal message of certainty to the markets, the risk of greater losses for the badets of the company. Argentina does not seem too big, "he says.
However, he warns that "if the Fernández team continues to act as if nothing had happened, then the financial implosion would loom and additional suffering would occur, after the high probability that the demand for currency will collapse completely. "
Apparently, another round of "talks" between the outgoing president and Fernandez will be needed to restore peace to the markets. The dynamics of the crisis, exacerbated now by a candidate who has no credibility for investors, could create more tension on the financial front.
In the short term, the rising dollar indicates that inflation in the coming months will be 4% or 4.5% and that the CPI will close the year closer to 55% to 40%, as it is believed only a few weeks ago.
In the middle, the new Finance Minister, Hernán Lacunza, will have little room for maneuver and very little interference in the mood of investors. Almost anecdotally: the market does not react to what Macri does or does not do, he only acts for what he can do or say who is now betting as virtual president of Argentina. He who, far from convincing the markets, continues to frighten them.
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