Macri spoke to them with his pocket, but the "markets" are tightening by more adjustment

After Black Wednesday that had the local stock market, with the largest decline in the Merval in a decade (-9.6%), and shares that fell to 15.6% (that was the case of the PGR), yesterday it operated in increase, but recovering only 3%. But despite this recovery, the "country risk", which marks the differential above the rate of US Treasury bonds. UU that should face the country's debt abroad, has further increased, nearly 586 points. This is the highest level since September 2015. The only countries that showed yesterday a risk for their higher sovereign debt were Venezuela, Ecuador, Lebanon and Ukraine. The euphoria generated by Argentina's transition from the border country qualification to emerging country in the MSCI was short-lived. The increase in country risk occurs despite the agreement with the IMF, which shows that the endorsement of this "last resort guarantor" for international creditors is not enough.

Meanwhile, the dollar closed again yesterday Although the Central Bank (BCRA) increased the amount of daily bidding calls with funds lent by the International Monetary Fund, it went from 100 to 150 million USD. The big dollar closed yesterday at $ 28.10, $ 0.66 more than the final value of Wednesday's wheel. The retail dollar price was $ 28.67 for sale in the average of the entities surveyed by the BCRA.

A weak link in a context of global turbulence

The past two days have shown that the country's financial situation is far from being stabilized. It has not reached what the government has done since Luis Caputo replaced Federido Sturzenegger, where the biggest novelty lies in the debt relief of the BCRA offset by the increase in public debt, which was placed with banks under lace The approval of the IMF's board of directors and the arrival of funds to return the market, or the news of the MSCI were not enough either.

It is not surprising that enthusiasm quickly evaporates and falls on the local stock market, in the context of an international situation where markets have days on the edge of A nervous breakdown by the announcement of Trump's tariff measures against China and the weaknesses shown by US banks.

Even with the IMF "helps" for Argentina, which has a high price for the strict objectives of fiscal adjustment and exchange rate exchange agreed by the Macri government, "l & rsquo; Next year, we must fund $ 33 million with closed voluntary markets. " Marcelo Elbaum. "With the IMF, it's not enough," he said.

But in addition, those who play the stock market are still waiting for the government to detail certain points in the roadmap that it has committed to the IMF. How the bailout of non-transferable bills that the BCRA will have, which will amount to $ 25 billion, will be made for the entity to save Lebac and improve its balance (and thus the ability to safeguard the value of the peso against the dollar), is one of the unknowns. They are also waiting for more details on tax scissors.

The winter must pbad

The data known this week show that already in the fourth month of the year the economy had begun the decline: 0.9 year-over-year and 2.7 % compared to March. The drought that has reduced agricultural production is the main factor that explains it. But in the coming months, private estimates anticipate that all effects generated by the race will be felt stronger. There are several reasons why this lowers the forecast of economic activity.

First, the rising dollar has accelerated inflationary pressures, which has lowered the cost of living. Although the government has eased the year 's wage targets, with respect to the 15% guideline that it initially wanted to impose on private joint ventures, the new level indicated by the government of Canada. Agreement signed by Truckers (25%) also remains brief against the outlook for inflation that is moving up 30% or more for the entire year.

A second element that curbs activity, is the search to contain the dollar (and at least partly inflation) restrict liquidity and keep interest rates in the clouds. With these funding cost levels, and with the turbulence of the exchange rate that is not settling down, it's not surprising that Dante Sica defines it as one of his priorities to prevent that in the SME sector the payment chains are cut.

The reduction of public expenditures, of which the government does not finish defining the contours, is another additional element. The government aims to achieve an additional fiscal reduction of $ 200 billion per year on average by 2020. Non-automatic transfers to the provinces, public employment and disbursements are the main beneficiaries of the program. this reduction.

Doubts about the objectives

In this context, with the economy in recession, and without having achieved stabilization after the cimbronazo exchange, the financial turmoil also cast doubt on the possibility of "the economy". achieve the objectives with the IMF. In this sense, the economist Luis Palma Cané, who has the habit of verbalizing what the "markets say," baderted that "there is a huge doubt about the capacity of the" market ". Argentina to achieve the objectives of the IMF, in terms of deficit reduction inflation ". In a recessionary climate that makes it difficult to meet fiscal targets and with the ongoing negotiations with the provinces to allocate costs, the demanding targets announced by the government may be difficult to meet.

To this is added the lack of definition that will come with the rates. As economist Guillermo Calvo said a few days ago, "the government is at a crossroads: if the rate adjustment is moderate, the budget deficit increases; if it does not moderate them, the rise in the price of oil, for example, and the sharp rise in the exchange rate fuel the inflation of costs. "The government could consider here that the operators pay part of the costs of oil. Stop the increase in tariffs, without covering subsidies, but it would allow the return of claims for the "business climate" that existed during the Kirchner years.Any decision entails high costs. Damage control "that the government seeks to do after the bullfight is plagued by difficulties.

The government continues to say that the worst has already happened, and that with the IMF's call it seeking to make it known that he will honor the debts that have grown enormously during his government with "hunger and thirst of the Argentines", the country will resume growth. "The markets", that is to say to say those whose government seeks to protect preferentially in the context of the disorder caused by the abrupt cut in the financing of the country, see something else and act accordingly. The worst, it has not happened yet.