The market climate changed Javier Milei: doubts with the dollar, inflation and stocks, and a warning light from the US

In the last few days the general climate has changed after the fear was released last week by the disarmament of to carry on trade world centered in Tokyo, hand in hand with good economic data in the US and the expect the Fed to cut interest rates in September. Therefore, the local market benefited from the international pressure and Argentine assets performed accordingly, although the weekly close was mixed.

The truth is that confidence returned to the stock markets after retail sales data in the US surprised above and weekly subsidy claims data improved. Therefore, Investors are starting to take risk and offload some of their defensive positions, particularly penalizing longer-dated bonds and sectors such as real estate and utilities. Now all attention will shift to the end of next week when the world’s main central banks meet at the traditional meeting of Jackson holewhere the head of the Fed, Jerome Powell, will speak.

And speaking of the USA, President Milei better recalculate his foreign policy strategy because if the bets turn out to be correct, it will now be Kamala Harris who will run ahead of the Republican candidate.: According to the RealClearPolitics average of six betting markets Donald Trump has a 45% chance of being in the November presidential election, while Harris has a 53% chance. The development, according to the people at Raymond James, is the result of strong fundraising by the Democratic team and an effective transition between the campaigns of Biden and Harris.

While at the local level the discussions between operators, managers and analysts, where the Chinese walls property of surrender of the 90s, clear an avalanche of fireworks that are typical for New Year’s celebrations or win a competition, with the help of Alberto-gate with all aspects, the emergence of the president of “Yuyito”, the fight for the field of information services, and the whole festival of videos, pictures and chats. What is heard among the mesadinistas?

Release the daisies from the stocks

The debate continues about the risk of freeing the exchange market and the risk of not doing so. Although President Milei refuses to reduce the value, there is still the opinion on the market that a jump in the official dollar is necessary to leave the stocks.

In a big Zoom, the guests, close to the libertarian government, believed that it should be done before the end of the year to reach the mid-term elections by air, without so much exchange rate delay. This date is linked to the January 2025 debt maturity, which is crucial to get out of the stocks. A renowned economist posed the problem of accelerating inflation and resource accumulation.

Then the question arose, from two experienced analysts, about what the necessary level of the reservoirs would be. Different assessments but the truth is that the candles are lit to money laundering, the moratorium and Personal Funds and some of the RIGI confirm things for what is to come in matters of exchange. Will General “Alais” Caputo’s REPO Fund Tanks? They would also help, a lot.

And speaking of exchange rate lags, a number of men and women in the market have already noticed the growing interest in knowing how the rents were on the adjacent shore, as that they reduced it will be cheaper this summer, in dollars, to spend this summer. in Punta del Este, even in Brazil. On another note, the confusion about monetary policy continues al dente, especially every time the President or a member of the economic team talks about it. In addition, the foundation of Rioja helps nothing but a trial summary in New York. The latest Letters offer showed that Economía is still interested in extending the average life of the debt ( more length).

In the Zoom they also talked about politics where it was obvious that the Government still did not learn political in the management, which in itself is frustrated by himself and others.

The man in charge of analyzing the political scene warned the virtual audience that what Milei voters wanted now was “to end,” which identify the social tension that is on the surface. In this regard, another colleague pointed out that the problem was that Milei was working as a candidate, not as a president, because that still paid off as a conflict strategy for someone who does not have much some parliament or governors. But the polarization of society that added to the high level of poverty was a wound that does not know how much more salt it will last.

At another meeting, in Puerto Madero, a sought-after political scientist said that polls, surveys and focus groups They still do not explain whether the libertarian experiment was a movement to change or whether it was a system change that passed Milei’s figure.

Anyway, the market’s interpretation of the appearance of the artist “Yuyito” on the scene is that the Government is pursuing the objective of portraying the President as someone who ‘ more and more human, as a normal person, further away from the schizophrenic media character as he was. know years ago.

How do they see it outside?

In a conference call It was mentioned in Britain that, for the first time in a century, the July CPI was going to be higher than expected in the last REM of BCRA. In this regard, they pointed out that the July CPI started to decrease again as a result of the Government stopping cuts to energy subsidies and increases in fuel taxes. They admitted that inflation rates had started to slow down more than they had previously expected but believed that they were unlikely to reach the official monthly target of 2%.

In another financial meeting, this time in one of the largest banks in Brazil, the appreciation of the real exchange rate was discussed as the main challenge of Argentine economic policy. They believed that the economic policy implemented by Milei was a shock where most of the measures are harsh, with the effect of a large recession in the short term but which has led to a certain improvement in the fiscal accounts, which for now is the main anchor of economic policy.

For these analysts, inflation also fell but due to the maintenance of an official exchange rate worthless since before the elections, which has made it difficult to collect reserves, a necessary condition for the government one of its main promises in terms of achieving the abolition of capital controls. .

They concluded that the prospect of a significant future devaluation of the exchange rate even contributes to undermining inflation expectations and represents a major obstacle to economic stability. . They also analyzed the issue of money laundering, with the aim of increasing reserves through reserve requirements on dollar deposits, and the expert in these matters recalled that there is an agreement between the AFIP and FATCA that opens up financial secrecy . In that meeting, the words of