When the outlook seemed increasingly gloomy and the virtuous dynamics of reserve accumulation, reduction of the exchange gap, financial surplus and rising markets threatened with an abrupt change in expectations, the Government managed to recover oxygen in quantity this week. Although the central note and sine que non to reverse the bad climate was the approval on Wednesday of the Bases Law, the truth is that the good news began before and continues afterwards. For example, late Tuesday, the Minister of Economy, Luis Caputo, announced the end of the blender – “the era of negative rates ended today,” he said – hours after confirming successful results in the Treasury tender in the which, for the umpteenth time, sought to capture the pesos placed in Central Bank debt to clean up its balance sheet.
It was the first concrete official sign of recognition of the end of an economic cyclewhich the market had already anticipated with its discomfort, and the advent of a new phase, about which there is optimism among economic agents.
In the middle, there were loose ends, such as the maturities of USD 5,000 million of the swap with China that were renewed and whose announcement occurred within the framework of the debate in the Senate. The approval of the goals by the IMF, which promptly released the USD 800 million after the sanction of the senators and the inflation figure that was expected to be low but was even lower than expectations, ended up directing the shift towards a somewhat clearer. All in all, Milei not only does not have a blank check but investor confidence has not yet recovered to the maximum levels reached during his administration. Investors want to see, the Government still has a lot to prove.
That is, at least, what the prices recorded by Argentine assets in the last rounds would be indicating. “Market reaction was generally positive particularly for dollar bonds, stocks and gap. But the euphoria was not excessive,” they anticipated in Consultatio, where they clarified that the titles were still 7.9% below the April highs and the gap practically doubled from that moment, although local stocks did have an improvement of almost 5 % in dollars. “What we read from this market reaction is that, at the risk of simplifying, the prices say that the prospects of the private sector improve, that the benefit for the solvency of the public sector is not yet completely clear and that Having postponed the exit of the stocks and deepened the liquefaction strategy was not free”said the consulting firm’s analysts.
From the outside, the view of the big Wall Street banks is more focused on the big picture than on the details. In that sense, after the purchase recommendation of several entities in their reports for their clients immediately after the approval of the law, such as that of BofA or Bradesco, Morgan Stanley also celebrated the event and titled “Back on Track” (Redirected) his analysis of the events in Argentina. “The approval of the omnibus law in the Senate and, therefore, the very probable approval in the Lower House, should reverse recent losses and return some positive momentum to the economy”, said one of the most influential investment houses in the United States. The bank also listed the factors to be taken into account from now on, among which stand out the projects that, it warned, increase public spending on retirements, in reference to the project that Deputies approved with a new retirement mobility formula, and also in education, for the initiative under discussion to guarantee university financing.
