Argentina braces for market reaction after Leftist wins election

[Swordsmyth]

President-elect Alberto Fernandez has barely time to savour his emphatic triumph in Argentina's elections before facing the challenge of trying to dampen likely volatile market reaction to his victory on Monday.Fernandez is scheduled to have an early breakfast meeting with President Mauricio Macri at the Casa Rosada palace to begin cooperating on damage limitation as Argentina swings from Macri's market-friendly policies back to Peronist protectionism.
"How the markets react will depend a lot on how the two candidates react," said Raul Aragon, analyst at Argentina's La Matanza University.
"It is very important that they immediately give a sign of tranquility to the markets and society and this they will have to do together, they will have to take action together," he said.
"Tomorrow it will be pretty bad, there will be a lot of pressure on the peso and the banks," said Nicolas Saldias, Latin American expert at the Wilson Center.
While most of the market reaction has been priced in ahead of an anticipated Fernandez victory, "the markets will be negative," he said.
"Macri is president, but Alberto Fernandez has the power. There has to be some signal that they are working together. If there is no coordination the situation could quickly get even worse."
The return to power of protectionist Peronists comes amid a lengthy recession and a debt crunch, raising market fears of a possible default on a $57 billion IMF loan.
The peso fell 5.86 percent in the week before the elections, and the week ended with the dollar at 65 pesos.
- Outright win -
Fernandez, a 60-year-old law professor, had 48 percent of the votes -- easily crossing the threshold for outright victory -- after 99 percent of the votes had been counted, with center-right incumbent Macri trailing at 40.44 percent.
His win also caps a remarkable political comeback for his running mate, ex-president Cristina Kirchner, who will be his vice-president despite facing a slew of trials over graft stemming for her 2007-2015 presidency.
Macri, 60, pledged "a healthy and constructive opposition."
He told his supporters he had spoken by phone to Fernandez and had "invited him to breakfast tomorrow at the Casa Rosada because he has to start a period of orderly transition that will bring tranquility to Argentines."
Fernandez earlier vowed to end the polarization which has long divided Argentine politics between his Peronist movement and supporters of the business-friendly incumbent.
"The days of 'Us' and 'Them' are over," the mustachioed leftist leader said after voting in the swanky Puerto Madero neighborhood of Buenos Aires. "We are in an enormous crisis. Everyone has to take responsibility for what's ahead."

More at: https://news.yahoo.com/argentina-heads-polls-incumbent-macri-ropes-163538632.html

Notice how the MSM is trying to make Protectionism the big problem instead of leftism.
I don't know if this guy's position on trade is truly protectionist or if he just believes in defensive trade policy but the globalists don't care.

 

[Swordsmyth]

The triumphant Peronist return is not just in the presidency: early results suggest that the Peronists and the center-right opposition will have similar representation in the lower house of congress and a third of the senate, with each group controlling almost half of both chamber.
As for Macri, whose brief stint at the top in Argentina led to an unprecedented crisis and a revulsion to so-called market-friendly, if utterly incompetent, centrists, said that "this is just the beginning" as he conceded defeat in an emotional address to his supporters, although it wasn't clear what exactly "this" was the beginning of. “More united than ever, we are going to be there to defend the values that we believe in . . . we are going to continue working for Argentines through a healthy, constructive and responsible opposition."
Yeah, good luck with that.
The new Peronist government will inherit an economy in crisis, on the brink of its ninth debt default, in recession and with inflation at around 55 per cent. Although Mr Macri also faced a disastrous economic situation when he took power four years ago, most headline macroeconomic statistics are now considerably worse after a bruising currency crisis that forced Argentina to seek a record $57bn bailout from the IMF.
Ironically, it was another peronist government that blew up the IMF back in 2001, when Argentina, during what would later be known as its Great Depression, defaulted on about $130 billion in debt, which at the time was a seventh of all the money borrowed by the developing world. This time it will be even worse, and the IMF has already alllocated over $50 billion to the local economy to boot.
And since Argentina's capital markets were already Hasenstabbed in August, when its bonds and currency imploded, and the monetary policymakers knew what to expect, moments ago the Argentinian central bank announced it would hold a press conference at 830am on Monday, ahead of which it imposed draconian capital controls, limiting dollar purchases to just $200 per person per month, down from $10,000.

More at: https://www.zerohedge.com/geopoliti...ols-peronists-return-power-after-macri-defeat

 

[Swordsmyth]

Argentina's center-left government approved on Monday a package of emergency measures aimed at lifting the South American country out of its worst economic crisis in years.Argentina is in a recession caused by a currency collapse that struck 18 months ago.
Poverty levels in the country of 44 million still top 40 percent -- in a country that was among the world's wealthiest in the early 20th century.
The emergency economic package was announced by new President Alberto Fernandez, who took office two weeks ago with a vow to put Argentina back on its feet.
The emergency measures were announced just after 5:00 pm in the government's Official Bulletin -- several hours after it was expected due to some last-minute changes.
Fernandez's plan involves tax hikes on foreign currency purchases, agricultural exports and car sales.
The government says the tax hikes will only affect the upper and middle classes.
The bill passed the lower house of Congress on Friday and the Senate on Saturday.


The new law will allow the executive extra powers over finance, tax, administration, pensions, tariffs, energy, health and social issues.
The government's aim is to "attend to the needs of the most vulnerable sectors and to ... spark growth," Social Security Administration chief Alejandro Vanoli said.
The government has vowed to "tackle hunger" and has announced a 10,000 ($160) peso bonus for pensioners and a six-month freeze on public utility prices.
"It's a difficult situation, it's a country that has had to restructure its debt, with a deep fiscal and financial deficit, in a situation of recession and inflation," said Vanoli.
"The state is putting all its efforts into those suffering the most from the social situation."
Market-friendly liberal ex-president Mauricio Macri had planned in September to negotiate a restructuring of debt repayments with the International Monetary Fund, with which he'd agreed a $57 billion bailout loan last year.

Argentina has already received $44 billion of that loan but Fernandez has said that he will refuse the remaining disbursements.
He told reporters on Monday an IMF delegation is due in Argentina "in the next few days."


Argentina's economy is expected to shrink by 3.1 percent in 2019, inflation is hovering around 55 percent and unemployment is rising to 10.5 percent.
"That's what we inherited. We can't face up to it and pay the obligations that we've been landed with," Fernandez said on Sunday, as he made comparisons with the 2001 crisis.
"We had massive unemployment, we also have that now. What we didn't have (then) is inflation (but) now we have it."
Economist Claudio Loser of the Washington-based Centennial Group says Fernandez wants to "make it clear to creditors that they're going to have to negotiate a restructuring with Argentina."
"He's referring to a virtual default to dramatize the situation and show that Macri left him a huge problem."
On Friday, Argentina unilaterally postponed a $9 billion maturities payment until August, a move that saw rating agencies Fitch and S&P downgrade its credit rating.
On Monday, though, Fitch restored Argentina's rating to "CC" from "restricted default" but warned of "a high probability of another default of some kind."
"We're in a huge freefall ... in two years, Argentina has massively increased its debt," said Fernandez.
Argentina owes $335 billion, just over 90 percent of its gross domestic product.
That figure was a little over 50 percent in 2016, soon after Macri came to power.
One of Argentina's main problems is its people prefer to hold dollars rather than pesos, meaning they try to sell their local currency and often keep their dollars in foreign bank accounts.
"Argentina has no more dollars. Macri lost $100 billion. Argentina needs dollars to come back in," said Fernandez, who has maintained the monthly $200 limit of buying foreign currency imposed by Macri last August.
"Dollars are scarce, as there aren't any, they have to be expensive" to buy, he said.

More at: https://news.yahoo.com/argentina-set-approve-economic-measures-aimed-ending-crisis-184222853.html