• Tag Archives Argentina
  • Gambling on Argentine Politics: US Dollar vs. Short-Term Debt

    The incredible credibility conundrum. By Bianca Fernet, Argentina, The Bubble: Trying to figure out what’s going on with Argentina’s Central Bank’s monetary policy right now is about as exact a science as checking out the horses as they parade around the paddock before a big race. There are clear favorites, a few dark horses, and until someone crosses the finish line it’s all guesswork. Except a lot less enjoyable because horses are cooler than politicians.
    Argentina’s currency market hiccuped last week at the prospect that former President Cristina Fernndez de Kirchner has an actual shot at becoming a national Senator, representing the Buenos Aires Province. After hovering pretty close to AR $15 for the better part of the year, last week the US dollar exchange rate reached AR $18.

    This post was published at Wolf Street by Bianca Fernet ‘ Aug 4, 2017.


  • Bolivia’s President Declares “Total Independence” From World Bank And IMF

    Via The American Herald Tribune,
    Bolivia’s President Evo Morales has been highlighting his government’s independence from international money lending organizations and their detrimental impact the nation, the Telesur TV reported.
    “A day like today in 1944 ended Bretton Woods Economic Conference (USA), in which the IMF and WB were established,” Morales tweeted. “These organizations dictated the economic fate of Bolivia and the world. Today we can say that we have total independence of them.”
    Morales has said Bolivia’s past dependence on the agencies was so great that the International Monetary Fund had an office in government headquarters and even participated in their meetings.
    Bolivia is now in the process of becoming a member of the Southern Common Market, Mercosur and Morales attended the group’s summit in Argentina last week.

    This post was published at Zero Hedge on Jul 25, 2017.


  • Venezuelans Are Now Paying 1000 Times More For US Dollars Than They Did In 2010

    The hyperinflationary-hell in Venezuela’s currency is deepening as a crippling dollar shortage and a threat of oil sanctions (amid President Maduro’s attempts to rewrite the constition to maintain his grip on power) take their toll on the economy.
    Venezuela’s Latin American neighbors urged President Nicolas Maduro to refrain from actions that might exacerbate the country’s political crisis in a disappointment to some regional governments that favored more direct and forceful criticism. As Bloomberg reports, Mercosur, South America’s largest trade bloc, called on ‘the government and the opposition not to carry out any initiative that could divide further Venezuelan society or aggravate institutional conflicts,’ in a joint statement issued at the end of a summit in Mendoza, Argentina. Member countries Brazil, Argentina, Uruguay and Paraguay were joined by Chile, Colombia, Guyana and Mexico in signing the statement.
    International condemnation of the Maduro government’s plan to rewrite the country’s constitution to maintain its hold on power is gathering pace after the U. S. said it would impose sanctions on Venezuelan officials if Maduro goes ahead.
    As we noted earlier in the week, The Trump administration is mulling over sanctions against senior Venezuelan government officials, and additional measures could include sanctions against the country’s oil industry, such as halting imports into the U. S., according to senior Washington officials who spoke to media.

    This post was published at Zero Hedge on Jul 22, 2017.


  • Bad Models Result In Terrible Outcomes

    Recently I spent a month in Buenos Aires. I went there to study the culture and the economy of a formrely prosperous land, filled with kind well-educated people.
    One key lesson was this: Given enough time, bad policies will eventually ruin any advantage.
    While not as bad off as it was in 2002, when the masses took to the streets banging pots and pans in protest of their nations ruined economy, the city of Buenos Aires is still clearly depressed. As are most of its people.
    More than that, all hope has been lost. Every time a new politician is elected, things are promised to get better, but they don’t. Argentina’s current woes are the result of far too many successive political regimes that made terrible decisions. It’s a clear as simple as this: Bad policies lead to bad outcomes.
    As we learned in our interview with Daron Acemoglu on Why Nations Fail, what matters most for widespread prosperity is that the political and economic institutions be fair and inclusive. From the podcast:
    It all depends on incentives and opportunities. If people have opportunities to become rich, to open businesses, be innovative, do things that are going to further their interests and at the same time the nation’s GDP (Gross Domestic Product) and they have incentives to do so, that’s going to lay the foundations of economic prosperity.

    This post was published at PeakProsperity on Friday, July 14, 2017,.


  • Doug Noland: Yellen on Inflation

    This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
    Global Markets rallied sharply this week. The DJIA rose 223 points to a record 21,638. The S&P500 gained 1.4% to a new all-time high. The Nasdaq100 (NDX) surged 3.2%, increasing 2017 gains to 20.0%. The Morgan Stanley High Tech Index rose 3.4% (up 24.6% y-t-d), and the Semiconductors surged 4.7% (up 21.8%).
    Emerging markets were notably strong. Equities rallied 5.0% in Brazil, 5.5% in Hong Kong, 5.1% in Turkey, 2.5% in Russia, 2.2% in Mexico and 2.1% in India. The Brazilian real gained 3.2%, the Mexican peso 3.0%, the South African rand 2.7% and the Turkish lira 2.3%. Global bond markets also rallied. Yields (local currency) dropped 27 bps in Brazil, 18 bps in South Africa, 16 bps in Turkey and 22 bps in Argentina. Here at home, five-year Treasury yields dropped eight bps (to 1.87%). U. S. corporate Credit also enjoyed solid gains. Across global markets, it appeared that short positions were under pressure.
    Markets reacted with elation to Janet Yellen’s Washington testimony – widely perceived as dovish. In particular, the chair’s timely comments on inflation were cheered throughout global securities markets. A headline from the Financial Times: ‘Fed Chair Yellen’s Inflation Concern Buoys Markets.’ And Friday afternoon from Bloomberg: ‘S&P 500 Hits Record as Inflation View Turns Iffy’.

    This post was published at Wall Street Examiner by Doug Noland ‘ July 15, 2017.


  • Faced With Rampant Inflation, Argentines Turn to Barter

    Instead of selling his soybeans for devalued pesos, Gustavo Tione exchanged 30 tons of soy for about 8,000 liters of diesel from the state-run oil company. This is just one example of a growing barter economy in Argentina as a 24% inflation rate rapidly erodes the value of the country’s currency.
    As Bloomberg reports, the rise of barter is simple economics. Commodities hold their value better than than cash.
    So, why bother with fiat currency if you don’t have to?
    Barter is the most basic economic transaction. You give me something I want or need. In exchange, I give you something you want or need.
    YPF, the Argentine energy company, uses barter to bypass the peso. The company barters with farmers, trading fuel for wheat, soy, and corn, and then sells it on the dollar-based export market for grain. Of course, this scheme will fall apart if the dollar crashes. Nevertheless, it illustrates the power of barter.

    This post was published at Schiffgold on JULY 12, 2017.


  • Testosterone and the Madness of Central Bankers

    The stock market is at all-time highs. Argentina, a serial defaulter just sold $2.75 billion worth of debt with a 100-year maturity. Commercial real estate is booming again. All of this irrational exuberance while the world’s government’s are over indebted, economies are punk, and hostilities are prevalent everywhere.
    Are memories too short? Or testosterone too high? Therese Huston, cognitive psychologist at Seattle University, writes for The New York Times,
    Researchers have shown for years that men tend to be more confident about their intelligence and judgments than women, believing that solutions they’ve generated are better than they actually are. This hubris could be tied to testosterone levels, and new research by Gideon Nave, a cognitive neuroscientist at the University of Pennsylvania, along with Amos Nadler at Western University in Ontario, reveals that high testosterone can make it harder to see the flaws in one’s reasoning.
    Ms. Huston goes on to explain that people with high levels of testosterone have less activity in their ‘orbitofrontal cortex, a region just behind the eyes that’s essential for self-evaluation, decision making and impulse control.’

    This post was published at Ludwig von Mises Institute on July 8, 2017.


  • Emerging Market Debt Risk Tumbles To 10-Year Lows, But…

    A serial deadbeat (Argentina) got investors to buy 100-year bonds, Sri Lanka’s latest debt sale was oversubscribed by 10 times, tiny Belarus is poised to issue eurobonds, and even Papua New Guinea, the impoverished Pacific Island nation, is planning its overseas debut in the second half of the year.
    But, as Bloomberg reports, that’s just a small sampling of the risks emerging-market investors have started taking, even as yields remain relatively thin.
    But there’s more: defaulted notes from Mozambique are among the best performers in 2017. The Maldives, a tiny nation in the Indian Ocean, sold its first international bond earlier this month. And Ecuador, where the former president disparaged bondholders as ‘true monsters’ when he defaulted in 2008, had no trouble raising $3 billion.
    Century bonds in EM are still rare, but have become more popular as global yields have collapsed…

    This post was published at Zero Hedge on Jun 23, 2017.


  • US Treasury Secretary Mnuchin Still Interested In Ultralong (High Duration) Sovereign Debt As Argentina Sees strong demand for surprise 100-year bond

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    US Treasury Secretary Steve ‘The Munchkin’ Mnuchin said on Bloomberg News today that Treasury is still considering issuing ultra-long sovereign debt. This comes on the news that Argentina is issuing a 100 year sovereign bond that is in hot demand. Reuters – Argentina sold $2.75 billion of a hotly demanded 100-year bond in U. S. dollars on Monday, just over a year after emerging from its latest default, according to the government.
    The South American country received $9.75 billion in orders for the bond, as investors eyed a yield of 7.9 percent in an otherwise low yielding fixed income market where pension funds need to lock in long-term returns.
    Thanks to a stronger-than-expected peso currency, the government has increased its overall 2017 foreign currency bond issuance target to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 20, 2017.


  • Argentina issues 100-year bond. What could possibly go wrong?

    Apparently while I was in the air yesterday flying between Asia and Europe, the financial system proved once again that it believes in magic beans.
    The latest absurdity is that the government of Argentina sold $2.75 billion worth of bonds yesterday afternoon.
    It’s not strange or unusual for a government to sell bonds; it happens multiple times across the world nearly every single day of the year.
    What’s totally insane about yesterday’s bond sale in Argentina, though, is the duration of these particular bonds.
    Remember that a bond is similar to a loan; as an investor, you’re basically loaning money to whichever government issues the bond.
    And, like a loan, a bond has a maturity date – the date at which the government is supposed to pay you back the ‘face value’ of the bond.
    often have a 3-7 year term. Student loans can easily go 10 or 15 years. A home mortgage can last 30 years.
    It’s the same with government bonds, which often have a term up to 30 years.

    This post was published at Sovereign Man on June 20, 2017.


  • Argentina 100 Year Bond Sale 3.5x Oversubscribed

    When we previewed yesterday unexpected announcement that Argentina would join Mexico, Ireland and the U. K. in issuing a 100 year bond, just one year after emerging from its latest default, we said “we expected the potential yield of 8.25% to come down as the offering will likely be many times oversubscribed.” It was.
    According to Reuters, late on Monday Argentina sold $2.75 billion of a “hotly demanded” 100-year bond in U. S. dollars, and as expected the surge for yield resulted in 3.5x oversubscription: the South American country received $9.75 billion in orders for the bond, which in turn lowered the final yield to 7.9% with a 7.125% cash coupon, from the initial price talk of 8.25% in what Reuters dubbed an “otherwise low yielding fixed income market where pension funds need to lock in long-term returns.” Luckily for those same pension funds, they never have to worry about returns on capital as there is zero chance Argentina will not default again in the next 100 years.
    Meanwhile, courtesy of yield-starved investors around the globe, the Argentina government increased its overall 2017 foreign currency bond issuance target even more, to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires, in large part to fund its soaring budget deficit. As Reuters notes, Argentina will tap international capital markets to finance a fiscal deficit of 4.2% of GDP. Caputo said Argentina has $2.6 billion in bonds left to be issued this year. The new paper could be denominated in euros, yen or Swiss francs. It is not clear if the remaining issues will be in 100 year or longer maturities.

    This post was published at Zero Hedge on Jun 20, 2017.


  • Argentina (!) Sells 100-Year Dollar-Denominated Junk Bonds

    Yield-desperate investors stop before nothing. What have central banks wrought? Junk-rated, deficit-plagued, inflation-whacked Argentina just sold $2.75 billion of 100-year dollar-denominated bonds. This was the first time ever that a junk-rated country was able to sell 100-year bonds denominated in a foreign currency, or any currency.
    Argentina sports a ‘B’ credit rating from Standard & Poor’s. Five notches below investment grade. Deep junk.
    And 100 years is a very, very long time for Argentina and its regularly beaten-up creditors: Just over the past 65 years, it has defaulted six times – in 1951, 1956, 1982, 1989, 2001, and its ‘selective default’ in 2014. Its default in 2001 on $80 billion of dollar-denominated debt was the largest sovereign default at the time.
    And yet, yield-desperate investors don’t seem to care. According to The Wall Street Journal, demand for the private-placement offering was such that Argentina could sell those ‘century’ bonds at a yield of 7.9%, down from the initial price talk of 8.25%.

    This post was published at Wolf Street on Jun 20, 2017.


  • Bill Blain Flips Out: “Not Much Surprises Me Any More About Markets, But Really? Really!?”

    On Monday morning, we reported that in a stunning development, chronic defaulter Argentina – which just one year ago emerged from its latest bankruptcy – has found enough willing greater fools to sell 100-year bonds to. One person who especially stunned, was Mint’s Bill Blain, who issued an entire note describing his disgust with what the market has devolved to.
    * * *
    Argentina 100 Year Bonds: Really? Nobody Believes, But They Will Buy.
    ‘Everyone should learn to Tango before they die.. ‘
    Markets can be a triumph of hope over reality. The news Argentina is going to launch a 100 year century bond caught my eye today.

    This post was published at Zero Hedge on Jun 20, 2017.


  • Cry For Argentina! Issuing 100 Year Sovereign Debt As Fiscal Deficits Grow To Worst Since 2000

    Cry for Argentina.
    Argentina, which has defaulted on its debt seven times, is now faced with the worst fiscal gap since 2000.
    (Bloomberg) Argentina is planning to sell its first 100-year bond a year after returning to global capital markets, as it grapples with a soaring budget deficit.
    The bond, which will be used to shore up its budget and refinance debt, may be priced as soon as Monday and yield about 8.25 percent, according to a person with knowledge of the matter, who asked not to be named because the deal is private. Citigroup Inc. and HSBC Holdings Plc are managing the sale. The debt-issuance plan was announced on Twitter by the Argentine Finance Ministry, which hasn’t provided further details.

    This post was published at Wall Street Examiner on June 19, 2017.


  • Argentina Unexpectedly Announces Sale Of 100-Year Bonds

    One year after Argentina emerged from its latest sovereign bankruptcy, and at a time when the Latin American nation grapples with a surging budget deficit, Argentina surprised markets by announcing (on Twitter) its intention to sell its first 100-year bond, taking advantage of a world starved for yield.
    The issuance, expected to price on Monday with a potential yield of 8.25% according to Reuters IFR – we expect this number to come down as the offering will likely be many times oversubscribed – came as a surprise, as Finance Minister Luis Caputo has said Argentina would meet the rest of its financing needs in non-dollar currencies after selling $7 billion in dollar bonds in January. According to Reuters, Citi and HSBC are acting as lead book runners on the deal, while Nomura Securities and Banco Santander are co-managers.

    This post was published at Zero Hedge on Jun 19, 2017.


  • From Yukon to Patagonia, gold explorers stir after sleep

    The number of holes drilled at gold deposits has been rising steadily for more than a year, according to S&P Global Market Intelligence. And while early-stage exploration budgets haven’t kept pace with spending at existing mines, prospecting hot spots are starting to pop up in traditional destinations Canada, Australia, and Latin America. In some parts of Argentina, exploration has jumped about 50 percent, mainly for lithium but also for gold in provinces such as Santa Cruz, according to state-controlled energy company YPF SA. Chile’s government also sees a pickup this year with prospectors focusing on both copper and gold. Colombia is also attracting more attention.
    In some parts of Argentina, exploration has jumped about 50 percent, mainly for lithium but also for gold in provinces such as Santa Cruz, according to state-controlled energy company YPF SA. Chile’s government also sees a pickup this year with prospectors focusing on both copper and gold. Colombia is also attracting more attention.
    Drilling successes are adding to the interest. Aurion Resources Ltd. shares have more than tripled since Feb. 1 when it announced a discovery in northern Finland, while SolGold Plc has risen 12-fold in the past year as it drilled out a copper and gold find in Ecuador. This week’s $431 million deal between Eldorado Gold Corp. and Integra Gold Corp. is the latest acquisition driven by a need to secure new ounces.
    ‘We need more exploration in the industry; it’s been such a long downturn,’ Mark Ferguson, head of mining studies at S&P Global Market Intelligence, said in a phone interview from Halifax, Nova Scotia. ‘A lot of producers are going to start facing medium-term shortfalls in their pipeline if they’re not replacing the reserves that they’re actively mining.’

    This post was published at bloomberg


  • The Knives Come Out for Trump

    A Minor Derailment GUALFIN, ARGENTINA – Yesterday, stocks fell.
    And volatility shot up.
    ***
    Reports Bloomberg:
    The Dow Jones Industrial Average tumbled more than 370 points, Treasuries rallied the most since July and volatility spiked higher as the turmoil surrounding the Trump administration roiled financial markets around the globe.
    Major U. S. stock indexes tumbled the most in eight months, while the CBOE Volatility Index [which measures investors’ expectations of price swings on the S&P 500] jumped the most since the U. K. voted to leave the European Union last June, shattering the calm that gripped markets in the past month as the crisis threatened to derail the policy agenda that helped push equities to records as recently as Monday.

    This post was published at Acting-Man on May 19, 2017.


  • The Fed Will Blink

    Honest Profession
    GUALFIN, ARGENTINA – The Dow rose 174 points on Thursday. And Treasury Secretary Steve Mnuchin said we’d have a new tax system by the end of the year.
    Animal spirits were restless. But which animals? Dumb oxes? Or wily foxes? Probably both.
    Since Thursday there have been two additional very spirited up days with large gaps – this is very rare in the DJIA, particularly from such a high level after a ~240% rally since the lows made 8 years ago… it continues to feel like a blow-off (and it happens against the backdrop of a sharp slowdown in money supply growth) – click to enlarge.
    But what caught our attention were the central bankers strutting across the yard and crowing with such numbskull cackles that even barnyard animals would be embarrassed by them. There was a time when central banking was an honest profession.
    Central bankers provided financing for the government. They backed the banking system, too, by holding savings as reserves, which they lent to solvent member banks in emergencies. They were tight-lipped, tight-laced, and tightwads. Their role was to say ‘no’ more often than ‘yes.’
    When the king wanted money to fight in a war… or build a bridge… the banker would give the terse reply: ‘Sire, we don’t have any.’ Real money was backed by gold. And credit had to be backed by real money, which meant it had to be saved. Savings were limited, as was money.

    This post was published at Acting-Man on April 25, 2017.


  • Trump Is An Insider Now

    Conspiracy of the Few
    GUALFIN, ARGENTINA – ‘U. S. stocks fall on Trump talk…’ began a headline at Bloomberg. Or it may be Trump action. We had already counted six major campaign promises – including no O’care repeal and no ‘America First’ foreign policy – already buried (some for the better).
    Then came four more major policy reversals on Wednesday. Seeking Alpha reports:
    In a single day, President Trump appeared to reverse his positions on no fewer than four key pledges that arguably led to his election victory.
    Trump told WSJ [The Wall Street Journal] yesterday that China is no longer a currency manipulator, he respects Janet Yellen and perhaps could nominate her to another term leading the Fed, he would support the Ex-Im [Export-Import] bank after previously saying he would shut it down (good news for the likes of GE and Boeing), and NATO was no longer obsolete since it is fighting terrorism.
    In the same interview, Trump said he believed the dollar was ‘getting too strong,’ sending the dollar lower and gold higher.

    This post was published at Acting-Man on April 18, 2017.