Saturday, December 4

IMF: the chronological and technical errors that deny Macri’s version


Finally, the April 25, 2018 came the day. At 11:15, one hour 15 minutes after the markets open, the Central Bank money table received the order for a double operation, the Lebac’s exit and the immediate purchase of dollars, for a very rare amount: more than u $ s800 million who asked to withdraw from the star operation of the financial market, in exchange for a quick exit and at a market price for the purchase of foreign currency, with the aim of selling positions in pesos and leaving the local financial system. The surprise was even greater when the management of the entity learned who was interested in leaving the Argentine capital market. Lebac’s sell order and immediate purchase of dollars era of JP Morgan, the international capital bank closest to the Government of Mauricio Macri.

If there was a world-class financial house that was close and friendly with the Government to the world, that was JP Morgan. He had also been a fundamental strategic ally in the first two years of Cambiemos’ management. In mid-2015, he opened an office in Argentina, and intervened in the most important operation of the Government of Mauricio Macri: the placement of the Bonds of the Argentine Republic at the beginning of the management Let’s change to pay the holdouts. The good relationship lasted (and intensified) throughout 2017 and Until March 2018, JP Morgan recommended its clients in their reports to bet on Argentina. That April 25 the romance ended. And the financial system was shocked. Massive orders began to arrive for the sale of positions in Lebac from “big hands” – as foreign investment funds that move millions of dollars a day are called on the Creole money tables – and that, by definition, can decide, for better or for worse, the luck of a day. Or, as on that day, that of an entire economic plan. The rumor that circulated in the international banks that operated the most Lebac (both North American and European) was that the sellers were few. No more than three. And that the intention was to get rid of all the holding in that title and buy dollars quickly, closing the circuit of the “carry trade”.

The price offered earlier in the day was $ 20.50; almost one peso higher than the price of only a day before, with which the conviction of the orders created even more anxiety in the Argentine operators. The financial chronicle of April 25 described a “perfect storm.” All the ghosts sleeping somewhere on the screens of the main operators in the country and the world coincided in a single day: the March rate hike in the United States, the beginning of the commercial crisis with China, the local ghost of the indomitable inflation and its battle against interest rates in pesos, month-end payments to importers, the delay in the soy settlement, the beginning of the application of the financial income tax and its influence on the profits of the Lebac, the eternal debate within the macrismo over the rise in rates, the threat of new increases in fuel and the eventual lack of dollars due to the drought.

First signs

Analysts already publicly questioned the effects of that failed press conference on 28-D (2017) in which Marcos Peña, live and direct, took away from the BCRA in view of the entire country the responsibility of controlling the monetary base and of set goals to face the most important problem in the Argentine economy: inflation. From that post-election day, Peña took personal control of the official management of the Argentine economy; a decision that had not yet been digested by the markets, and that raised doubts about the true official conviction of placing the fight against inflation in the highest ranking of official priorities.

All this in addition to a question that the Government still did not answer: how would the government get the more than US $ 15,000 million that still lacked to guarantee the payment of the debt during the rest of 2018. A few weeks after that April 25, JP Morgan himself distributed a lapidary report to your vip clients. At considered whether the tool that the BCRA had implemented to face the run (the rise in the interest rate) could be insufficient antidote to the evident capital flight that it had started; and revised for the worse all its forecasts for the Argentine economy in 2018: 2.4% growth and 22% inflation. In addition, it advanced a dollar to 24 pesos as of December.

Given what happened at the end of the year, the advances were somewhat naive. However, at the beginning of May (when the bank’s paper was known) that it was JP Morgan himself who began to lower his thumb on the Argentine capital market was seen as a deserter attitude. The truth is that that day began the exchange and financial ordeal that would modify, forever, the fate of Mauricio Macri in power. This was the scenario that led to the return of the IMF to the country. So that the body then managed by Christine Lagarde would contribute the money necessary for the bondholders to gain peace of mind knowing that the funds would be available to meet debt maturities. For that, the dollars from the stand-by had to be used. For the outflows of positions in Lebac and the other monetary and exchange policy instruments, the reserves of the BCRA should have been used. Until that moment, the crisis that led to the return of the IMF to the country was then related to the policies of the Mauricio Macri government itself, and not to the threat of the return of Kirchnerism.

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