Is the month of March over?
We are certain that the devaluation rate for the month was 3.3%, for the quarter 8.0% and for the last 12 months 20.6%, versus inflation that does not yield, which is expected to be higher than 5% for March, around 14% for the quarter and is projected at 53% for the last 12 months.
Divorce is too big
Enormous, those who are dedicated to export see their income grow at a rate of 20% and their structural expenses increase at a rate of more than 50% per year, profitability shrinks and they have to go out and find more scale to earn money.
How will the year go?
The Central Bank does not have Dollarsany account that we project will give us a shortage of foreign currency, therefore, companies will not be able to satisfy their import needs for raw materials essential for economic activity.
Are we going to grow less?
The Industrial Production Index reached a ceiling in February, we believe that in 2022 the GDP will grow less than the 3% projected by the government. At some point in the year the government will have to choose between continuing to contain the official dollar or growing.
What will you choose?
I have no doubts that the government will end up devaluing the official dollar at a faster rate, we do not have diesel for the logistics of the country, that is very serious, therefore, I believe that the rate of devaluation will accelerate notably in the coming months.
What would happen to the interest rate in April?
We believe that the Central Bank will increase the interest rate once more, today it stands at 44.5% per year, at least it would have to raise it to 47% per year, otherwise it will not generate effects on the market, personally I think it should already be around 50% per year.
That’s the problem?
It is the consequence of a country that sees the fiscal deficit grow every month, in the month of March the deficit will be much higher than that of January and February. If we finance it by taking credit in the market, companies will have difficulty obtaining financing and, if we add a rise in rates to this, we are facing an explosive combo. Companies will have to raise prices to close the budget positively.
From your point of view, are we going to have more inflation?
As long as we do not make structural reforms to reduce the deficit, inflation and devaluation are guaranteed.
If we dollarize?
The change of the monetary unit does not ensure that Alberto Fernández improves his management. Dollarization should be part of a change in the government’s global scheme, where management allows the Treasury to have a fiscal surplus and the country to be attractive for investments to arrive. The obligatory question is. If we have a fiscal surplus and we apply an attractive tax benefit plan so that investments return, why do you want to dollarize?
People love the dollar
You have to look at it from afar at this juncture. In the last 5 years people have collected many dollar bills. Today the market finds itself for the first time in years with a government that needs to control inflation, to do so it increases the interest rate in pesos, financing lines are cut and there is less credit for companies. The dollar in the midst of this recession is called to be calmer, and if it increases it will do so at a slower rate than inflation.
How do you see the evolution in the last 12 months?
In the last 12 months the blue dollar increased 41%, while inflation was more than 50%, the Chamber of Construction Index increased more than 50%, cars increased more than 60%, everything is increasing faster than the blue dollar There is inflation in the blue dollar.
Is it time to have stocks?
It is likely that the shares are in a process of accumulation and that in a short period of time we will see an interesting rise, starting with those companies linked to primary production.
What regarding the oil?
It happens that the policy of de-anchoring the local price from the international one does not work. Oil is sold on the domestic market at US$58 and internationally at US$105. With this price differential, production chooses to export and the domestic market will be left without supplies due to lack of incentives. Something similar happens with soybeans, wheat and corn. This is the country of intervention, everything they touch they ruin.
Conclution
Argentina is going through a very hopeless political situation, with a big crack in the ruling coalition. From the economic point of view, we lack inputs to be able to grow. From the monetary point of view, the mega emission of the second semester of the year 2021 bills us. To get out, we need a big rise in the official exchange rate that the Central Bank wants to delay, but which it will inevitably have to do if we want to move forward. Time to wait and not despair. This government will not give answers, there are 500 days left for the next elections, it is crossing out every day that passes.
