1. ANDRES OPPENHEIMER: MACRI MAY SHAKE LATIN AMERICA’S POLITICS (Miami Herald)
2. ARGENTINE HUMAN RIGHTS GROUPS FAVOR RULING PARTY IN ELECTION (The New York Times)
3. KIRCHNERS’ LEFTIST REIGN IN PERIL AS MAURICIO MACRI EMERGES AS FRONT-RUNNER IN ARGENTINA (The Washington Times)
4. ARGENTINE BANK RAID SPARKS POLITICAL ROW (Financial Times)
5. ARGENTINA CREDIT RATING MAY SLOWLY RISE IF MACRI WINS, MOODY’S SAYS (Reuters News)
6. ARGENTINA ECONOMY MINISTER SEES FISCAL DEFICIT AT 3.5 PCT OF GDP (Reuters News)
7. POLL THAT CALLED ARGENTINA FIRST ROUND SEES MACRI RUNOFF VICTORY (Bloomberg News)
8. BANKS THAT ENDURED ARGENTINA ANGUISH HOPE FOR PAYOFF AFTER VOTE (Bloomberg News)
9. ARGENTINE PESO SHOWDOWN LOOMS AS CENTRAL BANKER VOWS TO STAY (Bloomberg News)
10. RISING PROVINCIAL STAR AIDS MACRI’S PRESIDENTIAL BID IN ARGENTINA (Voice of America)
11. STATE ROLE, KIRCHNER-ERA POLICIES ARE CENTRAL QUESTIONS IN ARGENTINA’S PRESIDENTIAL ELECTION (Fox News)
12. NARCO-PLANES LANDING ON ARGENTINA’S RIVERS: REPORT (Insight Crime.org)
13. PRESIDENT OF ARGENTINA WON’T EXTRADITE DENVER MURDER SUSPECT (CBS Denver)
1. ANDRES OPPENHEIMER: MACRI MAY SHAKE LATIN AMERICA’S POLITICS (Miami Herald)
By Andrés Oppenheimer
November 18, 2015
If the polls are right and opposition leader Mauricio Macri wins Sunday’s elections in Argentina, we may see a huge change in Latin America’s political map: Macri has vowed to take distance from Venezuela’s leftist-populist regime, and seek closer ties with the pro-market Pacific Alliance bloc made up of Mexico, Colombia, Peru and Chile.
When I asked Macri in an interview earlier this year what would change in Argentina’s foreign policy if he becomes president, he started out by responding, “Everything!” Judging from his statements in recent days, that may turn out to be true. Here are some of Macri’s foreign policy plans:
On Venezuela, Macri has vowed to end outgoing President Cristina Fernández de Kirchner’s close political alliance with Venezuela. During the Nov. 15 presidential debate with government-backed candidate Daniel Scioli, Macri said that he would call for Venezuela’s “suspension” from Mercosur — the southern cone’s economic bloc made up of Brazil, Argentina, Uruguay, Paraguay and Venezuela — for not complying with the group’s democratic clause requiring all member countries to abide by democratic principles.
Macri did not elaborate, but one of his closest foreign policy advisers, Diego Guelar, told me that Macri may propose Venezuela’s suspension from Mercosur shortly after his Dec. 10 inauguration, during a Mercosur summit scheduled for Paraguay on Dec. 21.
According to Guelar, a Macri government would demand Venezuela’s suspension at that meeting if there is fraud in Venezuela’s Dec. 6 legislative elections, and if Venezuela’s political prisoners, including opposition leader Leopoldo Lopez, are not freed by then. “If those two things are not corrected by then, in our judgment, Venezuela will not be complying with Mercosur’s democratic clause,” Guelar said.
On South America’s economic and political blocs, Macri has said that his first priority will be forging a “strategic alliance” with Brazil to jointly start unity talks with the Mexico-Colombia-Peru-Chile Pacific Alliance bloc. Until now, Argentina has been opposed to that, in line with Venezuela’s claim that the Pacific Alliance is too friendly with “U.S. imperialism.”
Sources close to Macri say that, while Brazil until recently also opposed teaming up with the Pacific Alliance, there has been a major change in Brazil over the past six months. With Brazil mired in one of its worst economic crises in recent times, Brazil desperately needs investments, and new free trade deals that would reenergize its economy, they say.
On Iran, Macri has said that he would annul Argentina’s recent agreement with Iran to jointly investigate the 1994 attack on the AMIA Jewish community center in Buenos Aires. Critics say that deal amounted to a cover-up of Iran’s responsibility in the attack. Argentine prosecutor Alberto Nisman was found dead in his apartment a day before he was to testify in Congress about his charges that the Fernández government had conspired with Iran to kill the AMIA investigation.
On ties with the United States, Macri has said that he would revamp bilateral relations, which were severely damaged during the Fernández presidency. The first area in which he would forge closer ties with Washington would be in anti-drug efforts, Macri said.
A Macri government would also significantly tone down Argentina’s current anti-U.S. rhetoric. “The current government has chosen the systematic confrontation with almost the entire world, which has left us very isolated,” Macri told me during the interview in March. “We must reach out to the world, create new long-term strategic agreements, and recover markets for our products.”
My opinion: Politicians tend to say whatever is needed to differentiate themselves from their rivals, but Macri may be sincere in his foreign policy plans for the simple reason that Argentina is broke, and the country badly needs to restore its relations with the world’s biggest markets — the United States and Europe — after years of estrangement.
Argentina’s economy has not grown for the past three years, international prices for its raw materials have fallen and are not likely to come back anytime soon, and its current closest friends — Venezuela, Russia and China — are either bankrupt or suffering from economic slowdowns. Argentina’s foreign policy will change no matter who wins on Sunday, but it will change much more under a President Macri.
2. ARGENTINE HUMAN RIGHTS GROUPS FAVOR RULING PARTY IN ELECTION (The New York Times)
November 18, 2015
BUENOS AIRES, Argentina — Several Argentine human rights groups, including the Grandmothers of the Plaza de Mayo, are endorsing ruling party candidate Daniel Scioli in Sunday’s presidential runoff election.
The groups expressed their support at a Wednesday news conference. They say the ruling party has focused on what is best for all Argentines with policies of “inclusion” that they say would be threatened by an opposition victory.
Outgoing President Cristina Fernandez and late husband and predecessor, Nestor Kirchner, made uncovering human rights abuses and trying perpetrators from the military dictatorship central in their administrations. Rights groups estimate 30,000 people were killed or disappeared during the 1976-83 dirty war.
Opposition candidate Mauricio Macri has called the rights polices under Fernandez “vindictive” and says the government must focus on human rights abuses of the 21st century.
3. KIRCHNERS’ LEFTIST REIGN IN PERIL AS MAURICIO MACRI EMERGES AS FRONT-RUNNER IN ARGENTINA (The Washington Times)
By Andre F. Radzischewski
November 18, 2015
BUENOS AIRES — Just days before Argentina’s presidential runoff vote, center-right Buenos Aires Mayor Mauricio Macri has emerged as the unlikely front-runner as voters appear poised to turn the page on the 12-year rule of populist incumbent Cristina Fernandez and her late husband and predecessor, Nestor Kirchner.
A Macri win in the continent’s second most populous country would mark the first major electoral defeat for the leftist governments that have dominated South America for the better part of a decade. A member of a prominent family of entrepreneurs, the opposition leader would likely embark on a more market-friendly course and aim to improve Argentina’s strained ties with Washington.
Anticipating a U-turn in foreign policy, Mr. Macri said in Sunday’s final debate with Daniel Scioli, Ms. Fernandez’s handpicked heir, that he would ask the Mercosur trade bloc to suspend Venezuela over the “abuses” of leftist President Nicolas Maduro, whom he accused of holding “political prisoners” and fostering “military participation” in government.
Ms. Fernandez — a close personal friend and admirer of Mr. Maduro’s predecessor, Hugo Chavez — had long counted the Venezuelan leader as one of her key allies and routinely accused the U.S. of interfering in the internal affairs of their countries. She is barred from running again after eight years in the Casa Rosada, Argentina’s executive mansion.
Critics of the outgoing Argentine president have warned that her policies might lead to a Venezuelan-style economic meltdown, and Mr. Macri has argued that tight currency controls have failed to quell capital flight in both countries.
His arguments appear to be finding an audience.
In an opinion poll published Nov. 13 by the Clarin daily, Mr. Macri holds an 8-point lead over Mr. Scioli, the governor of the Buenos Aires region. With opposition parties largely coalescing around the challenger, the former president of the Boca Juniors soccer club has held similar advantages in nine out of 10 surveys conducted since he came in a close second Oct. 25 in the first round of the election.
What had been a lackluster campaign has turned into a fiery duel between the candidates, with Mr. Macri assailing his rival’s deep ties to the increasingly unpopular president and Mr. Scioli warning that a Macri win would invariably end in a doomsday scenario of brutal spending cuts, fiscal austerity and concessions to Argentina’s foreign creditors.
Most observers now believe that the election is Mr. Macri’s to lose, in part because Mr. Scioli faces a dilemma in trying to win over voters critical of Ms. Fernandez without offending his own base, said Joaquin Morales Sola of the La Nacion daily.
In interviews and TV spots, the candidate of the Peronist Front for Victory coalition attempted that balancing act, promising to be “more Scioli than ever” and acknowledging voters’ “anger” over the recent record of the government.
Still, “it is going to be very difficult for Scioli,” Mr. Morales Sola said.
“Sixty percent of society has asked for a change,” he said. “That is what has provoked such a change in the scenario.”
Jab-filled debate
Sunday’s jab-filled debate, meanwhile, may only have solidified the situation as both candidates largely stuck to their guns. Predictably, Mr. Macri never tired of comparing his rival to Ms. Fernandez during the clash, attacking what he said was her abrasive and authoritarian governing style.
“What have you turned into, Daniel? What have they turned you into? ” the mayor asked at one point. “… We need a president who talks less and listens more, who does press conferences and not televised statements, who understands the value of the team and not [a] personality cult.”
A fidgeting Mr. Scioli, meanwhile, accused his challenger of trying to camouflage his supposed commitment to obey a U.S. judge’s order to pay off foreign bondholders of Argentina’s debt instead of investing the money at home, a potent issue in Argentina.
“Either we again kneel before Judge Griesa or we have an Argentine development bank,” he said. “It is either the International Monetary Fund that once again dominates us, or it is Argentine pride and Argentine self-esteem.”
Mr. Scioli’s tone was in line with what critics have dubbed his “scare campaign” linking Mr. Macri’s policy proposals to those that caused the 2001 economic meltdown and the ensuing civil unrest and devaluation — still fresh in the memories of many Argentines.
“Do you imagine yourself without a roof? Do you imagine the hunger? Do you image [what happens] if Macri wins?” asked a TV spot for the 58-year-old former powerboat racer set to footage of riots, looting and homeless vagrants scavenging through garbage.
But Mr. Scioli’s tactics so far have not paid off in the polls, in part, perhaps, because Mr. Macri largely refused to take the bait and instead chose to mock the apocalyptic warnings.
“My daughter, Antonia, came to me to ask if it was true that Kinder Eggs would no longer have surprises from Dec. 10 if I won,” he said, referring to a popular chocolate candy that contains a gift. ” We have to move away from the idea that fear is what governs us.”
Analysts say Mr. Macri has cannily tapped into voter fatigue with the country’s grinding economic and currency crises and struck a chord with those put off by what they view as Ms. Fernandez’s governing style and lack of respect for the country’s institutions, said Facundo Cruz, a political scientist at the University of Buenos Aires.
“The citizenry asks that it is time to change the form of doing politics,” Mr. Cruz said, noting that the still-unexplained January death of federal prosecutor Alberto Nisman and the president’s meddling in the judiciary left many Argentines uncomfortable.
Leaders from Mr. Marci’s PRO party, founded just 10 years ago, will soon govern both the Argentine capital and the surrounding Buenos Aires province — home to about half of the country’s population. So if the 56-year-old capitalizes on his lead and captures the presidency Sunday, it would mark a historic political shift for the country, Mr. Morales Sola said.
“It would demonstrate that one can win without Peronism,” he said.
Although he views Mr. Macri as the front-runner, Mr. Cruz cautioned that voters could deliver a Truman-versus-Dewey moment despite the polls.
“[Mr. Scioli’s allies] still have a very strong territorial base,” he said. “Argentine politics is always good for a surprise.”
4. ARGENTINE BANK RAID SPARKS POLITICAL ROW (Financial Times)
By Benedict Mander in Buenos Aires
November 18, 2015
A police raid on Argentina’s central bank, which has been accused of jeopardising dwindling foreign exchange reserves with controversial derivatives trading, was not politically motivated, according to the prosecutor who ordered the move.
As Argentina heads towards a run-off presidential vote on Sunday, officials accused the opposition of orchestrating the raid in order to trigger a devaluation before the elections to avoid having to implement such a politically unpopular move itself if it wins.
With polls showing the opposition centre-right candidate Mauricio Macri leading by some eight points, the government-backed candidate Daniel Scioli has intensified accusations in recent days that the market-friendly mayor of Buenos Aires intends to devalue Argentina’s overvalued official exchange rate if he wins the elections.
The raid on the central bank’s trading desk on Tuesday followed a complaint filed by opposition lawmakers earlier this month that the price at which the central bank sold dollar futures, for fewer pesos than they fetch on the international futures market, constituted a serious financial loss for the state.
Analysts estimate that the central bank has open positions on futures contracts worth around $16.6bn, mostly expiring between January and April. The majority have been sold for around 10-11 pesos to the dollar, compared to the official exchange rate of 9.6 pesos, while dollars are currently worth around 15 pesos on unofficial markets. Many analysts speculate that a sharp devaluation by Mr Macri could quickly bring the dollar value close to the unofficial rate.
President Cristina Fernández waded in on Tuesday night suggesting that the search, carried out during the central bank’s operating hours, may have been aimed at triggering a run on the currency since the bank’s officials were not able to carry out their duties in the currency market.
It would be the last thing left to fall into the hands of the judiciary: the dollar and monetary policy
– Cristina Fernández
“Could it be that the devaluation Macri won’t talk about, he wants to carry out via the judiciary,” Ms Fernández wrote on her website. “It would be the last thing left to fall into the hands of the judiciary: the dollar and monetary policy.”
Claudio Bonadio, the prosecutor investigating the monetary authority, retorted that it would be “absurd” and “illogical” not to carry out the raid just because of the proximity of the elections, warning that he risked losing evidence if he waited.
“I realise that we are four days away from the elections, but what am I supposed to do, drop everything and come back on December 11?” Mr Bonadio asked during an interview on local radio on Wednesday, referring to the date of the inauguration of the new president.
Mr Bonadio ordered the raid after hearing technical evidence from former central bank presidents now linked to the opposition, Alfonso Prat Gay and Martín Redrado.
Alejandro Vanoli, the central bank president, said the move was designed to “generate anxiety” and backpedalled on a pledge to step down if Mr Macri wins the elections, saying he would seek to see out his term that ends in 2019, regardless of the winner.
“It’s my duty to make sure the position is respected and I will do it,” Mr Vanoli told reporters on Wednesday morning. “You don’t appoint someone because they want a central bank that’s at the service of a devaluation.”
Mr Macri has said he would seek to remove Mr Vanoli if he is president, claiming the former securities regulator is unqualified for the central bank job and a government activist.
5. ARGENTINA CREDIT RATING MAY SLOWLY RISE IF MACRI WINS, MOODY’S SAYS (Reuters News)
By Marc Jones
Nov. 18, 2015
Nov 18 Argentina may see its credit rating slowly rise if the current election favourite, Mauricio Macri, wins and pushes through proposed reforms, Moody’s top Latin America analyst said on Wednesday.
Macri leads the polls in the final days before Argentina’s presidential run-off vote on Sunday, and his pro-business credentials are kindling hopes that he can pull the country back from the brink of default.
Moody’s currently rates Argentina Caa1, which signifies a substantial risk of default. But its bonds have been rallying since Macri’s surprisingly strong performance in the first round of elections.
“If Macri starts pushing for the right policies and is able to deliver them you could argue that that will improve the fundamentals,” senior Moody’s analyst Mauro Leos said at an investor day.
“Maybe that would be sufficient to remove Argentina from the Caa group. But if we move, we are going to be really cautious,” he added, saying that worries about low foreign exchange reserves were unlikely to disappear any time soon.
“It is very rare we do consecutive upgrades one year after the other. But let’s assume that could be the case, how long would it take so to get to the top of the B category. That would be uno, dos, tres, three years.”
For Moody’s to consider even more aggressive “multi-notch upgrades,” Leos said, everything would have to go almost perfectly for Macri’s reform plans, something that Argentina’s recent record makes almost unimaginable.
6. ARGENTINA ECONOMY MINISTER SEES FISCAL DEFICIT AT 3.5 PCT OF GDP (Reuters News)
By Walter Bianchi
Nov. 18, 2015
Nov 18 -Argentina will likely end the year with a fiscal deficit of 3.5 percent of gross domestic product, Economy Minister Axel Kicillof said on Wednesday, rejecting estimates by the opposition for a deficit around twice as high.
“The opposition justifies the alleged need for austerity with lies because the truth is that the deficit is not as they say 7.2 percent, nor 6 percent,” he told Argentine radio broadcaster Nacional Rock.
“We will have to see how the year ends but it will be 3.5 percent of GDP.”
Private analysts often question the credibility of Argentina’s official statistics. Many say heavy government spending by outgoing President Cristina Fernandez is driving an expansion in the deficit that has been masked by government figures.
Goldman Sachs, for example, has said the deficit will reach 7.1 percent this year and says fiscal consolidation should “be given urgent consideration” as it is partly to blame for soaring inflation and exchange rate pressures
7. POLL THAT CALLED ARGENTINA FIRST ROUND SEES MACRI RUNOFF VICTORY (Bloomberg News)
By Charlie Devereux
November 18, 2015
* Macri has 7.7 percentage-point lead over Scioli ahead of vote
* Among 11 percent undecided voters, Macri has better image
The only pollster to accurately predict the outcome of the first round of Argentina’s elections is now auguring a comfortable victory for the opposition’s Mauricio Macri in Sunday’s runoff vote.
Macri, who is vowing to dismantle President Cristina Fernandez de Kirchner’s economic model of currency controls and trade protectionism, has 47 percent of intended votes against 39.3 percent for the ruling party’s Daniel Scioli, who advocates making slower and fewer changes. After projecting the 11 percent of voters who remain undecided, Macri’s lead rises to 8.8 percent, with Elypsis expecting him to capture 54.4 percent versus 45.6 percent for Scioli.
Elypsis, an economic research firm that only began political polling this year, correctly detected a late surge in votes for Macri ahead of the Oct. 25 first round. He garnered 34 percent against 37 percent for Scioli, confounding other polls that expected Scioli to win by at least 10 percentage points.
While the election could still be swayed by 11 percent of voters who remain undecided, Elypsis says Macri has a better image among those voters than of Scioli. The current mayor of Buenos Aires has a 42 percent positive image and a 20 percent negative image compared to Scioli whose positive and negative images are the same at 33 percent.
All but a few surveys by minor pollsters expect a victory for Macri. The average of four polls seen by Bloomberg, that includes Elypsis’ latest survey, sees an average of 47.9 percent of intended votes for Macri against 41.3 percent for Scioli.
8. BANKS THAT ENDURED ARGENTINA ANGUISH HOPE FOR PAYOFF AFTER VOTE (Bloomberg News)
By Katia Porzecanski
November 19, 2015
* Macri vows to unwind policies banks say hindered lending
* Spain’s Santander, BBVA seen in best position to benefit
After years of enduring double-digit inflation and government interventionism, foreign banks in Argentina are hoping for a payoff with Sunday’s presidential election.
The frontrunner, opposition candidate Mauricio Macri, has vowed to unwind policies that he says fueled stagflation and kept Argentina isolated from international capital markets for more than a decade. In addition to regulating peso trading, President Cristina Fernandez de Kirchner imposed measures such as rate caps and fee limits that impeded their ability to lend at a profit.
Local units of Spain’s Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA lead foreign banks in deposits, loans and assets, putting them in the best position to capitalize if reforms revive credit growth that’s flagged amid one of the fastest inflation rates in the world. While austerity measures such as higher interest rates may initially weigh on the economy, analysts surveyed by Bloomberg say growth will revive by 2017, at about 2.5 percent.
Banks Poised for Post-Election Payoff
Banks Poised for Post-Election Payoff
“One hope is that if the opposition wins, all these distortions will disappear and banks can begin functioning normally,” Juan Manuel Vazquez, a bank analyst at Buenos Aires-based brokerage Puente Hnos SA, said by phone. “In that scenario, there’s great potential for foreign banks like Santander and BBVA to grow and eventually utilize all the excess capital they have — which is a lot.”
Ulla Karppinen, a BBVA spokeswoman, declined to comment. Santander officials didn’t reply to e-mails seeking comment.
Macri had 46.5 percent support in a Nov. 9-12 Management & Fit poll of 2,400 people, compared with 39.9 percent for ruling-party candidate Daniel Scioli. The survey, which had a margin of error of 2 percentage points, shows 11.1 percent of people are still undecided, with 2.1 percent planning to cast a blank vote.
Citigroup, HSBC
Citigroup Inc., based in New York, has been in Argentina more than 100 years, while London’s HSBC Holdings Plc, Brazil’s Banco Itau BBA SA and the Industrial & Commercial Bank of China Ltd. also have operations in the country. Banco do Brasil SA is the majority shareholder of Buenos Aires-based Banco Patagonia SA.
Awash with pesos, banks have mainly used their excess cash to buy high-yielding central bank notes instead of making more loans — which has kept their credit quality in good condition, Vazquez said.
Estimated inflation of 26 percent has made banks reluctant to approve long-term loans at fixed rates, he said. At the same time, consumers are balking at floating-rate debt, because costs might soar, as overall demand slows with the economy. The nation’s mortgage market, which accounts for less than 10 percent of total lending, could boom once inflation is contained, Vazquez said.
Fee Caps
Banks suffered from measures that sapped profits from lending businesses, imposed by Fernandez to spur consumption and limit the outflow of dollars. They include interest-rate caps on consumer loans, forced lending to small companies at negative real interest rates, a minimum rate banks have to pay on deposits, and limits on fees, commissions, dividend payments and foreign-currency holdings.
“All of our banks have positive hopes for the next phase of our country,” Claudio Cesario, president of the Argentine Banking Association, said in an e-mail. “There’s consensus that the next government will make the necessary and appropriate measures to rid the obstacles that provoke our isolation from the rest of the world and prevent sustained economic growth.”
Skeptics abound. The nation that’s defaulted twice in the past 14 years will need to show concrete progress before analysts such as Banco BPI SA’s Carlos Joaquim Peixoto believe Argentina can be a genuine source of revenue growth for foreign banks.
“After such a long period of turbulence, particularly with inflation, you need to actually start seeing changes to start believing in them,” Peixoto said in an interview from Porto, Portugal. “If indeed a positive scenario materializes, you have the scope for Argentina to regain some momentum, and of course Santander and BBVA as relevant players in the market will be well-placed to benefit from that.”
9. ARGENTINE PESO SHOWDOWN LOOMS AS CENTRAL BANKER VOWS TO STAY (Bloomberg News)
By Charlie Devereux
November 18, 2015
* Vanoli says he won’t step aside if Macri is elected president
* Macri has pledged to remove currency controls in first week
Opposition candidate Mauricio Macri’s pledge to end Argentine currency controls should he win Sunday’s election just got harder after the central bank president vowed to stay on, criticizing any attempt to devalue the peso.
Alejandro Vanoli, whose term doesn’t end until 2019, backpedaled on comments from Tuesday in which he said lifting restrictions on currency purchases implied a devaluation of 50 percent and that he would step down rather than having to implement it.
“It’s my duty to make sure the position is respected and I will do it,” Vanoli told reporters in Buenos Aires on Wednesday during a morning briefing with Cabinet Chief Anibal Fernandez. “You don’t appoint someone because they want a central bank that’s at the service of a devaluation.”
With less than a week to go before the first runoff in Argentina’s history, the campaign is focused on front runner Macri’s plan to lift currency controls that have been in place since 2011, enabling companies to repatriate dividend payments and step up imports. Ruling party candidate Daniel Scioli says that will lead to a devaluation and a spike in inflation, triggering an economic downturn.
While the official exchange rate is 9.6 pesos per dollar, many Argentine companies and individuals pay as much as 15 pesos per dollar on a number of parallel markets. Macri argues that the peso will find an equilibrium that represents the average of what most Argentinians already pay to gain access to foreign currency. That equilibrium will be less than the current price of the peso on the black market, which today traded at 15.3 pesos per dollar.
Fernandez’s Appointees
Macri has said he would seek to remove Vanoli if he is president, saying the former securities regulator is unqualified for the central bank job and an activist for President Cristina Fernandez de Kirchner’s political alliance. In the past year, Fernandez has appointed nine out of 10 directors on the central bank board, including Vanoli.
Fernandez in 2010 removed central bank President Martin Redrado after he refused to comply with her orders to use international reserves to pay debt obligations. The process took a few months. Vanoli and his board members could present a similar obstacle to Macri, said Fausto Spotorno, chief economist at Orlando Ferreres y Asociados in Buenos Aires.
“If Macri wins the first thing he’ll have to do is to modify the central bank,” Spotorno said. “If the bank wants to put up a fight with the government, it can do so but it won’t win.”
Macri’s allies lodged a complaint against the central bank on Oct. 30 for “defrauding the public administration” by selling dollar futures at an artificially low rate. Police inspected the central bank offices Tuesday as part of the investigation.
While the bank doesn’t publish data on the futures contracts, they may total as much as $10 billion, according to consulting firm Elypsis. The onshore future prices suggest the peso will trade at 10.3 per dollar in the next three months, compared with 14.9 pesos per dollar in the offshore market.
The estimates have led to growing concern that the central bank’s daily contract sales on the local futures market are creating a growing liability for the government before the country’s next administration takes office next month.
10. RISING PROVINCIAL STAR AIDS MACRI’S PRESIDENTIAL BID IN ARGENTINA (Voice of America)
November 18, 2015
BUENOS AIRES— A little known city administrator has emerged as a major player in Argentine politics after her surprise victory to lead the country’s biggest province and her role in the campaign of Mauricio Macri, the front-runner in Sunday’s presidential vote.
If Macri, the business-friendly mayor of Buenos Aires, beats the ruling party candidate, he will owe part of the victory to Maria Eugenia Vidal, who rose from obscurity over the last year to clinch one of the country’s top jobs.
She unseated the Peronist party from its traditional perch atop the Buenos Aires provincial government in the October 25 general election. Macri defied the polls that same day by easily forcing a presidential runoff against ruling party candidate Daniel Scioli.
Vidal was nominated for Buenos Aires governor with the support of Macri back when she was a city official. By winning the governorship of Peronist stronghold Buenos Aires, Vidal raised expectations that Macri may be able to do the same at a national level.
“Macri is going to do good things, just as we saw in the provincial election with Vidal. That was a sign of hope,” said Ana Montes, a nurse in the Buenos Aires suburb of La Matanza.
Scioli has been endorsed by President Cristina Fernandez, who is revered by the poor for widening the social safety net but reviled by investors for heaping controls on the economy.
Macri blames the ruling party for Argentina’s slow economy and promises to restore investor confidence and break with Fernandez’s free-spending populism.
“With her middle-class roots Vidal acts as counterweight to Macri, whom Scioli’s Front for Victory party often portrays as a neo-liberal born into money and privilege,” said Jimena Blanco, an analyst with the Verisk Maplecroft consultancy in Britain.
Vidal, 42, even figures in one of Macri’s TV ads. “How can you not be optimistic?” she says, her voice accompanying images of her and Macri talking with voters.
Scioli says he will keep Fernandez’s popular welfare programs while gradually pursuing investor-friendly reforms.
Macri promises a quicker shift toward free markets. He has a lead in the opinion polls, but Scioli is still in the race.
“The greatest contribution that Vidal made to Macri is making people realize that change is possible,” said political analyst Alejandro Catterberg. “If Peronism was defeated in Buenos Aires province, it is easy to imagine it can be defeated on the national level.”
Vidal will start her four-year term as governor December 10, the same day that either Macri or Scioli will be sworn in as president.
11. STATE ROLE, KIRCHNER-ERA POLICIES ARE CENTRAL QUESTIONS IN ARGENTINA’S PRESIDENTIAL ELECTION (Fox News)
November 18, 2015
BUENOS AIRES, Argentina – From the tables of Buenos Aires pizza parlors to the fields of this South American nation’s farmlands, Argentines are intensely debating a question they must answer during Sunday’s presidential runoff election: How large a role should the government play in their lives?
At the center of the debate is the contentious legacy of outgoing President Cristina Fernandez and “Kirchnerismo,” the political movement aligned with the poor that she created with her late husband and predecessor, Nestor Kirchner.
During 12 years in power, the power couple rewrote Argentina’s social contract, gaining both impassioned followers and fierce critics. They designed programs for the poor, nationalized the YPF oil company, raised tariffs on imports to protect and develop local economies and passed laws to aid the elderly, handicapped people, homosexuals and other groups on the margins, such as becoming in 2010 the first Latin American nation to legalize gay marriage.
Fernandez’s chosen successor, Daniel Scioli, presents himself as the continuation of such policies — he calls them “the national project” — while promising to make fixes where necessary.
Opposition candidate Mauricio Macri promises to maintain a safety net for the poor but says he will overhaul the economy to address inflation estimated around 30 percent and a byzantine monetary system that has spawned a booming black market.
“The big question is the degree to which voters feel comfortable with continuity with a twist versus complete change,” said Jason Marczak, deputy director of the Atlantic Council’s Adrienne Arsht Latin America Center.
That’s a weighty proposition in a nation where most people are old enough to remember the 2001-2002 financial melt-down, when Argentina defaulted on $100 billion in debt and millions of people were plunged into poverty.
If last month’s first electoral round is an indication, Argentines are mulling their options. Scioli, the governor of the Buenos Aires province, got 37 percent of the vote compared to 34 percent for Macri, the mayor of Buenos Aires. The tight finish meant a runoff, and both men have been scrambling to appeal to the nearly 30 percent of voters who picked one of the other four candidates in the first round.
Macri has emerged as the front-runner, with several polls giving him an 8-point lead. But those same polling companies predicted Scioli would win the first round by more than 10 percentage points, which indicates the race is up for grabs.
During a debate last weekend, Scioli argued that Macri’s policies would eliminate subsidies, cut programs for the poor and provoke a sharp devaluation of the Argentine peso.
“Who will pay the price of lifting subsidies?” asked Scioli, a former speed boat racer who lost his right arm in an accident. “Families need to know how they will pay their light, gas and transportation bills.”
Macri accused Scioli of distorting his proposals. But he also argued an overhaul is needed to jump start the economy after four years of stagnation.
“Argentina can only grow with a government that will tell the truth,” said Macri, who comes from one of the country’s richest families and gained a national profile as president of a popular soccer club Boca Juniors.
Beyond the sluggish economy, voters are thinking about allegations of corruption involving people in Fernandez’s administration and the president herself, a rise in crime and drug trafficking and accusations of government’s mismanagement of the social programs it frequently touts.
“The government has created a factory that produces lazy bums,” said Guillermo Boianelli, who owns a recycling center on Buenos Aires’ outskirts and plans to vote for Macri.
Gladys Malverde, a mother of five who plans to vote for Scioli, sees it differently. She earns $275 a month cleaning buildings in a government jobs program that she says has helped her return to school to study nursing.
“If Cristina could run again, we would all vote for her,” said Malverde, who like many Argentines refers to the president by her first name.
Constitutionally barred from running for a third consecutive term, Fernandez still has been a force in the campaign — an object of both adoration and scorn in a deeply polarized country of 41 million people.
Scioli has embraced Fernandez’s policies while presenting himself as his own man capable of fixing huge problems, including a long-standing fight with bond holders in New York federal court that has kept Argentina on the margins of international credit markets.
Macri has criticized Scioli for aligning with Fernandez. But he also praises many government moves, such as nationalizing Aerolineas Argentinas.
He even inaugurated a statue of Juan Peron, a three-time president and founder of a working class movement that helped inspire Kirchnerismo. The ceremony raised eyebrows because Macri’s overarching ideology is free-market, but it underscored the resonance of the government’s hand in society, a force not easily discarded.
“We know that people want change and that Kirchnerismo will come to an end” when Fernandez leaves office, said Roberto Bacman, director of the Center for Public Opinion Studies, a South American research firm. “But therein lies the real question: What will change mean?”
12. NARCO-PLANES LANDING ON ARGENTINA’S RIVERS: REPORT (Insight Crime.org)
By Elijah Stevens
November 18, 2015
According to one report, traffickers are increasingly using amphibious aircraft to smuggle drugs into Argentina, a development which may possibly be in response to the country’s efforts to combat aerial drug trafficking.
Claudio Izaguirre, head of non-governmental organization the Argentine Anti-Drugs Association, told Diario Popular that drug traffickers have started using amphibious aircraft — planes with the ability to land on and take off from water — to smuggle drugs into the country via its rivers.
Izaguirre stated that this new approach is allowing traffickers to evade radar detection and police forces. According to Izaguirre’s estimates, traffickers are now bringing drugs into Argentina on approximately three “narco-aquatic” flights per day.
Many flights are taking off from the Paraguayan city of Pilar and landing on the rivers of Parana and Uruguay in Argentina, he added. This shift away from landing on clandestine airstrips may be in response to police and Gendarmerie activity along the northern border, he said.
Criminal organizations have been known to transport drugs from Bolivia and Paraguay into Argentina by plane, landing on clandestine airstrips in several northern provinces.
InSight Crime Analysis
Given that Argentina had previously taken steps such as destroying airstrips and installing radar in order to combat aerial drug trafficking, it is possible that Izaguirre’s assessment is correct. Criminal organizations are more than capable of shifting their tactics in response to pushback from law enforcement, and in Argentina, aerial traffickers may have found multiple advantages to landing on rivers rather than airstrips.
Other security officials in Argentina have not yet backed up Izaguirre’s assertions. Nevertheless, criminal groups have been known to use the Southern Cone’s network of rivers for transporting drug shipments. The governor of one of Argentina’s most violent provinces, Santa Fe, has said that one of the country’s biggest problems is drug smuggling via the Parana river. In Uruguay, authorities have also seized drugs from smugglers on the Uruguay river.
13. PRESIDENT OF ARGENTINA WON’T EXTRADITE DENVER MURDER SUSPECT (CBS Denver)
November 18, 2015
DENVER (CBS4) – The president of Argentina is blocking a court order to send a Denver murder suspect back to Colorado.
Kurt Sonnenfeld is accused of killing his wife at their Denver home back in 2002. He claims he’s being framed because of video he took at Ground Zero after Sept. 11.
Sonnenfeld fled to Argentina. Then-governor Bill Owens agreed to waive the death penalty if Sonnenfeld returned for trial.
“Kurt Sonnenfeld is definitely gaming the system, though someday, hopefully, that game may run out,” Owens said.
CBS’s “48 Hours” has been following the case since 2004. They recently flew to Buenos Aires to meet with Sonnenfeld and his new wife.
FRIDAY
1. PERONISTA VOTE FALTERS IN ARGENTINA’S POORER URBAN AREAS, ONCE STRONGHOLDS (The Wall Street Journal)
2. DANIEL SCIOLI’S FEAR CAMPAIGN FALTERS AS ARGENTINES SEEKS CHANGE (Financial Times)
3. ARGENTINA POISED TO MAKE HISTORY IN SUNDAY PRESIDENTIAL ELECTION (Bloomberg News)
4. ARGENTINA’S UNRELIABLE POLLS MEAN TRADERS MAY BE TOO OPTIMISTIC (Bloomberg News)
5. MONSANTO EYES OPPORTUNITY IN ARGENTINA AHEAD OF ELECTION RUNOFF (Bloomberg News)
6. ARGENTINE CRESUD TUMBLES TARGETED BY SHORT SELLER SPRUCE POINT (Bloomberg News)
7. ARGENTINE FIRMS HOPE FOR BETTER BUSINESS CLIMATE AFTER ELECTION (Reuters News)
8. ARGENTINA’S FUMBLED PRESIDENTIAL HANDOFF (Fortune)
9. KIRCHNER FOE IN LEAD IN ARGENTINA VOTE — AND MARKETS ARE EXCITED (CNBC)
10. ARGENTINA’S STOCK MARKET IS ON A TEAR DESPITE ECONOMIC WOES (CNBC.com)
11. ARGENTINA APPROVED FOR HELICOPTER BUY (UPI Online)
12. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)
1. PERONISTA VOTE FALTERS IN ARGENTINA’S POORER URBAN AREAS, ONCE STRONGHOLDS (The Wall Street Journal)
By Juan Forero and Santiago Perez
Nov. 19, 2015
Working-class districts that ring Buenos Aires, which powered Peronism for decades, are slipping from the movement’s grasp
SAN MIGUEL, Argentina—As a “point man” for the ruling Peronist movement, Javier Llanos works teeming slums of dirt streets and plywood homes, exhorting prospective voters in this industrial suburb of the capital to cast ballots for Daniel Scioli in Sunday’s presidential election.
But the working-class districts that ring Buenos Aires—packed with millions of voters who powered Peronism for decades—are slipping from the movement’s grasp.
Several polls show that opposition candidate Mauricio Macri, the business-friendly mayor of Buenos Aires, has a lead of five to eight points over Mr. Scioli, a signal that after 12 years, a movement that thrives on a mix of welfare programs and nationalism may be defeated.
“We’ll lose it all if Macri wins,” lamented Mr. Llanos, echoing the Peronist message that a vote for change will mean disaster for Argentina. “There will be a lot of suffering for the poor.”
But many Argentines—even those in poor districts who benefited from years of generous programs—disagree. They speak of decaying or nonexistent infrastructure and rising crime and drug trafficking under Mr. Scioli, who has been governor of the Buenos Aires province for the past eight years.
“I’m 52, and I have always known Peronism,” said voter Susana Arraskaita. “I want to see something different.”
Mr. Scioli, a 58-year-old former powerboat racing champion, fell short of the threshold needed to win in a first round of voting on Oct. 25 and barely squeaked by Mr. Macri, 56. Other outcomes of that election also went against President Cristina Kirchner and the Victory Front, the Peronist coalition she leads.
In large and populous Buenos Aires province, Mrs. Kirchner’s choice for governor, her mercurial cabinet chief Aníbal Fernández, lost in the October vote to Mr. Macri’s young and charismatic candidate, María Eugenia Vidal—the first time in 28 years a non-Peronist won that post.
The Victory Front’s mayoral candidates also took a beating in the 33 densely populated districts that ring Argentina’s capital and contain about 27% of the country’s 32 million voters, with Mr. Macri’s allies scoring victories in Peronist strongholds like the bedroom city of Lanús, population 500,000.
“With the results, the myths collapsed,” said Damián Sala, an activist who works for Lanús Mayor-elect Nestor Grindetti. “We learned that even in Lanús, a movement that’s not Peronism could win.”
Peronists are now feverishly trying to get the votes they need—a campaign to be won or lost in these 33 key districts. Of particular interest to both sides are three million votes that a dissident Peronist, Sergio Massa, received in the first round.
“The mother of all battles takes place in these working-class suburbs,” said Carlos Coronel, a teacher whose second job as a local Peronist representative entails organizing activists to convince San Miguel’s voters to cast ballots for Mr. Scioli.
In Mrs. Kirchner’s two terms—and in her husband Néstor’s previous 2003-07 term—Peronism has meant largess here in the capital’s industrial belt.
In the most costly expansion of social welfare since the rule of Peronism’s founder, Gen. Juan Domingo Perón, more than six decades ago, it has delivered everything from pensions for retired manual laborers to stipends for young mothers. For those fanatical about soccer, there is “Football For All,” which broadcasts games free that had once been available only on pay-per-view. Those who are hard to employ can work in government-supported neighborhood cooperatives, producing T-shirts or toys.
Peronist organizers now remind people here that deprivation and economic calamities of the past—like the 2001 debt default, which led to riots and poverty—took place under non-Peronist leaders.
“I remember 2001, I lost everything,” said Pedro Multari, a 54-year-old San Miguel resident. “We had to start selling things so we could have enough to eat.”
Peronism built up a fierce loyalty decades ago, winning territorial control by forging close ties to organized labor, said Rodrigo Zarazaga, a Jesuit priest who has spent two decades as chaplain in these downtrodden communities. Under the Kirchners, allegiance has been secured with public assistance.
But it has come at a cost. Ballooning government spending has fueled inflation, the second-highest in Latin America, which hits the poor hard. Rev. Zarazaga said the state has also ignored infrastructure: Nearly half of all households are without sewerage or potable water in the cities ringing Buenos Aires. Many roads are unpaved, large urban areas are prone to flooding,schools are decaying and decrepit commuter trains are overcrowded.
“The urgency was to resolve problems with massive cash transfers, but the lack of infrastructure is a problem,” said Rev. Zarazaga, a Harvard-trained social scientist who directs the Research and Social Action Center, a Buenos Aires think tank. “If Mr. Scioli doesn’t recover lost ground in these suburbs, he doesn’t have a chance.”
Mr. Macri’s efforts to win support in working-class wards haven’t been easy. The message activists of his Let’s Change coalition have hammered home in small-scale meetings with voters is that for Argentina to have a stable economy, it must resolve such issues as falling reserves and the lack of access to credit, said Lanús Mayor-elect Grindetti, who is currently Mr. Macri’s finance chief in the capital.
“That’s not the first problem people think about,” Mr. Grindetti said.
A few miles to the northwest, Mr. Coronel, the Peronist organizer in San Miguel, acknowledges how hard it has been to rev up the base. “There’s a sense of fatigue with regards to Mrs. Kirchner, so the runoff looks complicated,” he said while driving in San Miguel’s neighborhoods.
Mr. Coronel and other Peronist organizers have been actively trying to help residents with everyday problems, from assisting senior citizens with paperwork for pension benefits to sprucing up sport facilities. The idea, they say, is to make clear that their help is tied to Mr. Scioli.
“What some call populism is pejorative for us,” Mr. Coronel added. “We see this as social justice.”
Even with the headwinds for Peronism, many remain loyal.
In a San Miguel avenue where Peronist activists pass out pro-Scioli pamphlets, 63-year-old María Cristina Miranda recounted how she received retirement benefits under Mrs. Kirchner´s administration, though neither she nor her employer had ever contributed to a pension plan. And she doesn’t want to lose it.
“I pray to God and the Virgin that Scioli will win,” she said.
2. DANIEL SCIOLI’S FEAR CAMPAIGN FALTERS AS ARGENTINES SEEKS CHANGE (Financial Times)
By Benedict Mander in Buenos Aires
November 19, 2015
Just a month ago, Daniel Scioli looked to be a shoo-in as the next president of Latin America’s third-largest economy. As the chosen successor of Argentina’s fiery leader, Cristina Fernández, he promised Argentines continuity — albeit a more moderate version of her populist, free-spending and nationalist policies.
This Sunday’s presidential election was his to lose. Especially, it seemed, as he could paint his centre-right opponent, Mauricio Macri, as a bloodless “neoliberal” who would wreak untold economic pain on his countrymen.
“His ideas, decisions and proposals are a danger for the whole of our society,” Mr Scioli inveighed during Argentina’s first-ever presidential debate last Sunday. Mr Macri’s promises of change are a “great lie”, he added.
Yet now, on the eve of the vote and with Argentina’s economy in the doldrums, it is Mr Macri, the “turnround candidate” and pro-business mayor of Buenos Aires, who is leading the polls — and with a convincing nine point lead, according to Elypsis, a reputed local pollster.
The shift is a striking illustration of how many countries in the region, such as Brazil and Venezuela, are also adjusting to the end of a decade-long economic boom and how voters are rejecting the governments and charismatic leaders that presided over them.
Mr Scioli’s fear campaign was a “mistake”, said Juan Germano, director of Isonomia, another local pollster.
“Scioli failed to understand what Argentines want”, he said, especially after 12 “very intense” years of being ruled by the imperious Ms Fernández and Néstor Kirchner, her late husband. “The desire for a change among Argentines is pretty clear.”
That became obvious on October 25, when Mr Macri won 34 per cent of the vote in the first round. It was not enough to beat Mr Scioli, who won 37 per cent, but it put him within spitting distance.
Crucially, Mr Macri also had voter momentum behind him.
In addition, the government suffered an unprecedented defeat in Buenos Aires province, Argentina’s largest. Traditionally a stronghold of the ruling Peronist party, Mr Scioli had ruled it for the past eight years. The seat instead went to the fresh-faced María Eugenia Vidal, formerly Mr Macri’s deputy mayor.
It is not just the public that is clamouring for change in a country whose stagnating and investment-starved economy is struggling with a widening fiscal deficit, double-digit inflation, an overvalued currency and an acute shortage of dollars. Businesses want change, too.
Early signs that foreign investment is flowing back into an Argentina on the verge of change include a $16bn nuclear deal with China signed last week, while US businesses have been eagerly sending teams to Buenos Aires to scope out opportunities.
Financial investors are also hugely expectant. Argentine equities and bonds have rallied for the past month as investors have bet that Mr Macri, a former president of Boca Juniors, one of Argentina’s most popular football clubs, will introduce much-needed economic reforms and strengthen the country’s degraded institutions.
“I have never seen such demand for an Argentine economist,” said Andrés Borenstein, BTG Pactual’s chief economist in Argentina.
“If Macri wins, there is going to be a rally. There is a part of the Macri dividend that is not yet priced in,” he said, estimating that investors are assuming a 60 to 80 per cent probability that Mr Macri will win.
There will be a difficult start for whoever triumphs. The dire economic legacy left by Ms Fernández requires urgent attention. The most immediate problems are an acute shortage of foreign exchange reserves and an overvalued currency.
Mr Macri told the Financial Times in a recent interview that he would lift strict capital controls implemented four years ago on “day one” of his presidency, which will lead to a significant devaluation from Argentina’s official exchange rate and could stoke inflation already running at about 20 per cent.
There are also high hopes that the next government will swiftly settle a marathon legal dispute with a group of “holdout” hedge funds that has blocked Argentina’s access to international capital markets since it defaulted on $100bn of debt in 2001.
Despite the challenges, José Manuel Ortega, a Spaniard who owns a winery in the province of Mendoza, describes a “feeling of hope” among Argentines, who are “tired of more of the same” and realise the economy “cannot continue as it is”.
“From all parts of society to foreign and local investors, people are looking for change. Argentines do not want more conflict. They don’t want an absolutist monarch in power any more,” he says.
3. ARGENTINA POISED TO MAKE HISTORY IN SUNDAY PRESIDENTIAL ELECTION (Bloomberg News)
By Charlie Devereux
November 19, 2015
* Opposition’s Macri has solid lead over ruling party’s Scioli
* Economic changes expected even if race goes in unpredicted way
Four weeks ago, it was widely expected that the next president of Argentina would be the candidate of the ruling party. But in a first-round election that stunned the nation, opposition leader Mauricio Macri stole the momentum, and as voters return to the polls on Sunday the presidency looks like his to lose.
Macri is the more market-friendly candidate and global companies are lining up to invest, persuaded that the country will reopen for business since he is leading the ruling Peronist party’s Daniel Scioli by 6 to 8 percentage points. Up to a tenth of voters remain undecided, however, and polls were off a month ago, so there is room for surprise.
A central plank of Macri’s policies is the immediate lifting of currency controls to boost investor confidence amid the lowest reserves in nine years. Scioli says Macri’s plan would lead to a massive devaluation that would destroy purchasing power and fuel inflation already running at 24 percent.
In reality, the state of the economy will dictate austerity measures from either candidate, said Diego Ferro, co-chief investment officer at Greylock Capital Management.
“Argentina unfortunately doesn’t implement changes when it should, only when it has to and there is no doubt that next year they will have to implement changes regardless of who wins,” Ferro said by phone from New York.
Elephant In The Room
Neither candidate has addressed the elephant in the room: the reforms needed to reduce inflation, fix a fiscal deficit of 7.2 percent of gross domestic product – the largest in over 30 years – and lure back investment dollars which have stayed away due to currency controls, a lack of regulatory predictability and a decade-long dispute with holdouts from the 2001 default.
The men have put forth different images, with Scioli claiming the populist mantle. Campaigning on Thursday, he said the election is between Macri, whom he called “an arrogant guy from Barrio Parque,” an exclusive neighborhood in Buenos Aires, and him, the son of a worker who understands the needs of the people.
Both candidates will nonetheless probably prescribe a similar recipe, albeit with distinct dosages, analysts predict.
Macri says he will seek to end the holdout conflict that caused Argentina to default once again last year. He will eradicate tariffs on grain exports and reduce the 35 percent tax on soybeans, Argentina’s largest source of export revenue, by 5 percent a year. He also pledges to bring inflation to below 10 percent in two years and to restructure the statistics agency after the International Monetary Fund censured Argentina for misreporting economic data.
Scioli, while defending the legacy of President Cristina Fernandez de Kirchner, is promising similar changes in the agricultural sector while saying inflation will take a full four-year term to tame. Seeking to contrast himself to Macri, he says he will continue to protect Argentina’s industrial sector by sticking with the policy of a peso whose exchange rate is administered by the central bank.
Markets React
Markets have already reacted to a likely Macri win, cushioned by the knowledge that a Scioli victory would also be an improvement on the status quo.
The stock market is at a record high, bond yields are at their lowest in eight years and Morgan Stanley is advising soybean producers to sell their stock now in anticipation of a post-electoral glut.
Both candidates will not only change economic policy but the way that the government handles its trade partners, its opponents and its communications, said Juan Gabriel Tokatlian, of the University of Torcuato Di Tella. What will differ is the pace.
Fernandez’s eight years have been characterized by standoffs — with farmers over export taxes, international trade partners over import restrictions and the country’s middle class over access to buying dollars. All of those will likely ease, irrespective of who wins. The fact that 12 years of rule by Fernandez and her deceased husband Nestor are ending is creating a buzz of possibility.
Both candidates will face challenges in finding consensus to implement changes. Macri will govern with a minority in both houses of Congress, although he is bolstered by the surprise capture of Buenos Aires province in last month’s election which has caused fractures in the Peronist alliance. Scioli will have to distance himself from the rhetoric of continuity that has dominated his campaign, said Greylock Capital’s Ferro.
“There is no ambiguity in the case of Macri and that’s one of the reasons why the market was so happy, because we know that from moment zero there will be a coherent plan to get Argentina out of its problems,” Ferro said. With Scioli, “we will get there but it will take longer.”
4. ARGENTINA’S UNRELIABLE POLLS MEAN TRADERS MAY BE TOO OPTIMISTIC (Bloomberg News)
By Carolina Millan and Emma Orr
November 19, 2015
* Bond selloff is a big risk if Scioli pulls off surprise win
* Opposition candidate Macri leads polls with 46% support
Bond investors may be putting too much stock in Argentina’s presidential polls.
The country’s benchmark bonds have surged to an eight-year high as voter surveys show opposition candidate Mauricio Macri will win Sunday’s runoff vote, potentially setting the stage for sweeping policy changes that may allow the government to regain access to foreign debt markets and revive the economy.
But given how wrong the polls turned out to be in the first round of voting last month, the final result may still be a toss-up, said Bianca Taylor, a sovereign analyst at Loomis Sayles in Boston. The ruling party’s Daniel Scioli had long figured as the clear frontrunner in surveys leading up to the Oct. 25 election only to unexpectedly end up in a near tie with Macri when all the votes were counted. A selloff is likely to ensue if Macri loses to Scioli, who has promised to make only gradual changes to policies investors blame for stagnant growth and soaring inflation.
A Scioli win means “significant downside,” Jim Barrineau, director of Latin American fixed income at Schroder Investment Management, said from New York. “All the momentum is with Macri. But you have to allow for erratic polls in emerging markets.”
Macri had 46.5 percent support in a Nov. 9-12 Management & Fit poll of 2,400 people, compared with 39.9 percent for Scioli. The survey, which had a margin of error of 2 percentage points, shows 11.1 percent of people are still undecided, with 2.1 percent planning to cast a blank vote.
Before the first-round vote, a poll by the same firm showed Scioli was favored by 38.3 percent of voters, compared with 29.2 percent for Macri.
A poll released late Wednesday by Elypsis, an economic research firm that correctly detected a late surge in votes for Macri ahead of the first round, showed that the opposition candidate would capture 47 percent of the vote versus 39.3 percent for Scioli. The election could still be swayed by 11 percent of voters who remain undecided, according to the survey.
Investor caution on election projections comes after high-profile polling misfires around the world in the past year, notably in Greece, Israel and the U.K., have called into question whether technological and social shifts are hampering polls’ reliability.
Argentina’s $4 billion of defaulted bonds due in 2033 have gained 6.9 percent since Oct. 25 to 113.3 cents on the dollar as investors bet a Macri victory means the country will look to settle its decade-long debt dispute and end currency controls. In July 2014, President Cristina Fernandez de Kirchner’s refusal to abide by a U.S. court ruling requiring Argentina repay disgruntled creditors led to the nation’s second default in 13 years.
While a Scioli victory may initially trigger a bond slump, the decline will be limited, said Gerardo Rodriguez, a money manager at BlackRock Inc. The fact that the elections went to a runoff was a “game changer” because it indicated Argentines want different policies.
“Markets have rallied, not only on the prospect of a Macri victory, but also on the fact that the mandate for Scioli if he wins will be one of change,” Rodriguez said.
Still, to AllianceBernstein LP’s Marco Santamaria, a Scioli win won’t be welcomed by bond investors. He pointed to Scioli’s inability to gain ground on Macri in a debate Sunday, which has made investors even more optimistic.
“The market has been getting used to the idea of a Macri win, given the recent polls and the outcome of the debate,” said Santamaria, who manages $27 billion in emerging-market debt. “So I think it would be logical to expect some disappointment in the market if Scioli were to pull off a surprise win.”
5. MONSANTO EYES OPPORTUNITY IN ARG