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Google x Vogue x GQ - Encounters from ale ruiz-zorrilla on Vimeo.
Condè Nast Creatives: Alexander Freudenberger and Diana Alemann
Production Company: Iconoclast Germany Executive Producer: Alexis Delanoue Producer: Flora Marriot Production Coordinator: Henry Davidson First Assistant Director: Linus Weber
Director: Ale Ruiz-Zorrilla DOP: Louis Lustermann
Talents: Cristina, Bella, Naman, Josefine, Salif and Daniel
Focus Puller: Julien Bauer 2nd AC/Loader: Andrea Pedrinelli
Gaffer: Alan Waddingham Sound: Adam Asnan Best Girl: Elizabeth Root
Stylist: Linda Englehardt Styling Assistant: Konstantinos Efstahiadis
HMU: The Baligans
Colorist: Jonny Thorpe Editor: Tobias Kirschner Sound Design and Music: Jason @ Mosche
Driver/Runner: Anna Mengels Driver/Runner: Noelle Goetz Driver/Runner: Leo Schulze Driver/Runner: Marcel Calliku
Scan: Silveryway Paris Stock: Kodak
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Argentina: 25 aniversario del atentado de la AMIA – Entrevista al testigo Dr. Carlos Telleldín "En vísperas del 25 aniversario del atentado al edificio israelo-argentino AMIA, ocurrido el 18 de julio de 1994 en Buenos Aires, se destaca la envergadura de un personaje cuyo destino cambió de rumbo ese día, de forma dramática: el doctor Carlos Telleldín" …
#25 aniversario#amia#amia iran#argentina#atentado amia#atentado argentina#atentado Buenos aires#atentado de la AMIA#atentados#Carlos Telleldín#cia argentina#cristina kirschner#falsas banderas#IRAN#iran nisman#israel argentina#kirschner iran#macri netanyahu#mossad argentina
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she called cristina fernandez de kirschner sexy.....
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This is an opinion editorial by Samantha Messing, a Brown grad making the world a better place with Bitcoin.Investing legend and limousine liberal Warren Buffett has never been a fan of Bitcoin. He recently commented: Of course, Buffett does not get “it.” He is a Nebraska billionaire. The U.S. dollar is the strongest currency in the world. He cannot fathom the possibility that The State might hyperinflate the currency, default on debt or confiscate assets. For the people of Argentina, financial collapses are their Groundhog Day. Gratefully, Bitcoin offers a trustworthy alternative to their failing national currency and corrupt monetary system. Let’s get into it.Argentina is facing one of the highest inflation rates in the world … again! The nation has no access to international capital and owes over $40 billion to the IMF. Prices are soaring, and nearly half the population lives in poverty. Economic conditions are as bad as they have ever been … and that is saying something for Argentina.Successive governments, beginning with the Peronists in the 1940s, have saddled the nation with unwieldy debts. Argentina has gone bankrupt nine times, with more than a dozen cycles of hyperinflation and reform over the past century. No country has a worse track record.The playbook looks like this: Print money to deliver social services and retain power.Act shocked when inflation skyrockets.Act even more shocked when political unrest ensues.Institute monetary “reform” (Ha!).Argentinian inflation is a special kind of inflation. It comes with a lot of zeroes. We are talking millions. What good is a salary of $1 million when bread costs $2 million? Facing political pressure, politicians embrace monetary “reform” which includes a mix of raising policy rates, controlling currency exchange rates or introducing a new currency.Pretend it is 1970 and you have one million pesos in the bank. Feeling good, right? Here comes monetary “reform.”The peso ley replaces the previous peso at a rate of 1: 100. You now have 10K pesos.Then in 1983, the peso argentino replaces the peso ley at 1: 10K. You now have 1 peso.Just two years later, 1:1K — 0.001 peso.Ten years later, 1: 10K — 0.0000001 peso.Economist Marcos Buscaglia recently described the peso as ice cream: On paper, Argentina’s political system is akin to the United States: three branches and popularly elected presidents with four year terms. In practice, checks and balances have been on the decline for decades. Known as “hyper-presidentialism,” Argentine presidents wield far too much power, and Argentina has been poorly governed by both liberals and conservatives.The seeds of Argentina’s current economic crisis were sown over the last decade. It begins with Former President Cristina Kirschner (now Vice President) pursuing a populist-socialist agenda for her working class base. She spent massively on subsidies and social programs, all financed by foreign borrowing. Public debt soared, and then inflation and interest rates skyrocketed.Thereafter, center-right President Mauricio Macri took office with promises to revive the economy. However, the peso continued to fall against the U.S. dollar. With capital controls imposed on the populace, Argentines hoarded black market US dollars under mattresses.At this point, the government should have really stopped spending and reigned in the deficit. But, as we know, austerity dims one’s re-election prospects. So, in 2018, Marci secured a $57 billion credit line from the IMF, the largest in IMF history. Phew.The billions came with a caveat: Macri must implement anti-inflation policies. Marci looked for short-cuts. He sold tons of high-interest short-term bills, called Leliq notes, to sponge liquidity. But it wasn’t enough. Poverty rose and citizens grew restive. Macri’s popularity rating plummeted … just as the 2019 presidential election arises. His populist rivals, Alberto Fernandez and former president Cristina Kirchner, were swept into office.We know what happened next.
The pandemic, Russia’s war in Ukraine, shrinking food supplies and tighter energy markets battered economies all over the world. Few countries were less prepared than Argentina. Soon after the shutdown, the nation defaulted on sovereign debt and inflation hit 70 percent.This is not the first currency collapse rodeo for the Argentines. Citizens began to accumulate durable goods like homes, gold, technological devices and non-perishable food. They all have one goal: get out of the peso … now!On payday, Argentines rush to illegal “cuevas” (black market exchanges) to trade pesos for other currencies. These exchanges primarily distribute cash, and this is a dangerous undertaking. Criminals know the game, and muggings are commonplace. Even so, the black market offers a safer bet than the national currency and banking system. Really?Yes! In 2001, the Argentinian government enacted “el corralito,” denying people access to their bank accounts for almost a year. When the banks reopened, citizens discovered that all U.S. dollars were exchanged for pesos and the peso lost 60 percent of its value. Could this happen again? You bet your ass it could.No wonder Argentina bred Silicon Valley’s Bitcoin “patient zero,” Wences Casares, who helped convert Elon Musk, Peter Thiel, Reed Hoffman and Chamath Palihapitiya to the cause. Casares grew up in the Patagonia region and watched his family lose their life savings — three times — due to currency collapses. Casares also founded Xapo, the first Bitcoin institutional custodian, which he sold to Coinbase in 2019.Argentines are increasingly using bitcoin as an alternative to their shitcoin national currency. As a peer-to-peer decentralized network, bitcoin enables Argentines to freely send and receive value to each other and across borders. Importantly, bitcoin is both debasement resistant and seizure resistant. Bitcoin can be securely stored on a USB stick or in your head (if you can remember your seed phrase). Either way, it is much easier and safer than hauling cash from a cueva to an attic.Government officials, journalists and limousine liberals, like Warren Buffett and Elizabeth Warren, cluelessly deride bitcoin as dangerous and risky. They traffic in Western luxury beliefs with little regard for the needs of the billions of people who live in countries with unstable financial systems.To be clear — Bitcoin is not perfect. But, even as Bitcoin’s price has fallen (hard) in recent months, Bitcoin remains a superior alternative to the Argentinian peso. In fact, according to this New York Times article, “Nearly 60 percent of Argentines believed that Bitcoin, one of the most popular cryptocurrencies, would retain the value of their savings over that same period…”Adoption of Bitcoin in Argentina is outpacing Europe and the United States (duh!). The same New York Times article states, “About one-third of Argentines said they bought or sold cryptocurrencies at least once a month, double the percentage of people in the United States, according to a separate survey by Morning Consult.” The nation is a top country for receiving paychecks in crypto, and cuevas now offer exchange rates between the peso and Bitcoin.Of course, Bitcoin will not cure Argentina’s economic woes and political failure. But, it is a super valuable asset for the people … because it is the only money that Argentine politicians cannot destroy.Viva la bitcoin revolution!These views are my own and are not financial advice.This is a guest post by Samantha Messing. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine. Read More
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Maximo Kirchner's Buenos Aires PJ targeted the "Judicial Corporation" and supported Cristina
Maximo Kirchner’s Buenos Aires PJ targeted the “Judicial Corporation” and supported Cristina
Maximo Kirchner’s Buenos Aires PJ targeted the “Judicial Corporation” and supported Cristina The force released a statement on the Vialidade case just a day after prosecutors revealed the party leader’s text messages with José López; He linked the trial to “party interests”. August 5, 202220:19 Maximo Kirschner at the PJ Provincial Council meeting On the same day that prosecutor Diego Luciani…
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«… algunos países están utilizando para dar refuerzos para MATAR NIÑOS» – Tedros Adhanom. Director General de la OMS
27 diciembre, 2021
El señor Adhamon viene a decir que no es eficiente centrar los esfuerzos en los niños de los países con ingresos altos, en lugar de centrar la acción en los grupos poblacionales con más propensión de enfermedad y muerte, los ancianos «que no han sido vacunados ni siquiera con las vacunas primarias». Es decir, que hay que incidir más en los ancianos antes de pasar a asesinar en masa a los niños.
«Entonces, si va a ser utiliado, es mejor centrarse en aquellos grupos que tienen riesgo de enfermedad grave y muerte, en lugar, de como vemos que algunos países están utilizando para dar refuerzos para MATAR NIÑOS, lo cual no está bien. Es un tema de equidad. En lugar de poner un refuerzo a un niño en un país de ingresos altos, es mejor vacunar a los ancianos en los países que tienen ancianos que no han sido vacunados ni siquiera con las vacunas primarias.» – Tedros Adhanom, diciembre de 2021. Director General de la OMS (Brazo de la criminal ONU).
En la masonería hablan en estos términos. Tal cual. Y por un momento traspapelan dónde se encuentran y se les escapa el discurso que abiertamente usan en las logias, donde hablan con naturalidad de asesinar a una porción de la población. Dejo otro ejemplo a continuación, en este caso de Cristina Kirschner.
«… y por lo tanto va a ser gratuito, y por lo tanto vamos con el tiempo a lograr que miles de mujeres pierdan la vida por esto.»– Lapsus de Cristina Kirchner, 2021.
https://uncatolicoperplejo.wordpress.com/2021/12/27/algunos-paises-estan-utilizando-para-dar-refuerzos-para-matar-ninos-tedros-adhanom-director-general-de-la-oms-dic-2021/
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WASHINGTON — Long before the convictions last week of two former members of President Donald Trump’s inner circle, the political left’s expectations for the Russia investigation were at a fever pitch.
Democrats predicted that the special counsel, Robert Mueller, would break with a half-century of policy and prosecute a sitting president.
Mueller, a lifelong Republican who is an unlikely hero for the anti-Trump resistance, faces a series of crucial decisions in the coming months. Will he subpoena the president? Recommend charges? Will he write a public report? Each could help sway the midterm elections and shape the future of the presidency itself.
For insight on what he will do next, those who have known him for years say, do not look at the mythology that has built up since Mueller was appointed 15 months ago. Look instead to his four decades of government service.
As he advanced from line prosecutor to top Justice Department official to head of the FBI, his time was marked by aggressive prosecutions but also a deference at key moments to precedent, tradition and higher office. “He’s the last guy who’s going to do anything that’s even slightly a departure from the bedrock principles,” said Glenn Kirschner, who worked alongside Mueller as a homicide prosecutor.
The special counsel investigation has followed a familiar path, colleagues said, largely because Mueller, a publicity-averse 74-year-old, has stuck to his approach.
“He’s the same guy he’s always been,” said Marilyn Hall Patel, a retired federal judge in San Francisco. “Steady, measured, cautious.”
Shortly after taking over as U.S. attorney in San Francisco in 1998, former colleagues recalled, Mueller asked all the supervisors in the office to step down. He promptly sent a Justice Department-wide email announcing that “the following positions are now open” — and listing every major prosecution job in Northern California.
Many in the office found it brusque and off-putting. But Mueller told colleagues that he had learned a management style decades earlier as a Marine platoon commander: You cannot make people do things that they are incapable of doing. So rather than prodding employees, he preferred to move quickly to assemble the best possible team, even if his method was disruptive.
As special counsel, Mueller has recruited talented prosecutors from across the country, stocking the office both with trusted longtime colleagues and younger prosecutors with sterling résumés. “If you have an opportunity to work with him and learn from him, you do it,” said Melinda Haag, a former U.S. attorney in Los Angeles who once served as Mueller’s chief white-collar prosecutor.
Mueller was not the obvious choice to lead the San Francisco office during the Clinton administration. Those jobs usually go to politically connected lawyers, and Sen. Barbara Boxer, D-Calif., had formed a selection committee to recommend candidates.
Mueller was tied to the wrong party, having served as a top Justice Department appointee of George H.W. Bush. But the San Francisco office was adrift, and career prosecutors at the Justice Department in Washington recommended Mueller for the job. And though Boxer had an eye for liberal nominees who diversified the workforce, the chairwoman of her committee, Cristina C. Arguedas, had known and respected Mueller when he was a young prosecutor and she was a public defender.
As the nation’s top criminal prosecutor during the Bush administration, Mueller oversaw the high-profile investigations of the Lockerbie bombing, the prosecution of crime boss John Gotti and the sprawling BCCI financial corruption scandal.
Afterward, he took a sizable step down to return to front-line law enforcement. He became a homicide prosecutor in Washington, a city still reeling from the violence of the crack epidemic of the 1980s and early 1990s.
“I love everything about investigations,” he once said, reflecting on that period. “I love the forensics. I love the fingerprints and the bullet casings and all the rest.”
He demands the same from his subordinates, whom he expects to be steeped in the details. “The thing that would set him off was when someone would come in for a briefing unprepared,” said John S. Pistole, a former deputy FBI director.
By almost any measure, Mueller has led the swiftest, most successful independent investigation in modern Washington. In just over a year, he has indicted 25 Russians for trying to influence a U.S. election. He has won a conviction of Trump’s campaign chairman at trial and secured guilty pleas from two campaign aides and the former national security adviser.
—
When Mueller learned that CIA officers were waterboarding prisoners, he famously ordered his FBI agents not to participate.
For Democrats and human rights advocates, it was a laudatory but ultimately mealy-mouthed response. The FBI, after all, has the authority to investigate torture and prison abuses.
“Why did you not take more substantial steps to stop the interrogation techniques that your own FBI agents were telling you were illegal?” Rep. Robert Wexler, D-Fla., asked in 2008.
For Mueller, the answer was obvious. The Justice Department had declared the CIA tactics legal, and it was not his job to challenge that conclusion.
“There has to be a legal basis for us to investigate,” he told Wexler. “And generally that legal basis is given to us by the Department of Justice.”
“His prosecutor’s background is so deeply ingrained,” said Pistole, his former deputy. “It was such a key driver for him: What’s the precedent?”
Little precedent exists for the case Mueller has before him, but 50 years of Justice Department legal policy says that sitting presidents cannot be indicted. Congress, with its impeachment power, may prosecute a president, but the Justice Department may not.
So when Trump’s lawyer, Rudy Giuliani, announced that he had been assured that Mueller would abide by that policy, it rang true for those who have known Mueller for years.
“If the Department of Justice has a legal opinion that says you shouldn’t indict the president, he will feel like he has to follow that,” Arguedas said. “Because that’s his job. He’s not a guy who’ll say, ‘I don’t care about that legal opinion.'”
That may be why Mueller has allowed negotiations to drag on for more than eight months over whether Trump will sit for an interview. Forcing the issue with a subpoena would test the limits of executive power, and Mueller does not make such moves lightly.
Mueller has many options for ending his investigation, but Giuliani, the president’s lawyer, has said Mueller plans to issue a report on his findings, though the special counsel’s office has never confirmed that path. Any such report — especially a lengthy, damaging one like the one independent counsel Ken Starr released about President Bill Clinton — would raise the prospect of a spectacle in Congress.
But the independent counsel law that allowed for such a highly detailed report in the Clinton case expired, and under replacement Justice Department regulations, Mueller is required only to send a short, confidential summary of his investigation to the deputy attorney general, Rod Rosenstein.
A less splashy finale suits Mueller.
“He’s going to find out what there is to find out, and he’s going to say it in the most straightforward, neutral way possible,” Arguedas said. “And then he’s going to walk away, because his job will be done. He won’t go on any talk shows, and he won’t write a book.”
This article originally appeared in The New York Times.
Matt Apuzzo © 2018 The New York Times
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On today's @GoodDaySac @KinseySchofield was at @42ndstreetdesign w/ @KerrieKelly checking out GREAT gift ideas and ways to decorate your home. Did you miss today's @GoodDaySac #ICYMI Ken was with Spanish Bagpiper Cristina Pato before she performs tonight and Saturday at the Mondavi Center at UC Davis. Cody was previewing the 9th annual CruiseFest on Fulton Avenue, Northern California’s premier car cruise that benefits the California Automobile Museum. Cody was aboard Tall Ship aka Hawaiian Chieftain as it in Sacramento. Alisa was at Barsotti Family Juice Company who are known for their fresh apple juice and is now getting into the hard cider business. Tina was getting a preview of Nature Fest with Joe and Gabe Kirschner who is back with their Wild Things menagerie to tell all about the annual event at Effie Yeaw Nature Center at Ancil Hoffman Park in Carmichael this weekend. It’s the center’s biggest family event of the year. Tina was getting a preview of Dining Out For Life which is coming up on October 12. Several restaurants will be donating a portion of their proceeds to Sunburst Projects in a mission to serve children and families living with HIV/AIDS. Julissa and Tina talked with Paulo Machado a local artist who’s transforming gourds into 3D works of art. Julissa Ken and Kinsey got a preview of the Lodi Bike Rodeo at World of Wonder Science Museum this Saturday. For all these stories and more please check out #CruiseFest #HomeDecor #TallShips #Pumpkins #Cider #Dining and More Today in the News http://norcalnews.blogspot.com/2017/10/cruisefest-homedecor-tallships-pumpkins.html or https://norcalnews.wordpress.com/2017/10/06/cruisefest-homedecor-tallships-pumpkins-cider-dining-and-more-today-in-the-news/ Good Day YouTube Channel: https://www.youtube.com/c/GoodDaySacramento
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Argentina: Think Globally, Act Locally
Fed as expected...go ahead and whack bids on the levered VIX vehicle of your choice. They did have to keep that December dot implying a hike--if they took it out it would be a major mistake to try to put the toothpaste back in the tube and hike after all--but if the data rolls over it will be no surprise if they simply decide to stand pat. Deep dive time again folks...there was a quick mention on usd/ars in the comments last week--circling back to this market, the Argentine peso has been left out of the EMFX fiesta the past few months.
ARS has been a notable laggard over the last three months, and finishes dead last YTD, according to data from WSJ. Yet carry is over 20% per annum--a veritable tractor beam for sucking in EM and crossover investors.
While there has been continued optimism in the local political scene and inflows have continued, there is a divergence between tighter USD bond spreads and the value of the peso. Let’s break this down into its component risks.
The Credit
Frequent readers will remember my post on the government’s issuance of a 100-year bond back in June, an event many in the media, and even some old hands like Howard Marks, viewed as the end of times. The point I wanted to make is that it was driven by reverse inquiry--real money wanted a more capital efficient vehicle to express a positive view of Macri and his reforms, and the duration was better defined as a leveraged bet on medium-term credit improvement rather than a bet that the country wouldn’t default on my grandchildren.
If all goes well until year end, a couple of PMs that made that reverse inquiry are going to clear a pretty nice check...After tapping the market around 90, the century bond is going looking to take a crack at par...and that’s not even counting over 7% carry, payable in USD and settled in New York.
After winning an important election in June, Macri’s ratings are still relatively good by the standards of Latin America--with approval ratings ranging from the 40s to low 50s, and polling for the upcoming senate race shows Macri’s candidate with a small lead over former president Cristina Kirchner. A victory in this election would be a big signal that Macri’s platform will be sustainable politically and improve the odds for him to win a second term.
I continue to believe global trends will buy time for Macri’s agenda to work--and while an Argentine election is always a bit of a crapshoot, the trend in Latam favors center-right candidates as the pendulum has swung away from the neo-socialist candidates that won victories in the early 2000s in Argentina, Brazil, Peru, Ecuador, Venezuela and Chile.
Beyond the political risk, the fiscal situation is far from healthy--and will require a bout of austerity and likely significant spending cuts. The 2017 primary balance is a nasty -4%/GDP, which means the government is going to be running up a larger debt load for the foreseeable future.
With the economy still sluggish, here’s another chart that keeps the reformists awake at night:
Put another way, just as in Brazil, nearly 40% of the budget is going to pensions and social security obligations. That is simply strangling government finances. Slashing these benefits to cut the budget deficit isn’t going to be easy on the economy, on voters, or on the government’s relationship with unions.
Will Macri have the political capital to push through a pension reform? I’m skeptical--higher taxes seem more likely, but that can’t fully close the gap. A “fiscal rule” law would be a politically palatable intermediate step. Either way, as the charts below show, an acceleration of public debt at this pace for a sub-investment grade credit is simply unsustainable.
Which brings us to how Argentina fits into the broader EM sovereign credit universe. Below I have highlighted the public debt burden in Argentina, and circled a couple of similar credits--Brazil and South Africa.
From a debt sustainability perspective, Brazil and South Africa have similar burdens--Brazil is certainly trending fast in the wrong direction--but has a much bigger stock of domestic savings and (maybe) a reform movement of its own. South Africa has a worse political situation but a stronger domestic economy and not near the primary budget gap of its Latin brethren. Pairing that with a look at 5y CDS levels (as a proxy for credit spreads at large) demonstrates just what kind of premium investors are being paid in Argentina:
Yeah, juicy….so you can see why that kind of premium compared with a center-right, technocratic, reformist government is an attractive combination for foreign investors, especially when those investors have been starved Argy exposure (and yield) for years as they were locked out of international markets.
My takeaway on the credit is that there is much more beta than alpha at these levels--I continue to believe in the positive local theme, and it will work so long as the “reach for yield” theme works globally. I expect Cambiemos will win in October, which should provide a short-term tailwind, but the medium-term is fraught and highly dependent on local and international factors that could throw the reform movement into a state of chaos.
The Currency
As the century bond ripped 10 points in less than three months, an investor that sold a 3mo usd/ars NDF at the same time has essentially made nothing. Spot ARS has cheapened, but with that spicy 20% carry (in ARS), you’re basically flat here.
So what gives? USD has weakened across the board….”risk-on, reach for yield, buy EM” is arguably the theme of the year...Macri’s coalition performed well in primary elections and remains relatively popular….What’s not to like about ARS?
There are some fundamental and technical headwinds that have prevented further ARS appreciation. The first is a combination of the political economy of the Macri administration and the continued triage of the damage wrought by years of the Kirschners populist policies.
The first is local real rates. ARS rates are 20-22% are for a 1-3mo non-deliverable forward (NDF). The idea here is that if you want to buy pesos via an offshore derivative, you receive an ARS asset vs. a USD liability, to be settled in New York at an agreed, published fixing rate linked to the spot rate at the maturity of the derivative contract.
While rates are fantastically high by global standards, much of that value is eroded by inflation around 22% YoY. As I have mentioned before, at that level of real rates in Argentina you are highly levered to a positive economic and political outcome rather than a simple “cash and carry” trade. You’re gonna need help…. from inflation, from the BCRA, from Macri, and from voters. Will BCRA make progress in the battle against inflation? Will voters be patient enough with reforms to continue to support the government?
Another headwind for the peso is the central bank’s desire to accumulate foreign reserves after years of drawdowns. Earlier this year the BCRA announced they would continue to increase international reserves. The central bank is targeting a reserves-to-GDP ratio around 15% over the next two years, which according to a report from the Brazilian bank Itau, would require an increase of 48.3bn USD.
The central and provincial governments will issue more bonds in USD during that time, which the central bank will exchange for pesos. But there will be a significant gap between USD issuance and the accumulation to bring reserves to adequate levels.
That means the central bank will be on the bid in USD when there is significant appreciation not tied to improvements in the political situation and/or sovereign risk. Getting back to the opening point, that also fits with the administration’s incentive to keep ARS competitive and allow export markets to heal and grow after years of capital famine. Similar to the credit, this is an attractive carry trade if you buy into “the story”, but not without its risks. I think ARS will appreciate over time, but it won’t be quick.
A trade I like more than the credit/politics driven trades in outright usd/ars or the USD bonds is the local t-bill market, known as Lebacs, which sport a yield of roughly 27% for maturities under one year. The catch here is that you have to bring USD into the country, sell it in the spot market, and buy the Lebacs.Then you hedge that ARS exposure by buying a usd/ars ndf to the same maturity in the offshore market around 22%. You pocket 5% per annum for running the local credit risk and risk that the government again implements currency controls.
Why does this spread exist? I think it is a combination of three factors: 1) the bid for spot USD by the BCRA, 2) bullish fast money traders hitting bids in front end NDFs (Johno, I’m looking at you), and 3) higher local yields driven by supply of lebacs the BCRA issues to sterilize the ARS they are selling into the spot market when they buy dollars. Quite simply there is a shortage of dollars in the local market and there aren’t enough investors brave enough to step into the breach.
Any EM trader with stripes on their back, or one with even a cursory knowledge of Argentine financial history will tell you the catch there--one day the government may decide to implement capital controls because they don’t want to give your dollars back. You’re stuck with Argentine pesos with no way to exchange them back into dollars. Ask any US airline with connections to Caracas how that worked out for them.
But compared to 5yr CDS under 300bps, this is a very attractive spread. An investor sells USD into the local market and receives about 500bps with no FX or duration risk. The lebacs and ndf hedges mature every one to three months, so you have the opportunity to get out if the fundamentals or political situation deteriorate. That is unlikely--Macri’s structural reform agenda may or may not materialize, but he has embarked upon capital market reforms that aren’t going to be unwound before the presidential election in 2019.
Long story short, at 500bps this spread is well in excess of the risk that the government will again implement capital controls over the next 3, 6, or 12 months. It’s a clean single to right field if you have the cash and local legal set up to do it.
Not sure if the MM audience is well versed in the dynamics of on-off spreads, but feel free to step up and throw in your two cents on the credit or the local scene.
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Cristina Kirschner
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Starring Cristina Fernandez Kirschner.
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it's all about [power.]
the power went out today. i was mostly concerned because i was trying to write an essay and also because i was sitting beneath my ceiling fan in general bliss, avoiding sweaty pits and sunburns (though i never get the latter) when everything shut down. the fan went off, my computer stopped charging, and when i attempted to text marin-from-across-the-street to see if she was experiencing the same problem, my message wouldn't go through, even though i recently added minutes.
i ended up napping on the couch until my phone started buzzing off the hook - i had managed to send one text message to my host mother, asking what i should do, during a moment when the power was coming back on. she had attempted to call me, but apparently the outage caused nearby cell towers to lose service as well, and though the phone registered that someone was calling, the calls weren't actually going through. but then the power started coming back and my phone was getting all the backed up messages saying i had missed calls.
my host mother came home and explained that our power was coming back, but parts of the city did not have power - including several subte lines. on the news, reporters said that people had been trapped in tunnels between stops on unmoving subways for several hours until it was assured that it was safe for workers to come in and assist in the on-foot evacuation through the subte tunnels.
tomorrow, there is going to be a peaceful protest regarding the current government, run by Cristina Kirschner. my friend josh joked, "Hoy, Cristina olvidó a pagar su factura para la luz y la electricidad :)" (today, cristina forgot to pay the bill for light and electricity), and while it was funny, there might be some truth to it. my host mom hypothesized that the outage was supposed to cause chaos ("un quilombo"), and possibly disorganize those with plans to protest tomorrow. in the states, i'm usually fairly quick to shoot down conspiracy theories, but here, with all i've heard, i find myself almost convinced, and at the very least, quite curious.
as for the protest tomorrow, i may be in the area, but i think i'm going to see this one from afar. although it's supposed to be peaceful, that's no guarantee that there won't be violence, and since i am far from fully informed on the issues that will be raised, i don't know if it would be prudent to wander blithely onto the scene as if i understand the situation as well as porteños do. i have a library to go to and research to do, anyway. but if i'm around, i might dip in to take a closer look, but not too close. i don't think it'll do much more than make noise, but one never knows. maybe this time, something miraculous will happen.
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