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Key week for the dollar and the Government


. – It is very necessary to counteract the recessive scenario, but today it has not been present in this scenario.

How do you see the evolution of the dollar?

. – The Government has a severe problem that is the inheritance of remunerated monetary liabilities, to date the reserves total US$ 25,008 million, the monetary base $ 10.4 trillion, and remunerated monetary liabilities $ 31.0 trillion, this gives us a equilibrium dollar of $1,653.

Are we going there?

. – The Government is issuing a title called BOPREALand what it seeks is to place a title in dollars to absorb pesos from the market, it is offered to importers with a plus, it is sold at the price of the official dollar, and you can convert it to dollar bills. In this way, the Central Bank places debt and withdraws pesos. This future debt will be settled with the dollars that the Central Bank manages to obtain in the coming years in an economic context different from the current one.

Can individuals buy BOPREAL?

. – Yes, in the secondary market, and it is highly recommended.

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Depositphotos

What happened in the month of December with the exchange market?

. – Dollars continue to enter the country through exports, but 20% remain outside. For example, exports according to the index in the month of December were US$5,273 million, what was actually collected by the Central Bank was US$4,104 million. In terms of imports, according to Indec they totaled US$ 4,255 million, US$ 723 million were paid, leaving a debt of US$ 3,381 million that will be settled in the coming months.

What happened in the last 12 months with imports?

. – According to Indec, they totaled US$73,739 million, and the Central Bank paid US$49,176 million, which implies that there would be a debt of US$24,563 million, of which a part may have been paid and is being reported. currently.

There won’t be any dollars left over

. – Not at all, tight market, but not uncontrolled.

How is the situation in the field?

. – Two weeks of very hot weather, and crops that will enter into climatic stress, we believe it is likely that the estimates of 52 million tons of soybeans and 59 million tons of corn are above the numbers obtained at the end of the campaign, no. However, it will be a good campaign, we will have to see if the producers sell at the intensity that the Government wants.

Why wouldn’t they?

. – Because prices fell sharply, when corn planting began you could sell in April 2024 at a price of US$195 per ton, today this position is at US$173. In the case of soybeans, at At planting time you could sell the May 2025 position for $350, today that position is $286 per ton. With these prices, any productive inconvenience that produces a decrease in the yield of rented land will leave you without profitability.

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So?

. – As long as prices remain low, the producer will delay liquidation waiting for a price increase that will improve profitability, or eventually an improvement in the exchange rate that will liquidate past costs.

Liquidation in April, May and June will not be immediate.

. – No way. On the other hand, in corn the largest production is late corn, which is harvested in the month of July, therefore, do not expect a large income of foreign currency in April, rather a harvest liquidation more prorated over time.

For example?

. – 50% of the soybean harvest or slightly less could be liquidated in the months of April, May and June, the rest will be liquidated over time. In corn, 25% would be settled in that quarter, the rest later. On the other hand, there is an unclear climate forecast for the 2024/25 campaign, therefore, savings in merchandise will weigh on producers’ decisions.

Can the Government devalue?

. – The Government can devalue, but each devaluation is very harmful to the population, it plunges us into greater poverty. The ideal would be not to devalue and lower withholdings.

It cannot be done, because the expense must be financed.

. – Spending will have to be lowered further.

The Government could change the export settlement mix, for example, today you settle 20% abroad (CCL dollar at $1,231.1) and 80% in the free exchange market to the wholesale dollar at $823.5.

. – That could not be maintained over time, the Government committed to the IMF to accumulate US$ 10,000 million of reserves by December 31, 2024, if 20% continues to be liquidated outside, or if that portion increases, the Government will not be able to meet the IMF goal.

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We are full of restrictions

. – Correct, Javier Milei inherited a fiscal deficit of US$14 billion, that implies 6% of GDP. I believe that society does not take dimension of the state of the public accounts. If spending decreases, the unwanted impact will be more recession, if taxes increase it threatens investment, if it devalues ​​we will all be poorer, if it expands the mix of the export dollar it will not achieve the objective with the IMF. It’s a world of restrictions

What can happen?

. – We are going to a recessive scenario, with high levels of inflation

Where can I invest?

. – It would seem that there is little room to invest in stocks, since the recession will be very severe, on the other hand, we are in an international context where raw materials are unable to rebound. Our great hope this week is that it can happen with oil, on Friday it closed at US$78.23 per American barrel, and US$83.70 per European barrel. If it continues to rise it will be nice for the oil companies.

Bonuses?

. – The Government wants Argentine bonds that are quoted at a price of US$40 on average, to reach levels of US$60 to use them to obtain external credit, leaving these titles as collateral. We do not see that they will continue to climb in the short term, in the current context. As for bonds in pesos that adjust for inflation, it would seem that we have a positive scenario ahead of us.

Can you give me an example?

. – The TX26 bond has a technical value of $880, as adjusted for inflation until February 14, it updates 15%, this implies that the technical value of this bond for that date would be $1,015. This bond is worth $1,056, therefore, if as of February 14 it maintains the current parity of 120%, it is a bond that should be worth $1,218 and that would give you a return of 20% in 17 days.

What happens after February 14?

. – We will know the inflation for January and we will continue projecting inflation.

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Another example

. – In private reports, but you can repeat what we do here with other titles, taking technical value (base value 100 plus running inflation) plus the update index until February 14, and from there project the inflation that could occur.

How do you see January inflation?

. – Very high, meat rose again in Cañuelas, all rates rise, and we see a similar scenario for February and March. We do not see a slowdown in inflation, I leave you a comment, fuel prices had a huge increase, do you see the streets less congested? There you will have the answers to why inflation continues.

Conclusion

. – The President is convinced that the path is fiscal adjustment, not monetary emission and adjustment of relative prices. This implies that the path passes through bonds that adjust for inflation.

. – The BOPREAL is a nice bond, it yields 17.1% annually, it has a term of 3 years, and it was issued by the Central Bank, you have to arbitrate Negotiable Obligations of the same term that yield between 8% and 9% annually for this bonus.

. – A setback in the approval of the omnibus law in deputies could make alternative dollars rise, be careful.

. – Sovereign bonds maturing in 2029 and 2030 yield 37.2% and 36.3% annual Internal Rate of Return. They are high rates, but not that high.

. – Trips abroad are going to be ironed out, in 2024 the tourism balance showed that US$6,950 million were spent abroad, and US$1,201 million arrived in Argentina, this left a negative balance of US$5,749 million. . For the month of December, these figures were US$340 million in expenses and US$128 million in income, this implies a negative balance of US$212 million. With the current dollar, few Argentines have clear incentives to travel abroad. Argentina with the current dollar is given away, and the world is very expensive.

Final reflection. We went from the little money plan to no money. You have to change the way you think and act. If you don’t change you are going to lose a lot of money. In private reports you will have a help guide to change the way you invest and improve your performance in the market.

Disclaimer: Salvador Di Stefano SRL is not responsible for the final result of the recommendations made in this report on economic and financial operations carried out by the user.





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