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the risk of I choose to believe


Journalist: Were you not there in the 90’s?

LC: I entered at the end of the 90’s, I lived the decadence. When I started my first steps were all the debt swaps, of the Bocones, of the Bontes… Thinking about it, today the main fear is almost the fear of fear, the fear of the permanent failure of Argentina: Are we going to fail again?

When Macri’s government began, local financial investors were very skeptical and international investors were very euphoric. That was seen in the prices and what I am telling you is now seen in the prices as well. Local investors now, more willing, look at the peso curve, everything trading at 100 parity, the bill ironed, the stock market in a bull market that was born in July 2022 (climbing 190% in dollars) but despite the decline so far this month, Now it seems to hold.

And instead now skeptical international investors, bonds at 35-40 dollars, just showing their face in recent days. The rise we had up to this point with external papers, which started before winning Milei, is largely explained by global issues. You would have made much more money buying debt from other countries, not to mention Salvador than Argentina. Look, even countries like Salvador organize themselves, and we don’t?

I don’t see so much fear among local operators, I see perhaps a lot of voluntarism, I choose to believe, until, well… they disappoint me, if they disappoint me. The guys from outside are the ones who say: “Did you see, they didn’t pass the Law?”, “They are the same as always”, “Until I see it, I don’t believe it”, “the one who burned himself with milk…”

Photo LEo B&W.jpg

Leonardo “Leo” Chialva He has a Master in International Business from the EAE Business School-Universitat of Barcelona, ​​a specialist in Capital Markets from the UBA, a Public Accountant from the National University of Córdoba, CFA Chartholder, and has more than 25 years of experience in the market. He is followed by more than 13,000 users on X and on TikTok he has reached 132,000, which makes him a “power influencer.”

Journalist: Is that better or worse than Macri?

LC: I think it’s better. First because someone different won, saying what he was going to do, and because to Peronism – it is not a phrase of mine, I don’t remember who, otherwise I would tell you -, Peronism got the long term.

The idea of ​​Peronism – it is an entelechy – is very noble: that we all live well. Now, so that we can all live well if you don’t grow significantly, I have two paths: either I consume stocks like Perón did with gold reserves and Kirchnerism did with international reserves, or you loot someone. In the Argentine case in the countryside, every 10 years you took the money from foreign investors and did not pay them and you went on looting in some way – and this is where the long term came to Peronism – from the Argentines, with inflation.

If you default on the bonds, you hit Wall Street and local funds. But when it is with inflation, in the end you hit your voters. It is that voter who assumed that Peronism was going to bring well-being who is being hit by the long term.

What does this mean? That the welfare policy of Peronism is incongruent in the long term. Can the short be sustained? Sure, but sometimes the short film lasts five or ten years. And yes: tailwind, the price of soybeans, it’s raining on them, this, that, I grab a stock here, I grab a flow there… they arrive. Cristina in 2015, arrives very well. The macro was all messed up, but the micro was working very well. Now Alberto Fernández delivers the destroyed micro, the macro and the micro. Finally the two convergethat’s what I call “they get the long term.”

This politically enables Milei, who after more than two very hard months continues to have social support; the guy still has a 50% positive image. Because people come from that, which gives this project a greater chance of political success than others from the past. I say political because 80% of what happens in a country like Argentina is political and only 20% fundamental. If the Central Bank is buying reserves, great, but if politics decides that this is over, it’s over.

He has a better chance of success, but since Argentina’s “record track” is disastrous, it is still difficult. What “record track” does the country have for making adjustments of this type?… none. If we were Ireland we would say, the probability of success is 99.9%. But it is Argentina, in an unprecedented circumstance: the long term came to Peronism, the contract it had with society was finally broken.

That’s why Bonds have a favorable risk-return ratio, which stocks may not have., given the origin of the Bull Maket. On the screen, Argentina is worth, say, $40. We are $15 from hell, Ukraine is worth $25, the same as Venezuela until recently. What should it be worth if we do four things well…? u$d 65, put it in six months.

Let’s say we believe Caputo – we we are somewhat more skeptical about the speed of low inflation– and we are going to an April/May where the worst of inflation has already passed, the joint ventures come, income begins to improve, it rains – it is no coincidence that the bonds reacted positively after the 100mm of the long holiday – and it begins to After the money came in from the countryside, this center-right alliance plus some radicals was formed – because without them you wouldn’t reach 129 deputies – and the people supported it. There you enter a period in which you left the worst behind, you did not explode socially and now you have the political muscle for your reforms. At that point is where the guy outside can say “Hey… and if we put the nothing itself, that’s $5,000 in Argentine debt.” … Wow, bonds can’t be worth what they are worth now.

Of course Powell, region, etc. through. It seems to me that, in the first quarter, the world is not going to help us at all, leaving aside Ukraine and Israel, China is stumbling and the Yankees pushed the rate cut forward. Add that in the second you have Trump.

Journalist: What worries your clients who move in the real world?

LC: The normalization of exchange activity. These weeks the Central bought US$7,000 million, but it was at the cost of sitting at the till and not giving a dollar to anyone.

The guy who is in a real business, who matters, who has to pay bills abroad, who doesn’t get them, they don’t unlock them, they gave him a bonus, he doesn’t understand what it is, and we helped him, he went to the subscription , we sell it to them, we pay the outsider, they start to give them a few dollars, especially to the smallest SMEs…, What worries him most is normalization, that they lift the stocks. They are all involved in the same thing, entangled in a great bureaucratic obstacle. And if the company is international, it is even worse because outsiders don’t understand anything.

Milei knows it. The guy is not comfortable with Cepo because with Cepo the economy does not work. So the concern for clients is not: the gap went up, the gap went down, bonds went up, bitcoin or Powell went down, none of this, the only thing that interests him is that they regularize and normalize the exchange market, so he can regularize your day to day.

Journalist: Do you want dollarization or something similar?

LC: People are looking at the next 24 hours. Dollarization is a topic that is not even debated. It’s like the third derivative or asking what time we go on vacation in 2029.

my warning to all is: “regularize guys”Because be careful, the economy they are going to have after the stocks are normalized is not the Peronist economy of the Fernández administration or the electoral one of Fernández Maza, nor of these months. Demand is going to be lower, they are going to sell less, they are going to have to sacrifice margins.

Journalist: Are you talking to me about a recession?

LC: No. I’m talking about normalization.

What was happening was not normal. When I print millions of pesos and put them in everyone’s pocket, without any type of restriction on anything and I also lower my taxes, as happened with the income tax, I induce a situation of maximum well-being, which causes an economic revolution, the best of all worlds. But this is not sustainable, so now we are going to a constrained economy.

Journalist: So the perception that people are going to have later about what they are going to have to live through or could it end up being worse than what reality shows?

LC: Yes, totally. Living in a country that operates with the economic logic of capitalism is hard.

Do they pay you based on your productivity? Argentina has very low productivity.

Why do you have low unemployment? because salaries are very low.

What is going to happen is that Salaries in dollars are going to rise. Is people’s purchasing power going to increase? Yes, but only those who keep their jobs. In the middle what is going to happen is that many people are going to lose their jobs. Because they had an average job of $200 per month, but there are no more $200 jobs, now the average is $600. But at $600 there are fewer jobs, that’s why the average starts to increase. unemployment. That will start to happen once you normalize.

So this new process is going to be with the destruction of unproductive employment, driven by the increase in wages, generating a greater well-being for all those who manage to remain within the system; This is similar to convertibility.

What happened is that with convertibility – such a rigid system, in a very bad decade for countries like Argentina, etc. – more and more people fell outside the system.

You start today from a different situation, with better commodity prices -although soybeans have fallen-, with much more orderly neighbors, more stable currencies, etc., which should take you to a level of natural balance in which those who leave the system are not so many as to break the system.

That is where an academic philosophical debate comes in, one of the most complex to analyze. I would say only for an economist with a doctorate: What is dollarization? Or, what happens if I dollarized and the system ends up being so rigid again that it ends up removing -given its productivity, training, etc.- once again too many people from the system? This is not being discussed by the guy at a table.

Journalist: You are presenting me a panorama of adjustment for Argentina in these first 6 months, of structural improvements between 6 months and 18 months, from there a radical change in the economic base, which is when it would really have social problems.

LC: If in those 6 to 18 months you reformed my labor law, tax laws and foreign investment law encouraging genuine foreign direct investment, maintaining the stability of the currency, that is enough and more than

Journalist: Last question, what are you afraid of?

LC: May we miss an opportunity again

Journalist: Before I go, tell me a joke

LC: mmmhhh…

There were 2 elephants bathing and one says to the other:

Can you pass me the soap?

No…, radio.

Journalist: I don’t understand

LC: You are not a generation Zeta.





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