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Argentina's 46% Stock Crash - Shifty - 08-12-2019 10:45 PM

Looks like Argentina is going to be the next Venezuela, Cristina Kirchner set to come back as Vice President.

The surprise outcome in Argentina’s primary vote roiled the nation’s financial markets, sending the S&P Merval Index plunging 48% in dollar terms.


Source: https://www.bloomberg.com/news/articles/2019-08-12/argentina-s-46-stock-rout-second-biggest-in-past-70-years?srnd=premium


RE: Argentina's 46% Stock Crash - LoveBug - 08-13-2019 12:10 AM

I’ve always wanted to go, this might be the time


RE: Argentina's 46% Stock Crash - Wreckingball - 08-13-2019 02:51 AM

What the hell is wrong with most south america?


RE: Argentina's 46% Stock Crash - Obermarschall - 08-13-2019 03:20 AM

(08-13-2019 02:51 AM)Wreckingball Wrote:  What the hell is wrong with most south america?

Not just South America, we are heading towards the next financial crisis. The Federal Reserve bank already lowered the interest rate... German banks are discussing negative rates and are restructuring themselves, banks in my country made fees higher. Just add 1+1 and you know that the next financial crisis is almost as good as there. Oh and the Gold price recently broke also an important resistance if I recall correctly.


RE: Argentina's 46% Stock Crash - perros - 08-13-2019 08:47 AM

Why does Argentina always have economic, stock market, loans, and inflation problems? What's going on with them?


RE: Argentina's 46% Stock Crash - Wreckingball - 08-13-2019 09:19 AM

(08-13-2019 03:20 AM)Obermarschall Wrote:  
(08-13-2019 02:51 AM)Wreckingball Wrote:  What the hell is wrong with most south america?

Not just South America, we are heading towards the next financial crisis. The Federal Reserve bank already lowered the interest rate... German banks are discussing negative rates and are restructuring themselves, banks in my country made fees higher. Just add 1+1 and you know that the next financial crisis is almost as good as there. Oh and the Gold price recently broke also an important resistance if I recall correctly.

I've been hearing that, but can you please explain in layman terms what exactly those points mean?
I honestly cannot connect the dots or even understand their significance.


RE: Argentina's 46% Stock Crash - Foolsgo1d - 08-13-2019 10:28 AM

(08-13-2019 09:19 AM)Wreckingball Wrote:  
(08-13-2019 03:20 AM)Obermarschall Wrote:  
(08-13-2019 02:51 AM)Wreckingball Wrote:  What the hell is wrong with most south america?

Not just South America, we are heading towards the next financial crisis. The Federal Reserve bank already lowered the interest rate... German banks are discussing negative rates and are restructuring themselves, banks in my country made fees higher. Just add 1+1 and you know that the next financial crisis is almost as good as there. Oh and the Gold price recently broke also an important resistance if I recall correctly.

I've been hearing that, but can you please explain in layman terms what exactly those points mean?
I honestly cannot connect the dots or even understand their significance.

Look up Gerald Celente on youtube and go from there.


RE: Argentina's 46% Stock Crash - BBinger - 08-13-2019 12:21 PM

(08-13-2019 08:47 AM)perros Wrote:  Why does Argentina always have economic, stock market, loans, and inflation problems? What's going on with them?

Because the Argentine people demand their government deficit spend while being unable to print dollars. This comes from Argentina being a very rich country in 1904 and then squandering all that wealth in various flavors of socialism over a century. The 2003 crisis was exactly the same phenomenon that occurs when a trust fund kid's trust fund breaks.

Aggravating this is a labor movement which would rather see factories close than actually negotiate with the folks who own capital. When workers in the US strike they picket outside the factory. When "trabajadores" in Argentina strike the most militant of them will occupy the property and either claim they have seized ownership or start breaking things. It's absolute poison for foreign investment.

The last Kirchnerist government in Argentina blockaded border crossings to their richer neighbor Uruguay and claimed pissing off their smaller yet richer and more successful neighbor was a matter protecting Argentina's (absent) prosperity. They also claimed to have pegged the peso to the dollar while the value of their peso continually fell in places actually doing currency exchange. Much of the Argentine left's anger at Macri is that he let the official peso rate move with the markets and... the reality of Argentina's monetary situation very ugly.

Then there is the 2006 beef export ban pushed by the Kirchners which resulted in Argentina going from beef exporter to soy exporter even after the ban was lifted. The list of stupid things done "for the people" could go on.

The situation is very instructive for what future awaits the US in a future where the dollar isn't the world's reserve currency any more. Debtor country with large agricultural exports instead imagines it is an industrial power, Hillary-arity ensues.


RE: Argentina's 46% Stock Crash - NoMoreTO - 08-13-2019 12:37 PM

(08-13-2019 12:10 AM)LoveBug Wrote:  I’ve always wanted to go, this might be the time

I went back in 2012. There was the blue dollar.

In short, bring your USD cash, you can then either:
- Spend it locally at establishments which will give you a far better exchange rate than the posted international rate
- Exchange it at local offices (illegal) for Argentinian Pesos at a better exchange rate than the posted international rate

A friend and I had an idea, to take down a bunch of US cash, get it changed at the street level. Then bring back a huge chunk of the Argentinian Pesos (Acquired at lower price) to US, and change back at the posted level.

In theory you could go on vacation on a discount, depending how well you do on the arbitrage.


RE: Argentina's 46% Stock Crash - BBinger - 08-13-2019 12:49 PM

(08-13-2019 12:37 PM)NoMoreTO Wrote:  A friend and I had an idea, to take down a bunch of US cash, get it changed at the street level. Then bring back a huge chunk of the Argentinian Pesos (Acquired at lower price) to US, and change back at the posted level.

Dangerous idea. Depends on Argentina having the foreign currency reserves to enforce the illusion of an inflated rate on pesos on international markets. Even if it worked in the past, probably not happening in the future.


RE: Argentina's 46% Stock Crash - NoMoreTO - 08-13-2019 12:56 PM

(08-13-2019 12:49 PM)BBinger Wrote:  
(08-13-2019 12:37 PM)NoMoreTO Wrote:  A friend and I had an idea, to take down a bunch of US cash, get it changed at the street level. Then bring back a huge chunk of the Argentinian Pesos (Acquired at lower price) to US, and change back at the posted level.

Dangerous idea. Depends on Argentina having the foreign currency reserves to enforce the illusion of an inflated rate on pesos on international markets. Even if it worked in the past, probably not happening in the future.

So the risk is you try to change your Argentinian Pesos back to USD in US and its a "no-go". Wow.

Still it would all be within a short period of time (1 month vacation) so if you checked if there were reserves before you left that would mitigate your risk.


RE: Argentina's 46% Stock Crash - BBinger - 08-13-2019 01:18 PM

(08-13-2019 12:56 PM)NoMoreTO Wrote:  
(08-13-2019 12:49 PM)BBinger Wrote:  
(08-13-2019 12:37 PM)NoMoreTO Wrote:  A friend and I had an idea, to take down a bunch of US cash, get it changed at the street level. Then bring back a huge chunk of the Argentinian Pesos (Acquired at lower price) to US, and change back at the posted level.

Dangerous idea. Depends on Argentina having the foreign currency reserves to enforce the illusion of an inflated rate on pesos on international markets. Even if it worked in the past, probably not happening in the future.

So the risk is you try to change your Argentinian Pesos back to USD in US and its a "no-go". Wow.

Still it would all be within a short period of time (1 month vacation) so if you checked if there were reserves before you left that would mitigate your risk.

Consider the degree of divestment from Argentina that happened yesterday. Everytime I walked during business hours so far, the buy sell spread of Pesos Argentinos on the rate board of the local cambios widened and dropped (Here in Uruguay there's a cambio on just about every other street corner). Right now on their website Cambio Matriz is advertising a buy/sell spread of 0.45/0.90 for Pesos Argentinos denominated in Pesos Uruguayos.

That spread is insanely wide, because nobody outside of Argentina wants Pesos Argentinos. Argentina isn't some far away land where a wide spread could excused by citing non-existent volume. Argentina's a short boat ride from Montevideo.

The way to arbitrage Argentina's ongoing failure is dollars in, anything of value out. Of course, this is contingent on there being anything of value left to take out. This could be a challenge, because Argentina doesn't produce much of value. At the local Tienda Inglesa (local walmart like chain), products from Argentina are limited to the regional version of some western snack foods, and pesticides. Cookware, and anything else requiring advanced industry comes from Brasil, Europe, or Asia. The most industrially sophisticated new products imported from Argentina to Uruguay are cheap motorcycles made in India then assembled in Argentina.

Go to have fun and stretch you dollars, but don't count on being able to make a profit.


RE: Argentina's 46% Stock Crash - NoMoreTO - 08-13-2019 02:08 PM

(08-13-2019 01:18 PM)BBinger Wrote:  Go to have fun and stretch you dollars, but don't count on being able to make a profit.

Good advice. I just might. If its not Colombia next time it'll likely be Argentina or Mexico.


RE: Argentina's 46% Stock Crash - Arado - 08-13-2019 08:02 PM

Long term, would the marriage/dating market change if Argentina (and the banks lending them money) was forced to actually pay for their debt or default instead of constantly getting bailed out by the IMF in exchange for 'austerity' that is immediately reversed in the next election? Could massive budget cuts (beyond the austerity now imposed) drastically lower living standards in order to make exports cheaper and actually start building up some foreign reserves? I heard that they usually price property in dollars in order to keep prices stable but in such a scenario they would be forced to lower the dollar price as well?


RE: Argentina's 46% Stock Crash - djk100 - 08-13-2019 08:18 PM

Argentina has been an economic basket case. It seems like they have the same dysfunction as their Italian cousin. Am I wrong on this?


RE: Argentina's 46% Stock Crash - BBinger - 08-13-2019 09:13 PM

(08-13-2019 08:02 PM)Arado Wrote:  Long term, would the marriage/dating market change if Argentina (and the banks lending them money) was forced to actually pay for their debt or default instead of constantly getting bailed out by the IMF in exchange for 'austerity' that is immediately reversed in the next election?

The thing is they didn't actually do austerity. Instead they kept borrowing and paying higher interest rates.

Quote:Could massive budget cuts (beyond the austerity now imposed) drastically lower living standards in order to make exports cheaper and actually start building up some foreign reserves?

No, they can't. They already export what little they can manage for very cheap. Since did and undid the beef export ban, they adopted the feedlot system. All feedlots did for them was drop the value of the "Argentine Beef" brand reputation. Argentina has more land than Uruguay and a population of 44-ism million versus Uruguay's 3-ish million, but Uruguay exports more beef at a higher price because they can get a premium off of enforcing grass fed and drug free ranching.

As far as rebuilding foreign currency reserves, even making things cheaper there's nothing of value to export. Their labor movement killed what little industry they had. The Buenos Aires metropolitain area is more or less a warehouse containing 14-ish million hungry mouths. Argentina's interior is far under-developed for their population since too many folks just crowd around the capitol/port.

The borrowing Argentina's done has largely been under the pretense that "We swear we'll use this to develop this time", and then the money gets lost to the welfare state and graft.

To top this all off, Argentina is an IMPORTER of electricity. The station that failed and caused the multi-national blackout this year was one of the ones that processes the electricity going into the country.

Quote: I heard that they usually price property in dollars in order to keep prices stable but in such a scenario they would be forced to lower the dollar price as well?

Folks can list property and whatever value they want to. The thing is Argentine, especially Porteños in Buenos Aires tend to overestimate themselves and the value of whatever they hold. It's hard to tell how much hunger it will take for any particular Argentine to swallow their pride and yield on the advertised price.


RE: Argentina's 46% Stock Crash - Foolsgo1d - 08-14-2019 08:29 AM

I guess the Falklands IS
slands are up for debate once more. Nothing says look over there than some chest thumbing nationalism.

Should send in Jeremy Clarkson etc to get this show on the road. Laugh


RE: Argentina's 46% Stock Crash - Luke Stranahan - 08-14-2019 08:36 AM

During the last collapse, girls went full court press whore down there. Can of beans, you've got her for the afternoon, any way you would like.


RE: Argentina's 46% Stock Crash - Mekorig - 08-14-2019 10:01 AM

Its easy. Macri was doing, as best as he could, to try to clean the mess the populist Kirchnners left, with some outside help. Now people dont want to pay for the actual price of servicies, they want more bread&circus, so they vote for the Kirchneristas again. So, the external help sais "fuck you".

Also, dont blame the porteños, Macri won in most of the city but the poorer districts. Blame the Bs As Narco-Urbano (Conurbano, the Bs As province first and second corridor around the city.).


RE: Argentina's 46% Stock Crash - BBinger - 08-14-2019 12:11 PM

(08-14-2019 10:01 AM)Mekorig Wrote:  Its easy. Macri was doing, as best as he could, to try to clean the mess the populist Kirchnners left, with some outside help. Now people dont want to pay for the actual price of servicies, they want more bread&circus, so they vote for the Kirchneristas again. So, the external help sais "fuck you".

Also, dont blame the porteños, Macri won in most of the city but the poorer districts. Blame the Bs As Narco-Urbano (Conurbano, the Bs As province first and second corridor around the city.).

Well, there's also the dry old women drawing pay for sitting on their ass and gossiping lobby. Macri went and got external debt, yes. The problem with Macri can be seen in the 10 points of relief for the "gente" he issued today. He invites the market in then feeds the delusion that dignity is a necessary property that follows from being alive rather than one that follows from having accomplished.

Argentina doesn't have the insane mineral wealth that helped to blunt Venezuela's collapse. Yes, unlike Uruguay there's parts of Argentina with hydrocarbons in the ground. Argentina was and could have been a rich country, but decades of socialism has introduced structural problems.

I guess if the Argentine Navy wasn't shooting at Chinese fishing boats, the Chinese might offer a Kenya style development deal...


RE: Argentina's 46% Stock Crash - Kid Twist - 08-14-2019 09:01 PM

It seems as though if Argentina had had a Pinochet one of these years, it could have easily gone toe and toe with Chile as the only example of prosperity in South America. It's amazing that it took a military coup to defend the country and stop idiots from continuously voting in stranglehold killer politicians like Allende --- and that once, just once another country couldn't have tried a similar tactic with or without violence or a hostile takeover.


RE: Argentina's 46% Stock Crash - CaptainChardonnay - 08-14-2019 10:11 PM

(08-13-2019 02:51 AM)Wreckingball Wrote:  What the hell is wrong with most south america?

Watch out for the dog shit. There is dog shit every 5 meters on every street in Buenos Aires.


RE: Argentina's 46% Stock Crash - Spectrumwalker - 08-14-2019 10:17 PM

(08-14-2019 09:01 PM)Kid Twist Wrote:  It seems as though if Argentina had had a Pinochet one of these years, it could have easily gone toe and toe with Chile as the only example of prosperity in South America. It's amazing that it took a military coup to defend the country and stop idiots from continuously voting in stranglehold killer politicians like Allende --- and that once, just once another country couldn't have tried a similar tactic with or without violence or a hostile takeover.

Google Jorge Rafael Videla. Didn't work out though in the long run.Undecided


RE: Argentina's 46% Stock Crash - Going strong - 08-14-2019 10:30 PM

Keep in mind though, that Macri could still win.

He got severely beaten in the "PASO primaries", but the actual elections are in October.

And the Peso is free falling because of the shock and fear of people and markets, terrified by the prospect of the return of Cristina and Fernandez.

So Argentinian people will have 2 months to think real hard, 2 months of experiencing collapse and flight of capitals at the prospect of electing the Ks back in power.

It might change people's minds, plus Macri is already giving them urgent concessions and gifts, like freezing prices of petrol (in peso).

So we'll see if people only wanted to give a free warning to Macri, or if they really want to face total collapse of the peso and total lack of foreign investment.