Saturday , January 29 2022

Moderation in the market will mark the beginning of the week after the oil falls


The future of global markets shows that the week will begin with caution. On Friday, they left that euphoria gave up moderation and profit while US gold and Treasury bonds rose, classic shelters against fluctuations.

The closure of some US state departments, as determined by Donald Trump, to force the US Congress to the Mexican wall and the expectations of the balance Citigroup which will be presented before the launch of Wall Street caused caution. Another company from which a balance is expected, but it will be known that it starts to slip, is Netflix.

But none of these reasons was as important as Friday's oil drop. Untreated is what marks the growth of the world economy. And there are not so many blind rates that the world will grow as much as expected after the contract with China. Friday's fall of 2.26% of Brent oil, a benchmark in Europe and Argentina, and 1.37% of the WTI, which follows the US market, paralyzed enthusiasm.

This moderation will be experienced by the local market and we will have to look at the dollar response rather behind the IMF guidelines.

The offer to buy dollars as an instrument showed its inefficiency. A reduction in rates could be more important. But the government is in danger and, if you notice what is happening, there is little that will agree with the President of the Central Bank, Guido Sandler, that it is not urgent to cut the rate. Although famous from those who follow monetary policy, the action of the central bank manager on the production side is the center of criticism. Companies in particular, exporters are penalized by high interest rates and dollars, which dropped significantly and is charged an additional $ 4 withholding.

More favorable prices than last week will be hard to find in the future. Slowness in pushing rates is inexplicable. Since Friday, the Central Bank made $ 9 billion in liquid letters, which is four times the amount it gave to the market when buying $ 40 million to support the exchange rate. Not only did it not reach its goal – the dollar was almost 50 cents below the bottom line of the flotation band, but it caused more shortcomings in the notes, which remained at a high rate.

In other words, when the dollar sank rather than expanded its monetary base, it created the conditions to continue to fall.

Does the Central Bank holder use monetary policy as a monetary instrument. The government is excited about the low dollar. The problem is that this feeling will start to hit higher rates in the short term and a higher salary drop. Economic theory says that real wages are rising when the dollar falls. But this applies to stable countries that do not have high inflation, which leads to an increase in employment contracts. In fact, there were companies that did not pay the $ 5,000 bonus or paid it and then recovered the money by going for discounts for various reasons. Fear of losing work allowed this trap.

The market will show the dollar's price, stock and country risk as this situation will live. Don't forget it The greatest benefit of the country's risk reduction is the fall in the currency, rather than the investor's greater confidence in Argentine bonds.

Source link