How Martín Guzmán’s resignation affected Wall Street

The news of the resignation of the Minister of Economy, Martín Guzmán, arrived in the United States during the long Independence weekend, with which the impact on Wall Street will be postponed until Tuesday, after July 4th. However, analysts following the Argentine case consulted by Clarione on vacation pointed out that markets could react positively if they appoint someone with their own power and credibility, someone who has your “rational” plan.

Guzmán, 39, professor at Columbia University, he was the helm in the renegotiation of the program with the International Monetary Fund of 44,000 million dollars which is constantly being revised. The first phase has just been approved, with goals achieved from January to March, but now the second phase has been much more complicated, with annual goals very difficult to achieve.

The Fund has not yet commented on Guzmán’s departurebut the long-term agreement is with Argentina and he has no alternative but to continue negotiations with the next official.

Diego Ferrofounder of M2M Capital, said that “as long as someone with credibility is appointed, Wall Street can react well, the only problem is that even if the new minister has credibility, the weakness comes from Alberto Fernández”.

The analyst cited the case of Chief of Staff Juan Manzur who came to make changes but was unable to. “Fernández does not have the power to do anything, but he has the power to some extent to limit the visibility of anyone in his toilet of him, with which it does not do and does not allow to do. They say “let Massa come”, but I really don’t think Fernández will give Massa enough space to do something.

“I think the market is so depressed that maybe I see it as a way out if they name someone who has powersomeone who has actual power, “he added.

Guzmán wanted to make reasonable changes, he doesn’t seem like a spectacular Minister of Economy to me, but the things he wanted to do were reasonable. But he couldn’t do them because of Fernández and his lack of political power. I don’t know what can change in terms of how things are handled. Because ineffectiveness does not arise from Guzmán’s few ideas, the problem was that he had no political power. “

Carlos Abadi, executive director of Decision boundaries, said that “the resignation is due to the fact that Guzmán is tired of political friction. From Wall Street’s perspective, the news of his departure has the potential to be both good and bad because it all hinges on whether the president will now accept. a minister who arrives with a rational plan. In that case, the news would be good. “

For this expert, the government “needs a minister for tomorrow and the only ones in the breeding are people who have problems, like Martín Redrado, Carlos Melconian or Sergio Massa himself, who is closely linked to Redrado”.

“Since the door slams suddenly and they have little time, they have to choose one of those they were talking to and they don’t want to be a front man, they want to execute an economic plan and they are rational plans because they will make it one step ahead of the strikeout policy ”which had been there until now, he added.

Regarding the impact on the relationship with the Fund and the ongoing program reviews, Abadi said: “I don’t think the IMF has much interest in Guzmán’s stay, The Fund will continue to monitor the program objectively and will continue to press strongly on the message that those who enter continue with the objectives set.. Martin was neither the Fund man nor the Fund Nemesis ”.

Beyond the change of minister, says Abadi, “on Wall Street we’re worried about drifting, there was no economic policy based on an Argentine economy, it was a strictly financial policy that was dedicated to finding resources to pay for expenses, in a country like this you can’t believe it “.

For this expert, “any minister who comes in with a plan that is based on an economic vision based on Argentina’s comparative advantages right now has a chance to be very well received on Wall Street.”

Abadi believes that Cristina Kirchner will resign herself to a minister who does not agree one hundred percent with her ideas. “At the time, he realized that closing a deal with the Fund had a lower political cost than not terminating it. Now the situation is the same. I believe that the political calculation in Cristina’s mind remains the same: I see her capable of promoting a very strong minister who comes with her ideas that are also in contrast with theirs. I see him with more possibilities to choose that scenario than to put a Kicillof, but example. Because he doesn’t want the fire scene. “