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"Not A Good Sign" Argentine Stocks, Bonds Crash As Central Bank Chief Resigns

Tyler Durden's picture




 

Just a day after Argentine President Cristina Kirchner, in a televised speech, accused central bank employees of helping local bankers to speculate against the Argentine peso in hopes of forcing the government to devalue the currency, Juan Carlos Fabrega - the head of Argentina's Central Bank - has quit. As WSJ reports, unable to borrow abroad due to a legal dispute with creditors, Mrs. Kirchner has relied on money printing to cover spending deficits at the expense of inflation that is thought to be around 40%; and it appears the sanity of Mr. Fabrega was too much to bear for Kirchner (and Kiciloff - who had reportedly clashed with the Central Banker also). The reaction - not good - the stock index collapsed over 8%, bond yields spiked and the black-market peso dumped to record lows at 15.65 to the USD (drastically worse than the 8.51 official peso rate).

Fabrega’s departure is "Not a good sign," said Alberto Ramos, a Goldman Sachs analyst Alberto Ramos, Reuters reports. 

 

"Fabrega was perceived to be a moderating voice and someone that really understood financial market dynamics."

As The Wall Street Journal reports,

Argentine President Cristina Kirchner replaced the head of the central bank Wednesday, marking the second overhaul of her economic team in less than a year.

 

Mrs. Kirchner named her top securities and exchange regulator, Alejandro Vanoli, as central bank governor after she accepted Juan Carlos Fabrega's resignation, according to a statement posted on the presidency's press website.

 

Mr. Fabrega's resignation came a day after Mrs. Kirchner in a televised speech accused central bank employees of helping local bankers to speculate against the Argentine peso in hopes of forcing the government to devalue the currency. Argentina's central bank has little autonomy from the federal government and the president in practice can hire and fire its senior executives at whim.

 

"You blame me for the flight of capital and the rising dollar, that's fine," said Kirchner speaking to Fabrega in the front row of her public speech. "I feel for the dollar losses and not another one should leave the country. Besides that, you continue to have a problem with the economy that I don't have to solve. Just be sure another dollar does not leave the country."

 

Mr. Vanoli, who had served as head of the National Securities Commission since November 2009, takes the helm of a central bank whose main task is financing the federal government. Unable to borrow abroad due to a legal dispute with creditors, Mrs. Kirchner has relied on money printing to cover spending deficits at the expense of inflation that is thought to be around 40%.

 

Since 2010, the Kirchner administration has also borrowed tens of billions of U.S. dollars from the central bank's reserves to pay creditors. High inflation and declining reserves, now at $27.9 billion, have undermined faith in the currency and spurred some Argentines to seek the safe haven of the U.S. dollar.

 

Mr. Fabrega was widely respected among the country's bankers thanks to a career of more than 40 years at the country's largest bank, state-run Banco de la Nacion.

*  *  *

Stocks crashed...

 

Bonds tumbled...

 

and the Dolar Blue collapsed...

 

*  *  *

Good luck Mr. Vanoli...

 

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Wed, 10/01/2014 - 19:19 | 5277601 jubber
jubber's picture

sure is a lot of countries who should and probably are buying Gold hand over fist

Wed, 10/01/2014 - 19:38 | 5277628 Supernova Born
Supernova Born's picture

We in América del Norte are following a similar path to collapse.

 

Wed, 10/01/2014 - 19:48 | 5277677 max2205
max2205's picture

How do you say Hillary in Spanish ?

Wed, 10/01/2014 - 20:03 | 5277723 Barnaby
Barnaby's picture

La Cunta

Wed, 10/01/2014 - 23:17 | 5278424 Arius
Arius's picture

"Unable to borrow abroad due to a legal dispute with creditors" 

 

nice touch ...

wasnt a hedge fund in NY, the same btw involved in Greece on turning a 2 billion loan (investment managed by Goldman Sachs) into 2 trillion in less than few years ???

 

yeah well, if you read tha papers they make you believe these people are lazy etc. etc.

Wed, 10/01/2014 - 20:11 | 5277743 kaiserhoff
kaiserhoff's picture

Puta del Mundo.

roughly, whore of the world.

Thu, 10/02/2014 - 05:58 | 5279006 samcontrol
samcontrol's picture

.I am sorry she is the " national" whore , no need to go international.

Bs article peso touched 16 a week ago.

Wed, 10/01/2014 - 21:13 | 5277925 Lets Buy The Dip
Lets Buy The Dip's picture

how about PUTA. LOL.

Think that is crazy, some guy put a $2 MILLON Dollar bet on NASDAQ today. HOLY HELL!

Big trader took the put call spread today a whopping $2 Million dollar trade! HOLY HELL!

You can see here ==> http://bit.ly/1B4K0wk


Wed, 10/01/2014 - 22:03 | 5278112 666
666's picture

Why doesn't Kirchner do what so many other destitute countries have successfully done in the past: let the USSA gubmint "buy" their friendship/loyalty to prevent them from becoming a communist country or pledging allegiance with Russia.

Wed, 10/01/2014 - 22:54 | 5278336 SAT 800
SAT 800's picture

Kirchner.

Wed, 10/01/2014 - 20:04 | 5277724 Jumbotron
Jumbotron's picture

Ahem....Ms Kirchner.....you should have never whored your country out to our Banksters.

 

Wed, 10/01/2014 - 20:09 | 5277735 Barnaby
Barnaby's picture

No, not quite, she should not have pursued reparations with Great Britain. This is only the opening salvo in response to her armada of demands on Las Malvinas.

I love her, as I love her husband who fell on his sword similarly.

Wed, 10/01/2014 - 20:14 | 5277753 kaiserhoff
kaiserhoff's picture

Is there anything left in Latin America that isn't a basket case?

 

Wed, 10/01/2014 - 20:23 | 5277779 Jumbotron
Jumbotron's picture

Wha' 'chu talkin' 'bout mang ?   Everyting is fine here in Mia-meeeeeeee !!!

Wed, 10/01/2014 - 20:26 | 5277787 Jumbotron
Jumbotron's picture

"No, not quite, she should not have pursued reparations with Great Britain. This is only the opening salvo in response to her armada of demands on Las Malvinas."

 

HHmmm.....point taken.

Wed, 10/01/2014 - 23:14 | 5278406 Spine01
Spine01's picture

Neither she, nor her husband acquired the debt that is crushing the Country right now. It was a business arrangement between Bush's father's representatives and the Menem (placed there by manipulated popular strikes that forced the previous government out, who didn't want to pay the foreign debt -Alfonsin), the then president between 1989 to 2000's who through bribes he got and using his Chicago School, PhD economist Cavallo, sold out the Country and its future to the Banksters.

In the 2000's Cristina's husband renegotiated the debt and got an agreement with 93% of the creditors for a haircut and they had since then a steady growth.

But vulture funds, NML Elliot at the head (big republican backer and owner or 40% of the shares of Hess oil) bought the 7% for pennies on the dollar and sued the country to get full dollar payments plus interests, plus punitives. And got a federal judge in New York City to side with them and the judgement says that they can't pay their debt to the 93% holders who agreed the to the haircut if they don't pay first the minority holders the face amount plus everything. Since the haircut agreement said that if they pay any holder more, then they need to pay every holder more. The Country was placed between a rock and a hard place by the judge. Rather than paying, they made it a question of principle and decided to fight the vulture funds.
What you are hearing about their craziness is all MSM manipulation by the funds who want their money and can care less about the pain and suffering they are inflicting amongst the poor people in Argentina.
The infighting that the article describes (and this is not news in Argentina, this has been going on for some time) are similar with what you see when a ship is sinking, the rats go out first and they bite if you try to stop them on their way out.

Wed, 10/01/2014 - 23:47 | 5278558 Augustus
Augustus's picture

The current problem is that the country no longer has access to international debt markets.  If the country is so robust, why do they need that access?

They will need to roll over the large debts accumulated since they took the bankruptcy route in 2001, eliminating a alrge portion of the earlier debt.  Today's debt is a Kirchner creation.

Thu, 10/02/2014 - 06:02 | 5279008 samcontrol
samcontrol's picture

spine. lol.they decided to fight.....lol again.

Boca - river?
It's not a question of sides. They both suck !!

Fri, 10/03/2014 - 02:30 | 5283439 gallistic
gallistic's picture

In the past, I have written posts about this, and in my opinion, your read on the situation is generally accurate.

There are three things that I would like to add.

1) Argentina was not going to get sucker-punched again. They just made the most recent scheduled payment to their creditors through a different facility than the money-freezing, "fake default"-producing, US-controlled Mellon Bank of New York. The money was deposited in local state-run Banco de la Nacion Fideicomiso to keep the money beyond the reach of the US .gov and activist Judge Thomas Griesa. Non-vulture creditors can collect their money there without interference.

2) The Rights Upon Future Offers (RUFO) clause in the exchanged bonds’ contract, which says that the 93% of debt that Argentina did restructure cannot get worse treatment than the other 7%, expires on Dec 31, 2014.  Argentina is running the clock out on Singer and will take a big cudgel away from him soon. The vultures are hopping mad and desperate. Singer Et. Al. have proven their willingness to engage in economic sabotage, blackmail, and even the illegal seizure of sovereign Argentine government assets.

3) Just like Brazil, Argentina has excess food production capacity and they are currently ramping up production for export to Russia as part of Putin's counter sanctions. Just yesterday, Putin stated "We will continue to adhere to the declared course for the expansion and diversification of foreign economic ties. Among our priorities is greater business, trade, investment and technological partnership with Latin America". The US and the EU are not pleased at all that Argentina is busting up their sanctions, and will try to squeeze Argentina as hard as they can with whatever fifth column they have available. We all know how vindictive and underhanded our government in Washington truly is.

As some of you may know, there are some very strange US .gov actions going on right now in Argentina that are (deliberately) flying under the radar of the MSM. I might post up on it later...

 

-------------------------------

US Sponsored Coups in the last 12 years (in the Americas alone!)

  • Hugo Chavez 2002 (Initially successful, restored within days by raw people power)
  • Jean Bertrand Aristide 2004 (Successful)
  • Evo Morales 2008 (Unsuccessful)
  • Manuel Zelaya 2009 (Successful)
  • Rafael Correa 2010 (Unsuccessful)
  • Fernando Lugo 2012 (Successful)
  • Nicolas Maduro 2014 (Unsuccessful)

It never ceases to amaze me how many people simply cannot see what is right in front of their eyes.

We have not even talked about ongoing economic warfare with Alba and Mercosur countries.

By the way, the United States has also overthrown the Argentine government before (just not in the last dozen years).

When the Argentine President says that the US is trying to destabilize or overthrow her government, I tend to believe her.

 

Fri, 10/03/2014 - 02:34 | 5283454 Tinky
Tinky's picture

Please keep posting on Argentina. Your input is valuable and appreciated.

Wed, 10/01/2014 - 22:56 | 5278343 SAT 800
SAT 800's picture

Copacabana.

Thu, 10/02/2014 - 06:17 | 5279027 samcontrol
samcontrol's picture

@ banarby

I though he fell on his son's bullet ?

ok , maybe a little complicated for zh.

Wed, 10/01/2014 - 19:25 | 5277619 TeamDepends
TeamDepends's picture

It was the best of times, it was time to resign.

Wed, 10/01/2014 - 19:26 | 5277629 SHEEPFUKKER
SHEEPFUKKER's picture

He(or she) who resigns first resigns best

Wed, 10/01/2014 - 22:47 | 5278299 HardlyZero
HardlyZero's picture

Resign at top.

Get far out of country.

Grab the Gold.

 

or

wait around for hang-time.

Thu, 10/02/2014 - 06:18 | 5279010 samcontrol
samcontrol's picture

I bet u all the bitch will be back and win another couple of turns before it's all said and done.
She will light up the country after she leaves. guarantee.

Wed, 10/01/2014 - 19:28 | 5277620 Kirk2NCC1701
Kirk2NCC1701's picture

Just BTFD. Or wait for the "Blood in the streets", then pull a Red Shield and go All In.

The Tel Aviv investment Mafia is already drooling at the opportunities that some of their friends created.

Wed, 10/01/2014 - 19:37 | 5277648 LetThemEatRand
LetThemEatRand's picture

They prefer the phrase, "salivating expectantly."

Wed, 10/01/2014 - 19:28 | 5277630 chump666
chump666's picture

Massive risk aversion from all fronts. Central banks will start their jawboning big time in the bond markets.  Ref: MBS market buy up NY Fed, also note DXY selloff. 

*The NYFRB accepted $314 million 15yr 3s and 3.5s out of $3.47 billion submitted (9% hit ratio).

Thu, 10/02/2014 - 00:09 | 5278634 disabledvet
disabledvet's picture

Ebola will cause global QE.   Dollar shortages everywhere...

Wed, 10/01/2014 - 19:54 | 5277633 medium giraffe
medium giraffe's picture

Mr V still going to be banging the 'manipulation!' drum?

Wed, 10/01/2014 - 19:31 | 5277637 lasvegaspersona
lasvegaspersona's picture

So who is 'Fernandez?

Typical modern article that has been pasted together without editing for comprehension.

 

OK that got corrected fast...at least someone is reading it...

Wed, 10/01/2014 - 19:31 | 5277638 buzzsaw99
buzzsaw99's picture

they should have bought amazon common /s

Wed, 10/01/2014 - 19:36 | 5277645 himaroid
himaroid's picture

If the Argent of the periodic table crashes, I will have a sore back from the strain of loading up.

Wed, 10/01/2014 - 19:45 | 5277668 whoopsing
whoopsing's picture

Fuck this , I quit ! ...Fabrega

Wed, 10/01/2014 - 19:49 | 5277674 highly debtful
highly debtful's picture

I was just reading the on line comments with regard to this news in the Argentinean "La Nación". Most readers are mad as hell and many opine that one of the few remaining decent guys was forced to resign, leaving only certified nutcases at the helm of the ship.   

Those readers kinda remind me of the ZH crowd.

Wed, 10/01/2014 - 22:51 | 5278313 HardlyZero
HardlyZero's picture

just different phases of the fiat fandango.  Everyone could join the club and get help before their phase comes to town.

Wed, 10/01/2014 - 19:57 | 5277701 Duude
Duude's picture

Argentine stocks crashed because Christina revealed the US sent her an assassin. lol

Wed, 10/01/2014 - 20:02 | 5277721 JimS
JimS's picture

"Faberga was someone......... that really understood financial market dynamics", said by Goldman Sachs analyst Alberto Ramos. Does anyone else see something very wrong with this quote, other than me? Any diarrhea coming from the "mouth" of anyone representing Goldman Sack-o'-shit has got to be viewed with a very jaundiced eye. Really, as if Golden Sack gives 2 shits about anything other than the Sack itself.

Wed, 10/01/2014 - 21:25 | 5277972 q99x2
q99x2's picture

Kirchner is worried Hayman Capital is going to assassinate her.

Wed, 10/01/2014 - 21:32 | 5277995 disabledvet
disabledvet's picture

She's worried a lot of people are going to assassinate her at this point I imagine.

Wed, 10/01/2014 - 22:19 | 5278182 ghostzapper
ghostzapper's picture

Even if you feel BTC is a complete POS you can't possibly think Argentina would be worse off just throwing in the towel and running everything on BTC. These clowns will never get things right. Never.

Wed, 10/01/2014 - 22:46 | 5278284 Burticus
Burticus's picture

Argentina is a prime example of the results of Marxism & central banking - a prosperous, resource-rich country (whose name is based on the root noun "argent," meaning "money" in French) turned into a festering $#!+#01e. 

The Bushbama regime will lead United State_ and its sheeple to the same end, just like in Ayn Rand's "Atlas Shrugged".

Wed, 10/01/2014 - 22:58 | 5278347 HardlyZero
HardlyZero's picture

"During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income.

By 1913, Argentina was the world's 10th wealthiest nation per capita." - Economic History of Argentina, wikipedia.

Thu, 10/02/2014 - 00:02 | 5278605 disabledvet
disabledvet's picture

I think its safe to start looking at the folks running Argentina as the various "smurf characters" now.  Which one is sleepy smurf?  I demand to speak with withnPapa Smurf! And so on...

Thu, 10/02/2014 - 06:08 | 5279014 samcontrol
samcontrol's picture

is papa smurf pope Francis?

Wed, 10/01/2014 - 23:12 | 5278404 Mitch Comestein
Mitch Comestein's picture

So stocks and bonds fell a few percent....gasp!

Thu, 10/02/2014 - 00:04 | 5278616 disabledvet
disabledvet's picture

Easy for a rich American to say.  "I think I own the place..BECAUSE I ACTUALLY DO!"

Thu, 10/02/2014 - 03:01 | 5278875 Merca Visca
Merca Visca's picture

If you run a Central Bank and you allow and also promote attacks on your currency, you certainly are "working for someone else", not your country.

Thu, 10/02/2014 - 06:12 | 5279020 samcontrol
samcontrol's picture

Price-quality.

Argentina is one of the best places to live in the world right now.

where else can you get a world class gran reserva for 20 bucks?

Thu, 10/02/2014 - 06:34 | 5279050 Fedlin
Fedlin's picture

Default in 3 .. 2 .. 1 ..

Thu, 10/02/2014 - 06:40 | 5279061 samcontrol
samcontrol's picture

on what ?

Do NOT follow this link or you will be banned from the site!