Argentina's Mystery Rescuer Revealed

Franklin Templeton's $38 billion Global Bond Fund is suffering from its weakest start to a year since 2005, trading at it lowest price since January 2017 amid a slump in local debt of Brazil, Mexico, and Argentina - three of its biggest long-term holdings.

The fund, run by Michael Hasenstab, is down around 1.5% YTD after a dismal May that erased a gain for the year that had placed the fund at the top of its peer group at the end of April.

Hasenstab's biggest holdings were in short-dated Mexican bonds, mid-dated Brazilian bonds, mid-dated Indian bonds... and over $1.1 billion worth of Argentine debt...

 

That was until yesterday, when Hasenstab - the 'private sector IMF' as The FT's Robin Wigglesworth crowned him - decide to bailout Argentina with his investors' money.

The Financial Times reports that Argentina's "success" in its bond auction/roll last night was due to the Franklin Templeton manager who bought more than $2.25 billion - or more than three quarters of the 73bilion peso ($3bn) in Argentina 'Botes'.

Tripling his fund's exposure to the South American nation as it begins its bailout talks with the real IMF.

This is not the first time the 'private sector IMF' has bailed out a country in distress... as The FT notes,  Mr Hasenstab, the chief investment officer of Franklin Templeton’s global macro team, has earned a reputation for placing big bets on countries in economic and financial distress, such as Hungary in the wake of the financial crisis, Ireland at the depths of the eurozone crisis, and Ukraine around the time of its revolution.

While Franklin Templeton declined to comment on the Bote sale, Mr Hasenstab said in a statement:

“The current government continues to demonstrate incredible resolve and skill in giving life back to an economy that had all but collapsed.”

He added:

“Over the last months some policy errors did occur, as is common in any reform effort as large as is currently being undertaken. Importantly, errors were recognised and reversed and we remain confident the right policies are in place to improve the economy, (the) welfare of Argentines and the markets.

Hasenstab also defended his long-term holdings in Latin America in an interview with Bloomberg TV earlier this month, saying that Argentina is a “long-term buy” because it has already reversed its policy mistake and will now get back on track.

He stressed that Argentina and Brazil are examples of countries that have rejected populism and unsustainable macro policies, giving them “great potential.”

That was right before the currency collapsed...

While Hasenstab has gone "all-in" on Argentina, he is not alone in his bullishness as it seems the entire buy- and sell-side is anxiously pitching investors to remain long EM debt, FX, and stocks no matter what...

“We see nothing in the recent unwind of emerging-market positions which in any way changes the benign outlook for EM,” said Jan Dehn, the head of research in London at Ashmore, which manages about $77 billion of developing-nation assets. “This is the time to buy EM, not to sell.”

Morgan Stanley Investment Management also agrees.

“We believe that the EM fundamentals generally remain strong and this period of underperformance will end and EM assets will once again begin to outperform,” it said in a note received Wednesday.

The dollar’s recent strength was fueled largely by speculative investors covering their short dollar positions -- and “not due to a change in investor perception of the macro backdrop,” Goldman Sachs Asset Management said in a note.

“Recent relative underperformance in emerging-market debt appears excessive and we don’t think broad-based weakness is warranted given strength in select EM markets.”

Are they all worried?

Comments

HRClinton gatorengineer Wed, 05/16/2018 - 19:49 Permalink

"Nice Amish Lad, doing Gods work..."

You're a moron and journalistically lazy. He's not an Ashki, you nitwit. He's of German ancestry.

Just so you and other ZH bozos will know, the Ashkis took on German names in the Middle Ages, cause they had to. That does not mean that those with German names are Ashkis, FFS.

How did you ever get that engineering degree? From a cereal box?

In reply to by gatorengineer

uhland62 HRClinton Wed, 05/16/2018 - 22:47 Permalink

Yes, the Germans forced them to take on surnames because without them they escaped military service and taxes. Depending on the money they paid the inspectors they got more or less nonsensical names. Hasenstab translates to rabbit stick and sounds very much like a name for Jews even though the family's Jewishness might have been lost over the centuries. 

On Argentina: So we have another round of fixing Argentina!!! I remember that Carlos Menem was praised to high heaven that he fixed Argentina with his privatisations. That was more than 20 years ago. Keep on fixing, guys.

In reply to by HRClinton

nmewn GreatUncle Wed, 05/16/2018 - 19:05 Permalink

His bag is distressed debt (a vulture capitalist, whatever one wants to call them) and Argentina has been a complete financial basket case for as long as I've been alive. 

Anywhere Keynesian, socialist or oligarchical/patronage economic systems & policies have been implemented you will find guys like this, simply because "the state" will not live within it's means or (as in the case of patronage policies) past & present "officials" have raided the treasury and the present state just continues to issue debt to cover expenses and obligations because thats all they know.  

In reply to by GreatUncle

nmewn GreatUncle Wed, 05/16/2018 - 19:42 Permalink

Oh, don't get me wrong, these are detestable little maggots...on a "social scale". 

But they do provide "a service" to both capitalists and socialists...it's sort of like the Snidely Whiplash used car salesman, you KNOW you're getting screwed by high interest rate (he makes that clear up front) but it's the only thing you can afford to do by your past financial history in paying off on your prior new or used cars. 

The socialist knows they can just go down the road and pay cash for a bike until their finances are more stable but they just can't give it up, the car.

That they can't afford ;-)

////

LOL! at my down "voter"...you know its true...lol.

In reply to by GreatUncle

1 Alabama nmewn Wed, 05/16/2018 - 19:26 Permalink

yeah who makes these words, books and people up, and do they have meetings once and a while and talk of independence, where and when to go places, they've had enough time to think about things, somethings coming to a head, like maybe next monthIf not I'll just throw some dice at a trump casino and c which way the wind blows.
 

In reply to by nmewn

GreatUncle revolla Wed, 05/16/2018 - 18:50 Permalink

Tried to explain earlier I no longer givew a shit in the grand scheme of things.

Kill a jew or muslim I do not care why the fuck should I?

A good state of mind is the predator 1 movie, if it bleeds I can kill it.

 

In reply to by revolla

LaugherNYC revolla Wed, 05/16/2018 - 19:04 Permalink

 So, if the Jews buy up Patagonia and move in and turn it into a flowering, beautiful place and turn Argentina's economy around, will Venezuela, Colombia and Peru build camps and force all the native people into them, deprive them of their rights and sustenance, steal their money,  and then blame the Israelis? 

Why don't you just stop pretending you give a flying fuck about "israel" or the "poor palestinian refugees" and admit that no matter where the Jews go, what they do, you and your ilk will blame them for your own failures and little weenies, and call for their extermination?

Maybe, just maybe, it is YOU who needs to go?

 

In reply to by revolla

charlewar revolla Wed, 05/16/2018 - 19:14 Permalink

paleswinian filth deserve the burning desert of whatever country (which means NONE) will take those lazy, illiterate, welfare sucking, fomenters of   terrorism maggots and perhaps even you and your family (if you can round them up from drunk tanks, rehab centers and prisons).

In reply to by revolla

Son of Captain Nemo revolla Wed, 05/16/2018 - 20:13 Permalink

Interesting read rev especially the "wandering weed" picking somewhere in the Southern Hemisphere which sounds like a good move after a "fallout"!...

But the first one doesn't mention Iran which could also make Israel the biggest open air parking lot in the Middle East along with Russian nukes with their Kalibr cruiser(s) (https://southfront.org/russian-warships-with-kalibr-cruise-missiles-to-…) and last but not least the RSM-56 if the odds don't look great in the "mix"!...

As for taking over Argentina?... Jews have that "baked in wandering" gene when they are prone to stealing or "destroying" everything where they cohabitate before they run off to suck the blood out of the next host!... Parasites that they are and "always will be" of course.

In reply to by revolla

dratalux revolla Thu, 05/17/2018 - 01:06 Permalink

In Chile Patagonia, IDF people have been visiting the place for years now. And fire took place. According to Adrian Salbuchi, in at least two cases where Israeli men were arrested for starting the fire, the State of Israel recognized its involvement and offered compensation to Chile.

In reply to by revolla

Son of Captain Nemo Ahmeexnal Wed, 05/16/2018 - 20:25 Permalink

FOOLS with other peoples money?...

Picture(s) of the worst and most dangerous "whores" their are (https://www.rt.com/usa/426643-lee-camp-pentagon-theft/), that couldn't pass an elementary macro economics class if there fucking lives depended on it!... Let alone the required reading for their job(s) (http://www.au.af.mil/au/awc/awcgate/ucmj.htm) that becomes a "doorstop" instead once they take their oath to God and Country!...

 

 

In reply to by Ahmeexnal

delivered Wed, 05/16/2018 - 18:45 Permalink

As the old saying goes, when it gets serious - Lie!. But let's face it, once the EM turmoil spills over into actual financial institutions that have too much exposure, another round of QE will ultimately occur.

The MBS bailout by the Fed along with treasury purchases was just the warm-up act. It really doesn't matter where you look down the road as whether it is EM debt, subprime auto, student loans, the healthcare industry racking up uncollectible fees or premiums (that the average US citizen cannot afford to pay), and personally my favorite, unfunded pension/retirement obligations (including SS), its just a matter of time and pressure for more and more unpayable debt to one day be papered over again and again by the world's central banks.

Imagine that, EM having difficulty repaying debt (about like everyone else). The more things change, the more things stay the same.

GreatUncle delivered Wed, 05/16/2018 - 19:20 Permalink

Yea I know how you feel but you cgot to call the fucker out! Fuck all the bullshit now.

Definitely ... watching and waiting for the QE it is coming.

Liking to gamble we do not make it to Xmas this year before QE is back.

So I see this ... nuts am I? Only matters if I am nuts if I care if I am nuts - I don't.

Elite profit = (Σ|+ve|) - (Σ|-ve|) to maintain the status quo. (A NEW EQUATION)

The | & | is a modulus sign denoting magnitude Zigma is absolute summation of everything.

Right up QE is a +ve moment in a NIRP economic system.

Inflating through interest rates rises is +ve movment.

Taxation is a +ve movement also price increases.

Technology efficiency is a -ve.

House prices by price increase is +ve because it is a price.

China being real fucking cheap is +ve coz you got it for free provided the CB prints the deficit.

If the CB does not print and it is -ve as in you run out of money. (QE is coming)

Now in the deal of Keynesian and fuck all you other fucking economic twats off (Love you guys really)

When you see some economic concept choose +ve or -ve i do not care which because it is the sum of it all.

Tired of individual concepts, here is the scrapings off my ass it has no reality to the size of my dump.

Σ|+ve| > Σ|-ve| to keep the wealthy elites in their position.

Everything else is bullshit all measured effects are relative but +ve must always be greater than -ve for those who rule us.

In a world of relative concepts FIAT has no worth only a relative measure of all the other worthless shit!

In reply to by delivered

AurorusBorealus Wed, 05/16/2018 - 21:47 Permalink

Templeton picked up most of the debt because he was the first to the table.  The auction had money lined up to purchase Leblacs: $5 Billion more USD than was needed.  Blackrock purchased the rest of the debt.  The banks that had been shorting Pesos and publishing mierda about Argentina were shut out.

So your headline about Argentina's "Mystery Savior" is a load of horseshit.  There was a mountain of money chasing Pesos and Leblacs until 3 PM EST, and at one point in the day, the Peso flash-rose upward 15% against the USD in a period of seconds.  And everything that Templeton said is completely correct.  Federal revenues here have been increasing for 18 consecutive months faster than government expenses.  The economy is growing, at least for the moment, and with current interest rates, there will be no further bank loans here for anything.  The money supply will contract considerably, and the government may well reach its inflation target of 15% next year.

Keep selling the Argentine "crisis" narrative.  The tale grows more ridiculous every time you tell it as the financial position of Argentina grows stronger each day, as the U.S. financial position grows weaker each day.