Milei and Caputo avoided a financial crisis with strong strategic support from the United States
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By Martin Sarano, Economist at Fundación Internacional Bases.
We Argentines have normalized failures and frustrations to the point that we let ourselves be easily manipulated by members of the State Party who don't want anything to change.
On Thursday night, Luis "Toto" Caputo commented, almost in passing, that they were evaluating options to guarantee sovereign bond payments in January and July of next year. It's hard for us to remember that the economy minister was a great trader and could easily have been one of the protagonists of the classic "Liar's Poker" by Michael Lewis. Although he never shows all his cards, he also doesn't "spill the beans." Everything is done in due time.
Atmosphere of chaos, death, and destruction. With the "helicopter operation" launched on Thursday afternoon, the week ended with the market testing the band to measure, to put it elegantly, the blood testosterone level of the Caputo-Bausili combo.
The scenario was clear. With the dollar parked at the top of the band, the treasury had no chance of obtaining the dollars needed to cover the January maturities without plucking the BCRA. To this was added that, making the situation even worse, if the market expected the bands wouldn't hold, a self-fulfilling prophecy could materialize.
El ministro Luis Caputo.
With the market closed and the BCRA having delivered 678 (Argentina's scriptwriter should at least be nominated for a Goya award) million dollars, the news screens across the entire spectrum of the local left-wing ideology (from C5N to LN+) were filled with charlatans promoting a climate of dismay and anguish. The State Party was salivating like Pavlov's dog at the possibility of a coup.
Many speculated about how long this would last, the bands yes, the bands no, dollarization, coup d'état, legislative assembly, transitional government.
After a weekend of extreme tension and the troops lamenting another missed opportunity, rumors began to circulate over the weekend that President Milei was going to bring an announcement from New York. The strong rumor was a line of credit, but no one expected what was coming.
In the morning, minutes before 8am, Manuel Adorni announced via his X account that export taxes on all grains were being eliminated temporarily until October 31 (he later clarified that the elimination also extended to bovine and poultry products).
This alone would have brought calm to the market since the Ministry of Economy was very intelligently using the financial surplus it had managed to build to create another bridge.
The hammer blow would arrive 2 hours and 5 minutes later when the US Treasury Secretary, Scott Bessent, posted a thread of 4 messages on X announcing that, given our country's status as a strategic partner with the United States, the Treasury was going to support the country with all necessary resources.
Milei y Trump cerraron en la ONU un acuerdo para pagar los vencimientos de deuda.
It was a level of support that reminds us of the famous "whatever it takes" by Mario Draghi in 2012, when the then president of the European Central Bank (ECB) promised to do whatever was necessary to save the euro and maintain financial stability in Europe during the severe crisis suffered that year.
The impact was immediate. All the operators who had speculated about why the president's trip to New York had been postponed were clearly caught offside. Argentine stocks soared up to 25% in dollars, bonds rose 20%, and the Country Risk erased all the previous week's gains.
Milei's government, which is constantly attacked for traveling abroad, silenced its detractors with a show of strength only possible due to the relationships it developed with Western leaders.
Meanwhile, Caputo once again demonstrated why he earned the nickname "Messi of finance." He pulled a rabbit out of the hat that not only helped avoid a crisis but also radically changed expectations and the market mood.
From now on, politics must do its part and LLA must win the October legislative elections, but next weekend of financial madness once again puts things in their place in the balance of power and shows that more attention must be paid to the minister's words. Surely many of the "champions" who bought at 1550 on Friday to "not miss out" would have preferred to have listened to Caputo on Thursday night.
