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Javier Milei looks for an orthodox for the chainsaw and Wall Street measures Luis Caputo, without opening his wallet

2023-12-01T13:08:02.139Z

Highlights: Javier Milei will dismantle the "ravioli" of the Ministry of Economy. The dismantling of Massa's power scheme is advancing. The Central Bank will not be closed, but the power scheme erected by Sergio Massa will be demolished. Milei, Posse and Caputo are recruiting against the clock to fill the thousands of second- and third-line positions on the economic team. Joaquin Cottani, a former undersecretary of finance under Domingo Cavallo until 1996, will be in charge of the Secretariat for Economic Policy.


The dismantling of Massa's power scheme is advancing.There was an offer to an economist from FIEL, but he rejected it. Foreign funds tightened.


The Central Bank will not be closed, but the power scheme erected by Sergio Massa will be demolished. Javier Milei's order is to dismantle the "ravioli" of the Ministry of Economy. Energy and Transport will be transferred to the Ministry of Infrastructure, and the Ministry of Commerce will be eliminated. Domestic Trade would be transferred to the Presidency and Foreign Trade to the Ministry of Foreign Affairs, under the wing of Diana Mondino.

The Ministry of Industry, in turn, will lose its powers and will be reformatted as "Industrial Competitiveness". Former General Motors CEO Federico Ovejero worked on projects and put together teams with fintech expert Alejandro Cosentino and Javier Cardini, some of whom could replace him if "family restrictions" persist. "The boss is Caputo," they say.

Milei made his appointment as economy minister official on Wednesday as soon as he returned from the United States. The "expert" on monetary issues and financial markets, as the president-elect dubbed him, worked for three months on a program to disarm the Leliqs, hired by the designated chief of staff, Nicolas Posse, and has already begun deploying his men on the battlefield.

Luis Caputo with Pablo Quirno during a trip to New York in 2017. Photo: Adriana Groisman

At this time, the one who sounds the most to lead the Central Bank is Pablo Quirno, an economist graduated from The Wharton School of the University of Pennsylvania, with more than three decades of experience in the financial system and a fleeting companion of Caputo in his time at the Ministry of Finance and also at the Central Bank. "He's very close to Toto," says one former official.

Toto dismantled his consulting firm

The other candidate to occupy that hot seat was his partner in the consulting firm Anker and friend, Santiago Bausili, but he will most likely need him in some strategic position in Economics. Just like Federico Furiase, Martín Vauthier and Felipe Berón. All of Anker's economists threw themselves fully into management, to the point that the consulting firm announced that it will close its doors.

Milei, Posse and Caputo are recruiting against the clock to fill the thousands of second- and third-line positions on the economic team. On Thursday, Joaquin Cottani, a former undersecretary of finance under Domingo Cavallo until 1996 and current managing director of Standard & Poor's, joined the meeting. He will be in charge of the Secretariat for Economic Policy.

Joaquín Cottani.

Cottani and Cavallo are natives of San Francisco (Córdoba), were members of IERAL and taught at NYU. In 2005, the disciple of the father of convertibility settled on Wall Street and ended up earning a reputation as "orthodox". Those close to Macri consider him to be "the best addition to Milei's team." Others believe that the incoming minister is assembling his team with "brave people".

In 2017, from S&P, Cottani recommended that Macri abandon "fiscal gradualism," with an adjustment of energy and transport rates. Macri listened, but in 2019 he backtracked and froze them. Fernandez and Massa segmented the subsidies for electricity, gas and water, but after the defeat in the PASO they suspended the increases. Now, Milei sets out to complete the task.

Along these lines, he announced that "six very hard months" of "stagflation" will come. A fiscal adjustment of 5 points of GDP, a possible devaluation and monthly inflation that could reach 20% are expected. The slogan has already begun to permeate the business community. "The harder, the better," said stock exchange chief Adelmo Gabbi optimistically at UIA's annual convention.

The Chainsaw Fool

Milei's problem is that they still haven't found "the crazy guy with the chainsaw" who manages the Ministry of Finance, occupied by Raul Rigo. The last to receive an offer was FIEL's chief economist, Daniel Artana, but he turned it down, according to three sources familiar with the negotiations. Apparently, he was more tempted by the proposal to become Boca's treasurer under Macri and Andres Ibarra.

With the displacement of Emilio Ocampo from the Central Bank, the "pure" libertarians were practically removed from the main positions of the economic team. Economist Héctor Rubini worked on state reform, but it is unclear whether he could go to the Treasury. "You need someone with a lot of experience, a NO Doctor, with strength, character, that everyone is afraid of," they believe close to Macri.

While Wall Street welcomed Caputo's appointment, the still-open vacancy at the Treasury is drawing attention. They believe that this is where the heart of the "shrinking of the state" and the reduction of the fiscal deficit lies. Large funds and investment banks see other limits: a complicated macro, high level of debt in dollars and depleted reserves, with inflation that could be close to 200% by the end of the year.

With this reduced room for manoeuvre, Milei and his minister presented the economic plan this week to the White House, the IMF and the Treasury, the IMF's main shareholder. The decision to put the chips in Washington is that there — and not in New York — there would be a better chance of getting some $3 billion from the agency's Resilience Fund, something that is not assured.

Milei said he is content to renew debt maturities and maintain the agreement signed in 2022. In its first 40 days in office, US$ 4,500 million mature, the bulk with the Fund and the rest with bondholders. Within the latter, those who manage millionaire investments with some holding of Argentine debt hope to see progress before opening their wallets.

Caputo is a well-known extrader among the "wolves" of Wall Street: he negotiated the exit of the holdouts in 2016, placed a 100-year bond in 2017 and, in the midst of a run against the peso, agreed with foreign funds to sell bonds in pesos for US$ 3,000 million in 2018. But from the New York skyscrapers they want to see the names, programs, the support of Congress and the agreement with the IMF.

It is the condition for a further rise in dollar bonds – since the last elections they have risen 11% – and can serve as collateral for an eventual private loan from abroad (repo). They also look at the ability to pay: with bonds issued from 5 to 10 years, it is impossible to know who will lead the country in 2028. Caputo received other messages: They don't want him to use dollars to ransom Leliqs.

NE

Source: clarin

All business articles on 2023-12-01

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