Archive for February 22nd, 2021

United States

February 22, 2021

Political and Economic Updates:

Joe Biden defeated Donald Trump for the White House; Americans waiting for Republicans in Congress to acknowledge Joe Biden as the President-elect may have to keep waiting until January as GOP leaders stick with President Donald Trump’s litany of legal challenges and unproven claims of fraud; GOP lawmakers like to ignore Electoral College official confirmation of Joe Biden as the next President of the United States saying the January 6 vote in Congress to accept the Electoral College outcome may be when the presidential winner becomes official. GOP Senator Mitch McConnell, the majority leader, finally accepted Joe Biden’s victory after he was confirmed by the Electoral College on December 14, warning Senate Republicans not to reject president-elect’s victory, when Congress meets to ratify the election result on January 6, although President Donald Trump keeps protesting, no matter that he has no chance of recovering his loss to Biden. Congress agreed on a $900 Billion corona-virus aid package, including direct payments of $600,- to most adults and $600,- per child, and $284 Billion into the Paycheck Protection Program small business loans, as well as another $20 Billion to small business grants and $5 Billion to live event venues. President Trump threatens to veto the covid-19 relief bill, he wants $600 stimulus checks to be increased to $2.000 for individuals and to $4.000 for couples; the fate of the stimulus deal remains in limbo after House Republicans rejected Democratic effort to meet President Trump’s demand for $2.000 checks. Trump finally signed Pandemic Relief bill after unemployment aid lapsed, extending expanded unemployment benefits and an eviction moratorium keeping the Government open. Murdoch’s New York Post, long one of President Trump’s strongest allies, demanded him to stop spreading false claims of voting fraud and to accept President-elect Joe Biden’s victory. The House voted to override Trump’s veto of Military Bill, Republicans joined with Democrats to hand President Trump a rare legislative rebuke in the final days of his presidency. The bill will next be taken up by the Senate, where it is expected to pass. The House approved to raise stimulus checks to $2.000 from $600, that President Trump demanded, the bill’s fate in the Senate is uncertain. The Senate voted to override Trump’s veto of the $740,5 Billion annual defense funding bill, handing him the first such legislative rebuke of his presidency. A last-ditch effort by President Trump and his allies to overturn the election thrust Washington into chaos as a growing coalition of Republican Senators announced plans to rebel against Senate leaders by seeking to block the formal certification of President-elect Joe Biden’s victory; a group of 11 Republican Senators and Senators-elect led by Ted Cruz of Texas vowed to join Senator Josh Hawley (R.-Mo.) in challenging votes from some contested states, calling for an ’emergency 10-day-audit’ to investigate Trump’s unfounded claims; Trump wrote on Twitter that there would be ‘plenty more to come’. The move amounts to an open rebellion against Senate Majority Leader Mitch McConnell (R.-Ky.), who last month pleaded with GOP Senators to avoid a public debate over the legitimacy of November’s election result; McConnell has personally congratulated Biden on his victory. Protesters incited by Trump stormed the Capitol, as lawmakers gather to count electoral votes, officers drawn guns in the House, lawmakers evacuated; National Guard activated, person shot dies; Biden condemns assault on liberty, calls chaos on Capitol an ‘insurrection’; defying Trump VP Pence, who will preside over the joint session of Congress to certify the electoral college votes, said he won’t overturn the 2020 election; Rep. Omar, Pressley said the president should be ‘immediately be impeached’, calling his behavior ‘dangerous and unacceptable’; U.K. Prime Minister describes scene on Capitol Hill as ‘disgraceful’; speaker Pelosi says leaders of Congress have decided to resume the joint session tonight to affirm Biden’s win. Democrats gain control of the Senate with victories in Georgia runoffs, taking control of Congress for the first time in ten years. Congress reconvened to certify electoral college vote and Biden’s election as president, hours after the mob stormed the Capitol. House speaker Pelosi and Senate Minority Leader Schumer call for the immediate removal of President Trump, demanding Vice President Pence immediately invoke the 25th Amendment, for what they call inciting sedition by encouraging the rioters, threatening to start impeachment proceedings if Pence doesn’t agree. Lawmakers are vowing an investigation into how the police handled the violent breach at the Capitol. As the effort to involve the 25th amendment is viewed as unlikely to proceed, Democrats march toward another impeachment against President Trump following a deadly riot at the Capitol. President Trump promised an orderly transition, saying he will not assist the inauguration ceremony of President Biden on January 20, 2020. House Democrats will introduce an Article of impeachment during the House’s pro forma session on Monday January 11, 2020, after 180 cosponsors signed on. With Trump considering pardoning himself, it’s time for a closer look at his pardon powers. In a letter to Speaker Nancy Pelosi, VP Pence rejected the effort to invoke the 25th Amendment. The House of Representatives than voted 232-197 on Wednesday, January 13, 2021, to impeach President Donald Trump for an unprecedented second time for his role in January 6 riot and siege of Capitol; 10 House Republicans voted for impeachment and denounced the president’s action; the Senate trial could come after Trump leaves office; Senate Republican Leader Mich McConnell said he won’t bring back the Senate from recess before January 19, which could push a trial into the beginning of the Biden administration; McConnell is said to be pleased about impeachment, believing it will be easier to purge Trump from the G.O.P.. Joseph R. Biden Jr. was sworn in as the 46th President of the United States, promising to seek unity in a moment of national crisis, honoring the over 400.000 Americans lost to Covid-19, asking Americans to wear face masks in public for 100 days and imposing there use on federal property, making the corona-virus pandemic his top priority. He announced a broad plan to reverse some of Trump’s most controversial immigration policies, ordering a ‘pause’ on border wall construction. He also recommitted the U.S. to the Paris climate agreement, an international accord designed to avert catastrophic global warming. President Biden signed order of federal mask mandate in planes, trains and buses; travelers to the U.S. will be required a negative Covid-19 test before flying to the U.S. and to quarantine on arrival. Senator Mitch McConnell asks Democrats to delay the start of Donald Trump’s impeachment until early February 2021, saying former President needs time to prepare and stand up his legal team, ensuring due process. Senate leaders struck a deal to delay Donald Trump’s impeachment for two weeks, aiming to begin week February 8, 2021; the House still plans to deliver its impeachment of insurrection at 7:00 pm, Monday, January 25, 2021. The GOP looming impeachment strategy; Focus on the constitution and not Trump, Republicans reportedly plan to argue Trump can’t be convicted now that he is out of office. The Senate confirmed Janet Yellen, former chairwoman of the Federal Reserve, as first female Treasury Secretary. The Senate has passed a $ 1,9 Trillion budget for Covid-19 relief, with Vice President Kamala Harris carting the crucial 50-50 tie-breaking vote. The Senate agrees trial is constitutional as Trump consolidated votes for an acquittal; lawmakers on both sides are said to favor a quick trial, amid ongoing effort to have President Biden’s corona virus relief package approved. According to new polls, Biden’s job approval remains steady at around 60%. The United States Senate voted 57-43 to acquit Donald J. Trump in his second impeachment trial, but seven Republicans voted with all 50 Democrats to convict, the most bipartisan margin in favor of conviction in history.

The Pfizer/BioNTech vaccine received emergency-use authorization from the U.S. Food and Drug Administration/FDA and the U.S. begins vaccine roll-out as high-risk health care workers go first. FDA find that U.S. Moderna vaccine is highly protective against covid-19 and will likely grant emergency authorization to a second corona-virus vaccine this week. The FDA authorized also Moderna’s vaccine for emergency use. The BioNTech/Pfizer vaccine is the first to receive the emergency use authorization from the World Health Organization/WHO. Johnson & Johnson said its single-shot corona-virus vaccine was 66% effective overall in protecting against Covid-19 and it was 85% effective in preventing severe decease four weeks after vaccination in all adults; the vaccine however appears to be less potent against variants. Novavax Inc, an American biotech firm, announced that its protein based Covid-19 vaccine candidate NVX-COV 2373 met the primary endpoint with a vaccine efficacy of 89,3%, in its Phase 3 clinical trial conducted in the United Kingdom/U.K.. Johnson & Johnson asked FDA for an emergency use authorization of its Covid-19 vaccine, taking forward the possibility of a third corona virus vaccine for the U.S. market.

The jobless rate fell to 6,3% in January 2021, although payrolls barely grew, adding the U.S. economy just 49.000 jobs, after a decline of non-farm payrolls of 140.000 in December 2020. U.S. jobless claims totaled 861.000 for the week ending February 13, 2021, total filings for assistance dropped by 1,3 Million to ^8,34 Million.

The January 2021 Manufacturing PMI registered 58,7%, down 1,8% from 60,5% in December 2020, new orders index at 61,1%, down 6,4% from 67,5% in December 2020, production index at 60,7%, down 4,0% from 64,7% in December 2020, employment index at 52,6%, up 0,9% from 51,7% in December 2020. The January 2021 ISM services PMI at 58,7%, up 1% from 57,7% in December 2020, business activity index at 59,9%, down 0,6% from 60,5% in December 2020, new orders index at 61,8%, up 3,2% from 58,6% in December 2020, and employment index at 55,2%, up 6,5% from 48,7% in December 2020. The Conference Board Consumer Confidence Index improved moderately in January 2021, after decreasing in December 2020, standing now at 89.3, up from 87.1 in December 2020, the present situation index declined from 87.2 in December 2020 to 84.4 in January 2021, while the expectations index increased to 87.0 in December 2020 to 92.5 in January 2021. The U.S. is struggling with a resurgence in new corona-virus cases, with more than 17,78 Millions people infected and over 317.800 dead. The Conference Board leading economic index for the U.S. increased 0,3% in December 2020 to 109.5, following a 0,7% increase in November 2020 and a 0,9% increase in October 2020. The U.S. CPI-U index increased steadily in January 2021, rising 0,3% after climbing 0,4% in December 2020, gaining the all items index 1,4% over the last 12 months through January 2021, after a similar rise in December 2020; the core-CPI, less food and energy, was unchanged in January 2021, after surging 0,1% in December 2020, rising 1,4% over the last 12 months through January 2021, down from 1,6% in December 2020. The PCE price index, excluding food and energy, rose 0,3% in December 2020, after being unchanged in November 2020, increasing the so-called core PCE 1,5% over the last 12 months through December 2020, up from 1,4% in November 2020. The U.S. disposable personal income surged 0,6% in December 2020, after declining 1,5% in November 2020, the personal savings rate at 13,7%, up from 12,9% in November 2020 (personal savings as a percentage of disposable income). The U.S. consumer spending declined 0,2% in December 2020, after dropping 0,7% in November 2020. U.S. retail sales fell again in December 2020, dropping 0,7%, while data for November 2020 was revised down to show declining 1,4% instead of 1,1%, but December 2020 retail sales were still 2,9% higher compared to December 2019; total sales for the 12 months of 2020 were up 0,6% from 2019. The U.S. international trade deficit in goods and services stood at $66,9 Billion in December 2020, down 3,5% from the previous month, imports were up 1,5% to $ 256,6 Billion and exports were up 3,4% to $190.0 Billion. The U.S. economy grew at a revised 33,4% rate in the third quarter of 2020, following a 31,4% rate of contraction in the second quarter of 2020, and a 4% annualized growth in the 4th quarter of 2020, shrinking by 3,5% in 2020, expecting to rebound by up to 4,1% in 2021. U.S. light vehicle sales were down in 2020 to levels not seen since 2012, but they’re in a recovering mode now that leaves the industry hopeful for 2021; sales are estimated to finish around 14,5 Million in 2020, down 14,9% to 15,5% bringing sales to the lowest levels since 2012; Fiat Chrysler saw a 17% decline through the year, Ford sales down 16% as compared to the prior year, GM finished the year down 12% compared to 2019, Toyota’s total sales shrank 11,3%, Volkswagen sales dropped 10% in 2020; Trucks and SUVs are set to make up 79% of new vehicle sales, up from 75% in 2019, strong Truck and SUV sales have underscored many of the results seen in 2020. The Fed raised its economic outlook for 2021 slightly to 4,2%. U.S. light vehicle sales rose by 2,5% month-on-month in January 2021to 16,6 Million units (seasonally adjusted annual rate); light trucks accounted for 77,8% of the January 2021 sales, up 3,5% from 2020. According to the Congressional Budget Office the federal budget is projected to be $2,3 Trillion in fiscal 2021, not counting additional stimulus, which is smaller than the 2020 shortfall of $3,13 Trillion, but larger than anything the nation had seen prior to the covid-19 pandemic; current United States National Debt $27,91 Trillion, U.S. Debt to GDP ratio 130,91%. U.S. household debt rises to $14,6 Trillion due to a record-breaking increase in mortgage loans, rising 1,4% in the fourth quarter of 2020, totaling more than $10 Trillion.

The current average 30-year fixed mortgage rate decreased to 2,85% in December 2020, from previously 2,92%. U.S. pending home sales dipped for the fourth straight month, falling 0,3% in December 2020, standing the sales index/NAR now at 125.5, but were 21,4% higher compared to December 2019 when the index stood at 107.2. Existing home sales fall for the first time in 5 months, declining 2,5% in November 2020 to a seasonally adjusted annual rate of 6,69 Million units, down from 6,85 Million units in October 2020, but sales were still a strong 25,8% higher from a year earlier; the median existing home price in November 2020 was $310.800,-, a 14,6% increase from November 2019. U.S. housing starts jump 5,8% in December 2020 to a seasonally adjusted annual rate of 1.669.000 units, from 1.547.000 units in November 2020, increasing 5,2% on a year-to-year basis; overall building permits increased 4,5% in December 2020 to a seasonable adjusted annual rate of 1.709.000 units, from 1.639.000 units in November 2020, totaling 1.452.000 in 2020, a 4,8% gain compared to 2019. Sales of new single-family houses in November 2020 fall for the fourth consecutive month, dropping builder stocks, declining 11% month-over-month to a seasonally adjusted annual rate of 841.000 units, down from the 979.000 peak in July 2020, but sales were still up 21% year-over-year; the median price for a newly built home rose 2,2% in November 2020 to $335.300 from $328.000 a year ago. The NAHB/Wells Fargo Housing Market Sentiment Index edged up 1 Point from the previous month to 84 in February 2021. U.S. home-prices rising at the fastest pace in nearly six years, were up 9,5% in November 2020 compared with 12 months ago, one of the highest gains on record, pushing a strong demand and limited supply prices u


February 22, 2021

Political and Economic updates:

Alexi Navalny, 44, was arrested as he returned to Russia, after being poisoned and restored to health in Germany, authorities had issued a warrant for his arrest on December 29, 2020, and the message was clear, stay out of Russia or face prison; Navalny defied the Kremlin and came anyway; the dissident politician was jailed for 30 days on the grounds that he has violated the terms of his suspended sentence for embezzlement issued in 2017, a conviction he has always dismissed as being trumped up in order to deny him a chance to stand as candidate in the 2018 presidential election; he will be held until a court rules on his new charge of parole violation; while Navalny is the most recognized opposition leader in Russia, and has core of committed supporters, particularly among the younger generation, his overall approval ratings are at -30%; Western protests never bothered Putin, now Russia’s relations are in a deep freeze after the 2014 annexation of Crimea, the accusations of Russian interference in 2016 U.S. presidential election, or poisoning of Sergio Skripal in the U.K. in 2018; on each of these incidents Russia was placed under significant economic and political sanctions and there is nothing for the Kremlin to care about in terms of possible damage to its non-existing reputation in the West, or even further economic sanctions; it actually appears inconceivable for Putin to let the West dictate him how Russian politics should be run; if Putin were to release Navalny it would create an untouchable opposition leader under Western protection, operating with impunity inside Russia; so the more the West piles on pressing to release Navalny the more defiant Putin will be in keeping him in prison. However Putin might consider to show his statesmanship and generosity to his citizens, granting Navalny a conditional pardon, showing his government is willing to hear different opinions, respecting dissidents, seeking to start reshaping deteriorated relations with the West, as Biden assumes office as the 46th President of the United States, rebuilding a peaceful competitive coexistence, the way Russia is eager to construct with China. Protests swell across Russia calling for the release of Kremlin critic Alexei Navalny; tens of thousands of Russians took the street in protest on Saturday, January 23, 2021 to demand the release of the jailed opposition leader, braving the threat of mass arrests in what was expected to be one of the largest demonstration against the Kremlin in years; police and protesters clashed in multiple cities ; by 10.00 p.m. Moscow time more than 2.600 demonstrators across the country had been detained, among those was Navalny’s wife, Yulia Navalnaya, she was later released; the U.S. State Department condemned the Russian Government for its use of ‘harsh tactics against protesters and journalists’ and called on Moscow to release all those who had been detained ‘for exercising their universal right’, including Navalny; saying the U.S. we will stand shoulder to shoulder with our allies and partners in defense of human rights, whether in Russia or wherever they come under threat; Navalny’s team released a scathing investigation accusing Putin of corruption and detailing the construction of a lavish palace on the Black Sea allegedly built for the Russian leader using a ‘slush fund’; The investigation titled ‘Putin’s palace, history of world’s largest bribe’. The Kremlin already denied Putin has such a palace. The palace by the Black Sea, estimated property cost about €1,1 Billion, was allegedly financed by billionaires close to Mr. Putin, it is said to have a casino, skating rink and vineyard; Russian President Putin, who’s net worth is estimated to reach at least €36 Billion, which would make him the richest man of Europe, says the opulent palace featured in a video by his arch-critic Alexei Navalny ‘doesn’t belong to me’. A leading Russian oligarch, Arkady Rotenberg, Putin’s ex-judo sparring partner and childhood friend, has taken the beat by claiming that he is the owner of a notorious €1,1 Billion Black Sea palace, not Vladimir Putin. Russian riot police arrest more than 5.000 people as protesters across the nation again take the street to demand the release of jailed opposition leader Navalny. A Russian court handed opposition politician Navalny a 3 1/2-year jail sentence for parole violations, charges he and his team say are trumped up and politically motivated; the judge said, the year that Navalny has already spent under house arrest, will be deducted from his jail term. Sicne Navalny’s return to Russia, and his immediate detention, demonstrations have broken out across the country in the last two weekends, with thousands protesting against Navalny’s treatment and demanding his release, as well as railing against corruption and kleptocracy. Russia expels diplomats from three countries as tensions rise over Navalny protests, accusing them of taking part in illegal protests. Yulia Navalnaya, the wife of Kreml critic Alexei Navalny returned to Germany. Russia’s communists are split over support for Navalny; the opposition activist’s jailing is upsetting the balance between the party’s pro-Kremlin leadership and radical grassroots membership. E.U.’s foreign ministers agreed to fresh sanctions, such as asset freezes and visa bans, against ‘specific persons’ over Russia’s jailing of opposition politician Alexei Navalny and a crackdown on his allies. Europe’s top human rights court urged Russia on February 2021 to immediately release Kremlin critic and opposition leader Alexei Navalny ; the European court for human rights (ECHR) said it was granting on interim measures on an application lodged January 20, 2021 by Navalny related to his detention that asked for release.

Russian President Putin signed a law ratifying the extension of New Start, a key nuclear arms control treaty with the United States, a week before it was due to expire; the nuclear arms control agreement has been extended for five years, until February 5, 2026.

Russia authorized its third Covid-19 vaccine, after Sputnik V and EpiVacCorona, now the CoviVac vaccine, however clinical trial reports are not yet available.


February 22, 2021

A country which could have a promissory future, however facing many internal difficulties and challenges. Center-right President Macri inherited an economical and political disaster from his predecessor Cristina Kirchner, one of Latin America’s populist and authoritarian political leaders and a close ally of Venezuelan Maduro. Stubborn and corrupt worker unions, radical and aggressive social movements, a bad functioning justice still integrated and badly influenced by disturbing militants of the Kirchner Front of Victory, egoistic local companies with lack of competitiveness and progressiveness, which enjoyed government protection during the 12 years of the Kirchner administration and an opportunistic and small-minded opposition missing to be constructive, contribute to continued political instability. High inflation, an overvalued local currency and a declining spending capacity slowing consumer demand delay the return of the country into growth territory. The government, advancing to reintegrate Argentina back into the world, taking decisive corrective steps to stimulate, activate and normalize the economy, received considerable applause and support from important Foreign Head of States, international political leaders and chief executives of multinationals, increasing foreign commitments, investments and exposures, complementing local private initiatives or occasionally replacing them, comforting the Macri administration, promising there is no return to the past and to continue its efforts pushing the country ahead; the country’s stability and progress may depend finally on the government’s willingness and capability of compromising with remaining major local power players to implement pending essential domestic reforms, like a tax reform and a labor reform and cleaning up the justice system, to reduce risks to fail. The outcome of the legislative election to be held on October 22, 2017, will be decisive for the future of the country and should confirm that the majority of voters continue to support the Macri administration, helping an improving economic outlook for the second half of 2017, despite a still high inflation and a persisting weak consumer spending capacity.  The Peronists, divided into two main groups, the Front of Victory led by former President Cristina Kirchner, leading the parliamentary opposition to Macri’s administration, and another group composed of politicians of dissident Peronists from the Justicialist Party, the largest Party in Congress, and the Renewal Front of Sergio Massa, forming an alliance with Margarita Stolbizer’s Progressive Party to improve their chances in the coming legislative election, are not expected to obtain sufficient votes to be able to introduce political changes or reverse the economical reforms introduced by the Macri government. Argentina failed to win back its status as an emerging market in the influential MSCI benchmark equity index, relegating the country to the ranks of frontier markets for at least until 2018, contrasting the MSCI’s decision with Argentina’s success to issue a $2,75 Billion 100-year bond; the downgrade to frontier market status has been caused during the former restrictive populist Kirchner administration and the MSCI wants to be sure that Macri’s open market policies will be irreversible, waiting to see the results of the important midterm legislative elections in October 2017, still influenced by the campaigning former President Cristina Kirchner, introducing her new left-wing alliance called ‘Unidad Ciudadana’, opposing Macri’s economic reforms, which she claims are hurting the poor, launching her bid for a Senate seat and breaking with Peronism; a still more divided opposition could help Macri’s coalition for a strong showing in the coming elections, not expected to change the actual balance of power in Congress, and improve his chances to seek re-election in 2019. Obtaining Cristina Kirchner a seat in the Senate would give her immunity from arrest, but not from trial, advancing investigations of accusations of wrong doing and corruption related charges against her. Renewal Front’s Massa success strategy seems to be polarizing with former President Cristina Kirchner seeking also a Senate victory to stop her as he did winning in 2013. Cristina Kirchner won narrowly the mid-term primary elections against Macri’s candidate Bullrich and also a possible second-place finish in the October 22, 2017 election would still grant her a seat in the Senate, from where she likely will lead a most uncomfortable opposition intending to stop planned Government reforms, what advancing investigations and trial, even an eventual prison sentence against her could interrupt, cautioning her candidacy many investors; senator Pichetto, president of the Peronist/Front of Victory party bloc, already signaled that Cristina Kirchner, if elected to the Senate, will have to form her own bloc; after a strong general showing of Macri’s ‘Let’s change’ coalition in the mid-term primary elections his Government is facing the coming October challenge with confidence; but no matter how many seats he will be able to pick up he will still lack a majority and has to continue seeking, building and strengthening alliances to pass necessary reforms. A second place finish in the October 2017 election is granting Cristina Kirchner a Senate seat, giving her immunity from arrest but not from trial, and advancing legal procedures may still frustrate and limit her political ambitions. A sweeping and notably victory of the ‘Let’s Change Coalition’ in nearly the whole country allows to increase its seats in the House and the Senate, pressing and calling President Macri for a basic consensus to push ahead with tax, labor and pension reforms, as well as reforms of the country’s justice system to combat more efficiently corruption, seeking with governors to achieve a fiscal balance. Elisa Carrio and Cristina Kirchner , totally opposed political players, both tolerated and also used by the Macri-Government, likely underestimating the problems they can cause to the administration given their renewed influence and political power. Elisa Carrio, founder of the political movement ‘Civic Coalition ARI’, is actually a fundamental part of the ‘Let’s Change’ coalition, accustomed to express publicly her opinion about what’s wrong and what’s right and what and how it should be done, worrying not only the opposition but also the government. Cristina Kirchner, accused also on treason, asking a federal judge to lift her immunity from arrest as newly sworn in senator, facing also charges in several corruption investigations, creating her own political movement ‘Citizens’ Unity’ and dividing Peronists, may not be able to enjoy her role as a potential opposition figure, as she will have to face a difficult and long battle with justice. After violent protests pushed by opposition legislators, identified also as Kirchner supporters, battled to stop a congressional session on the pension reform, intending to destabilize the government, and Cristina Kirchner’s first appearance in the Senate, seen as destructive and full of hate, breaking congressional rules, her image is suffering a further deterioration, which could damage still more her remaining political influence. President Macri, recovering the initiative, leaving no doubt about his firmness and determination to fight for the pending reforms to overcome the worst legacy of the Kirchner administration, pushing grows and seeking above all to reduce deficits, stabilizing public finances and balance budget, counting on the approval and help from foreign economic powers, including the U.S. Trump administration. President Macri, seeking to position himself for re-election in 2019, delays necessary labor reform to avoid further confrontations with unions. Declining purchasing power, stagnating growth, a still uncontrolled inflation and a very high, still increasing debt level are seen as obstacles to reach a major economic recovery, making it doubtful if the government will be able to fulfill its goals, implementing all the mandatory reforms and secure re-election in 2019. During his second speech to Congress since he was elected, President Macri tried to transmit optimism, willingness to overcome difficulties, defending pending reforms, confirming that the country’s economy surged 4,1% in January 2018 compared with the same month of 2017 and the poverty rate fell to 25,7% in the second half of 2017 from 28,6% in the first half of the year and 30,3% in the second half of 2016, but overshadowed Macri’s market friendly policies designed to cut fiscal deficit, reduce inflation and attract foreign investment, by a persisting high inflation elevated due to additional increases in the prices of electricity, gas, transportation, communication and prepaid medicine, reducing again spending capacity of consumers, expecting actually analysts 2018 will be still ending with a high inflation more likely around 40%. After not very successful interventions of the Central Bank to stop the Peso sinking and to help slow down inflation, mowing rates up to growth depressing 40%, Argentina finally returns again to the IMF, seeking financial assistance, like a Standby Credit Facility to address the Peso volatility and regain the confidence of investors, hoping its program of adjustment and reforms gets back on track in time for the Presidential election late 2019, counting with little or no constructive help from a still deeply divided opposition. President Macri vetoed the law seeking to freeze utility rates agreed by an unified Peronist opposition, including followers and non-followers of Cristina Kirchner, saying there was no way the budget can stand an additional 1% of GDP, complicating still more a political relation with the divided opposition and increasing tensions with labor unions and social movements. Index provider MSCI finally reclassified Argentina as an emerging market, coming the reclassification just hours after the IMF approved a $50 Billion financing deal for Argentina as the country seeks to stabilize its currency. The IMF $50 Billion Stand By facility is considered as a political gesture to support the Macri administration, helping to avoid the return of populism in Argentina; however stagnating growth, an out of control and run away inflation, the pressure of a strong Dollar, the elevated fiscal deficit, high foreign debts and increasing social tensions require very conscious economic measures and corrections, discipline and more consensus, and do not permit arrogance and new errors, without putting at risk a possible re-election of President Macri in 2019. President Macri is obliged to resolve the fiscal deficit, cutting it according to the agreement with the IMF from 3,7% to 2,7% of GDP in 2018 and to 1,3% in 2019, meaning the government is forced to accelerate austerity rising recessionary tendencies, and to deal with the continuing lack of productivity of the Argentine economy, as he seemed to have lost the political capital to carry through the much-needed labor reform. Very high interest rates accelerate advancing recession, increasing pressure on the Peso, as the confidence in Argentina is also shaken by a major corruption scandal, expected to damage further economic growth, seeing economists a contraction of at least 1% of the GDP in 2018, before returning the country eventually to growth in 2019, seeking President Macri to renegotiate the IMF- agreement getting still more flexible conditions, allowing to use all $50 Billion of the agreement in 2018/2019, helping to ease the financial pressure on Argentina and to regain calm and confidence of the people and markets. Following an urgent request from Argentina the IMF seems willing to speed up loan disbursements helping to reverse collapse in investor confidence and the local currency, after the government disclosed to impose taxes on exports and cutbacks in government ministries to ease budget deficit, needing President Macri now a political consensus to make it possible that congress approves a revised budget 2019, which sees inflation coming in at 23% with an average exchange rate of 40,1 Pesos for 1,- US-Dollar, after the inflation rate of 2018 is expected to hit 40%, while the budget deficit will be reduced to 2,7% of GDP. The IMF announced a deal extending financial institution’s support by a further $7 Billion elevating total commitment to $57,1 Billion, after the resignation of Luis Caputo from the presidency of the Central Bank, succeeded by Guido Sandleris, confirming the IMF every effort is being made to stabilize Argentina’s economy, agreeing on disbursements of $19 Billion until the end of 2019 and of the remaining $38,1 Billion until 2021, adopting the Central Bank a floating exchange rate regime between 34 Pesos and 44 Pesos for 1,- US-Dollar to face still ongoing currency crisis, allowing interventions only in case of disorderly market conditions or erratic fluctuations in exchange rates. The government seemed to ignore a nationwide strike to protest President Macri’s handling of the economy and his decision to turn for help to the IMF. Each day less people are believing in President Macri’s economic team, as it has lost credibility; the approval ratings of Macri’s top political opponent Cristina Kirchner, embroiled in a widening corruption scandal, have plunged even lower than his, giving him still hope for re-election in 2019. Eventually Argentina has lost the train against Brazil with its new elected right-wing President Bolsonaro, expected to seek new trade agreements, and to attract more international companies and foreign  investment, while the hesitating and contradictory Macri-Government, forced to ask the IMF for help to avoid default and to delay necessary reforms, leading the economy into recession, has not been able to win back the confidence into the country, as out of control inflation, record high interest rates and a dramatically shrinking money supply to protect the Peso against the U.S. currency, as well as extraordinary spending cuts to fix the permanent budget deficit are depressing demand and blocking the economic activity and expansion altogether, increasing social conflicts, probably overshadowing violent protests the coming G20 leaders summit under the presidency of Macri. Jet investors see still chances that the country’s plan seeking financial stability will be successful under the supervision and assistance of the IMF. Fitch rating agency revised Argentina’s Long-Term Foreign Currency Issuer Default Rating/IDR, leaving it at ‘B’, but downgraded outlook from stable to negative, citing a weakening economy, doubts about a multi-year fiscal consolidation and market availability when IMF funds are used up, as repayments come due in 2021, posing risks to sovereign debt sustainability; saying intense macroeconomic instability in 2018, marked by a major depreciation in the Peso, have dramatically weakened Argentina’s near-term growth prospects and prospects for economic recovery in the medium term are unclear. Leaders of the world’s most important economies will meet in Buenos Aires Nov 30-Dic 1, 2018, for the G20 summit to discuss sustainable development, existing some expectations on solving trade disputes, above all the U.S.-China trade war; before the G20 summit President Trump signed with his counterparts of Mexico and Canada the USMCA deal (the renegotiated NAFTA trade deal U.S.-Mexico-Canada). Argentina received a good notice just days before the arrival of President Trump for the G20 summit: After 17 years Argentina is set to secure a two-way trade deal with the U.S. for fresh beef products, giving the country a limit of 20.000 tonnes on exports to the U.S., valued at around $150-180 Million, and there would be no limit on beef imports from the U.S.. The final comuniquè of the successful G20 summit in Buenos Aires backed the necessary reform of the WTO to improve its functioning and encouraged energy transition that combine growth with decreasing greenhouse gas emissions towards cleaner more flexible and transparent systems and cooperation in energy efficiency, although the U.S. reiterated its decision to withdraw from the Paris climate agreement. Argentina is still pending to receive a formal invitation to join the OECD, remaining also delayed a Mercosur-EU trade agreement, now awaiting Brazil’s position under its new President Bolsonaro. If re-elected in 2019, with an economy probably still in recession, carrying out a severe austerity plan, making it difficult to obtain political concessions, Macri, most likely governing again with a marked minority in both chambers of the Congress, will necessarily have to seek stronger alliances with moderate and pragmatic Peronists, an option, he may be advised to initiate still during his first term, to get the approval of his hardest delayed decisions, such as the labor reform, an improvement to education, more ambitious tax and pension reforms and a waiting justice shake-up. Elsewise, a new Macri- Government could face another 4 years failing to push through the necessary basic reforms to stabilize the economy of the country, improving the expectations of its citizens and increasing relations with potential investors. Quite obviously there seems to be no way to make a deal with the left wing Cristina Kirchner-movement ‘Unidad Cuidadania’, and apparently the chances to reach an agreement with the volatile leader Sergio Massa of the apparently non constructive Renewal Front are doubtful. The national government confirmed electoral schedule 2019, with primary elections taking place on August 11, 2019, and the presidential elections, where also half of the Lower House and a third of the Senate are elected, taking place on October 27, 2019, while an eventual runoff, in case neither of the presidential candidates manage to obtain over 50% of the vote, would take place on November 24, 2019. Still to be seen if Federal Peronists and the Kirchner-movement will hold a large primary or if they do arrange it separately. Also pending details about a primary in the ‘Let’s change coalition’. Cabinet chief Marcos Peña has once hinted at the possibility of eliminating the primaries, calling them an ‘exorbitant expense’ that the government had to pay for. Moderate Peronists see an opportunity to beat President Macri in 2019, indicating multiple polls that Roberto Lavagna, a lifelong Peronist and a former minister of economy who helped lead the country out of its 2001/2002 economic crisis, already endorsed by important politicians and one of the country’s most popular figures, could be a perfect candidate to oppose and win Macri in the presidential elections 2019, although Macri is seen to have good chances to win re-election if the economy in the election year 2019 is improving and not getting worse and concerns about the possibility of a new default after 2021 have been duly addressed and are going to disappear. Accelerating the devaluation of the Peso against a strong U.S. currency, putting still more pressure on the out-of control inflation in the election year 2019, leading continuing high interest rates the country into a deeper recession, rising unemployment, the opposition is sharply increasing its criticism and doubts about Macri’s economic policy, practically ignoring the IMF support in propping up the still-vulnerable Peso. OECD called on Argentina to deepen its economic and structural reforms, warning that the nation must not reverse its course, a similar recommendation as received from the IMF, predicting that inflation, which topped 47% in 2018, would remain high in 2019, and that the economy would bounce back from recession and start recovery in the second half of 2019, insisting that Argentina must continue to fight against inflation and prioritize the reduction of spending. President Macri is seeking a deal with the opposition over the economic crisis, inviting the country’s political and social leaders to join negotiations on agreeing a 10-point plan to stabilize the economy, receiving some main political figures like Lavagna and Massa, and Cristina Kirchner, his invitation cool; even so the President continues to go ahead with his plan, a necessity to calm markets and improve chances for his re-election. IMF chief Lagarde said that many, including herself, underestimated the complicated economic situation in Argentina. An eventually re-elected Macri government, likely again with a minority in both chambers of the Congress, will finally have to seek a participation of moderate opposition leaders in his ‘Let’s change’ coalition to be able to deepen and push through Congress outstanding tax, labor, pension and justice reforms, and put into effect structural reforms to promote future growth; it appears to be quite doubtful that an eventual populist government under Alberto Fernandez and Cristina Kirchner would be really willing to seriously carry out such reforms, seeking probably a constitutional reform to reduce independence of justice, after Alberto Fernandez intimidated judges who are cracking down on the corruption of the last Kirchner administration. Macri chooses Peronist senator Miguel Pichetto as vice-presidential running mate, an expected and necessary step to open up the ‘Let’s change’ coalition, obviously producing positive market reactions, joining former Economic Minister Lavagna and Salta Peronist Governor Urtubey up for elections under ‘Federal Consensus 2030 banner’, formalizing Renewal Front leader Massa a deal with Kirchnerism, promised to lead a list for Lower House. Among 20 economies Argentina ranked more fragile, needing a continuation of a good relationship with the IMF, which requires an internal basic political consensus, requiring from whoever wins the general election to seek to establish cross-party bridges. The populist ticket including Cristina Kirchner as VP dominated with 48% of the vote the primaries, defeating by surprising 15 points center-right President Mauricio Macri, reflecting a general repudiation of the actual austere economic program and seen as a ‘vote of punishment’, as in the last two years businesses had to close and more than 250.000 jobs were lost, outpacing an uncontrollable inflation waged and pensions. Reflecting investors fears of a possible take over by populists, the Argentine stock market fell by 35%, the local currency declined 26% against the dollar, interest rates jumped from 64% to 74% and the country’s risk more than doubled. To calm markets and intending to win back voters before the coming general elections, President Macri, seeking his re-election, announced after years of spending cuts, significant relief measures helping to reduce the pain of the economic crisis. Of the record $57,1 Billion bailout the IMF already disbursed $44 Billion facing now the difficult choice to hand over another $5,4 Billion to the Macri government  or wait to deal with the next president, however conforming it will continue to stand with Argentina during these challenging times. Now under a new finance minister a delayed contingency plan went into action, imposing currency controls on businesses and asking creditors for more time to pay back Argentina’s $101 Billion foreign debt, including the IMF money. Macri lost the presidential primaries 47-32% to Peronist Alberto Fernandez, the likely new president, who has been sending contradictory signals about his intentions, saying he will pay back the IMF loan, but also harshly blaming the IMF for Argentina’s running away inflation and recession, adding his VP candidate Cristina Kirchner, Argentina will pay back the IMF loan but not at the expenses of suffering people. Investors and business people would like to see Mr. Fernandez and President Macri work together to calm markets and stabilize the economy, but there is now sign that either of the two presidential candidates is prepared to do so, which could be a chance to resolve united, including eventually other presidential candidates, Argentina’s political and economic problems. President Macri launches election push with Buenos Aires march, saying he could still turn the tide and win the upcoming presidential election, despite his main opponent’s wide lead, counting with considerable public support. The IMF forecasts that Argentina’s economy will contract by 3,1% in 2019, after declining 2,5% in 2018, and shrank still by 1,3% in 2020, seeing an inflation of 57,3% in 2019 and of 39,2% in 2020. Alberto Fernandez secured 48% share of the vote, returning populist y protectionist Peronists back to power, defeating conservative President Mauricio Macri who won about 41% of the vote, regaining America’s left force after several years of conservative gains. Fernandez will have to face a lengthy recession, an out of control inflation, high unemployment and a debt crunch, increasing market fears of a possible default in 2020/2021. Alberto Fernandez was sworn in as Argentina’s new president, marking a historic return to power for the leftist Peronist movement, amid a looming sovereign debt crisis and a deep recession, saying the new president that the country is willing to pay, but it needs first time to grow; creditors and bondholders have a difficult choice: negotiating or wait until there is a new plan with credible policies from the new government and it is doubtful that the IMF for now will be on board, considering the plans of Fernandez to increase subsidies, tax cuts and generally high public spending. Fernandez is close to former leftist Brazilian president Lula da Silva and Mexico’s populist president Lopez Obrador, while tensions with far-right president Bolsonaro of Brazil, Argentina’s main trading partner, have been increasing. Bolivia’s exiled former president Evo Morales has been granted asylum by the new leftist leaders of Argentina, who probably would also grant refugee status to Ecuador’s former president Rafael Correa, if asked for, both Morales and Correa accused of crimes committed in their countries. Argentina announced measures to protect Argentinians from the corona virus outbreak , presenting the pandemia a big test for its ailing economy, the country has at least 21 confirmed corona virus cases with two fatalities so far. The rhetorical battle between the government, the IMF and bondholders is heating up, seeking the country a sustainable debt relief agreement, while the economy on its current trajectory is itself completely unsustainable, increasing the risk of a looming financial collapse; Country risk above 4.000, an all time high, S&P credit risk for Argentina CCC- with a negative outlook. Argentina announced an obligatory quarantine, restricting people to their homes, with some exceptions, beginning at midnight March 20, 2020 until midnight March 31, 2020, confirming 31 new cases of corona virus, bringing the total to 128, and three deaths. The World Bank predicts recession of the local economy and a contraction of up to 5,2% in 2020. Fitch puts Argentina in restricted default, offering the government to restructure foreign-law bonds proposing a 62% cut in interest payments, asking for a three-year grace period; the corona virus crisis provides a natural argument for a postponement and it could be ideal to wait for the crisis to phase out to to initiate negotiations in earnest and avoid a protracted default; eventually creditors may accept to negotiate a standstill agreement, to allow the reprofiling of debt service with a view to new negotiations, say in 2022/23, under a more stable economy and with a better idea of what the country can afford to offer. The offer from Argentina to restructure about $ 65 Billion in foreign bonds (about 40% of its foreign currency debt) into new debt was rejected by a group of creditors that includes Black Rock and Fidelity, raising the stalemate the risk that Argentina may default again as soon as next month (Mayo 2020), which would be the ninth default of the country; the government is seeking a modest -haircut- of 5,4% on the principal (which would save the country about $3,6 Billion) and a dramatic 62% cut in interest payments; these payments would start low, at just 0,5%, and late, beginning in 2023, when an election is due, they would peak in 2029 at less than 5%; under this plan the government would save $37,9 Billion on its interest bill; the government put a 20-day limit on negotiations, but the real deadline is May 22, 2020, the end of the 30-day grace period for a missed $500 Million payment. Pressure to ease the lock-down is building up before the pandemic is expected to peak (June 2020) and the government is likely to rule out a quick return to normality; the preexisting recession makes the trade-off between public health and economic growth still more painful, and a new -patriotic- tax on the rich of the country, endorsed by the government but not yet approved by congress, may delay further or even kill any possibility of recovery. The three principal rating agencies downgraded the long-term foreign currency rating of Argentina, Fitch restricted default from CC, Moody’s from CAA2 to CA with a negative outlook, Standard & Poor’s from CCC- to SD;  Argentina missed the deadline on May 22, 2020, to pay $503 Millions in interest on dollar bonds issued under New York law, marking the ninth default since independence in 1816; the government intends to extend its self-imposed deadline for negotiations set to expire on May 22, 2020, until June 2, 2020 and further, planning to revise its offers to creditors, seeking eventually to avoid a hard default which carry serious economic and political costs. Due to corona virus effects on the economy the IMF forecasts a contraction of 9,9% for the country in 2020. Argentina will unveil a new debt offer to creditors, extending deadline until August 4, 2020, and eventually until late August 2020, seeking still to strike a deal despite rising tensions with creditors. Creditors said the offer of Argentina is short of what the creditor group can accept, adding they would not meet the deadline August 4, 2020, imposed by Argentina to find an agreement; but Alberto Fernandez dismissed the counter-offer from the three groups of creditors, who said they had rejected the proposal of the country to restructure $66 Billion of debt, saying it is not possible to move from the last offer which was worth 53,5 cents on the dollar up from initially 39 cents, improving the originally three year grace period to one year, with repayments beginning September 2021;  sources said, the counter-offer from the group of creditors represents 56,6 cents on the dollar with the new bonds beginning to accrue interest from September 2020. This deal represents roughly a fifth of the total debt of the country, which reaches $324 Billion, amounting to around 90% of its GDP. Argentina has been in default for the ninth time in its history since May 2020, when the country missed the deadline to pay $500 Million in interest on the debt that is subject to the current negotiation. Standard & Poor’s lowered to the level of default the qualification of Argentina’s bonds. Argentina reached an agreement with three creditor groups, the Ad. Hoc. Group of Argentine Bondholders, the Exchange Bondholder Group and the Argentina Creditor Committee; they will now help to restructure the debt and offer a significant debt relief; Argentina agreed to make some debt payments sooner than expected and the new recovery value seems to be 54,8 cents on the dollar; bondholder will still need to vote on the deal, representing the three main bondholder groups 60% of bonds outstanding from the previous restructurings of the country known as exchange bonds, and 51% of the outstanding global bonds issued from 2016; notes issued in 2005 and 2010 require sign off from at least 85% of all bonds, versus two-thirds or 75% threshold on securities issued more recently; the country extended its debt offer invitation until August 24, 2020, while the settlement date remains September 4, 2020. Argentina will now enter into talks with the IMF, which has lent the country $44 Billion since a currency crisis in 2018, seeking to delay payments coming due in 2021-23, while avoiding strong austerity measures. Argentina succeeded in restructure $66,5 Billion in foreign debt as 93,55% of bondholders agreed, activating collective clauses lifting overall acceptance to 99%; the deal is worth 54,8 cents in the dollar, and the republic issued 12 new bonds exchanging those previous bonds, settlement date September 4, 2020, obtaining Argentina a benefit of $37,7 Billion in debt relief, dropping annual interest rate from 7% to 3%, avoiding its ninth default, which took place since May 22, 2020. President Fernandez has won some applause for reaching a deal restructuring $65 Billion of the country’s foreign debt; now comes a tough negotiation with the IMF to delay a punishing repayment schedule starting in 2021, in which the lender is requesting a plan to reduce fiscal deficit, reaching 10% in 2020. Critics evidence and are worried about a gradual radicalization of Mr. Fernandez’s leftist government under influence and pressure from his VP, Cristina Fernandez Kirchner, examples include: a failed attempt to nationalize the country’s largest grain exporter, the freezing of telecoms tariffs and bills being pushed through Congress such as a wealth tax and a judicial reform that opponents say is an effort to secure impunity for Mrs. Cristina Fernandez Kirchner prosecuted for corruption. Argentina’s lock-down, the longest and toughest in Latin America has failed to prevent some of the highest death from corona-virus, while dealing a blow to the economy; according to the country’s industrial union production at 63% of companies has either fallen by more than half or ceased altogether; President Fernandez can’t afford a rupture in the uncomfortable alliance with Cristina Fernandez Kirchner, needing to keep the coalition together to guarantee governability. Adjustments required by the IMF, the ongoing pandemia and the political radicalization will make efforts in reactivating the economy more difficult. President Fernandez announced the purchase From Russia of enough vaccines Sputnik V for 10 Million people, as Argentina’s corona-virus death surpassed 40.000, accumulating more than 1,5 Million cases. The Sputnik V vaccine has been authorized in Russia, but does not yet count on an international approval and there are still doubts about its safety and effectiveness. A Russian interim report from a phase 3 trial of the Sputnik V Covid-19 vaccine was published in the scientific magazine ‘The Lancet’, saying the vaccine appears to be secure and effective and that no serious adverse events considered related to the vaccine were recorded; the vaccine efficacy, based on the numbers of confirmed cases from 21 days after the first dose of vaccine is reported to reach 91,6% and the suggested lessening of disease severity after one dose is particularly encouraging for current dose-sparing strategies. The Argentina government celebrated the report and V.P. Cristina Kirchner, who promoted the negotiation to acquire the Sputnik V, appears to feel relieved, despite an announced delay in the production and delivery of the vaccine from Russia. Argentina is rattled by a VIP vaccine scandal that led to the resignation of its Health Minister, naming the President Carla Vizzotti, the second on board, as his successor, who already was sworn in; Argentina, with a population of about 45 Million, so far has received 1,22 Million doses of the Sputnik V vaccine from the Russian Gamaleya Institute and 580.000 doses of the Covishield vaccine manufactured by the Indian Serum Institute and developed by Oxford University and AstraZeneca; India’s Serum Institute will also manufacture the Sputnik V Covid-19 vaccine once authorized in India; the new Health Minister, Carla Vizzotti,  approved emergency use of the Sinopharm Covid-19 vaccine ahead of an expected delivery of 1 Million doses of the Chinese made jab.