Stock Market Set To Sell Off Next Week: Argentina Nearing Technical Default, EU Budget Summit Heading Toward Failure, Black Friday Retail Sales Fell Nearly 2%, 30% of Businesses Had Put At Least Some Projects On Hold, And A Very Bad Fiscal Cliff Idea Is Floated
November 25th, 2012
Argentina Nearing Technical Default
Based on Argentine government’s belligerent behavior toward the rest of the world (see discussion), the odds of the $1.3bn showing up in the escrow account next month are not great. That, combined with the Appeals Court (as well as whatever other appeals Argentina can come up with – possibly appealing to the US Supreme Court) agreeing with Judge Griesa, will put the nation into default – again. By the way, those who still don’t think Argentina’s government is acting like thugs toward foreigners, just read this story from the Mail.
The market-implied peso exchange rate (the so-called “shadow” exchange rate – see discussion) now puts the peso at 42.3% discount to the official rate as the currency continues to decline. Should the technical default take place, the US will begin freezing Argentine government’s dollar accounts – which will push the shadow exchange rate to new lows.
EU Budget Summit Heading Toward Failure While Demanding 8000 Layoffs At Spanish banks