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72 Days Is a Long Road Ahead for Argentina’s October Vote

72 Days Is a Long Road Ahead for Argentina’s October Vote

(Bloomberg) -- The unexpected result of the primary election fueled a record plunge in the peso and drove bonds and stocks lower in a terrible week for Argentine assets, with the remaining 72 days until the October vote seeming like an eternity.

While the opposition candidate Alberto Fernandez still hasn’t given signs of who will be part of his economic team if elected, President Mauricio Macri will seek to recover votes despite the 15 percentage point gap.

Olive Branch?

A phone call between Macri and Fernandez on Wednesday brought some calm, with a commitment from both to lower the impact the political uncertainty is having on the economy. Up until now, however, there is no planned meeting between the two and it’s not clear what the communication channel will be going forward. Eyes are set on August 22, when an event organized by local newspaper Clarin will have the two candidates as speakers, albeit at different times.

72 Days: An Eternity

To win the elections in October, the main candidate must get 45% of the votes or 40% with more than a 10 percentage point difference with the second-place contender. Looking forward, the support obtained by Fernandez (47.65%) and Macri (32.08%) in the primaries sets the strategy:

  • Frente de Todos (Fernandez)
    • Votes: retaining supporters would ensure a win in the first round
    • Cabinet: Fernandez said it is “too early” to announce his cabinet, and gave no details about his economic team should he win; Matias Kulfas and Guillermo Nielsen continue as his key economic advisers
    • FX: After the peso’s plunge this week and after closing at 60 per U.S. dollar, Fernandez called that level “reasonable”
  • Juntos por el Cambio (Macri)
    • Votes: the government will seek to gain enough votes to allow Macri to be competitive in a second round vote. For Macri, that scenario implies not only convincing new voters, but also detracting support from Fernandez
    • Economic measures: the government announced a series of measures such as freezing fuel prices for 90 days and removing VAT on some food staples to moderate the impact of the crisis
    • Inflation: Although inflation slowed to 2.2% in July, an acceleration is expected in August due to the peso rout

Key Dates

These are the most relevant events of the electoral calendar this year:

72 Days Is a Long Road Ahead for Argentina’s October Vote

Eyes on Pollsters

Following the wide difference between what polls were showing and the actual results, no new polls have been released ahead of the first round . This week, BTG Pactual said in a report to clients that it made a “wrong assessment of risks based on wrong information from polls.”

“At the end of the day, Fernandez channeled the demand for change, which ended up being the driving force behind the election.”

To contact the reporter on this story: Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net

To contact the editors responsible for this story: Andrea Jaramillo at ajaramillo1@bloomberg.net;Carolina Millan at cmillanronch@bloomberg.net

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