Reaching that goal is an aspiration of many people who dream of quitting work or having a life full of luxury. Is it so?
Becoming a millionaire and enjoying life on a paradise beach in the Caribbean is a fantasy that only very few people can realize.
Obviously the reasons are very simple: there are few who manage to raise that amount of dollars and those who do must dedicate a good part of their time to prevent their capital from devaluing over time.
In this sense, the latest data on inflation in the US, which in annualized terms is dangerously close to 4%, set off alarm lights among analysts and operators of financial markets, since there are very few options that arise for prevent the amounts invested from being eroded.
Inflation in the United States is a critical variable to consider
Few alternatives to US inflation.
With this reality, the big question arises: in what to invest a million dollars in order not to lose financial capacity? The answer will depend on the risks that you want to assume and the level of activity that you are willing to assume with the investment.
On this point, Gabriel Holand, CEO of HRGlobal, argues that “the point is this: projected annual inflation for the US is 3.6% according to the Consumer Price Index published this week.”
“From this inflationary floor, any investment that yields less than that will suffer a similar fate, that is to say will lose to inflation“Holand adds.
That is why investing in US and German sovereign bonds loses all the appeal that they had until not too long ago.
As an example, a 10-year US Treasury bond pays just 1.66%, but if you consider its German pair, the matter is much worse, since the rate is negative 0.11%. .
It is also not very tempting to place that amount in a Certificate of Deposit in a US bank, since the interest rates paid are around 0.5% per year, so it barely yields about $ 5,000 per year. for having the money immobilized.
So, according to Holand, “to get bond yields that are close to international inflation, you should look for a title that is not” Investment grade “, which implies assuming some risk, so many conservative investors would discard this possibility.
Another alternative is to dive into the US or European stock market, especially the German one, some paper that has category AAA, which also forces us to assume certain risks, given the volatility that they have been showing.
You have to diversify a lot and take risks
In this scenario, one option that is presented is “to choose an American Treasury Note, which throughout its useful life, that is to say 10 years, yields” half a point all in, “says the HR Global expert.
Translated this definition, it means that if US $ 300,000 are invested, they will contribute a income of u $ s15,000, above inflation.
“With the remaining 70% it would be convenient to buy a representative set of the strongest stocks of the S&P 500 on Wall Street, if there are any,” says Holand.
Why this mix? Because those US $ 15,000 that the T Note would earn you would allow you to sustain, in the worst case, a 10% loss in stock prices.
“That is why far from doing the initial operations and forgetting, would oblige al a investor to enter Y leave of the stock market almost permanently, “adds Holand.
Actions are a path, but there are risks
The other option that is presented to a conservative investor would be to acquire shares of an investment fund made up of good quality stocks and that also have the possibility according to its regulations to keep cash if things go wrong or invest in conservative bonds the authorized portion of cash.
For its part, Mariano Sardan, CEO of FDI Global, argues that “in this context of high inflation, and given the differential in rates between US bonds and those of other countries, institutional investors are making a kind of financial bike, arbitrating between them “.
As for the local investor, “it is evident that if he is going to bonds, rates are not going to protect you against inflation. That is why you have no choice but to invest in stocks. Although today the market is expensive, there are some of them that can still be entered, “adds Sardans.
But what should be clear is that in the face of the fluctuations in the market, in recent months investment portfolios have shifted from a defensive position against a weak dollar to one that little by little began to include some items such as agro,Energy, supplies and the segment financial, always with traditional companies.
“If a new portfolio is to be formed today, it should be more tactic what strategic. To do this, it should include 35% of American bonds, another 50% of global shares and the rest in T Bills, which do not have a spread or commissions, but provide immediate liquidity, thus allowing any fluctuation in the equity portfolio to be stabilized ” adds the CEO of FDI.
Conclusion: $ 1 million is not synonymous with multiplying money
Beyond the way in which the portfolio is formed, “it is essential to be very clear about two issues: the commissions that are charged, since there are marked differences depending on the type of entity and due to the Covid effect, the way in which the family wealth and decision-making, “concludes Sardans.
In short, if you reach that much-desired amount, far from having a good time on a lonely beach, it is most likely that in the battle against inflation, the owner of that money spends a lot of time looking at how to try to win, alone or with the hand of a broker.
So are the costs of having a million dollars.
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The world of cryptocurrencies seems very attractive to invest, but there are many aspects that must be taken into account before doing so
Bitcoin, and cryptocurrencies in general, they have been transformed into words that are mentioned on a daily basis. In the media, on social media, among financial experts, and even among those not so expert but who are looking for a way to invest and maximize their money.
Bitcoin is skyrocketing, other cryptocurrencies rise exponentially, while many collapse, and that makes many see that market as a possibility to invest and make money. But not all that glitters is gold, that is, it is not as simple as putting money in and just waiting for the profits to grow naturally.
There are many aspects that should be known before investing in bitcoin or another cryptocurrency, especially in times where experts from the world of finance and business have strongly criticized it. The clearest examples are Warren Buffet and Elon Musk, who have launched their criticisms of bitcoin in recent days.
What to consider before investing in bitcoin
Bitcoin is a cryptocurrency or virtual currency and as such can be used to purchase products or services. It is a unit of payment, like the peso or the dollar, but with the difference that it is virtual and decentralized.
It was conceived in 2008 by a secret entity known as Satoshi Nakamoto and their transactions are carried out on the internet thanks to encrypted and confirmed codes using the technology of blockchain (blockchain).
In addition to being useful as a means of passage, it is also used as an investment asset.
What are the risks and what to know before investing
Lack of regulation
Bitcoin is a self-regulating currency, without any authority or country to control or endorse it. This means that nobody is responsible for its issuance, something that does happen with the rest of the currencies of the countries – dollar, euro, Argentine peso, among the hundreds that exist.
Experts point out that bitcoin is not for everyone, that is, you have to have a minimum of knowledge to put money there. “These are complex instruments, which may not be suitable for small savers, and whose price entails a high speculative component that it can even suppose the total loss of the investment “, they explain.
“Additionally, there are leveraged derivative products linked to cryptocurrencies that allow indirect investment in them, which further increases their complexity and the possibility of suffering losses greater than the initial investment, so they require great knowledge and experience “, they mention.
Investing in bitcoins or other cryptocurrencies carries a number of risks
Volatility and unpredictability
Bitcoin is very volatile, something that adds to the complexity mentioned and the lack of transparency that derives from the lack of regulation. All these elements transform bitcoin into “a high risk bet”, according to some specialized entities.
The data reflects that volatility of bitcoin, whose price can rise and fall suddenly and become a merry-go-round difficult to predict. The month of April was an example of this: the price of bitcoin touched all-time highs, above $ 64,000, but it also fell by more than 15%.
Invest what you can do without
That volatile and unpredictable nature of bitcoin leads to it being recommended put money with common sense and prudence, especially if it is the first time. This means that it is recommended to invest a low percentage of the equity, something that is willing to lose and that it does not destabilize personal, family or business finances.
Therefore, you should maintain a secure base of money and bet on only investing a part of the savings that you can do without without affecting key income and expenses. In other words, having that money invested in bitcoins shouldn’t take away the investor’s sleep, whether they win or lose.
Possibility of theft, fraud or loss
Anyone who wants to start investing in bitcoin must pay attention to each step and movement, inform themselves well to choose the most suitable platform and wallet in their case and take care of security. It is possible to experience theft or scams of the digital wallet, especially “if your private key gets into the wrong hands,” an expert tells Business Insider.
In addition to theft and scams, losses due to inexperience or self-distraction can also be very costly.
Passwords for virtual wallets must be preserved and not lost
Be aware that transactions are public
All bitcoin transactions are public, traceable and they are permanently stored on the network, so that anyone can see the balance and operations of any bitcoin address.
Of course, this does not mean that the user identity behind these operations, unless that person so decides when making it public.
Transactions are also irreversible
When investing in bitcoin, you have to escape your troubles. In the first place, because the transactions take time to be confirmed and carried out and, secondly, because they are irreversible.
A transaction in bitcoin cannot be refunded (a new one can be generated for the same amount in the opposite direction), so it is convenient to review each step and figure carefully and make sure that everything is correct.
There were 50 units available for the pre-sale period but they asked for double that. They prepare for a new one in June
Produced in San Luis by the manufacturer Coradir, it reached the market Tito, the national electric car that is powered by lithium battery.
Last week, they made 50 units available for the pre-sale period, with a 20% discount on the final price of $ 15,000 (that is, it remains at $ 12,000). However, this number fell short of them.
“We offered 50 units in pre-sale and they asked us for 100, so we had to close the pre-sale and outline a new one, in which we already have 150 interested parties, so Tito far exceeded our expectations and we were very surprised.“, explained the president of the firm, Juan Manuel Baretto.
And he added: “Argentines and Argentines from 16 provinces signed up to acquire the car, so approximately 97 units are destined for the national territory and only four or five will remain in San Luis.”
Regarding the purchase format, he said that “the interested parties have six banks with different lines of credit to carry out the operation and among them there is a variety of age, sex and residences.”
They hope that by June they can open another presale of this vehicle.
How is Tito
Tito, the car of national production that reached the market.
Titus has a capacity for 4 people despite its compact dimensions, with 2.83 m long.
To function, it requires a load from 8 hours for a range of 100 kilometers. Inside it is equipped with a 10 ″ HD Touch LED screen with multimedia player, backup camera, radio and Bluetooth technology.
According to the manufacturer, it saves up to 90% in costs, “totally without fuel and without expensive services.”
Today there are different companies that sell not only imported models but also made in the country, both for use in closed premises and on public roads, utilities and passengers.
The great advantage of these vehicles is that their values are more accessible than imported ones and electricity consumption is minimal when compared to gasoline consumption.
Another point in favor is that they have practically no maintenance costs, since they do not require the periodic service that is carried out on conventional vehicles. This is an extra savings of $ 15,000 on average per 10,000 kilometers.
They also stand out for having, in some cases, prices very similar to the cheapest 0 km in the local market, an advantage that makes their range of options to compete much wider.
Among the local alternatives, in addition to Tito, are:
Sero Electric, another car of national production.
Sero Electric: The national brand offers three models: sedan, high cargo and low cargo that does not have doors. All offer a capacity for two people, with a maximum speed of 50km / h and a range of approximately 100 kilometers.
In dimensions, the models are compact. They have a maximum length of 2.70 meters, a height of 1.56 m and a width of 1.32 m.
As for the electrical system, they are suitable to recharge their battery in a 220 v outlet. The time is 5 to 7 hours if they were fully discharged. In addition, it is important to know their status, inside the vehicle it has a discharge indicator.
Sero Electric is approved for use on public roads in its Sedan and Cargo Alto models with doors. As for prices, the values start at $ 1,272,000 and extend to $ 1,973,000 in its most equipped version for charging and with the maximum battery life.
Volt, the car of national manufacture that is already sold in the market.
Volt eléctrico: It is another of the nationally manufactured models, which is sold in three versions: the Z1, W1 and E1.
The Z1 is one of the entry-level models and has a range of 80 km and requires about 6 hours to fully recharge. As for its equipment, it has regenerative brakes, on-board charger and LED lights.
The value of the vehicle is $ 1,000,000, positioning itself as the cheapest in the market also considering gasoline.
The W1, meanwhile, offers a space for charging, and stands out for its autonomy: up to 150 km with the possibility of adding another battery and doubling that distance. In addition, you can use fast charging and have reservations in just 3 hours.
It offers 4G connection, keyless access, 7 “screen with MirrorLink containment cage and non-slip floor. It costs $ 1,900,000.
Finally, the e1 version, an electric urban, the most complete in the range. It is controlled entirely digitally via a 16-inch screen. This model also has a range of 150 km or 300 km if you add an extra battery. The value is 2,300,000 pesos.
Only five EU countries are still affected by these restrictions. However, the presentation of a negative PCR test of less than 72 hours remains compulsory.
After the United Kingdom, Portugal will authorize tourist travel for most European countries from Monday, the Interior Ministry announced on Saturday. People from European Union countries with an incidence of the coronavirus “less than 500 cases per 100,000 inhabitants“Will be able to perform”all types of travel to Portugal, including non-essential travel“, The government said in a statement.
Read also :Portugal allows tourist travel from UK from Monday
However, all passengers over two years of age must present a negative PCR test of less than 72 hours before boarding. Airlines that board passengers without testing incur “a fine of 500 to 2,000 euros per traveler», Specifies the Ministry of the Interior.
Travel restrictions, limited to essential travel, only remain for eight countries, including five from the European Union. These are Cyprus, Croatia, Lithuania, the Netherlands and Sweden, as well as South Africa, Brazil and India. Travelers from these countries are also subject to a 14-day quarantine.
Authorized essential travel concerns in particular travel for professional reasons, studies, family reunification or health reasons.
See also – Portugal begins its final phase of deconfinement and reopens its border with Spain
British tourists expected
Portugal had already given the green light for tourist travel from the United Kingdom on Friday, after the restrictions put in place in early January to contain the explosion of the Covid-19 pandemic were lifted. Links with the United Kingdom were suspended in January before being re-established in mid-April, but only for travel deemed “essential».
Read also :Spain, Portugal, Greece … These countries seeking to attract foreign teleworkers
Hundreds of British holidaymakers, the leading tourist market, are expected from next week in Portugal mainly in the tourist region of the Algarve (south), a boon for a sector affected by the Covid-19 pandemic.
On May 29, thousands of supporters are also expected in Porto (north) to attend the Champions League final between Manchester City and Chelsea.
Italy announced on Friday the end of the five-day mini-quarantine imposed so far on travelers from European Union countries, with the stated aim of reviving its tourism sector.
Read also :Italy and the G20 work for the recovery of tourism
«Health Minister Roberto Speranza signed an ordinance that provides for entry from countries of the European Union, the Schengen zone, Great Britain and Israel with a negative test (anti-covid, editor’s note) , thus canceling the current system of mini-quarantine“, Said his ministry in a press release.
This measure will come into effect from Sunday.
Italy relies heavily on foreign tourists to boost its economy, while the tourism sector accounts for around 13% of its GDP.
SEE AS WELL – Italy: partial reopening of bars, restaurants, cinemas and theaters
The peninsula has particularly suffered from the Covid-19 epidemic, which in 2020 led to the worst recession since the post-war period, and seeks to recover as quickly as possible by ensuring foreign tourists simple and clear rules for their travel. allow entry into the country.
In this context, the Minister of Health also announced the opening of new airports to flights “Covid-free»From more countries.
Until now, this Covid-free flight system, providing for a negative test on departure and another on arrival, worked between the United States and the airports of Rome and Milan.
It is now extended to the airports of Venice and Naples and also covers Canada, Japan and the United Arab Emirates.
The restrictions concerning travelers from Brazil are maintained, according to the same source, with a ban on entry into Italian territory, except in specific and limited cases.
LeEco, which made low-cost smartphones and scrapped due to financial difficulties, wants to return to business. She announced her own conference, where she wants to show a whole range of gadgets, including smartphones, smart TVs, smart watches and headphones.
A new beginning
LeEco, formerly a major smartphone maker, has announced its comeback. In 2017, the company curtailed its activities due to a lack of money and growing debts to creditors.
LeEco is a Chinese company founded in 2004. According to GizmoChina, it has sent out invitations to its new LeTV Smart Ecological Conference, which it intends to hold on May 18, 2021.
The invitation depicts a silhouette of a man in a sweater with a hood, raising his right hand in greeting. This is the signature gesture of the LeEco founder Jia Yueting (Jia Yueting), who stepped down as chairman of his company in 2017.
LeEco event invitation
Also, the invitation contains the inscription “I am back!”, Which can mean the return of not only the company itself, but also Jia Yueting himself.
The LeEco invitation can be considered a whole collection of hints. In addition to the silhouette of the company’s founder, there are references to smartphones, headsets, smartwatches, game controllers and a number of other devices. It is possible that the company plans to show them at the upcoming conference.
Take off LeEco
LeEco at the dawn of its formation was called LeTV. From the beginning, Jia Yueting had plans to create his own digital ecosystem, like Apple’s.
LeEco started with digital TV and video content streaming services and has achieved some success in this. In particular, its streaming service Leshi, writes the CGTN portal, was very popular in China, since Jia Yuetin did not skimp on the purchase of rights to various content.
In the next stage of its development, LeEco began to produce TVs, both conventional and smart. Later, tablet computers and smartphones appeared in her catalog, which were sold in many countries, including Russia.
Later, LeEco began to launch cloud services, became a software developer and producer of video content, plus it added the production of e-bikes and e-scooters to its assets. There was even an attempt to compete with Tesla – for this in 2015 it launched the Faraday Future brand, under which the first concept car was demonstrated in January 2016.
Jia Yueting at the presentation of his electric car
It never came to the launch of the serial production of the car.
An attempt to capture the Russian market
LeEco was able to launch in Russia 12 years after its foundation. She began her march across the country with the opening of a brand store in the capital’s Atrium shopping center, which took place on October 15, 2016.
LeEco invested about $ 1 million in this point of sale. Its plans included opening 150-500 more stores throughout Russia, and the company intended to implement this idea no later than December 2018. In total, LeEco intended to invest in the development of its business in Russia up to $ 1 billion over three years.
Kazakhstan wants to protect the domestic market from the expansion of global IT players
To conduct sales in Russia, LeEco created a subsidiary company LeRee, headed by Victor Xu… However, the development of Russian business did not go according to plan at all. The company never opened a single new store, limiting itself to a single point in the Atrium, and even that was closed in August 2017 due to too high rental rates and minimal customer interest in this store.
“At the stage of launching LeEco in Russia, the brand’s flagship store performed an important image task, but today there is no great need for an expensive showroom in the center of Moscow. We analyzed the flow of visitors and sales at this point and came to the conclusion that the cost of renting a store does not justify itself. In this regard, it was decided to close the brand’s own store and focus on sales through partner retail networks and the Internet, ”Victor Xu told TASS.
End of story
In early November 2016, just three weeks after the opening of the first and only Russian store, LeEco publicly announced major financial problems. Lei Jun sent out a letter to his employees saying they were short of money.
In January 2017, LeEco arranged a sell-off of its companies, which resulted in $ 2.44 billion in investments. Jia Yueting was going to spend it to fight the Chinese giants Baidu, Alibaba and Tencent, and use some of them to pay off debts.
LeEco then released a report for the fourth quarter of 2016, which indicated a 40 percent drop in smartphone sales. In March 2017, the sales situation worsened. Delays in salary payments began in the company, and key employees, first American and then Russian, began to leave it. So, in April 2017, the Russian manager of LeEco left his post. Anton Shveinov… “The Russian representative office simply did not receive the status in the eyes of the Chinese parent company, which it initially hoped for, and this reduced all actions to meaninglessness, because all activities began to bear a purely local small-town character,” he said, adding that under the “shtetl” he implies “lack of strategy and a clear future.”
In July 2017, a Chinese court arrested a total of $ 183 million held in the accounts of Jia Yueting himself, his wife, and three businesses associated with LeEco. The reason was the non-payment of interest on loans. The court also froze his stake in LeEco’s equity capital and bonuses from the Dasheng Technology car-selling joint venture for three years. Accounts receivable from LeEco at the end of the first quarter of 2017 amounted to $ 1.4 billion.
As a result, LeEco was ruined by its desire to gain a foothold in several different areas at the same time and go beyond China (in particular, to Russia and the United States – these markets were priority for LeEco). Lei Jun wrote about this in his letter to employees. This led to an increase in costs and, as a result, to debt. By May 2021, the company had nearly scaled back its operations, but continued to show signs of life. for example, in October 2020, LeEco released in China a 65-inch smart TV LeTV Zero65 for 6999 yuan (80.5 thousand rubles at the exchange rate of the Central Bank on May 13, 2021), and in January 2021 it showed wireless headphones Letv Super Earphone Ears Pro, the design of which was copied from the Apple AirPods Pro.
The latest LeEco novelty for May 2021
In May 2021, according to CGTN, the China Securities Regulatory Commission (CSRC) banned a number of LeEco top executives, including Jia Yueting and CFO Jania Liege (Yang Lijie), enter the securities market. The ban is valid for life and is associated with a number of cases of financial fraud.
In addition, the CSRC fined Lei Jun 241 million yuan ($ 36.8 million) for financial fraud from 2007 to 2016. During this period, LeEco developed its Leshi streaming service, but provided deliberately inaccurate financial statements.
We add that in 2019, Jia Yueting filed for bankruptcy in the United States with a net debt of $ 2 billion.
Ilnaz Galyaviev, who attacked the Kazan school, underwent a narcological examination. In the analyzes of the offender, no traces of drugs or alcohol were found. He attacked school # 175 while sober. The preliminary psychological and psychiatric examination of Galyavieva is personally carried out by Zurab Kekelidze, the chief freelance psychiatrist of the Ministry of Health and director of the Center. V.P. Serbian in Moscow. The publication Life reports that on the way to the police after the arrest, Galyaviev tried to commit suicide. Yesterday at the trial, he pleaded guilty and was arrested.
Now local residents are discussing whether the attacker was sane. During the meeting, he communicated with the judge in a calm tone, and ignored the emotional questions of journalists about whether he was aware of what he had done. His behavior at the meeting had nothing to do with the interrogation footage that got into the network immediately after the arrest, where the young man screams obscenities and claims that “two months ago he realized himself to be a god.”
A former employee of the school, with whom Marfa Smirnova spoke at the funeral of teacher Elvira Ignatieva, who died in the shelling, said that Galyaviev was “an absolutely normal boy”, studied well and had no conflicts with other children and teachers.
The price of the dollar is still, something that favors investors to do operations in pesos to obtain interesting returns and then go green
The official brake on the increase in official dollar, as an anti-inflationary anchor, causes many investors to take advantage of this situation to carry out carry trade. Operation that is carried out with bonds, and that has generated Profits so far this year of the 12% in US currency.
Even economists argue that these interesting returns can be kept during the previous election.
It should be clarified that the “carry trade“, O financial bikeIt is when an investment is made in pesos, taking advantage of the high yields offered by some instruments in said currency, and after a certain period of time “switch” to foreign currency and obtain a higher profit.
This occurs when the price of the dollar is expected to be stable for a considerable period of time, precisely to be able to make this passage.
According to a report from Delphos Investment, since the beginning of the year until now the Accumulated profit in dollars is between 6.5% and 12%, this last yield corresponding to the debt securities of the province of Buenos Aires, at a variable rate and maturing on May 31, 2022 (PBY22).
“We must also consider that there was a strong compression of rates throughout the month of January,” the letter clarifies, something that justifies the increase in the prices of public securities in pesos.
And adds: “In another odd year, the carry trade takes a certain role again“.
With the price of the dollar still and yield in high pesos, investors were once again tempted to carry out a carry trade or financial bicycle.
A business until the elections?
The explanation is that after value jump (overshooting) of the parallel exchange rates of last October, where the blue touched the $195, they achieved stabilize until the present.
“Via government intervention, now with more favorable conditions than before, it seems that said calm would continue until at least the legislative elections October this year, “project Delphos economists.
In conclusion, they argue that the greater firepower on the part of the public sector, to contain possible triggers of the dollar counted with liquidation, and the ratio between the latter and the solidarity, located near the ceiling of the intervention band of the Central Bank, ” It makes us think of carry as an alternative. ”
In other words, the argument is that, since the beginning of the year, the Government intervenes in cash with liquidation within a range of up to + 5% difference between this and the solidarity.
“In contrast to last year, there are some current issues that can be mentioned that managed to give the government greater firepower in an effort to keep parallel exchange rates within the mentioned range,” says the Delphos report.
Arguments for the carry trade
Among the most important arguments he cites for the continuation of a situation of “ironed dollar”, and that this favor the carry trade, figure:
1. That the soybean price almost double the one registered in March 2020.
2. Furthermore, with the sovereign debt swap on demand, “Now the public sector has an important tool to contain potential triggers,” says Delphos Investment.
3. the third reason is that the foreign funds, who had a high percentage of holdings of securities in pesos and would be looking for their exit, now barely exceed $ 3 billion.
That is, this does not make as much noise to the market, something that is because the The current carry trade is quite different and limited, with respect to the one that existed during the management of Federico Sturzenegger at the head of the Central Bank, when there was no exchange stocks.
“In 2017, the exchange rate was very backward and it was a very expensive country, something that was counteracted by putting the interest rate very high and attracting a lot of speculative capital from abroad. A fact that was extremely harmful to the economy because, hardly The conditions of the country changed, the flows left and generated a great lag, “he reflects on iProfesional Leonardo Chialva, analista de Delphos Investment.
Instead, it details that in the present you are in front of “another type of carry trade“, because now the flows of local capitals, because people sell cash with liquidation at $ 160, so as not to lose to inflation.
“The starting point of this carry trade of a dollar of $160, what it is not cheap Not at all, and it is carried out in the very short term between private parties and in a limited context of exchange rate. So that it has no negative consequences “, Chialva ends.
Investments in bonds denominated in pesos and their subsequent passage to the dollar, came to yield up to 12% in US currency in 2021.
Also for Consultatio all this situation controlled by the Government, regarding the exchange rate, “would favor the idea of keeping the carry trade a couple more months, before the exchange balance begins to complicate from June or July, at which point the chances of higher rates in pesos will increase. ”
Although he clarifies that this should be “directly proportional” to the probability assigned to the government’s ability to control the exchange rate gap.
In this sense, Gustavo Dominguez, CIO of AdCap, also affirms to iProfesional that he carry trade “is an investment opportunity that it has been attractive “and that the strategy” can be maintained in the short term. ”
However, like his colleagues, he cautions that chance it is “fragile“thinking about it forward.
“The big risk of the carry trade is that the gap is triggeredSince the devaluation of the official exchange rate I do not think it will change, but the gap can go to the Government. Especially if there is a worsening in the market’s perception of the situation, from now on. Situations of that type would trigger the gap and the carry trade disappears “, concludes.
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The Cedears, certificates that replicate the foreign shares that are bought from Buenos Aires, are all the rage. Now there is fear of an increase in rates
The collapse of stocks in Wall Street, with reds that exceeded 2.50% taking the once lucrative panel of technology companies (Nasdaq) due to an unexpected increase in inflation in the United States, it could shake the star investment of Argentine investors: Argentine Certificates of Deposit (Cedears).
After all, this instrument, which accounts for 70% of the volume that moves on the Buenos Aires Stock Exchange, is a reflection of American companies and their stock market performance. Will the Cedears’ business go bust?
According GMA Capital, since last September the Cedears have outnumbered local stocks. In April, they constituted 72% of the amount traded in equities (a record figure since it is registered), while a year ago they barely reached 44%.
“The Cedears are a boom that grew 218% in dollars in the last 12 months. With the magnifying glass in the first quarter of 2021, volume increased more than 360% in hard currency compared to the same period in 2020. In the antipodes, the actions contracted 36% annually in dollars and fell 33% compared to the period January-April of last year, “he warns
Seeing that the Argentine investor became “Give in dependent“What happens on Wall Street will have a direct impact on the star tool of local savers that not only allows them to avoid the” Argentine risk “, but also to be in an asset that replicates the financial dollar such as cash with liquidation.
The Cederars most demanded by local savers are Mercado Libre (MELI), Apple (AAPL), Tesla (TSLA), United Health Group (UNH), Amazon (AMZN), Alibaba Group (BABA), Coke (KO), Microsoft (MSFT), Petrobas (PBR) y Walmart (WMT).
Local investors only want Cedears but not local stocks and bonds
The “Cedear dependence” of savers
How does the movie go on? To answer that, we must take into account that the shock that occurred this Wednesday due to an inflation figure for April (0.8% per month versus 0.2% estimated). This alerted investors and brought to the table the idea that the Federal Reserve you will have to raise interest rates (which are at lows) sooner rather than later.
Pablo Haro, from Grupo SBS, says that these types of events must be taken into account. “The Fed has been doing a very fine job to reactivate the American economy and increase employment,” he says. And remember that in recent weeks there was a data that disappointed the market which makes it clear that the economy still needs stimulus: 260,000 new jobs were created in April when the estimate spoke of 1 million.
“The Fed knows that the economy is in a recovery process and has been posing a very clear way. They are willing to tolerate a little inflation. But you have to keep looking at the macro side of the market to anticipate, “he said.
For much of the market, the Fed will still be inclined to ensure that the economy will improve in terms of employment and activity level before proceeding to raise rates. If the cost of money increases in the US, companies that are listed on the market will be harmed. But the “critics” of the ultra-expansive policy in the US have already begun to make themselves heard.
“The great hope is that Fed officials are correct in their call for transitional inflation and help bring about a smooth transition for the economy, markets and policymaking. The risk is that the Fed will be left behind, forcing markets into a messier process that could jeopardize economic well-being and disturbing financial instability.“wrote the economist Mohamed A. El-Erian, former head of PIMCO (when it was the largest fund in the world) and current advisor to Allianz.
The concern on Wall Street is that the Federal Reserve will have to raise rates sooner
Inflation and the markets, a classic
Of course, for now, the Argentine investor will remain (with an eye on what happens outside) in Cedears. It is not yet clear what will happen and in the midst of a menu of very unattractive investments such as local stocks and bonds, foreign papers will continue to seduce.
In a study of Schroders, which reproduces the GMA report, the relationship between inflation and Price Earning (the company’s price-to-earnings ratio) of the S&P 500 over nearly 5 decades.
“The relationship between the variables is negative, but the link is more ambiguous when inflation is low (less than 3%). In any case, other factors could explain the dynamics of the valuations,” he says.
What sectors can be better protected in an adverse scenario? According to the study, the shares energetic, especially from sectors of Petroleumand gas, beat inflation 71% of the time from 1973 to the present, with an average return of 9% per year.
Equities linked to real estate (REITs) also offered protection 67% of the time with an average return of 4.7% per year. With real estate as the underlying, the pass-through from inflation to rental values and home values contributes to the good defensive performance of REITs.
On the precious metals side, Schroders found ambiguities. Gold and mining-related stocks achieved an average return of 8%, but the probability of outperforming inflation was 47% (almost like flipping a coin).
Mortgage REITs, consumer discretionary companies and technology companies stood out among the sectors that showed the greatest vulnerability to an inflation rebound. In the latter case, as the expectation of earnings growth may be highly deferred over time, the punishment of the higher discount rate becomes critical.
“Ultimately, Cedears they are a great vehicle for, nonstop, set foot in New York and invest globally. Although avoiding Argentine risk contributes to reducing the total risk of the portfolio, does not remove it completely. Systematic risk is always present. For this reason, it is essential that each investor finds the roles that best role can play within a balanced portfolio aligned with the risk profile, personal preferences and time horizon, and look askance at the dynamics of North American prices and rates ” advises GMA Capital.