Argentina's new President, Javier Milei, has hailed his country's first quarterly budget surplus since 2008 as a "historic achievement."
Inputs that matter: In the first quarter of 2024, the South American country recorded a budget surplus of about 275 billion pesos ($309 million).
- "If the state does not spend more than it collects and does not issue (money), there is no inflation. This is not magic," explains Milei.
- Milei won elections last November, vowing to reduce the deficit to zero, a target more ambitious than required by the International Monetary Fund (IMF), with whom Argentina has a $44 billion loan.
The opportunity: Acknowledging that Argentines are suffering amid high inflation and falling purchasing power, Milei promised them that "we have already gone more than halfway."
- Around half of the population now lives in poverty (though Milei said in his speech Monday that the figure was 60%).
Zoom in: Meanwhile, in the U.S., first-quarter growth fell well behind estimates, rising at an annualized rate of 1.6%, according to the Bureau of Economic Analysis.
- "This was a worst-of-both-worlds report—slower than expected growth and higher than expected inflation," wrote David Donabedian, chief investment officer of CIBC Private Wealth U.S.
- It's also bad news for the economy, as sputtering growth and higher prices are the key ingredients for stagflation, characterized by economic listlessness and stubbornly elevated inflation over a prolonged period.
- The last episode of stagflation in the U.S. occurred during the 1970s.
- To finally reign things in, then-Fed Chairman Paul Volcker was forced to raise interest rates by a staggering 20%, calming price highs but throwing the U.S. into a deep recession.
Between the lines: Fed funds futures trading data suggests there will be just one interest rate cut this year, according to the CME FedWatch Tool.
- "In the short term, the numbers don't appear to be a green light for either bulls or bears...the uncertainty is unlikely to ease pressures in a market experiencing its deepest pullback since last year," said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.
Follow the money: "For all of the attention given to generative A.I. in the past nine months, Meta's failure to attain its revenue growth projections in Q1 is raising questions about whether the monetization of this technology is as easy as management led traders to believe," said Thierry Wizman, global F.X. and rates strategist at Macquarie.
- Meta plunged 10.5% after the social media giant issued light revenue guidance for the second quarter.
- IBM also fell 8.3% after missing consensus estimates for first-quarter revenue.
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Read More
- https://www.france24.com/en/live-news/20240423-milei-announces-argentina-s-first-budget-surplus-in-16-years
- https://www.batimes.com.ar/news/argentina/the-last-stretch-milei-praises-heroic-effort-in-patriotic-prime-time-address.phtml
- https://twitter.com/ioliveradoll/status/1783504120525054125
- https://www.businessinsider.com/stagflation-recession-us-economy-outlook-gdp-dimon-inflation-rate-cuts-2024-4
- https://www.cnbc.com/2024/04/25/dow-drops-more-than-600-points-on-inflation-and-growth-concerns-live-updates.html