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It takes two to tango

To all our Latam readers we’re going to admit up front that we’re jealous. You’re all naturally good dancers. We’re not saying we’re bad at dancing but…ok, yeah we’re bad compared to you.To be a good dancer, there are a couple of key tenets for success. Two that come to mind are have a good partner and don’t drop them. 

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” – Chuck Prince, CEO of Citibank right before the great financial crisis

On Monday markets dropped their Argentinian dance partner on the floor and it looks like she may need to go to the hospital. The MERVAL Index dropped over 37% in a day! 
 

Considering that Argentina has defaulted eight times on their government bonds how do you think their 100yr bond will do? So far it’s down 16% this year.

So equities and bonds are down in Argentina, is anything going up? Yes. Gold has reached an all-time high in Argentinian pesos. 

 
 

The biggest mistake we see investors making right now is believing that Argentina is an isolated situation. In a global world, everything is connected. Hong Kong, Europe, Argentina. It’s all connected. 

The lesson today is don’t think that you can dance without a partner. If you’re buying stocks you need a seller and if you’re selling stocks you need a buyer. Think of other market participants as your partners. Without partners, you don’t have a market and as they were reminded yesterday in Argentina, it takes two to tango.