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Argentina’s markets tumbled on Monday, with the peso currency at a historic low, after a heavy defeat for President Javier Milei’s party at the hands of the Peronist opposition at local elections stoked worries about the government’s ability to implement its economic reform agenda. The peso was last down almost 5% against the dollar at 1,434 per greenback while the benchmark stock index fell 10.5%, and an index of Argentine stocks traded on U.S. exchanges lost more than 15%. Some of the country’s international bonds saw their biggest falls since they began trading in 2020 after a $65 billion restructuring deal. The resounding victory for the Peronists signaled a tough battle for Milei in national midterm elections on October 26, where his party is aiming to secure enough seats to avoid overrides to presidential vetoes. The government now faces the difficult choice whether to allow the peso to depreciate ahead of next month’s midterms or spend its foreign exchange reserves to intervene in the FX market, according to Pramol Dhawan, head of EM portfolio management at Pimco. “Opting for intervention would likely prove counterproductive, as it risks derailing the IMF [International Monetary Fund] program and diminishing the countrys prospects for future market access to refinance external debt,” Dhawan said via email. “The more resources the government allocates to defending the currency, the fewer will be available to meet obligations to bondholdersthereby increasing the risk of default.” He said early indications that the government may double down on the current strategy “would be a strategic misstep.” The 13-point gap in the Buenos Aires Province (PBA) election in favor of the opposition Peronists was much wider than polls anticipated and what the market had priced in. The government setback at the polls adds to recent headwinds for a market that had until recently outperformed its Latin American peers. “We had our reservations about the market being too complacent regarding the Buenos Aires election results. The foreign exchange market will undoubtedly be under the spotlight, as any instability there can have a ripple effect on Argentine assets,” said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS, in response to emailed questions. “However, it’s important to note that simply using reserves to prop up the currency isn’t likely to provide much reassurance to the market,” she added. “The midterm elections, in my opinion, carry more weight and their outcome will significantly influence how Argentine assets perform in the coming months.” The bond market sell-off saw the country’s 2035 issue fall 6.25 cents, on track for its largest daily drop since its post-restructuring issuance in 2020. Based on official counts, the Peronists won 47.3% of the vote across the province, while the candidate of Milei’s party took 33.7%, with 99.98% of the votes counted. Argentinaone of the big reform stories across emerging markets since Milei became president in December 2023has seen its markets come under heavy pressure over the last month following a corruption scandal involving Milei’s sister and political gatekeeper Karina Milei. The government defeat also comes after the International Monetary Fund approved a $20 billion program in April, of which some $15 billion has already been disbursed. The IMF has eagerly backed the reform program of Milei’s government to the point that its director, Kristalina Georgieva, had to clarify remarks earlier this year in which she invited Argentines to stay the course with the reforms. The IMF did not respond to questions on whether this vote result would change its relationship with the Milei administration or alter the program. Market sell-off Argentina’s main equity index had dropped around 20% since the government corruption scandal broke, its international government bonds have sold off, and pressure on the recently unpegged peso forced authorities to start intervening in the FX market. “The result was much worse than the market expectedMilei took quite a big beating, so now he has to come up with something,” said Viktor Szabo, portfolio manager at Aberdeen Investments. Morgan Stanley had warned in the run-up to the vote that the international bonds could fall up to 10 points if a Milei drubbing dented his agenda for radical reform. On Monday, the outcome saw the bank pull its “like” stance on the bonds. Barclays analyst Ivan Stambulsky pointed to comments from Economy Minister Luis Caputo on Sunday that the country’s FX regime wont change. “Were likely to see strong pressure on the FX and declining reserves as the Ministry of Economy intervenes,” Stambulsky said. “If FX sales persist, markets will likely start wondering what will happen if the economic team is forced to let the currency depreciate before the October midterms.” Some analysts, however, predicted other parts of the country were unlikely to vote as strongly against Milei as in the Buenos Aires Province, given it is a traditional Peronist stronghold. They also expected the Milei government to stick to its program of fiscal discipline despite economic woes. “The Province of Buenos Aires midterm election delivered a very negative result for the Milei administration, casting doubt on its ability to deliver a positive outcome in Octobers national vote and risking the reform agenda in the second half of the term,” said JPMorgan in a Sunday client note. “The policy mix adopted in the coming days and weeks to address elevated political risk will be pivotal in shaping medium-term inflation expectationsand, ultimately, the success of the stabilization program.” By Karin Strohecker and Rodrigo Campos; additional reporting by Marc Jones and Shashwat Chauhan, Reuters
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Pope Leo XIV canonized the Catholic Churchs first millennial saint over the weekend, a teen computer whiz who died of leukemia in 2006 at age 15 and had used technology to spread his faith, earning him the nickname Gods influencer, according to The Associated Press. Some 80,000 worshippers filled St. Peters Square in Rome on Sunday to see the canonization of Carlo Acutis, including many millennials and young children with their parents, The Washington Post reported. Pope Leo also canonized Pier Giorgio Frassati, a young Italian who died in 1925 at age 24. Acutis’s ascent to sainthood is being called one of the fastest in modern history, and comes at a time when many younger generations, from Gen Z to millennials, struggle to connect with the church. For some, Acutis, who was tech-savvy and reportedly loved video games, may be seen as more relatable and a good role model for the next generation of Catholics. The former pope, Francis, also championed Acutis. Carlo was well aware that the whole apparatus of communications, advertising, and social networking can be used to lull us, to make us addicted to consumerism and buying the latest thing on the market, obsessed with our free time, caught up in negativity, Francis said in 2019, as reported by The Washington Post. Yet he knew how to use the new communications technology to transmit the Gospel, to communicate values and beauty. The teen, who was born in London and raised in Milan by a well-known Italian Catholic family, designed a website documenting reported Eucharistic miracles around the world, which has become a teaching tool for parishes worldwide and is seen as a positive way to use technology in support of religion.
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For decades, scientists believed Prochlorococcus, the smallest and most abundant phytoplankton on Earth, would thrive in a warmer world. But new research suggests the microscopic bacterium, which forms the foundation of the marine food web and helps regulate the planets climate, will decline sharply as seas heat up. A study published Monday in the journal Nature Microbiology found Prochlorococcus populations could shrink by as much as half in tropical oceans over the next 75 years if surface waters exceed about 82 degrees Fahrenheit (27.8 Celsius). Many tropical and subtropical sea surface temperatures are already trending above average and are projected to regularly surpass 86 degrees Fahrenheit (30 Celsius) over that same period. These are keystone species very important ones, said François Ribalet, a research associate professor at the University of Washingtons School of Oceanography and the studys lead author. And when a keystone species decreases in abundance, it always has consequences on ecology and biodiversity. The food web is going to change. These tiny organisms hold a vital role in ocean life Prochlorococcus inhabit up to 75% of Earths sunlit surface waters and produce about one-fifth of the planets oxygen through photosynthesis. More crucially, Ribalet said, they convert sunlight and carbon dioxide into food at the base of the marine ecosystem. In the tropical ocean, nearly half of the food is produced by Prochlorococcus, he said. Hundreds of species rely on these guys. Though other forms of phytoplankton may move in and help compensate for the loss of oxygen and food, Ribalet cautioned they are not perfect substitutes. Evolution has made this very specific interaction, he said. Obviously, this is going to have an impact on this very unique system that has been established. The findings challenge decades of assumptions that Prochlorococcus would thrive as waters warmed. Those predictions, however, were based on limited data from lab cultures. For this study, Ribalet and his team tested water samples while traversing the Pacific over the course of a decade. Over 100 research cruises the equivalent of six trips around the globe they counted some 800 billion individual cells taken from samples at every kilometer. In his lab at the University of Washington, Ribalet demonstrated the SeaFlow, a box filled with tubes, wires and a piercing blue laser. The custom-built device continuously pulls in seawater, which allowed the team to count the microbes in real time. We have counted more Prochlorococcus than there are stars in the Milky Way, Ribalet said. Experts warn of big consequences Paul Berube, a research scientist at Massachusetts Institute of Technology who studies Prochlorococcus but was not involved in the work, said the breadth of data is groundbreaking. And he said the results fit with what is known about the microbes streamlined genome, which makes it less adaptable to rapid environmental changes. Theyre at the very base of the food web, and they feed everything else the fish eat the things that eat the phytoplankton and we eat the fish, he said. When changes are being made to the planet that influence these particular organisms that are essentially feeding us, thats going to have big consequences. To test whether Prochlorococcus might evolve to withstand hotter conditions, Ribalets team modeled a hypothetical heat-tolerant strain but found that even those would not be enough to fully resist the warmest temperature if greenhouse emissions keep rising, Ribalet said. He stressed that the studys projections are conservative and dont account for the impacts of plastic pollution or other ecological stressors. We actually tried to put forth the best-case scenario, Ribalet said. In reality, things may be worse. Steven Biller, an associate professor at Wellesley College, said the projected declines are scary but plausible. He noted Prochlorococcus form part of the invisible forests of the ocean tiny organisms most people never think about, but are essential to human survival. Half of all photosynthesis is happening in the oceans and Prochlorococcus is a really important part of that, Biller said. The magnitude of the potential impact is kind of striking. Biller, Berube and Ribalet said that while other microbes may compensate somewhat, the broader risks to biodiversity and fisheries are real. We know what drives global warming. There is no debate among the scientific community, Ribalet said. We need to curb greenhouse gas emissions. He hopes the findings bring more attention to tropical oceans, which could serve as natural laboratories for warming adaptations and as early warning signals for ecological collapse. For the first time, I want to be wrong. I would love to be wrong, he said. But these are data-driven results. Annika Hammerschlag, Associated Press The Associated Press receives support from the Walton Family Foundation for coverage of water and environmental policy. The AP is solely responsible for all content. For all of APs environmental coverage, visit https://apnews.com/hub/climate-and-environment
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