China Sets 1.25% Overnight Reverse Repo Rate Below Market Expectations 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
Despite its best efforts, Iran won’t be able to toll the Strait of Hormuz. Here’s why 
Alcohol is one of the most dangerous drugs, yet its presence is ubiquitous in social settings and celebrations 
Trump has made more than $1 billion from crypto in a year. How? 
BOJ Hawk Signals Faster Interest Rate Hikes Amid Inflation Risks 
Supreme Court Backs Lisa Cook, Defends Federal Reserve Independence Against Trump Firing Attempt 
In a rebuke to Trump, the Supreme Court rules that birthright citizenship is the law of the land 
Elon Musk is remaking the world, like Henry Ford before him – but more dangerously 
AI can be a personal trainer in your pocket – but is it safe? 
We encourage holding longs in ARS, short USDARS. The peso is currently trading a bit cheap to coincidental risk metrics (refer above chart), helped by soy prices, the positive real rate enforced by the Central Bank to prevent further inflation expectations de-anchoring, and high agricultural export proceeds for the season of the year.
The trade balance posted a US$2.1bn surplus in 2016, a sharp turnaround from the US$3.0bn deficit in 2015.
Imports contracted US$4.1bn last year, explaining 81% of the swing in the trade balance.
2016 primary fiscal deficit (ex.-tax amnesty fiscal inflows) was 6.0% of GDP, well above our 5.0% forecast.
Short USDARS, we remain constructive on ARS and continue to recommend selling 3m and up to 6m USDARS NDF as one of the few carry trades where we expect the positive total return.
The recent macro news supports this outlook, as our nowcaster suggests that Q4’16 GDP expanded by 5% QoQ SAAR, materially better than our prior 3.2% forecast.
Stay short in USDARS via 6-month NDF (sell at 15.86).
