Skip to comments.Wall Street whoops as Mexico leftist faces defeat(Reuters bitterness on display)
Posted on 07/03/2006 3:29:53 PM PDT by Dane
Wall Street whoops as Mexico leftist faces defeat
By Greg Brosnan
MEXICO CITY, July 3 (Reuters) - Wall Street on Monday cheered the apparent defeat of a Mexican leftist presidential candidate whose spending promises raised debt fears, but a looming vote dispute and a longer-term political crisis may ruin the party.
Conservative candidate Felipe Calderon declared victory on Monday after Sunday's hotly contested election, and official returns appeared to show that leftist favorite Andres Manuel Lopez Obrador could not catch him.
"The market thought that Lopez Obrador was going to win," said Benito Berber, an economist at HSBC Securities. "Suddenly we're in a position where it seems that Calderon is going to be the next president."
Lopez Obrador had wooed many of Mexico's poor with handouts to the elderly, disabled and single mothers while mayor of Mexico City, and promised a greater state role in the economy.
Ruling party candidate Calderon, however, wants to continue the free-market policies of President Vicente Fox.
Investors had grudgingly priced in a Lopez Obrador win based on polls ahead of Sunday's vote, and Mexico's currency, bond prices and stocks all rallied on Monday as authorities showed Calderon ahead with most almost all votes counted.
The stock market soared 4.77 percent on Monday, its second-biggest one-day gain this year, and the peso strengthened 1.8 percent.
But with Lopez Obrador expected to contest a final result that will not come until at least Wednesday and little clue as to how millions of his poor supporters will react to having their hopes dashed, market euphoria could be short-lived.
"The fact that Calderon is now the most likely winner is a positive for the market," said Alberto Bernal, an economist at Bear Stearns. "The bad news is that the election will be contested, I have absolutely no doubt about it."
"(Wall Street's celebrations) definitely could be short-lived, bad news could come at any point," he said. "The risk remains of strikes, disruption to economic activity and violence."
TOO CLOSE TO CALL
Electoral authorities said late on Sunday that the contest was too close for the result to be based on a quick count. But both candidates claimed victory on television, a move seen exacerbating tensions that could lead to market volatility.
"We see these hasty declarations as a potential risk that the election could be disputed in the electoral court or, in the worst case scenario, on the streets." Goldman Sachs said in a research report.
Lopez Obrador can challenge the final result in Mexico's electoral court, a process that could leave markets in limbo for several weeks, although most analysts say his party would need to present concrete evidence of vote fraud to do so.
The election was Mexico's first since Fox broke the Institutional Revolutionary Party's 71-year hold on power in 2000, but some say the country's democracy is mature enough to sidestep chaos.
"There'll be someone breaking a window, there'll be someone yelling and screaming in front of the TV cameras," Joydeep Mukherji, sovereign ratings director at Standard & Poor's rating agency, said, arguing that serious civil unrest was unlikely.
"This is not a new democracy that came out of dictatorship yesterday," he said. "We're dealing here with a political leadership which although very divided, is very mature at the end of the day. They do negotiate things."
While Fox has been praised for maintaining economic stability, a deadlock in Congress has stopped him passing structural reforms economists say are vital.
While the National Action Party appeared to have increased its share of Congress on Sunday, so did Lopez Obrador's party and Calderon looks likely to inherit the same stalemate.
"The nature of this victory being so close means that there's greater uncertainty over the medium term about the ability to come to agreements on these issues that are really important for Mexico," said Mukherji. "I think that will be a sobering thought to the market."
His story submission to Reuters was clearly wet with tears.
"We see these hasty declarations as a potential risk that the election could be disputed in the electoral court or, in the worst case scenario, on the streets."
I see they are taking lessons from the Democratic Party.
Is this just like the *Crintons getting impeached for perjury?
By 10:00 central time last night, Calderon was 70 bid on tradesports (implying his later win, which would in turn imply MXN rising vs USD), but the Globex CME Peso contract was still at that time down almost 9 ticks (0.0875 if you're a trader).
"potential risk that the election could be disputed in the electoral court or, in the worst case scenario, on the streets."
Typical international leftist thuggery talk. Yeh..that includes you too DimRats.....purveyors of fraudulent votes.
Calderon, el gran ladron.
Hey, I made a little rhyme.
Somehow I doubt that Jimmy Carter is going to certify that an election in which the leftist lost was fairly conducted. Maybe the UN should investigate? / sarc
LOL! Some others are crying, IMO, and that would be the tancredo/buchanan political family.
A PAN elected Mexico(PAN made great gains in the Mexican Senate election) is the tancredo/buchanan worst nightmare.
A stable and freemarket oriented Mexico, IMO, means one less bogeyman for the tancredo/buchanan family to count on for money.
I hope nobody thinks that George Soros and Hillery are above organizing something like that for election night in 2008... national eruptions of riots and calls of "election theft"
It ain't time to pop the corks on any bottles. The FAT LADY has not yet begun to sing. Wait, cautiously and see if the other candidate accepts the results, otherwise, it may spill on to the streets, kind of like Hugo Chavez led massive protests and got his power....
The headline of an earlier Reuters story today was even better. "Conservative creeps to victory in Mexico". Somehow if the leftist had been gaining, he would have been surging, not creeping. They also had another headline up that they just changed as I was watching. It said "Mexican standoff leaves markets on edge" and was changed to "Mexican vote standoff leaves markets on edge".....guess someone pointed out the bit of politically incorrectness in the first version.
Fox was PAN and he was for open borders
Will Olberman be leading the charge about Ohio voters were disenfranchised in Mexico?
If Obrador were winning by this margin it would be called a landslide-mandate
I just saw Buchanan on C-SPAN saying that John Edwards had it right when he said we had "Two Americas." Tom Daschle was up next and seemed to echo Buchanan's sentiments.
Well pat buchanan has to give, how should I say this, literal political fellatio, to his liberal boss at MSNBC so that he can keep his 6 figure salary to be the Bush bashing "conservative" on MSNBC.
So if the Canadians went right and Mexico went right, on the average then we are going right next.