Despite the fact that its benchmark Merval index is up over 50% this year–making it the world’s fifth-best performer according to Bloomberg–Argentina lost its position in the benchmark emerging-market stock index this past week and joined MSCI Inc.’s “frontier” category, a classification based on a given market’s size, liquidity and economic development.  Analysts told Bloomberg that the change “may lure funds to the nation and extend a three-month equity rally,” especially those portfolio managers who are feeling the start of a new secular bull market in commodities–crude, for instance–and those who are betting that the government’s days of defaulting on debt are fin.

“’You’re getting fresh eyes with frontier investors taking a look at Argentina,’ said Paul Herber, who helps manage $5 billion at Forward Management LLC in Seattle, including the Accessor Frontier Markets Fund, and plans to buy Argentine shares. ‘We’re not looking to take any heroic bets

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We recall a meeting, back in the ’90s, with Mr. Carlos Menem. “Can investors rely on Argentina’s commitment to keep the dollar and the peso linked together?” we asked.

“Absolutely,” replied Argentina’s president. “We would never give up the peso-dollar link. It is too important to our economy. Without it foreign investors would leave and the economy would collapse.”

Five years later, Argentina cut the peso loose from the dollar. Foreign investors fled and the economy collapsed.

What lesson can you draw from this narrow set of facts? If you say, ‘politicians can’t be trusted,’ you are merely stating an obvious, universal truth, like ‘public toilets stink.’ But do they stink more on the pampas than, say, in London or New York? That is the question before us.

We begin by posing other leading questions: can investors depend on the money custodians north of the Rio Grande more than they could depend on those

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A fascinating article in this week’s Economist details the phenomenon whereby Argentina’s seemingly secular instability is this time paying dividends to its vastly smaller neighbor, which the newspaper predicts will better weather the global downturn despite having a “small, open economy dependent on banking, beach tourism and beef exports.” Why? The primary reason provided is that Uruguay will better be able to finance stimulus, an ability it owes to its decision back in 2001-2 to enter into a rescheduling agreement with its creditors, while Argentina defaulted on its debt, nationalized foreign businesses and imposed price controls: “Argentina may struggle to roll over the $23 billion in debt maturing this year and next because of investors’ distrust: its bonds yield 15 percentage points more than American Treasury bonds. Uruguay is charged a premium of only five percentage points, and can thus ...

Fundamental research by IIR Group indicates a 25% upside in Telecom Argentina’s Class B common stock in a 6 - 24 month perspective. The target price for the company’s ADR (NYSE: TEO) is set at US$10.10, reflecting a 18.82% upside.  IIR’s outlook for TEO is broadly positive based on the healthy top-line growth reported for 2008, and expectations of higher future revenues from wireless services. The wireless market is expected to grow on basis of higher usage as a result of lower tarriffs. According to consultancy firm Frost & Sullivan, the WiMax customer base is expected to grow at a CAGR 97.7% from 2006 to 2012. The competitive situation, with only two major telecom players present in Argentina, puts TEO in a position to capitalize on the opportunities in the WiMax market. Moreover, IIR reports TEO is planning to form an ...

Why is oil going high and going higher? Well, basically, the world economy is growing at 4%. The world oil supply is flat or growing — at most — 1%. The world economy runs on oil. And that’s a recipe for higher oil prices.

Here is a movie you might want to check out …

And here’s another one. I don’t know if they’re really making a movie of Kunstler’s book, but the book is great. Here’s a movie trailer … maybe it’s just an ad for the book?

Quote for the day ……