In seizing control of YPF, Mrs. Kirchner has adroitly shifted attention away from her country's soaring inflation , capital flight and her own falling approval ratings , focusing instead on a longstanding subject of resentment here: the market-oriented policies of the 1990s, which preceded a severe economic crisis at the start of the last decade.

And

Meanwhile, YPF and other oil companies, wary of investing in a country where low energy prices curb profitability, limited spending that could have lifted energy production. The result: Argentina went from being an energy exporter to importing fuel from countries as far away as Qatar.

This reliance on foreign energy sources grew acute in the past year. The authorities now struggle with a $3 billion energy deficit to meet domestic demand for oil and natural gas, according to Esteban Fernández Medrano, an independent economist.

Eoin Treacy's view At the Scarsdale Equities lunch I mentioned in the above piece an Argentine attendee remarked on some of the reasons the government had just nationalised part of YPF some of which are covered in this article.

This move has initiated a great deal of speculation as to whether it represents the thin end of the wedge for a regime which is notably populist. Since just about every Argentine asset was sold off in the 1990s there are a wide range of sectors in which the government might now decide to acquire.

The Argentine Peso continues to trend lower against the US Dollar and a meaningful break in the progression of higher reaction lows would be required to question the consistency of the decline. The Merval Index found support in the region of the 200-day MA during reactions between early 2009 and Q3 2011. However it broke downwards in August and has encountered resistance in the region of the MA since. The Index has fallen to test the October low and while somewhat oversold in the short term a clear upward dynamic would be required to check downside potential.

The problem for the market now is that confidence has taken a beating. I suspect that an unequivocal announcement from the Kirchner administration that YPF is the only planned nationalisation would be required to stem medium-term supply dominance.