An emerging market fintech that is my fave potential double bagger!

Wall Street’s strong bid is skating on macro thin ice as a government shutdown that reflects the toxic polarization in Congress looms. The latest PCE data shows that Powell’s fear for a tariff related uptick in inflation was well founded and Fed funds futures have narrowed the odds of a December rate cut to only 60%, which is perfectly rational given that the US economy is in the clear twilight zone early stages of stagflation. The labour market would have been in dire straits had Trump’s immigration crackdown not sharply reduced the supply of workers.

Political risk, inflation risk, earnings growth risk, Fed risk, margin risk and tariff risk may all converge to create a nasty Halloween trade in October.

Events in Dalal Street, Jakarta, Buenos Aires, Riyadh and Beijing reinforced my conviction that fairytales and liquidity/geopolitical nightmares are recurrent themes in emerging markets. However, amid the macro trick & treat tempests in EM, I still find potential double baggers in carry trade boogie wonderland countries like Brazil, take the global digital bank Nu Holdings, whose New York ADR is up 45% since I profiled it on this platform. With implied vols in NU at 35%, writing puts spreads has been a consistent money maker on Nu.

I like the idea that Latin America’s preeminent Fintech boasts both Berkshire Hathaway and Ark Investments as strategic shareholders as it is an embryonic global champion of the billion plus underbanked human beings in the dark alleys of the planet, once known as the Third World and now referred to in polite PC company as the global South.

I once pulled an all-nighter at Penn reading Frantz Fanon’s “The Wretched of the Earth” but it took the Bangladeshi genius Dr. Yunus’s Grameen Bank and now Nu to teach me that there is big money to be made banking the underbanked souls of the planet.

Mexico and Columbia are just the tip of the iceberg for Nu’s growth template. Legacy banks that fleece retail customers in the Gulf with exorbitant fees are now in the crosshairs of Nu Holdings as tech related disruption sweeps the Middle East’s financial markets.

After all, Nu counts half the adult population of Brazil as clients without any useless, brick and mortar network of branches. A liquid global fintech with 30% rev growth and 60% EPS growth with the world’s highest carry against Ex-King and now Sad Sack US dollar with 35% option vols is my idea of a samba money machine.