In the emerging markets financial jungle, fairytales are impossible without the right jungle guide. So when Alejandro A (gringo name Alex), one of my closest friends in life since we first met in New York in J.P. Morgan Chase’s capital markets training program decades ago and now the chairman of his own I-bank in Buenos Aires dissected President Milei’s blueprint for revolutionary energy reform, I dutifully synthesized his ideas in a post just after last November’s election. The state oil and gas company YPF’s New York ADR (symbol YPF) was trading at 10 when Alex gave me his priceless intel. It is now 16.70, down from almost 19 at its highs. Book profits now. With a 70% profits in 2 months on YPF, why would any sane soul in the Textile Market listen to Goldman or MS’s thesis on Exxon and Chevron, especially as it has not done squat in the past 10 years.
The world’s boldest macroeconomic experiment is happening in Argentina and those who can grasp its awesome implications can make 5-8 times their money in the Buenos Aires bolsa. Economic shock therapy is never easy as Milei’s peso devaluation, removal of price caps and thus inflation spike proves. Judicial push back begins as the labour union CGT, whose struggles with the military during the dirty war in the 1970’s triggered the coup against Isabelita Peron, the same month PM Zulfi Bhutto made his fatal mistake in appointing a creepy fanatic General Zia as Pakistan’s Army Chief.
The Peronista dominated union will now fight back, just as England’s miners under Arthur Scargill tried their best to dethrone Margret Thatcher only two years after she launched the torpedo that murdered hundreds of Argentine boys my own age on the Admiral Belgrano in the Falklands/Malvinas war, a crime for which I can never forgive her. Alex’s father, Argentina’s preeminent lawyer and aristocratic patriarch served on the Belgrano and my dear friend was a mere 11 days away from being drafted by the generals to risk a pointless death in 1982. The real criminals in this world are those who play dice with the lives of young men and women, a despicable specimen of evil we know all too well in the Middle East.
Milei has captured the hearts of his people with his long hair, crazy jokes for which he is nicknamed El Loco and his four English mastiffs named after famous economists. I will ask Alex to remind ex-Chase NY emerging market debt trader and his ex-roommate and now economics minister Luis Caputo to remind Milei to name one of his pets Ibn Khaldun. This Tunisian genius was the Herodotus/Meynard Keynes of the Islamic world. The only tragedy was that he lived and died 700 years before I was born. Argentina will easily repay the $1 billion bond repayment due on its sov Eurobond and the IMF will play ball on its debt renegotiations, since the US Treasury and the White House have fallen in love with Milei’s ideas. Yet shock therapy also means a 1000 peso black market rate and a horrible recession. Stay tuned hombres. Adios!
Also published on Medium.
