AIA Newsletter December 2024
Bullish on Latin America
Commentary
As we end the year, I wanted to discuss a theme I am currently invested in and an area where I have been developing a bullish thesis.
Latin America
I think we have all been amazed by what Javier Milei has been able to do in Argentina. As I have stated in the past, as the Argentina Presidential election approached last year, I was skeptical that he would get elected and, even if he did, would he be able to push through his radical economic reforms.
Well, I am happy to say I was wrong. He got elected and pushed through a host of reforms that have significantly cut the budget deficit, resulting in a budget surplus. This has also caused inflation to crash downwards.
As was expected, the country is in a recession, but we are beginning to see the emergence of “green shoots.” Here are some other opinions on what is happening in Argentina. I would suggest following these folks on X and Substack.
“This Time Is Different”
Will the Argentina rollercoaster keep on climbing without the vertical drop afterwards?
“Argentina Update: Milei’s First Year In Office”
As represented by the ETF, Argentina's stock market has moved up massively as reforms have kicked in and economic indicators have begun to turn upward.
The market has moved quite a bit since the reforms began gaining traction. Recall what Druckenmiller has said about markets: They tend to look forward 12-18 months and reprice for what will happen in the future.
Argentina seems on the right path, and economic conditions appear to be improving. What if the rest of LatAm looks at Argentina and decides it wants to move from statist and left-wing governments to something like Argentina under Milei? As I highlight below, voters will have their chance over the next couple of years.