A big moment for Argentina - Libertarian Javier Milei wins the Presidential primary

I identified the election of Javier Milei as a possible catalyst for Argentina/YPF

Last year I made a blog post about YPF as an opportunity (which has been a 3-4x since publish date) - and many subscribers who followed me in buying 2024 calls made 20x or better. One of the  factors I mentioned was that while the traditional parties who turned Argentina into a basket case were stumbling, the Libertarian Dark Horse candidate, economist Javier Milei, was rising.

Now, he’s still a long shot, and some would even argue that an anti establishment candidate like Milei simply can’t become a world leader, but crazier things have happened. Meanwhile, other developed countries, especially in Europe, are generally moving away from free market ideals.

Well, it’s a lot closer to happening. Yesterday, Milei won 30% of the Argentine Presidential primary vote, soundly defeating both liberal and conservative candidates.

Milei will face conservative Patricia Bullrich and Peronista Sergio Massa in the general elections in October.

Now, I’m generally a major critic of election security, and I would still be shocked if Milei is actually allowed to become President (he wants to dismantle the Argentine government - literally cutting nearly every single department), but let’s see what happens.

Maybe, Argentina, which has been rocked by hyper inflation, controlled largely by Marxist radicals (Peronistas) for decades, and was one of the more totalitarian countries in Latin America during covid, is simply a reminder that it’s always darkest before dawn.

So what will this mean for Argentine stocks? If Milei wins the election, I think a lot of confusion and fear will follow. The system will do everything it can to fight back. Nobody wants to lose their job. Entrenched interests never want to lose their power. The global economic system will hate the idea of a minarchist running a major economy, and will see his possible success as a threat to the established order. In short, if he wins, I think in the short term, the narratives will be awful.

Argentina has already had a tremendous rally, outpacing the rest of Latin America. YPF is no longer the cheapest LatAm energy name. Argentine names, a focus area of mine in 2020 and 2021, have appreciated significantly, and most are up big on today’s news.

If you’re currently long Argentine equities, I would use this as an event to sell the news. Let the dust settle. If Argentina will really be changing its stripes and becoming a functional, non Peronist economy again, the best opportunities in the country might be found on the ground. Residency permits are currently very cheap due to the Peso devaluation. Huge discounts to real assets can be found from using foreign currencies outside of the official exchange rate.

I’m hopeful for the future of Argentina, and beyond shocked that a Libertarian may be at the head of one of the world’s most important commodity exporters - but I know the system will fight him with everything they have, and let’s face it, he might not be able to get his agenda in, and even if he does, the public worker unions would probably literally go to war if he started shutting down public institutions.

Let’s wait and see what happens.