Argentina Assets Plummet as Milei's Party Loses Buenos Aires Vote

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Transcript

00:00To what extent was this provincial election result a surprise to investors?

00:04Scarlett, this was a big disappointing surprise for investors.

00:07Javier Millet's government in Argentina is really now at an inflection point.

00:12This vote in the province of Buenos Aires, which is Argentina's most populous,

00:16was seen as a bellwether for the national midterm race in late October,

00:20where Millet's party needs to perform well in order for Millet to implement more market-friendly reforms that investors are looking for.

00:27In the provincial vote yesterday, investors had hoped Millet's party would be within about 5 percentage points of the Peronist opposition party,

00:36but instead they lost by nearly 14 percentage points.

00:39Millet could still make up some of the ground in other provinces during the October midterm race,

00:43but this is going to be much more challenging after a big, big loss in the province of Buenos Aires.

00:49So what does this setback mean, Patrick, for his economic agenda?

00:57Well, in the near term, investors are going to be looking at how Millet reshapes his economic agenda and his political agenda.

01:07He really focused last night in his concession speech about reshaping his campaign team and his campaign messaging,

01:15but he said he would firmly keep in place his fiscal currency and monetary policy,

01:23which has really brought the Millet economy here with rising unemployment yet low inflation.

01:29So what's going to be tested in the next few weeks is Millet's currency policy,

01:34whether the peso, which is seen by many as strong, if not overvalued, can maintain this pace.

01:40As it's facing a sell-off today, the pace was down more than 5%.

01:44But going forward, investors are really going to be seeing if Millet can convince them that he's got a better campaign message

01:52going into the October midterms because he's facing a culmination of setbacks.

01:58It's not just the vote in Buenos Aires.

02:00His sister and top advisor, Karina Millet, is also facing bribery allegations.

02:04The economic recovery is stagnating, as I mentioned, with rising unemployment and wages that are trailing inflation.

02:10So he really needs to change the narrative before the October midterms.

02:15And investors are going to be seeing if Karina Millet continues to call the shots for his campaign.