have featured hyperinflation, a president escaping on a helicopter from the roof of the presidential palace, a decadelong battle with creditors, oil-company nationalization, mass bank-deposit seizures, taking private citizens’ pension funds... Argentines have tried every dish at the smorgasbord of economic crisis. NO BLOOD IN THE STREET... BUT PLENTY OF OPPORTUNITY Argentina’s economy has been mostly shrinking since early 2018. Since then, the currency has fallen
inspiration) would be disappointed: There’s no blood in the streets in Buenos Aires. But some of the biggest financial crises are bloodless... But still just as desperate. In Buenos Aires – a beautiful European-style city that today doesn’t exactly lend itself to “gripped by crisis” headlines – things seemed... normal. Sidewalk cafes were bustling, and the city’s craft-beer scene is still burgeoning. Flights into the Buenos Aires international airport were packed. Staying at the Four Seasons will set you back a very un- crisis-like $400 per night. DOWNTOWN BUENOS AIRES… BLINK AND YOU COULD BE IN MADRID But appearances are deceiving. If your pesos are inflating away at 5% a month, what else is there to do but spend them today? Of course you’re going to order another Malbec and
from around 19 pesos to the dollar, to the current 57 pesos to the dollar. Bank deposit rates run at around 80%, but even at that rate, no one wants to hold pesos or put their money in Argentina’s banks. There’s no lending going on at all. Currency controls, implemented in August, are crippling companies, which have to ask the central bank’s permission to buy dollars to purchase anything from abroad. But as Argentina’s economy and markets find the bottom – as disgusted, broken, penniless, disheartened investors give up – there’s going to be a massive opportunity in finding those babies that were tossed out with the bathwater. I’ve followed Argentina since the mid-1990s when I was just starting out on Wall Street in Latin American markets... And it happens every time. John Templeton (and every would-be contrarian investor who cites him as an
American Consequences
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