Prof G Markets - How Milei’s Surprise Win in Argentina Defied the Market

Episode Date: October 28, 2025

Ed Elson speaks with Oliver Stuenkel, Associate Professor at FGV’s School of International Relations in Brazil, to break down the results of the election in Argentina. Then Robert Armstrong, US financial commentator for the Financial Times and author of the Unhedged newsletter, returns to the show to unpack what the latest CPI report says about the state of the economy.  Check out our latest Prof G Markets newsletter Order "The Algebra of Wealth" out now Subscribe to No Mercy / No Malice Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

Not too long ago, everyone in digital media had the same idea. Get really big, really fast, with help from Google and Facebook. Turns out, there was a problem with this plan. There was no loyalty. These audiences were not really the media company's audiences. They were truly rented from Google or from Facebook. That's Brian Morrissey, the super sharp media observer and media operator. And this week on channels with Peter Kafka, I talked to Morrissey about,

how to run a media business without getting big. What happens to the industry next? That's this week on channels wherever you listen to your favorite podcasts. Giving up is unforgivable. So whether we're reading more serious books about democracy in our book clubs or talking about it family gatherings, I think Thanksgiving is going to be lit for a bunch of families this year. That's something that we can all do.

I'm Preet Bharara, and this week, former U.S. attorney and author, Joyce Vance, joins me to discuss her manual for protecting our democracy and the rule of law from President Trump's overreach. The episode is out now. Search and follow. Stay tuned with Preet wherever you get your podcasts. The computers are using themselves. This week on the Vergecast, we look at ChatGBT's new web browser that browses the web for you. It's part of a big trend across the industry. Basically, every AI company is building one of these. and we'll talk about why.

Plus, Samsung made a much cheaper version, the Apple Vision Pro, who's that for? And we talk about Microsoft's enduring plan to get Windows in your living room. That's this week on The Vergecast, wherever you get your podcasts. Today's number, 1,100. That's how many chairs were recently stolen

from restaurants in Madrid. The heist took place over two months and targeted the patios of, 18 different restaurants. Damages are estimated at nearly $70,000, and authorities are calling it the lowest margin crime since Joker Part 2. Money markets met. If money is evil, then that building is held. Welcome to Profitey Markets. I'm Ed Elson. It is October 28th. Let's check in on yesterday's market vitals.

The major indices closed at record highs on hopes of a U.S.-China trade deal, the S&P end of the day above 6,800 for the first time ever. Meanwhile, gold dipped below 4,000, and finally, Qualcomm shares popped 11% after the company announced new AI chips that will compete with NVIDIA. Okay, what else is happening? Argentina President Javier Millet led his party to victory, in Sunday's midterm elections. His party doubled their representation in Congress

and won nearly 41% of the national vote. President Trump congratulated Millet on social media, saying, quote, he's making us all look good. The peso surged 9% against the US dollar, its biggest one-day gain in over 20 years. Argentinian stocks and bonds also rallied. This win should help Millet

push through his economic agenda over his first two years in office. Malay has slashed spending, unified exchange rates, cut energy subsidies, and laid off tens of thousands of public sector workers. And that will all likely continue because the recent $40 billion bailout from the US is tied to the condition that he makes further progress on those reforms. Still, Millet has his work cut out for him. Inflation, though down, remains above 130%. Unemployment is rising and real wages have fallen over 20%. since 2023. The election turnout was 68%, the lowest in a national election in decades. And even

after the win, his party does lack a full majority. Here to explain what this all means for Argentina, we are speaking with Oliver Stunkel, Associate Professor at FGV's School of International Relations in Brazil. Oliver, thank you very much for joining us on the show. Thanks for having me. So we want to hear about this election. Just at a very basic level, walk us through the election, results. What does this mean for Javier Milley and what does this mean for Argentina going forward? So those were the midterms. Half of the House of Representatives and the third of the Senate were up for voting and renewal. And it has been a surprisingly good result for Javier Milay, the self-declared anarcho-capitalist who's been in power for two years. And the elections were sort of a referendum

on his policies. He's a libertarian, so his key argument has been that it's necessary to radically reduce public spending, to reduce inflation, to finally stabilize Argentina after decades of instability. And he did bring down inflation, however, the economy is still reeling from his policies of dramatically reducing public spending. so the economy is not growing but he is saying that he still needs some time

for the economy. He finally recovered that this is the medicine which initially has a negative impact but which will eventually put Argentina's economy on a stable footing and the voters have despite the negative short-term impacts given him a vote of confidence

and said that basically signalled that they would like him to continue the liberalizing reforms. Over the next two years, he now has enough votes to override vetoes in Congress, which were employed during the past years against his decrees when he tried to liberalize the economy. So I think we can expect him to continue like that for now. Now, he still needs to deliver, so basically voters have given him a lifeline, and we'll now see how this experiment will unfold. Yeah, help us with the context there. I mean, from my understanding, Argentina's been in the

news a lot recently. We had this other election, this local election in Buenos Aires, which, again, us, we Americans, weren't very aware of what was happening, but what we know is that it wasn't good for Millet. You saw this implosion in the bond markets, massive collapse in the peso, which was what led the U.S. to come in and intervene and give them that $20 billion. So this is quite a reversal as just an observer. It seemed

as though Millet was in trouble. Now apparently he isn't. Help us with the context there. Absolutely. So he had a pretty bad result in his political elections in the province of Buenos Aires, which was traditionally more perinists, which has been supportive

of the traditional mere populist, an unethical populist policy. and it was seen as a bellwether election for yesterday's election. So expectations were low, and the Trump administration made a big bet. I mean, they basically, you know, the U.S. government promised a rescue package, a lot of financial support, seen to somehow condition that on a good result for Malay. Yes. And that good result now came to pass.

I think that the U.S. certainly did have a role in that because a lot of voters are aware of the fact that the Belay's policies haven't yet stabilized the Argentine economy. A lot of investors are still very concerned about the capacity to pay its debt. Argentina is one of the countries that has most frequently defaulted on its debt. So that lifeline, obviously, from the role largest economy, does play a role. So it's a vote of confidence, and in that sense, it's also a win, a geopolitical win for Trump because a lot of countries in Latin America are moving closer to China or are sort of multi-aligning, preserving ties to the United States, but also seeking strong ties to China. And Malay kind of stands out.

He actually has actively sought to move closer to the United States. And in that sense, the U.S. government has now kind of offered a reward, so to say, for that strategy. And I think in many ways, a successful government in Argentina will certainly inspire similar figures in other electoral cycles in the coming months. So basically, Léé has now gained another two years to reform Argentina's economy. But I think, I mean, were markets overly pessimistic, perhaps a bit. I mean, last week, I, you know, did speak to several investors and everybody expected Malay to not gain sufficient votes. So there was a sense of, you know, maybe investors will abandon Argentina. And I think that may have influenced voter behavior because they said, you know, they're actually concerned about a Malay loss.

Right. And said, you know, let's give him that vote of confidence in order to help stabilize the economy. I'd also like to get your reactions to the $20 billion, which may become $40 billion bailout. I call it a bailout because I think it is a bailout. They were in trouble, and the U.S. came in, and they intervened to try to help Argentina. There are debates over whether it was to help Argentina or whether it was to help Treasury Secretary Scott Besson's buddies who are invested in Argentina. We don't need to have that debate. But what does it say about the Malay agenda and the libertarian?

agenda, which was supposed to be about reducing spending, shock therapy, let's get rid of our addiction to spending in the short term to fix our problems, let's figure out long-term solutions, let's get this inflation thing under control, and then suddenly they actually need an emergency wire transfer of $40 billion to prevent financial ruin, essentially. Right. Yeah. So, I mean, the first part of the question is some progress has been made in reducing public spending. I mean, you had a massive reduction of, let's say, ministries, for example. You did have, you know, tens of thousands of public workers, which have been let go. But at the same time, these kinds of adjustments are inherently painful. And, you know, Argentina's economy has been, has had low indices of productivity for a long time. And you need. initially, at least, investor confidence. And of course, Argentina's history, you know, generates a lot of caution among investors.

A lot of people got their fingers burned over the past decades, betting on Argentina, and then Argentina defaulted. It's still, there's no other country in the world that owes more money to the International Monetary Fund than Argentina. So in that sense, it continues to be sort of a high-risk investment, and it may still very well fail. So the current, this recent result is, so good news from LA, he can continue to implement his reforms. He'd actually, I think, even accelerate reforms because he didn't have a governing coalition in Congress.

He still needs a party which is sort of center-right tied to former president, Macri. So I expect him to advance faster now than during the past two years. But there's no guarantee. I mean, a country has had for a long time a very bloated public sector, which attracted a lot of talent. This is a problem in several Latin American countries where the smartest people seek to enter government where not necessarily, you know, they make the greatest contribution to economic growth. So these are, you know, structural issues, of course. there's a problem of still excessive bureaucracy and excessive dependence on exporting commodities, issues with education, with infrastructure.

So, you know, these things take time. And it's a big question mark, particularly now that, you know, we sort of see increasing state intervention in the economy around the world. You know, the United States, actually, you know, you have the U.S. government, you know, purchasing stakes of strategic companies. You see protectionist trends. You see sort of a geopoliticization of the world of economy. So it's going to be really interesting to see whether this kind of libertarian approach is still viable in this age of great power competition where everything seems to be politicized, right? I mean, it's not like Trump promotes free trade. or China or any other major power. We're kind of in this completely different age where very few political leaders embrace the kind of ideology we're seeing in Argentina. All right, Oliver Stunkel,

Associate Professor at FGV's School of International Relations in Brazil. Oliver, we really appreciate your time. It will be very interesting to see how this all unfolds in Argentina. Thank you. Thank you very much. After the break, a look at the latest inflation report. If you're enjoying the show, give property markets a follow.

Scott, we're hitting the road, bringing pivot live to the people. Seven cities, Toronto, Boston, New York, D.C., Chicago, San Francisco, and L.A., of course. You went to Oasis, you went to Beyoncé, you saw the remake of Wizard of Oz in the sphere. All those suck compared to the pivot tour. This is, this is the big. biggest tour. Same people that are organizing our tour that organize Taylor Swift's tour. They are much more excited about our tour. All right. That's enough, grandpa. It's going to be so good. And we're bringing our brand of whatever we do to the people. And we're excited to meet our fans. We love our fans. For tickets, head to pivottour.com. See you there.

If it seems like AI is touching just about every part of your life these days, you aren't imagining things. It's all up in your streaming services, it's all up in your job search, and now it's even in your doctor's office. It can perform exceptionally well, kind of almost in a superhuman way, on these specific, very challenging, complex clinical cases. This week, unexplain it to me, when AI meets medicine. And I think it can be potentially revolutionary and transformative people if they use it in the right way. And when it doesn't compute. One in five, around 20% of Americans said that they had turned to a chatbot for advice that later turned out to be incorrect. New episodes, Sundays, wherever you get your podcasts.

This week on Net Worth and Chill, we're tackling the elephant in the room, today's brutal job market. I'm joined by career experts, Laura Brown and Christina O'Neill, who've guided thousands of professionals through layoffs, pivots, and complete career reinventions. From understanding why good people get fired to turning unemployment into your biggest opportunity, Laura and Christina break down the real strategies that work when everything feels uncertain. They share why getting laid off isn't a reflection of your worth, how to navigate the emotional roller coaster of job searching, and the exact steps to position yourself for roles that actually pay what you're worth. Kind of a reminder that it is, you know, when you're

going through it, you know, there is grief. And you do have to mourn it. It is a loss when you lose your job. Get ready for honest talk about resilience through tough times, the networking moves that actually land interviews, and why your next career chapter could be your most profitable yet. Listen wherever you get your podcasts or watch on YouTube.com slash your rich BFF.

We're back with Profi Markets. After a 10-day shutdown delay, the consumer price index is in. Prices rose 3% from a year old. earlier the highest since January. Still, the result was under the 3.1% estimate and was up 0.1% from August. Major stock indices rose to record highs on the news, and the report all but seals the deal for a rate cut at the Fed's meeting, which takes place tomorrow. Here to explain this report and what it means for the economy. We are speaking with Robert Armstrong, US Financial Commentator for the Financial Times and author of the unhedged newsletter, Rob. Great to have you back.

on property markets. Great to be back. So we want to get your reactions to this inflation print, the CPI. We're up to 3%. We were at 2.3 earlier in the year. Now we're at 3. All that's on my mind is the tariffs and the fact that this is a reflection of tariff impact. But I want to get your angle, your initial reactions. Well, better is what I would say, but better with an asterisk next to it. So both on the good side, the series I like to look at are durable goods, which tends to be a series, as you mentioned, that's very much affected by import tariffs. So, you know, cars, refrigerators, everything but kind of clothes and food, and then at core services, services without energy. And both of those dip down a little bit. And that's welcome

news. We're still about a percentage point above the Fed's target, but at least we're trending in the last month or two slowly in the right direction. But I haven't gotten you to the asterisk yet. Yeah, let's say the asterisk. The asterisk is there were two very big items that went down a lot, sharply down, in September. And that was on the services side, that was housing, rent, and owner's equivalent rent, and on the good side, it was new and used cars. And these are big series that have a lot of waiting in the index, but they're lumpy, and they move around a lot month to month. Also, on the housing side, it's a very lagging number. It tells you a little bit more about the world six months ago than it tells you about the world today. But both of those

were low. And so it could be that we sort of rolled the dice. and got a lumpy month to the low side on those two things. And if you take those two out, we're still pretty warm. We're still well above 3% if you take out those two. Now, it's not fair to just take out whatever you want. You can't go month by month and say, well, this month we're not going to count housing. This month, we're not going to count autos. What is just telling you is that the numbers are lumpy,

and we have to be a little bit careful about reading too much into September. Mm-hmm. There are some items that are tariff-sensitive that we are seeing rising in price. I think probably the best example would be coffee, which is up almost 20% year over year. I look at what's happening with inflation, the fact that we went from 2.3, the month of Liberation Day, it went up to 2.4, it kept going up, it went up to 2.7, then it went up to 2.9, now we're up to 3%. is it, in doubt at all, that tariffs are pulsing through? I don't think so. I mean, we know the tariffs are being charged at the border to the tune of many tens of billions every month,

and we know who's paying those tariffs as of right now. It's mostly the importers and the wholesalers who are doing the importing. But we know they're passing a little bit, maybe a third or a quarter of the tariffs onto the consumer. So that's what shows up in this report, not the full impact of tariffs, but just the bit that the companies aren't eating. So one of the big questions for the next six months or so is, are companies going to stop

eating as much of the tariffs as they're going to eat? In which case, you could see goods inflation, you know, which is not even half of the picture, but it's a significant amount of the picture, total inflation. You could see goods inflation heat up in the next month, six months, year. Right. And that's something I'm going to be watching really closely. We have no September jobs report. We'll have no October jobs report.

This is obviously all very important in terms of the Fed's interest rate decision, which is happening, going to be happening tomorrow. I mean, the whole picture, I'll tell you, Ed, I think the whole picture is one where I think, think market commentary and the market itself has gotten a bit ahead of itself in terms of how many rate cuts we're going to get. We're a solid percentage point above the Fed's target on inflation. If you look at things like the Goldman Sachs index of financial conditions, financial conditions are very loose. Markets are extremely hot. And indeed, the economy, with the very important exception of the jobs reports, and we talked a little bit about those on the show in the

past, looks pretty hot too. So, you know, I don't think any rational person would look carefully at the numbers we're seeing right now and say inflation is beaten, the economy is slowing down, we have a percentage point or more of cuts coming. I just don't see the case. And yet we're looking at a, I think, near 100 percent certainty of a rate. rate cut, and the market appears to be unanimous. And in a lot of the reporting, I was seeing, which surprised me, I agree. I think the commentary's a little got itself in a bit of a spin, because the commentary says, this seals the deal. Now that we're at 3% inflation, hooray, now we're going to get a rate cut. It's like, hold on, we were at 2.3. I thought we were

trying to get to 2. We're at 3 now. And there, that is something that is sort of in the background on everyone's mind, I think, which is, does two percent now mean the number starts with a two? Right. You know what I mean? Right. It's not two percent. Like, 2.7 percent counts as two now. Round up a number. Yeah. And I don't really know. I don't really know what the fed's position on that is. And look, I'm sympathize with the people on the monetary. Policy Committee or the Federal Open Market Committee who are more dovish because the job situation is a little weird. Yes. You know, you're looking at a very low level of job creation every month. You're reading a lot of announcements about layoffs and the fact that the rest of the indicators we have of the economy look pretty strong other than that jobs number. That's only so reassuring. I mean, the Fed's mandate is employment. Right. Right. The Fed's mandate is not economic growth, it's employment. So they've got to take the jobs numbers, which are a little spooky. They have to

take them seriously. But everything else that I can see is saying the economy's warm, financial conditions are loose, and inflation is too hot for comfort. What would be your predictions for the next several months or so when it comes to inflation? I mean, I can just tell you where I stand. on this. Prices are going up. Tariffs pass it beginning to pass through. We're starting to see it in the data and we're cutting rates. I think it's only going to get worse from here. I just want to sit here if you agree. I agree with you on the good side. Yeah. I think there's good reasons to think that there will be more tariff pass through to consumer inflation. We're already seeing it in producer inflation. It's going to move towards consumer inflation. The services side,

is the real question. Wage growth is still pretty good, but again, if you take housing out, services inflation, you know, haircuts, legal services,

health insurance, all that kind of stuff, that stuff's pretty hot too. Right. So I think, but I just don't know, I feel less confident about what that's going to do.

If the jobs number are telling us something about underlying weakness in the economy and we continue to see very low job creating, It makes sense that non-service, that service inflation would come in a little bit. Because that stuff is really driven by wages, and wages is driven by how type the job market is. Yeah.

We're also seeing a lot of sentiment reports coming out. You Michigan sentiment down 22% from a year earlier. Trump is just increasingly polling badly when it comes to his handling of tariffs on the economy. I mean, I know that I struggle with these sentiment reports because I find them so political just by nature. But are you looking at these sentiment reports? Are they playing into your view of the economy? I look at them.

The problem is, and I've written about this a little bit in recent weeks, is they're less and less predictive. Right. That the sentiment has been bad for a long time. And in the last couple of years, it just hasn't been a great guide to what markets are going to do, what employers are going to do. I think there is no question that the Liberation Day fiasco put employers in a mood to wait and see. I don't think there's any question that people like to hire when the future looks predictable. and we don't we haven't had a lot of that in policymaking but i i think we might be getting over

that a little bit the the the shock and horror of that absolutely bizarre news conference is receding a little bit into the past yeah and hopefully there's been some lessons learned there and uh we're will be sentiment will slowly recover okay uh just while we have you we only get to speak every so often what else is on your mind anything anything happening in the markets right now that you're paying particular attention to that you're finding quite significant? It's fun watching gold wobble here. Because gold was an interesting case where it started out as a fundamentally backed story. So a year or two ago, it was like central banks were buying more gold as a kind of way to diversify their portfolios. Gold was cheap.

dollar weakened a little bit, you know, all this stuff was getting behind gold. But then the trade kind of took on the life of its own and became a kind of FOMO momentum retail trade. And in the last couple of days, it's kind of been like, whoa, let's slow down here a little bit. And I'll be fascinated to see what that does. And, you know, it's been a great case of when you have a price that's going up, the narratives will fall in place. Like, You know, gold went past 3,000, up to 4,000. It was like, let's just make up stories about what's driving the gold price. Yes.

But what was driving the gold price was the gold price. Exactly. There's nothing else to it, yeah. It's a classic case of FOMO, and it's so interesting how the price increases in gold. We did see in the reporting, oh, it's because the central banks are buying gold. But that only explained a fraction of the price increase. And, and explained it like two years ago. go. You know, the banks have actually backed off now, right? Yes. Because if you're a central bank,

you have an allocation to gold, and it's a percentage allocation of your portfolio. Price of gold goes up 50%. Suddenly you're over your allocation. You have too much gold. Yes. Right? Exactly. So this is a very funny story. And of course, we have, Ted, the other thing I would mention is just we, you know, we have big tech earnings rolling in this week. Absolutely. Oh, we always kind of hold our breath because, you know, this is a third of the market by value or whatever it is now. And we have five of the big ones reporting this week. And we're going to be waiting, of course, with a baited breath for all of that. Any thoughts on what you think we can expect the next week or so? I mean, any time I've been skeptical of these businesses' ability to just

keep growing despite their incredible size, I've been wrong. So I'm just not going to step in front of that steamroller again. I mean, these businesses are just their ability to grow. And, of course, everyone's worried about their spending right now. But the fact is, they've got the money. Yep. Sales are growing. So, I mean, these things are an incredible story.

And I think chances are good. They'll just report another good quarter. It's the tail risk you worry about. The small percentage chance that one of these guys says, we've been doing some thinking and maybe we have to change our strategy with regard to these data centers a little bit. And then it's going to be game on. But I think the probability of that is low, but it's just going to be a high consequence event if it does, if the dice come up that way. All right. Robert Armstrong, U.S. Financial Conversator for the Financial Times, author of the

unhedged newsletter, which, as everyone knows, is my favorite newsletter. Rob, great to have you on the show. Thank you. Pleasure to be back. You invite me any time. So, the data is in. Inflation is up again. Last week, we predicted that this would happen. We said that inflation would rise again and that it would continue to rise. Indeed, prices in America are now up 3% from a year ago. That's up from 2.3% inflation just a few months ago. Now, why did we predict this? Well, quite simple. Our thesis is one, that tariffs raise prices. And two, that it takes some time for tariffs to raise prices. That's why we weren't surprised when inflation was only 2.4% in May because the tariff impact hadn't taken effect. And it's also why we were so angry

when we saw Treasury Secretary Scott Besant going around parading that number to the media as his evidence that tariffs don't raise prices. No, tariffs do raise prices, but it takes time, and that's exactly what we're seeing now. We had 2.3% in April, the month of Liberation Day, then it went up to 2.4%, then it went up to 2.7%, then to 2.9%, and now we are up to 3% inflation. There is absolutely no question. Tariffs are raising prices. That's also why the tariff-sensitive items are exploding in price. Audio equipment prices up 14%. Beef prices up 15%. Coffee prices up 19%.

This is the tariff impact. This is what we're seeing. Now, for those of you who say, hey, you're wrong, economists had expected 3.1% and we got 3%. So this is actually good. All I can say to you is that you are missing the point. Just because a group of economists were 0.1% off on how large the tariff impact would be in this specific month, that doesn't mean there is no tariff impact. And it certainly doesn't mean the experts were wrong. The debate, the that we were having back in April was whether or not tariffs would reignite inflation. Many people said they wouldn't, including people in the administration. Well, we were at 2.3, now we're at 3. So there is no debate.

Tariffs have reignited inflation. Tariffs have made America more expensive. And so long as the tariffs remain in place, prices will continue to rise. Our prediction, next month, when we get the next CPI report, inflation will be even higher. Okay, that's it for today.

This episode was produced by Claire Miller, edited by Joel Patterson, engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shillan, Isabella Kinsel, Kristen O'Donohue, and Mia Silverio, and our technical director is Drew Burroughs.

Thank you for listening to ProfG Markets from ProfiMedia. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you. tomorrow.