JP Morgan recommends to Exit Carry Trade Positions in Argentina

[earlyretirement]

JP Morgan takes BuySellBA's recommendation to Exit Carry Trade Positions in Argentina

As we posted a few weeks ago, you will see BIG MONEY start exiting carry trade positions before the October mid-term election. It's happening even sooner than we thought.

JP Morgan delivers a notably cautious and critical assessment of Argentina's current economic strategy under President Javier Milei and Economy Minister Luis Caputo.

⛔️Recommendation to Reduce Exposure: J.P. Morgan advises investors to step back from Argentine assets, specifically recommending an exit from the popular "carry trade" (short-term investments in peso-denominated instruments like LECAPs), due to rising risks associated with the country's economic program and currency policy.

⛔️Concerns Over Currency Sustainability: The report is sharply critical of the government's policy of maintaining a "cheap dollar" (an overvalued peso), warning that this approach is unsustainable and likely to trigger a currency crisis. The bank notes that the artificially strong peso, supported by debt, is already leading to significant capital outflows, especially through tourism, and predicts further pressure on reserves during the winter holiday season.

⛔️Political and Electoral Risks: J.P. Morgan highlights "electoral noise" as a significant risk factor ahead of the October legislative elections, suggesting that political uncertainty could further destabilize the economy and markets.

⛔️Peak in Agricultural Dollar Inflows: The report points out that the current period coincides with the seasonal peak of agricultural export dollar inflows. However, it warns that these inflows will drop sharply by mid-July, potentially exacerbating the country's foreign currency shortage.

⛔️Mixed Medium-Term View: While acknowledging some positive developments—such as robust disinflation, the lifting of capital controls, and fiscal discipline—the bank ultimately prefers to "wait and see" before increasing exposure, citing ongoing risks and the lack of confidence in the sustainability of the current stabilization program.

⛔️Record Country Risk: Despite some reforms and the end of capital controls, Argentina's country risk premium remains exceptionally high (over 700 basis points), reflecting persistent investor skepticism.

⛔️Recent Financial Operations: Argentina has recently engaged in a $2 billion repo agreement with several international banks, including J.P. Morgan, to bolster central bank reserves, highlighting ongoing liquidity concerns.

⛔️Potential for Future Inflows: J.P. Morgan has also noted that a potential reclassification of Argentina by MSCI could trigger up to $1 billion in capital inflows, but this is contingent on further macroeconomic stabilization and the easing of capital controls, which is not expected imminently.

📣 - When BuySellBA talks, ALL the Big Money Listens

 

[ben]

Wow this is bad news. Things must be bad if they are recommending this now. The election is still several months away. When does Milei's special powers end?

 

[Wally]

Wow this is bad news. Things must be bad if they are recommending this now. The election is still several months away. When does Milei's special powers end?

Bad news indeed. Milei's powers end on July 8 which is just around the corner.

 

[earlyretirement]

Also BA Herald had this story today:

https://buenosairesherald.com/politics/cristina-kirchner-to-milei-dollars-are-leaving-and-investments-are-not-coming

Former President Cristina Kirchner lambasted President Javier Milei’s economic program and its consequences, saying that the private sector is massively moving dollars away from Argentina and that foreign investments are in “negative numbers.”“You can scream like a madman, swear in Aramaic and threaten to ‘jail everyone,’ but brother… DOLLARS ARE LEAVING AND INVESTMENTS AREN’T COMING,” Kirchner wrote on X on Saturday.

This is the first time Kirchner has written a scathing attack on social media against Milei since the start of her house arrest sentence on June 18.The 72-year-old, who was president of Argentina for eight years from 2007-2015 and vice president between 2019-2023, also quipped how Milei has described himself as an “expert in economic growth with or without money,” while questioning the results of his austerity measures.

She referred to a recent speech in which Milei said he is “cruel” with “filthy kukas” — a derogatory term used for Kirchnerists — and “state workers.”“We already know you are cruel… what you can’t be, brother, is a boludo and not realize that you are headed toward a dead-end street.”Kirchner cited results of the latest exchange report released by the Argentine Central Bank on Friday. In May, she pointed out, “the non-financial private sector took US $3.226 billion” outside of Argentina, “breaking the 2003 record and surpassing the monthly average of 2018 and 2019.”

At the time, she said, the International Monetary Fund (IMF) loan taken by incumbent Economy Minister Luis Caputo, who was finance minister in 2018 under ex President Mauricio Macri, “exploded [in the face] of the mobster right-wing government.”The private sector, Kirchner said, took US $5.247 billion outside of Argentina in April. “In 45 days, they took outside 44% of the 12 billion dollars the IMF gave you in April,” Kirchner said. “Do you still think that those who took dollars outside were the ‘heroes fighting the caste?’ Watch it, you are the president now, and they are still doing it.”CFK questions low foreign investmentsKirchner also said that, since Milei became president, direct foreign investments have a “negative balance by 1.5 billion dollars” and that his Large Investment Incentive Regime (RIGI, by its Spanish initials), created in 2024, “was a failure.

”The former first lady and vice-president added that the almost 26 billion dollars that had been accumulated in the trade balance between December 2023 and May 2025 disappeared through outbound tourism and payment of debt interests. “A catastrophe.”“Do you seriously still believe that Argentina’s problem is just the public sector?” Kirchner asked. “You no longer have to make cuts. You are keeping the provinces’ money. Half of Argentines can’t make ends meet and are going into debt to eat,” she said.“You may lock me up and proscribe me, but the economic model of structural debt, crushed salaries and a flat dollar exchange, like always, will fail.”

 

[Betsy Ross]

Seems like their risk appetite has gone. I think they were just part of the $2 Billion loan that they recently got. Maybe they know things are worse than people think.

 

[James Bond]

Also BA Herald had this story today:

https://buenosairesherald.com/politics/cristina-kirchner-to-milei-dollars-are-leaving-and-investments-are-not-coming

Former President Cristina Kirchner lambasted President Javier Milei’s economic program and its consequences, saying that the private sector is massively moving dollars away from Argentina and that foreign investments are in “negative numbers.”“You can scream like a madman, swear in Aramaic and threaten to ‘jail everyone,’ but brother… DOLLARS ARE LEAVING AND INVESTMENTS AREN’T COMING,” Kirchner wrote on X on Saturday.

This is the first time Kirchner has written a scathing attack on social media against Milei since the start of her house arrest sentence on June 18.The 72-year-old, who was president of Argentina for eight years from 2007-2015 and vice president between 2019-2023, also quipped how Milei has described himself as an “expert in economic growth with or without money,” while questioning the results of his austerity measures.

She referred to a recent speech in which Milei said he is “cruel” with “filthy kukas” — a derogatory term used for Kirchnerists — and “state workers.”“We already know you are cruel… what you can’t be, brother, is a boludo and not realize that you are headed toward a dead-end street.”Kirchner cited results of the latest exchange report released by the Argentine Central Bank on Friday. In May, she pointed out, “the non-financial private sector took US $3.226 billion” outside of Argentina, “breaking the 2003 record and surpassing the monthly average of 2018 and 2019.”

At the time, she said, the International Monetary Fund (IMF) loan taken by incumbent Economy Minister Luis Caputo, who was finance minister in 2018 under ex President Mauricio Macri, “exploded [in the face] of the mobster right-wing government.”The private sector, Kirchner said, took US $5.247 billion outside of Argentina in April. “In 45 days, they took outside 44% of the 12 billion dollars the IMF gave you in April,” Kirchner said. “Do you still think that those who took dollars outside were the ‘heroes fighting the caste?’ Watch it, you are the president now, and they are still doing it.”CFK questions low foreign investmentsKirchner also said that, since Milei became president, direct foreign investments have a “negative balance by 1.5 billion dollars” and that his Large Investment Incentive Regime (RIGI, by its Spanish initials), created in 2024, “was a failure.

”The former first lady and vice-president added that the almost 26 billion dollars that had been accumulated in the trade balance between December 2023 and May 2025 disappeared through outbound tourism and payment of debt interests. “A catastrophe.”“Do you seriously still believe that Argentina’s problem is just the public sector?” Kirchner asked. “You no longer have to make cuts. You are keeping the provinces’ money. Half of Argentines can’t make ends meet and are going into debt to eat,” she said.“You may lock me up and proscribe me, but the economic model of structural debt, crushed salaries and a flat dollar exchange, like always, will fail.”

I always tell people to never count out Peronism out again. I have people that told me Argentina would never go back to that. I moved to Spain because I don't honestly see things turning around there. I love Argentina but can't see it getting its act together.

 

[lemonade]

Isn't the fact that they keep getting billions and billions more in loans a cautionary sign? It seems like they just get more loans and then claim their reserves go up?

 

[Uncle Wong]

I always tell people to never count out Peronism out again. I have people that told me Argentina would never go back to that. I moved to Spain because I don't honestly see things turning around there. I love Argentina but can't see it getting its act together.

Darn. I know you have been posting this for a while James. I just saw LLA lost in Rosario elections. Could this be slipping through their fingers?

Elecciones en Santa Fe: los candidatos de Pullaro ganaron en el 80% de la provincia y el peronista Monteverde triunfó en Rosario

Se eligieron concejales, intendentes y jefes comunales y el ausentismo volvió a ser muy alto. El oficialismo se impuso en la capital y en más de 280 localidades. Y el candidato peronista dejó atrás a La Libertad Avanza

www.infobae.com

 

[Nasdaq]

I always tell people to never count out Peronism out again. I have people that told me Argentina would never go back to that. I moved to Spain because I don't honestly see things turning around there. I love Argentina but can't see it getting its act together.

I tell my friends the same thing. I think Cristina is done with politics but this is Argentina so you never know! Not good about JPM sending this signal this far away from the elections. That means they think things will fall apart sooner.

 

[ElQueso]

JP Morgan takes BuySellBA's recommendation to Exit Carry Trade Positions in Argentina

As we posted a few weeks ago, you will see BIG MONEY start exiting carry trade positions before the October mid-term election. It's happening even sooner than we thought.

JP Morgan delivers a notably cautious and critical assessment of Argentina's current economic strategy under President Javier Milei and Economy Minister Luis Caputo.

⛔️Recommendation to Reduce Exposure: J.P. Morgan advises investors to step back from Argentine assets, specifically recommending an exit from the popular "carry trade" (short-term investments in peso-denominated instruments like LECAPs), due to rising risks associated with the country's economic program and currency policy.

⛔️Concerns Over Currency Sustainability: The report is sharply critical of the government's policy of maintaining a "cheap dollar" (an overvalued peso), warning that this approach is unsustainable and likely to trigger a currency crisis. The bank notes that the artificially strong peso, supported by debt, is already leading to significant capital outflows, especially through tourism, and predicts further pressure on reserves during the winter holiday season.

⛔️Political and Electoral Risks: J.P. Morgan highlights "electoral noise" as a significant risk factor ahead of the October legislative elections, suggesting that political uncertainty could further destabilize the economy and markets.

⛔️Peak in Agricultural Dollar Inflows: The report points out that the current period coincides with the seasonal peak of agricultural export dollar inflows. However, it warns that these inflows will drop sharply by mid-July, potentially exacerbating the country's foreign currency shortage.

⛔️Mixed Medium-Term View: While acknowledging some positive developments—such as robust disinflation, the lifting of capital controls, and fiscal discipline—the bank ultimately prefers to "wait and see" before increasing exposure, citing ongoing risks and the lack of confidence in the sustainability of the current stabilization program.

⛔️Record Country Risk: Despite some reforms and the end of capital controls, Argentina's country risk premium remains exceptionally high (over 700 basis points), reflecting persistent investor skepticism.

⛔️Recent Financial Operations: Argentina has recently engaged in a $2 billion repo agreement with several international banks, including J.P. Morgan, to bolster central bank reserves, highlighting ongoing liquidity concerns.

⛔️Potential for Future Inflows: J.P. Morgan has also noted that a potential reclassification of Argentina by MSCI could trigger up to $1 billion in capital inflows, but this is contingent on further macroeconomic stabilization and the easing of capital controls, which is not expected imminently.

📣 - When BuySellBA talks, ALL the Big Money Listens

View attachment 9402

Thank you for your continued posts. I have been reading your posts for 14 years! Always very article and helpful. Informative!

 

[Rich One]

Thank you for your continued posts. I have been reading your posts for 14 years! Always very article and helpful. Informative!

Agreed! It is incredible how many correct calls you have made on Argentina @earlyretirement! What is your secret? How do you do it? I know one of your clients (Paul). He was one of your early investors and told me he bought 4 properties with you very early on and you told him to dump it all in 2017. I believe he waited a year but still made a lot of money with you. He kept one that I believe he still owns today. I have not spoken to him in a few years.

He told me one time in your Recoleta office while he was waiting for you, you introduced him to former President de la Rua in your office. He joked with me that in your office you had photos with you and him, you and Nestor Kirchner, you and Cristina and you and President Macri. He joked no matter who was President at the time you had a photo in your big office bookshelf with the current President. He said that was genius! He was always impressed by that. I am not sure if anyone mentioned that before. It must have been interesting going through so many different Presidents in Argentina!

 

[Larry]

Agreed! It is incredible how many correct calls you have made on Argentina @earlyretirement! What is your secret? How do you do it? I know one of your clients (Paul). He was one of your early investors and told me he bought 4 properties with you very early on and you told him to dump it all in 2017. I believe he waited a year but still made a lot of money with you. He kept one that I believe he still owns today. I have not spoken to him in a few years.

He told me one time in your Recoleta office while he was waiting for you, you introduced him to former President de la Rua in your office. He joked with me that in your office you had photos with you and him, you and Nestor Kirchner, you and Cristina and you and President Macri. He joked no matter who was President at the time you had a photo in your big office bookshelf with the current President. He said that was genius! He was always impressed by that. I am not sure if anyone mentioned that before. It must have been interesting going through so many different Presidents in Argentina!

Remarkable! I have read the disdain you had for the Kirchner's. It never occurred to me that you probably did the best with the K's! 🤣🤣🤣

 

[LongIslander]

Wow this is bad news. Things must be bad if they are recommending this now. The election is still several months away. When does Milei's special powers end?

Things must be worth than anyone imagines if they are already exiting out in June a full 4 months before the elections. I jut noticed that there is more bad news.

MSCI keeps Argentina as ‘standalone market’ without reclassification​

MSCI keeps Argentina as ‘standalone market’ without reclassification - Buenos Aires Herald

An improved assessment could have opened up to US$3 billion in investment, but a government spokesperson told the Herald there were ‘no expectations’ prior to the announcement

buenosairesherald.com

 

[CraigM]

I tell my friends the same thing. I think Cristina is done with politics but this is Argentina so you never know! Not good about JPM sending this signal this far away from the elections. That means they think things will fall apart sooner.

The road ahead was always going to be lumpy and Milei's administration is going to get tested over and over. Popular support is so critical in times like this and why dumbassery like that crypto scam is so damaging. They have got to clean it up and stay focused. I still believe Argentina will vote in another socialist eventually, but the more Milei can get done the better.

 

[Esposas]

The road ahead was always going to be lumpy and Milei's administration is going to get tested over and over. Popular support is so critical in times like this and why dumbassery like that crypto scam is so damaging. They have got to clean it up and stay focused. I still believe Argentina will vote in another socialist eventually, but the more Milei can get done the better.

I agree the more they can get done the better but my husband that is Argentinian tells me that another Socialist will get voted in and it will all be undone again. 🙁

 

[earlyretirement]

The road ahead was always going to be lumpy and Milei's administration is going to get tested over and over. Popular support is so critical in times like this and why dumbassery like that crypto scam is so damaging. They have got to clean it up and stay focused. I still believe Argentina will vote in another socialist eventually, but the more Milei can get done the better.

Lumpy is putting it mildly. Still, you have to remember on "popular support" Milei will NEVER get at least 50% of the population. No matter what. Even if their life is better they will ideologically be against him. Kind of like Trump in the USA no matter what there is a huge segment of the population that will never support him. Milei will never get these people.

I was VERY critical of Milei and his sister when the Libra scandal broke out. There are other smaller scale slimy stuff going on. Just looking at some changes that happened are great. But I know Argentina VERY well and they need a very successful October mid-term elections and vote in drastic changes. They need to lower interest rates, totally rehab employment and labor laws, get rid of federal holidays and eliminate a lot of taxes. They need deflation on prices. Prices are too high and the exchange rate is not realistic.

 

[earlyretirement]

Agreed! It is incredible how many correct calls you have made on Argentina @earlyretirement! What is your secret? How do you do it? I know one of your clients (Paul). He was one of your early investors and told me he bought 4 properties with you very early on and you told him to dump it all in 2017. I believe he waited a year but still made a lot of money with you. He kept one that I believe he still owns today. I have not spoken to him in a few years.

He told me one time in your Recoleta office while he was waiting for you, you introduced him to former President de la Rua in your office. He joked with me that in your office you had photos with you and him, you and Nestor Kirchner, you and Cristina and you and President Macri. He joked no matter who was President at the time you had a photo in your big office bookshelf with the current President. He said that was genius! He was always impressed by that. I am not sure if anyone mentioned that before. It must have been interesting going through so many different Presidents in Argentina!

Sorry @Rich One I didn't see your post. I'm traveling right now on the road so skipping around on posts. My secret? Well, painstaking research, research, research, research. And reading, reading, reading and consuming as much data as I can. My friends say I'm like Rainman with numbers. LOL. You can see a small example at this link. I posted under ApartmentsBA. You can see I successfully laid out how, why and when the USA real estate market would crash and the stock market too. I laid out my thesis and posted articles. I also said to short the stock market and when to cover short positions. It was beautiful!

http://tinyurl.com/sawthefuture2

Ah Paul! Paul was a great guy. I'm not sure you heard but Paul passed away in late 2023. He was a true gentleman. Loved that guy. Yes, I introduced him to Fernando de la Rua who had his office in my building. We were friends because I would ride with him in the elevator all the time. Believe it or not, I had employees that refused to ride in the elevator with him after the Corralito crash in 2001. They blamed him. I had coffee with him in my office every week. He was a true gentleman. I had the entire 3rd floor and 5th floor of my building in Recoleta. We were the largest tenant. He had a small office.

That is funny that he noticed the photos in my office. Yes, I did that on purpose to have a photo with the current President of Argentina. I had this big grand office. HUGE. I had this huge glass desk that was huge and 2 sofas, chairs, bookshelves. It was an old building with very high ceilings. It was a very grand office. I didn't think anyone would notice the photos. I have been through 6 Presidents in Argentina. (Actually 10 because Argentina had 5 Presidents int he span of 12 DAYS after the Corralito) but I was't doing business there yet. The only one I haven't met personally is Alberto Fernandez because I had largely exited already and I didn't want to go back during COVID and get stuck there.

I didn't like the Kirchner's but boy were they great for business. Tourism boomed. Anyone in real estate typically makes more money with bonehead socialists because of the arbitrage between white and blue dollar. But I want to see Milei succeed. But I have realistically pointed out I won't see it in my lifetime.




And if you want to see my Rainman # crunching skills you will see that I was the ONLY one that nailed the election results ahead of time. I was very very very close just based on my own polling. People see this and the date and they say A) You can see the future or B) You are damn good with financial and numbers modeling and forecasting.