I am getting very bullish on #Mexico. Tweetstorm to follow. (1/18)
Mexico has a young population, a growing multilingual middle class with 21st century skills, a geographical advantage over all other low-cost manufacturing centers, and a president-elect (#AMLO) with a mandate for “national regeneration.” (2/18)
Despite negative comparisons to autocrats such as Castro and Chavez by some US critics, AMLO seems to be an economic nationalist who aims to boost living standards by leveraging Mexico’s relationship with the US. (3/18)
IMHO Mexico has a VERY strong hand vis-a-vis the US. @USTradeRep #Lighthizer has demonstrated this clearly by cutting Canada out of #NAFTA talks and stalling Beijing while he negotiated with Mexico. (4/18)
I see 3 big incentives for Trump to work with AMLO: (5/18)
(1) to gain geopolitical flexibility over Beijing by incentivizing multinationals to diversify and regionalize supply chains away from China into N. America, (6/18)
(2) to resist China’s push into Latin America and maintain regional dominance, (7/18)
and (3) to stem migrant flows. (8/18)
In other words, Mexico is critical if the US wants to counterbalance the rising G2 power that is China. (9/18)
The alternative to Trump working with AMLO would be for Mexico to increasingly fall into China’s sphere of influence (and for James Monroe to roll over in his grave). (10/18)
Although corruption and cartel violence continue to weigh heavily on Mexico, the country can thrive in the years ahead as AMLO applies his state capitalist agenda. I expect a big boost in investment, wages, and development in poorer regions. (11/18)
Further, if AMLO can sell Trump on the idea of a US-led LatAm development initiative like JFK’s “Alliance for Progress” or Reagan’s “Caribbean Basin Initiative” to counter China’s “Belt & Road Initiative”, the economic upside for Mexico could be enormous. (12/18)
All of this is another way of saying that I expect foreign capital to pour into Mexico in the coming years. (13/18)
I think long Mexico (e.g., MXN, govt bonds, some equities) is setting up beautifully, and I can see it lasting for a long time. (14/18)
Investor sentiment seems to range from bearish to ambivalent – no one seems to own this stuff and it seems to me AMLO may be the most misunderstood person on the planet (outside of Mexico). (15/18)
Mexico has been almost completely immune to recent EM/Turkey contagion – MXN has rallied almost 10% over the past two months (the low almost perfectly coinciding with Mexico beating Germany in the world cup 😀) and has barely acknowledged the recent #TRY meltdown. (16/18)
I think the peso has probably bottomed for the cycle. When the USD eventually turns weaker (and I think it will relatively soon), economic, financial, & geopolitical conditions could align in Mexico’s favor in a powerful way. (17/18)
In the meantime, domestic optimism is running high after the recent election, credit growth appears to be improving, & credit penetration is still very low. If AMLO is the change catalyst he appears to be, it won’t take much to see a lot of value unlocked in Mexico. (18/18)

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