The Mexican peso has tumbled over 3% in the last 4 days, plunging to its weakest against the USDollar since March as the ongoing corruption investigation soured market sentiment. As we detailed yesterday, a deepening graft investigation involving Alejandro Gutierrez, a former deputy of sitting President Enrique Pena Nieto could imperil his party’s chances in the coming July elections. An ongoing scandal could also bolster the prospects of leftist rival Andres Manuel Lopez Obrador. “The news of this arrest scares investors,” said Jesus Lopez, a strategist at Banco Base in Monterrey, Mexico. “These days, the exchange rate is more sensitive because of low liquidity, and we already know that the peso is more vulnerable from the political side.” And the pso is extending losses…
This post was published at Zero Hedge on Dec 22, 2017.
The Mexican peso is plunging (down over 1% today) to its weakest against the dollar since March after a former deputy in the ruling party in Mexico was arrested as part of a graft inquiry. As Bloomberg reports, political uncertainty continued to weigh on the most-traded currency in emerging markets.
This post was published at Zero Hedge on Dec 21, 2017.
Well-known tourist spot Los Cabos in Mexico was currently the scene of a gruesome sight, but it’s unfortunately all too common for the area. Six corpses have been found hanging from three bridges and authorities believe the deaths to be drug cartel and gang-related. The popular resort of Los Cabos is on the southern tip of the Baja California peninsula and incorporates the two towns of Cabo San Lucas and Jose del Cabo – the latter of which is the municipal seat. The economy of the area is highly driven by tourism and welcomes millions of foreign visitors every year.
This post was published at shtfplan on December 21st, 2017.
Uncertainty, threats, and counter-threats. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Catalonia’s recent declaration of independence may have been a largely symbolic act but the economic hangover it has left in its wake is very real. Last month the number of unemployed in the region rose by 7,391 – the highest rise in a month of November since 2009. During the same period the number of people registered with social security fell by 4,038 – the sharpest fall since November 2013. The economic pain is already taking a psychological toll. According to a new poll published by Spain’s Center for Sociological Research (CIS for its Spanish acronym), the number of households that fear that their economic situation will worsen in the next six months surged from 14.2% in August to 22.2% in October. By contrast, in Spain as a whole there was hardly any change, with the rate barely budging from 15.1% to 15.6%. Almost 3,000 firms have shifted the registered address of their headquarters outside Catalonia since the banned referendum on October 1, many to Madrid. Although the exodus has slowed in recent weeks, every day dozens of Catalan companies continue to change their registered office, despite the express appeal of Spain’s Prime Minister, Mariano Rajoy, to stop doing so after the activation of Article 155 of the Constitution. The Catalan exodus has so far been purely administrative, with companies effectively shifting domiciles, the ‘brass plate’ of the business, to avoid legal and tax complications rather than moving staff or operations, which would have huge cost and logistical implications.
As a world traveler and investor, I always try to find markets where there’s a huge difference between the ACTUAL risk and the PERCEIVED risk. And this risk assessment applies not only to investing, but also to entire countries. Mexico is a great example. Sure, Mexico has some serious problems. Crime. Gangs. Drugs. Corruption. Tensions with the US over illegal immigration and American jobs. But did you know that more Americans applied for residency in Mexico than vice versa over the past few years? Do these Americans know something others don’t? Maybe they know a foreign residency opens opportunities you otherwise wouldn’t have. A foreign residency gives you more options for work, business, investments, travel and living. It’s one part of a Plan B… in a location where you like spending time. And residency in Mexico could be a solution for you. Mexico’s story is more complex than what’s presented in the news. The country offers a lot more than its northern states where the drug war rages… and where the US media focuses all its attention.
This post was published at Sovereign Man on Simon Black, November 28, 2017.
Insanity, like criminality, usually starts small and expands with time. In the Fed’s case, the process began in the 1990s with a series of (in retrospect) relatively minor problems running from Mexico’s currency crisis thorough Russia’s bond default, the Asian Contagion financial crisis, the Long Term Capital Management collapse and finally the Y2K computer bug. With the exception of Y2K – which turned out to be a total non-event – these mini-crises were threats primarily to the big banks that had unwisely lent money to entities that then flushed it away. But instead of recognizing that this kind of non-fatal failure is crucial to the proper functioning of a market economy, providing as it does a set of object lessons for everyone else on what not to do, the Fed chose to protect the big banks from the consequences of their mistakes. It cut interest rates dramatically and/or acquiesced in federal bailouts that converted well-deserved big-bank losses into major profits. The banks concluded from this that any level of risk is okay because they’ll keep the proceeds without having to worry about the associated risks. At this point – let’s say late 1999 – the Fed is corrupt rather than crazy. But the world created by its corruption was about to push it into full-on delusion. The amount of credit flowing into the system in the late 1990s converted the tech stock bull market of 1996 into the dot-com bubble of 1999, which burst spectacularly in 2000, causing a deep, chaotic recession.
While everyone salivates over the board game, ‘Cards Against Humanity’s’ latest political stunt in buying a small piece of border land in attempt prevent President Trump from erecting his proposed Mexican wall, there is a greater crisis lurking that no wall will stop: a Mexican drug-shooting Bazooka. *** New evidence from Mexican daily El Universal suggests a wall would do very little to stem the flow of drugs across the border, as drug cartels have resorted to mobile vans using a tubular mechanism powdered by compressed-air to launch drugs and other illegal objects into the United States.
This post was published at Zero Hedge on Nov 15, 2017.
As our elected officials in Washington D. C. continue to debate whether or not Trump’s proposed border wall would be an effective deterrent to those looking to come to the U. S. illegally, the one thing that is becoming increasingly clear is that Mexico’s drug wars are spiraling out of control…a fact that the Trump administration will almost certainly leverage as it seeks additional funding for border security. As PanAmPost notes, Mexico has recorded a staggering 24,000 homicides in 2017 through September with 73% of those murders being tied to organized crime. 2017 might be the most violent year in Mexican history, one NGO claims. Semforo Delictivo said that, due to the 24,000 homicides between January and September, the year is proving even worse than 2011, when President Felipe Caldern’s war on drugs led to 22,000 homicides. President of the organization, Santiago Roel, said that 73 percent of murders committed in the first eight months of the year were related to organized crime. He said that in 2007, there were 2,828 executions. Now, a decade later, 18,017 have been reported. All high-impact crimes have increased during the current year, including abductions, homicides and grand theft auto at gunpoint. According to Roel, the main cause of violence and corruption is the ‘Mrida Plan,’ which focuses on eradicating drug cartels.
This post was published at Zero Hedge on Oct 26, 2017.
Answers emerge. Including offshore private accounts. Mexico’s public debt-to-GDP of 50% may seem modest by today’s inflated standards, but when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press, and if you borrow in a foreign currency that you don’t control. As the debt load grows, more and more of the States’ financial resources must be used to service it. As El Financiero reports, the cost of servicing Mexico’s debt, despite super-low interest rates globally, has almost doubled in the last five years, and is now higher than it has been at any time since 1990. In fact, according to the Government’s own figures, more state funds will be spent this year on servicing the debt than on all public infrastructure projects put together. Yet as the government scrimps and scrapes in areas that might actually help to boost economic growth, it’s more than happy to dig deep to fill its own pockets. A joint investigation by the news website Animal Politico and the NGO Mexicans Against Corruption and Impunity has revealed that, amidst all the budget cuts, the Pea Nieto Government has been using a complex web of shell companies to make hundreds of millions of dollars of public funds, originally intended for public causes such as combating poverty or financing public education, completely vanish.
This post was published at Wolf Street on Sep 11, 2017.
It’s no secret that Latin America is rife with violence. A recent ranking from the Citizen’s Council for Public Security and Criminal Justice(CCSPJP) further illustrates this point with the top 10 most violent cities in the world being exclusively located in Latin America. Additionally, Latin America has the dishonor of having 43 of the 50 most violent urban centers located in the region. These shocking levels of violence can be attributed to several factors – corruption, failed drug war policies, and the lack of rule of law in the region. *** But there is one elephant in the room that is largely ignored in the discussion of crime in Latin America: the stringent gun-control laws present in these countries. While the previously mentioned factors cannot simply be discounted, the lack of coverage on Latin American gun control policy is rather alarming. Countries like Brazil, Colombia, Mexico, and Venezuela feature some of the most draconian gun control policies in the region. With crime rates at already high levels, gun control simply makes matters worse for law-abiding citizens fearful of criminals.
Americans don’t know what’s being negotiated at their expense. The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations ‘classified’ and they’ll be cloaked in secrecy. But corporate lobbyists have access. And they’re all over it. The Electronic Frontier Foundation put it this way: Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.
This post was published at Wolf Street by Wolf Richter ‘ Aug 19, 2017.
Will Spain’s central government blink (again)? By Don Quijones, Spain & Mexico, editor at WOLF STREET. Madrid’s standoff with Spain’s north eastern province of Catalonia, which plans to hold a forbidden referendum on national independence on October 1, grows more and more complex by the day. Just in the last week alone the following developments have taken place: Spain’s Civil Guard has raided Catalonia’s parliament and government HQ as part of its investigation into political corruption in the region. As new research has shown, this investigation forms part of a broader police operation that has served as a means for Spain’s governing People’s Party to spy on political rivals. Catalonia’s government has replaced the region’s chief of police with a die-hard separatist. It has also purged the cabinet of any members perceived as not fully committed to the separatist cause. Deloitte published its annual barometer of Spanish businesses according to which 74% of business leaders believe that the independence of Catalonia would do serious harm to Spain’s economy. Support in Catalonia for national independence is on the wain, according to a new poll, with 49% opposing independence, and just 41% favoring it. That said, only 67.5% of respondents said they still plan to vote on Oct. 1. Most of them will be nationalists. Madrid will do everything it can to stop them. The Rajoy government has warned this week that anyone who participates in the purchase of ballot boxes for the referendum could be criminally prosecuted.
This post was published at Wolf Street on Jul 23, 2017.
While tense trade negotiations between the US and Mexico over the price and quota for U. S. imports of Mexican sugar continue (a happy ending appears unlikely, especially after a Mexican sugar company on Friday called on the government to take action against American fructose producers and protect the local industry from US deals), a new protectionist measure involving sugar half way around the globe was unveiled on Monday when China – the world’s biggest importer of the sweet substance – said it will impose significant penalties on sugar imports following lobbying by domestic mills. According to the ruling first described by Reuters, up to a third of China’s annual sugar imports will be impacted by an extra tariff for the next three years on shipments that the government said had “seriously damaged” the domestic industry. The details: China currently allows just over 1.9 million tonnes of imports at a tariff of 15% as part of its commitment to the World Trade Organization. All imports above this amount are slapped with a 50% levy. After Monday’s ruling, the total sugar duty will nearly double, with Beijing imposing an additional 45% tax to these imports in the current fiscal year taking the total to 95%. This will fall to 90% next year and 85% a year later, China’s Commerce Ministry said in a statement. The ruling exempted 190 smaller countries and regions from the new duty, including smaller producers such as the Philippines, Pakistan and Myanmar.
This post was published at Zero Hedge on May 22, 2017.
Reporting from Lake Atitlan, Guatemala… Interpol helicopters swam through the darkness outside my room. Scattered booms of M-80s cracked and whipped the rushing winds in celebration of Semana Santa. Dogs roared. Other strange animals, of which your editor is not yet accustomed to, howled, hooted and growled in vain efforts, it seemed, to beat back the chaos. Saturday evening, as my driver, Ricardo, pulled into Panajachel (the ‘New York’ of Lake Atitlan), so did a swarm of Interpol officers. They came to capture the fugitive ex-governor of Veracruz, Javier Duarte de Ochoa. Coincidentally, those who conspired to help Duarte make his way to Lake Atitlan, according to authorities, did so from Mexico City… from where I just flew in. (For the record, I’ve never seen that man before in my life!) Six months ago, Duarte resigned from his position as governor of Veracruz to, according to him, ‘fight the corruption charges’ made against him. (Racketeering, theft, money laundering, bribery… you know, the usual) A few days later, he vanished without a trace.
On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico. As Visual Capitalist’s Jeff Desjardins reminds readers: Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’ Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico. IT’S A COMPLICATED WORLD Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action.
This post was published at Zero Hedge on Mar 29, 2017.
On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico. Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’ Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico. It’s a Complicated World Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action. However, coming to a decisive viewpoint on NAFTA’s success or failure can be difficult to achieve. Over two decades, the economic and political landscape has changed. China has risen and created a surplus of cheap labor, technology has changed massively, and central banks have kept the spigots on with QE and ultra-low interest rates. Deciphering what results have been the direct cause of NAFTA – and what is simply the result of a fast-changing world – is not quite straightforward.
Having already signed a (mostly symbolic) executive order on Obamacare on Friday night, urging US agencies to “waive, defer, grant exemptions from, or delay the implementation” of provisions deemed to impose fiscal burdens on states, companies or individuals, Trump is preparing to unload a volley of many more executive orders. Courtesy of Axios, which quotes “one of the best-wired Republican lobbyists in town”, here is a preview of the initial round of Trump executive actions, some of which may hit as soon as Sunday afternoon: Look for a possible hiring freeze at executive branch 5-year lobbying ban on transition and administration officials Mexico City policy, which prevents foreign NGOs from getting U. S. family planning money if they provide abortions with non-U. S. funds. (It’s already illegal to use U. S dollars on abortions.) Task the Defense Secretary and joint chiefs to come up with plan to eviscerate ISIS Report on readiness, and something cyber security related Border/immigration: Something on sanctuary cities, expand E-Verify, an extreme vetting proposal Trade: Withdraw from TPP and a thorough review of NAFTA Axios also notes that “the Mexico City executive order could come as soon as today.”
This post was published at Zero Hedge on Jan 22, 2017.
San Diego, CA – Long-simmering social tensions in Mexico are threatening to boil over as failing neoliberal reforms to the country’s formerly nationalized gas sector are compounded by open corruption, stagnant standards of living, and rampant inflation. The U. S. media has remained mostly mute on the situation in Mexico, even as the unfolding civil unrest has closed the U. S.-Mexico border in San Diego, California, several times in the past week. Ongoing ‘gasolinazo’ protests in Mexico over a 20 percent rise is gas prices have led to over 400 arrests, 250 looted stores, and six deaths. Roads are being blockaded, borders closed, and government buildings are being sacked. Protests have remained relatively peaceful overall, except for several isolated violent acts, which activists have blamed on government infiltrators. The few mainstream news reports that have covered the situation blame rising gas prices but fail to examine several other factors that are pushing Mexico to the brink of revolution.
In a few short hours we’ll be treated to the President-Elect’s much-anticipated first press conference. We’re not sure there’s been a more eagerly awaited event of its kind in memory. As Bloomberg’s Richard Breslow notes, global markets (ex-Mexico and Turkey) have ground to a halt. You can cut the anticipation with a knife. Will the powerful trends we’ve seen for the last two months continue? Or reverse with a vengeance? All will be revealed. And investors will know exactly which the best trades to set up their year are. Don’t get your hopes up. But who knows? It’s a must-listen in any case. Investors will do their best to focus on comments and policy prescriptions specifically aimed at various sectors of the S&P 500. There will be a natural tendency to try to ignore as unpricable potential policies that affect massively important geopolitical and international economic issues. That might work in trading the S&P financials index this afternoon. But perhaps not so well for the Asia dollar index, where the countries comprising that measure are already being forced to speculate on what the acronym might be for a China-led economic and security pact.
This post was published at Zero Hedge on Jan 11, 2017.
Marching with a boisterous but peaceful crowd through central Mexico City, Hctor Prez, a sales manager with an insurance company, rattled off a list of grievances to explain a wave of furious protests which erupted after a rise in the country’s government-set petrol price. ‘It’s not because we all have cars. When gasoline prices go up, everything else goes up: tortillas, public transportation, everything,’ said Prez. Pressed a little harder, he voiced another set of reasons for his discontent: President Enrique Pea Nieto and his Institutional Revolutionary party (PRI) justified an agenda of structural reforms with the promise of growth for all – but have instead presided over a stagnating economy. Meanwhile, a string of high-profile corruption scandals has heightened the perception that the while ordinary Mexicans have seen a gradual decline in spending power, the country’s politicians have grown rich.