Today's number, 1,100.

That's how many chairs were recently

stolen from restaurants in Madrid. The

heist took place over 2 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

two.

Welcome to Property Markets. I'm Edson.

It is October 28th. Let's check in on

yesterday's market vitals. The major

indices closed at record highs on hopes

of a US China trade deal. The S&P ended

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 Mille 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 Mle 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 Malay 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. 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, Malay 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

Stunkle, 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 Mille and what does

this mean for Argentina going forward?

So those were the midterms. Um half of

uh the House of Representatives and the

third of the Senate were uh up for

voting and renewal. And it has been a

surprisingly uh good result for Kavier

Mille, the self-declared anarco

capitalist uh who's been in power for 2

years. And the elections were sort of a

referendum on his policies. uh he's a

libertarian. So his uh key uh 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 uh reeling

from uh his policies of dramatically

reducing public spending. So the economy

is not growing but he is saying that he

still needs some time uh for the economy

to finally recover that this is the

medicine which initially has a negative

impact uh but which will eventually put

uh 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 signal that they would like

him to continue uh the liberal izing

reforms over the next two years. He now

has enough votes to override uh vetos in

Congress uh which were employed uh

during the past years against his uh

decrees when he tried to uh liberalize

uh the economy. So I think we can expect

him to continue uh like that for now.

Now uh he still needs to deliver. So uh

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

has been in the news a lot recently. Uh,

we had this other election, this local

election in Buenosire, which again, us,

we Americans weren't very aware of what

was happening. But what we know is that

it wasn't good for MLE. You saw this

implosion in in in the bond market. uh

massive collapse in the peso which was

what led the US to come in and intervene

and give them that 20 billion dollars.

So this is quite a reversal as just an

observer. It seemed as though MLE was in

trouble. Now apparently he isn't. Help

us with the context there.

>> Absolutely. So he had a pretty bad

result in municipal uh elections in the

province of Buenaziris which uh was uh

traditionally more paranist. though

which has been supportive of the

traditional populist economically

populist uh policies and it was seen as

a dull weather election for uh for

yesterday's election. So expectations

were low and the Trump administration

made a big bet. I mean they basically

you know the US government promised uh a

rescue package a lot of uh financial

support seemed to somehow condition that

on a a good result peri uh and that good

result uh now came to pass uh I think

that the US certainly did have uh a role

in that because a lot of voters are

aware of the fact that the policies

haven't yet stabilized the Argentine

economy a lot of investors are still

very concerned about the capacity to pay

its debt. Uh Argentina is one of the

countries that has most frequently

defaulted on its debt. So that lifeline

obviously from the world largest economy

uh does play a role. So it's a vote of

confidence and um in that sense I it's

also a win a political a geopolitical

win for Trump because um a lot of

countries in Latin America are moving

closer to China or are sort of

multi-aligning preserving ties to 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 US government has now

kind of uh offered a reward so to say uh

for that strategy and I think in in many

ways a successful government in

Argentina will certainly inspire similar

figures in other electoral cycles uh in

the coming months. So basically MLE has

now gained another two years to uh

reform Argentina's economy. Um but I

think I mean were markets overly

pessimistic perhaps a bit. I mean last

week I um you know did speak to several

investors and everybody uh expected

Malay to 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 they're actually concerned about a

Malay loss and said, you know, uh, let's

give him that vote of confidence in

order to to help stabilize the the

economy.

>> I'd also like to get your reactions to

the $20 billion which may become $40

billion

bailout. Uh, and I call it a bailout

because I think it it is a bailout. they

were in trouble and the US 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 uh Treasury

Secretary Scott Besson's buddies who

were 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 uh fix

our problems. Let's figure out long-term

solutions. Uh let's get this inflation

thing under control. And then suddenly

they actually need an emergency wire

transfer of $40 billion

to prevent

uh financial ruin essentially.

>> Yeah. So um 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 uh you did have

uh you know tens of thousands of public

workers uh which have been let go. Uh

but at the same time these kinds of

adjustments are inherently painful and

um you know Argentina's economy has been

uh has had low uh indices of uh of

productivity for a long time. need

initially at least investor confidence

uh and of course uh Argentina's history

uh you know generates a lot of caution

among uh investors a lot of people got

their fingers burn you know there got

burnt over the past decades betting on

Argentina and then Argentina uh

defaulted it's still there's no other

country in the world that owes more

money to the international monetary

funnel than Argentina so um in that

sense it continues to be sort of a

high-risk uh investment and it still

very well fail. Uh so the the the

current this recent result is so good

news for Malay uh he can continue to

implement his reforms. He'd actually I

think even accelerate reforms because he

didn't have a governing coalition um in

in Congress. He still needs uh a party

which is sort of center right tied to

former president Maki. I expect him to

advance uh faster now than during the

past uh two years. But there's no

guarantee. I mean uh the country has has

had for a long time a very bloated uh

public sector uh which attracted a lot

of talent. This is a problem in uh

several Latin American countries where

this the smartest people uh seek to

enter government where not necessarily

they make the greatest contribution to

economic growth. Uh so these are you

know structural issues of course um

there's um you know problem of uh still

excessive bureaucracy an excessive

dependence on exporting commodities uh

educa issues with education with

infrastructure so you know these things

take time it's a big question mark

particularly now that you know we sort

of see uh increasing state intervention

in the economy uh around the world you

know the United states actually you know

you have the the US government you know

purchasing stakes of strategic companies

uh you see protectionist uh trends you

see sort of a geopoliticization of the

global economy so it's 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 uh or or China

or any any other major power. We're kind

of in this um completely different age

where very few u political leaders uh

embrace the kind of ideology we're

seeing in Argentina.

>> All right. Oliver Stankl, associate

professor at FGV's School of

International Relations in Brazil.

Oliver, we really appreciate your time.

It'll be very interesting to see how

this all unfolds in Argentina. Thank

you.

>> Thank you very much.

>> We'll be right back. And if you're

enjoying the show so far, be sure to

like and subscribe to the Profod YouTube

channel at the link below.

We're back with Profy Markets. After a

10day shutdown delay, the consumer price

index is in. Prices rose 3% from a year

earlier, the highest since January.

Still the result was under the 3.1%

estimate and was up.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 ProfitG Markets. Great to be back.

>> So, we want to get your reactions to

this inflation print, this CPI. We're up

to 3%. We were at 2.3 earlier in the

year. Now, we're at three. All that's on

my mind is the tariffs and the fact that

this is a reflection of tariff impact.

Uh, but I want to get your angle, your

initial reactions.

>> 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 uh import tariffs. So

you know cars, refrigerators,

uh 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 this se 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

monthtomonth.

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,

you know, go month by month and say,

"Well, this this month we're not going

to count housing. This month we're not

going to count autos." What what this 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. There are some items that are

tariff sensitive that we are seeing

rising in price. I think the 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 four.

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

passing through?

>> I don't think so. I mean, we know that

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, you

know, not even half of the picture, but

it's a significant amount of the

picture, total inflation, you could see

good goods inflation heat up in the next

month, 6 months, year. And that's

something I'm going to be watching

really closely. We have no September

jobs report. Uh 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 uh

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

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 where you know 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've talked a little bit about

those on the show in the past looks

pretty hot too. So, you know, I don't

think any 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% certainty of a rate cut.

>> Um, and the market appears to be

unanimous. And in a lot of the reporting

uh I was seeing which surprised me. I I

agree. I think the commentary is a

little um 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 now

we're going to get a rate. It's like

hold on. We were at 2.3. I thought we

were trying to get to two. We're at

three now. And there that is something

that is sort of in the background on

everyone's mind I think which is does 2%

now mean the number starts with a two

>> do you know what I mean it's not 2% like

2.7% counts as two now

>> right

>> round up a number

>> and I I don't really know I don't really

know what what the the Fed's position on

that is and look I'm sympathize with the

people

on the monetary policy committee or the

open the federal open market committee

who uh are more dovish because the job

situation is a little weird. You know,

you're looking at a very low level of

job creation every month. You're reading

an a lot of announcements about layoffs.

The fact that the rest of the indicators

we have of the econ of the economy look

pretty strong other than that jobs

number that it's only so reassuring. I

mean, the Fed's mandate is employment,

right? The the Fed's mandate is not

economic growth. It's employment. So,

they've got to take that 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 is 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 I I can just

tell you where I stand on this. Prices

are going up, tariffs passing, 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 s hear if you

agree.

>> I agree with you on the good side.

>> Yeah.

>> I think there's good there's good

reasons to think that there will be more

tariff pass through to consumer

inflation. We're already seeing it in uh

you know, producer inflation. it's going

to move towards consumer inflation. The

services side is the 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.

>> So, I think but I just don't know. I 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

continue to see very low job creation,

it makes sense that uh non-service that

service inflation would come in a little

bit cuz that's where that stuff is

really driven by wages and wages is

driven by how tight the job market is.

We're also seeing a lot of sentiment

reports coming out. You Michigan

sentiment down 22%

uh from a year earlier. I Trump is just

increasingly polling badly when it comes

to his handling of tariffs and the

economy. Um I mean I know that I I

struggle with these sentiment reports

because I find them so political just

>> yes

>> by nature. But are you are you looking

at these sentiment reports? Are they 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 there's le they're less

less and less predictive 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 uh 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 policym 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 and hopefully there's been some

lessons learned there and uh we're

sentiment will slowly recover. Uh just

while we have you we only get to speak

every so often. What else is on your

mind? Any 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 a fundamentally backed story.

So a year or two ago it was like central

banks were buying more gold as as a kind

of way to diversify their portfolios.

Gold was cheap. The dollar weakened a

little bit. Uh you know all this stuff

was getting behind gold. But then the

trade kind of took on a 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.

And it was like, let's just make up

stories about what's driving the gold

price. But what was driving the gold

price was the gold price. You know what

I mean? There was nothing else to it.

Yeah. It's a classic case of FOMO. And

it's so interesting how the 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.

You know, the 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 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, right?

>> Yes.

>> Exactly. So, it's a very funny story.

And of course, we have the other thing I

would mention is just of we, you know,

we have big tech earnings rolling in

this week. And 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

baited breath for all of that.

>> Any thoughts on what 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 gonna

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, you know, sales are growing.

So, I mean, these 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 uh

worry about the small percentage chance

that one of these guys says ah we've

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, US financial commentator for

the Financial Times, author of the

Unhedged Newsletter, which as everyone

knows is my favorite newsletter, Rob.

Uh, great to have you on the show.

Pleasure to be back. Invite me anytime.

>> 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 Bessant 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.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 that we were having

back in April was whether or not tariffs

would reignite inflation, including

people in the administration. Well, we

were at 2.3, now we're at three. 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.

Thanks for listening to Profit Markets

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