The distress flare goes up
A health crisis, racing back to England, major change in Argentina, bonds, gold and more
An apology!
You haven't heard from me for a bit.
The reason is simple. The parental distress flare went up in Sussex, South-East England.
Yes, my ageing mother had an incident and had to be rushed to A&E (ER), and then a hospital ward for a couple of weeks. Meanwhile, someone had to look after my father, who had a stroke a decade ago and can't fend for himself.
So I jumped on a plane from Buenos Aires to England and have been in the thick of family firefighting ever since. There are other family members on hand, but there are certain things that only yours truly can really sort out.
That's kept me busy for the past couple of weeks, and it's not over yet. Mum escaped from the blandness of hospital food on Monday, and now it's all about settling her back into home, with some major life adjustments. It's a home that my parents bought 60 years ago. Thus, any changes will be a big deal to get used to.
Ah, getting old. It's certainly no fun. But, as I usually say, it's better than the alternative. Well, within reason.
While I've been away, nothing short of a political shock hit Argentina. In the final round of the presidential election, the left-wing, big-state, money-printing Peronists were soundly beaten by a new political force, La Libertad Avanza (Liberty Advances).
With president-elect Javier Milei at its head, Argentina has done something that I never thought could happen in that politically rotten country.
Argentine voters have elected a small-state, pro-capitalist, arch liberal government.
For avoidance of doubt, by "liberal" I mean the old meaning, from the Latin "liber", meaning free. And not left-wing, or woke, or other sinister connotations.
(Yes, the Latin word sinister means "on the left side", and in the English language has connotations of evil that date back to around the 14th century.)
In North American parlance, Milei is something like a libertarian, at least economically speaking. To avoid confusion in different quarters, he usually calls himself a "liberal libertarian". Which I guess means he's a freedom loving freedom lover.
He's also described himself, philosophically speaking, as an "anarcho-capitalist". That means fully in favour of free market enterprise between consenting counterparties, without government interference.
But, in reality, Milei is a pragmatist at heart, and has therefore also said that he intends to govern as a "minarchist". That means being in favour of reducing government to the smallest size possible, but knowing that pragmatism is required, and a phasing of changes.
Of course, the usual media suspects have branded Milei otherwise, as they are prone to do. He's either "far right" (e.g. in The Guardian newspaper) or "hard right" (e.g. at the BBC).
But there's a notable lack of brown-shirted and jack-booted thugs goose stepping to Milei's tune along the avenues of Buenos Aires. Instead, Milei simply says he wants less government waste, fewer ministries, lower taxes, deregulation, more personal freedom, no capital controls or trade tariffs and so on.
Viva la libertad, carajo!
As Milei is prone to shouting, as he wields the symbolic chainsaw of deep spending cuts (yes, really).
Long live freedom, dammit!
Hey, I can get behind that.
This is not to say that it will be easy. The rot is deep within Argentine politics, finance and the economic system. There are decades of idiocies, distortions, corruption and vested interests to untangle. What's more, Milei has a minority in the Congress, which means he'll need support from other parties to make significant legislative changes.
But, in my opinion, this is Argentina's best chance ever to extract itself from the slippery slope of decline that it's been sliding down for the past 70 to 100 years.
Fingers crossed for some positive change.
Cue the anti-reform, socialist riots. (Trust me, these will happen.)
But what about elsewhere?
In the UK, the Tory government continues to avoid being conservative. I know that I promise to avoid politics as much as possible. But I just find it ironic that the Chancellor of the Exchequer (translation: finance minister) can claim to cut vast swathes of taxes, and yet the overall tax burden is still expected to rise further, to its highest percentage of GDP since the 1940s. Someone needs to call Javier Milei...
(Incidentally, Milei has even praised Margaret Thatcher. This is no small deal in Argentina, given that she was British Prime Minister during the 1982 war over sovereignty of the disputed Falklands / Malvinas islands.)
In the markets, bonds have popped a bit higher in the short-term, presumably because markets believe that inflation is now largely under control and interest rates have peaked. Next comes recession (probably) and interest rates cuts.
But I'm still leery of owning long-dated bonds beyond a few months, or perhaps a year. Government spending is still out of control, especially in the US, and any recession will see a drop in tax revenues. That will lead to yet another jump in government budget deficits and debt burdens.
As debts keep climbing, the days draw closer when we see sovereign crises in various developed countries. That means collapsing bond markets and/or currencies.
Of course, one great hedge against such extreme outcomes is to own gold, or gold mining stocks. As I write, the spot price of gold is $2,041 an ounce, up from $1,819 as recently as early October.
Actually, in the short term, gold is most likely merely reacting to the peaking of interest rates, and the prospect of falling rates in future. Anyway, whether you own gold or gold miners, the past couple of months have been enjoyable ones.
Before the parental distress flare went up, I was mid-way through writing a reader Q&A, responding to many excellent questions received from readers. I'll finish it and send it as soon as possible.
I'll also get the latest book chapter out when I can. Plus there will be a new stock analysis soon.
(I note that the last one that I covered, in late September, is up over 7% in two months. Paid readers can refresh their memories here.)
With the immediate family crisis over, I'll be heading home to Buenos Aires next week. Not least since my daughter is about to leave school and turn eighteen, neither of which I want to miss.
There’s lots more to come in the next few weeks. 2023 isn't over yet!
Everything at OfWealth is produced by me, and me alone. Not by some junior trainee or AI system.
Which means, occasionally, something might hold things up. I hope you’ll agree that a parental crisis is a reasonable excuse.
In the meantime, I beg your patience. And assure you that I’ve still got at least one eye on the markets.
Please send comments or questions to the email shown below.
Until next time,
Rob Marstrand
email: ofwealth@substack.com
The editorial content of OfWealth is for general information only and does not constitute investment advice. It is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Appropriate independent advice should be obtained before making any such decision.