Report of the day

‘Stabilizing the US-China Rivalry’ 

That’s the name of the report just published by US thinktank RAND, now generating a heated and nerdy debate over both its recommendations (like urging the US to stop aiming for a decisive ‘victory’ over China), and its criticisms (like arguing Western officials are mis-translating and over-dramatizing Beijing’s speeches to exaggerate the threat).

Argentina’s big surprise

The world doesn't ordinarily hold its breath for Argentina's mid-terms, but President Milei’s massive performance over the weekend had all those sweet sweet ingredients the headlines love: high stakes, tight margins, big egos, all culminating in… a plot twist.

So let's take a quick look at what Sunday's result means, and why it matters:

• First, the stakes

Technically, voters were renewing half the lower house, and a third of the senate.

But practically, this was a referendum on Milei's austerity shock therapy to a) curb inflation, b) stabilise Argentina’s economy, and c) finally end its endless default cycle.

And so politically, his surprise 41% result is not just a boost (polls said he'd be lucky at 35%), but this also makes it much harder for the opposition to block Milei's reforms.

Which reforms, you ask?

His 'phase 1' already delivered Argentina's first full-year surplus in 123 years and crushed monthly inflation from ~25% to ~2%, all by slashing things Argentina can't really afford (subsidies, costly public works, and a big public sector). And while poverty is still high, the latest stats show it’s falling (though critics argue the numbers cloud a complex picture).

His planned 'phase 2' reforms will be just as big and polarising, whether deregulating the labour market, simplifying the tax code, or privatising another ~20 state-owned firms.

And yet voters just gave Milei the green light (a ~veto-proof presence), which takes us to…

• Second, the margins

It's one thing for polls to project a razor-thin result, but when markets predict it? Ufff.

Yet that’s what played out lately, as traders saw a) stubborn poverty, b) big protests, c) Milei’s poor provincial result, and d) scandals (like alleged kickbacks involving his own sister/chief-of-staff), and concluded maybe Argentines were finally fed up with him.

That’s why in recent months, a spooked market went running on the peso, and forced the central bank to burn reserves to defend it, all while edging Argentina closer to default.

Which gets us to…

• Third, the egos

President Trump then shocked everyone earlier this month with a ~$20B currency swap (plus another possible $20B private facility). It didn’t fix Argentina's problems, but it gave the central bank enough breathing room to avoid a pre-election collapse that would’ve wiped Milei at the ballot.

So this was a circuit-breaker to stop the market’s prophecy from self-fulfilling.

And it arguably worked.

So… that sound you can hear? It’s a sigh of relief as Argentina’s peso, bonds, and stocks all bounce back after a rough few months. It’s a regional sigh, too — even neighbouring Brazil’s currency is up on the news, as fellow emerging markets get a kind of halo effect.

Intrigue’s Take

The signal in amongst all the noise here is that folks in Argentina are still willing to endure more pain to avoid their country’s 10th default since 1816 (or fourth since 2001).

The alternative — a sudden halt, midway through a historic reform program — might’ve been the worst of both worlds: pain without the payoff.

But to be clear, months of declining approvals are also a reminder that this big result is hardly a blank cheque for Milei: voters also want their side-burned, leather-clad, rock-belting economist of a leader to cut the scandals, ease the burden on the poorest, and maybe stop calling student protestors “terrorists” while he's at it.

We just wonder if he can hear that message over the roar of his own celebrations.

Sound smarter:

• Milei has almost tripled his seats and beat the opposition Peronists by ~10%, but (based on pre-existing seats) the weakened Peronists still hold more seats.

• Turnout came in at a relatively low 68%.

Meanwhile, elsewhere…

Extra Intrigue

🤣 Your roundup of the world’s lighter news

• Police in Spain have arrested seven people suspected of stealing 1,000 chairs from restaurants and bars.

• A man caught breaking into an empty house in Japan has denied being responsible for the udon noodles found in its refrigerator.

• A Texas college is banning its students from throwing celebratory tortillas at the start of football games.

• Last week’s Amazon cloud outage apparently caused smart mattresses to overheat.

• And sneaker brand ‘On’ is getting sued by customers complaining of an embarrassingly loud squeak coming from their kicks.

Photo of the day

There’s no better way to tackle Monday-itis than by browsing the finalists of this year’s Comedy Wildlife Photography Awards, including the above cracker by the UK’s Warren Price. He snapped it off Norway’s Hornøya as two guillemots squabbled for nesting space.

The big winners will be announced in London on December 9th, all part of trying to encourage more wildlife conservation around the world.

Today’s poll

Last Thursday’s poll: Who do you think will be winning the space race in 2040?

🇺🇸 US (40%)
🇨🇳 China (50%)
🇯🇵 Japan (2%)
🇪🇺 Europe (2%)
🇮🇳 India (3%)
🇷🇺 Russia (1%)
✍️ Other (write us!) (2%)

Your two cents:

• 🇨🇳 I: “China has the drive and expertise. They also plan decades in advance which is something the USA refuses to do.”

• 🇺🇸 D.G: “The US has so many companies competing to be #1 right now that they will continue to rule space. Competition breeds winners.”

• ✍️ S.M: “Private organisations like SpaceX will dominate the field. The space race is no longer just a national competition.”

• ✍️ J.M: “None. Other geopolitical events will receive more urgent attention. The Space Race will be a political and power flexing strategy instead of a tangible plan.”