Damian Fraser’s Post

Delighted to be joining forces with Francisco Zambrano and Ramón Castellot to create #MirandaVenturaComunicaciones (MVC), a JV between Miranda Partners and Ventura Comunicaciones in Communication, PR & Crisis Management. MVC will join the Miranda Partners family, which includes #MirandaMediaMarketing, #MirandaIR, #MirandaESG, #MirandaGlobalResearch, #MirandaDesignStudio, and #MirandaFinancialAdvisory. Every division operates on its own, yet they join forces whenever it is advantageous for the client. https://lnkd.in/epzjjSEe

In #MexicoInTheForeignPress Rolling Stone’s article on how as President Trump would send kill teams to take our cartel leaders caught our attention. Also, a great piece by Manuel Bayo Gisbert on his kidnapping and other stories of abduction and violence.   Trump Is Planning to Send Kill Teams to Mexico to Take Out Cartel Leaders  05/07/2024, Rolling Stone, ASAWIN SUEBSAEN  https://lnkd.in/etY7ha78    Kidnapped in Mexico: I Am One of the Missing Who Survived  05/07/24, The New York Times, Manuel Bayo Gisbert  https://lnkd.in/eeAVqKRt El Chapo’s opium heartland bereft as Mexico cartels embrace fentanyl  03/05/2024, Financial Times, Michael Stott and Christine Murray  https://lnkd.in/e2N4S58Y Mexico’s presidential frontrunner defends sweeping legal reforms  08/05/2024, The Financial Times, Michael Scott and Christine Murray   https://lnkd.in/e3qYsH-B Mexico City, a city of 22 million, is running out of water  09/05/2024, Vox, Caroline Houck   https://lnkd.in/eCeeEKhG ‘Time, Patience, Cold Blood’: Mexico Prepares for a Potential Trump Win  09/05/2024, The New York Times, Natalie Kitroeff   https://lnkd.in/eU35GYUm Rolling blackouts dim several cities as heatwave scorches Mexico  08/05/2024, The New York Times, Emiliano Rodriguez and John Yoon   https://lnkd.in/eFxYRheg Surfer murders shock peaceful Mexico community  06/05/24, BBC News, Will Grant   https://lnkd.in/ekYsNNfU   ‘Why doesn’t anybody care?’ Texas-Mexico border devastated 05/05/24, The Guardian, Michael Gonzalez   https://lnkd.in/e_BybmBS The Mexican bank behind alleged bribes to a Texas democrat  08/05/2024, The Wall Street Journal, José de Córdova and Santiago Pérez   https://lnkd.in/ezsBAAAF Tesla’s plans in Mexico are not dead. They’ve just lost steam  06/05/2024, El País, Isabella Cota  https://lnkd.in/eVVVWyt8 Mexico’s presidential election features 2 women. But it’s about AMLO  04/05/2024, The Washington Post, Mary Beth Sheridan and Lorena Rios   https://lnkd.in/eJm7-EDk    

Nubank Mexico 1Q24 losses mount, but at least default rates improve. Long-term if you can lend at 70%, fund at 20% or less, get default rates plus write-offs to under 20% you will eventually make money in Mexican credit cards. Unless of course competition drives credit card rates down (see below). 1) Nu Mexico deposits 1Q24 at US$2.2bn, explosive growth from US$1bn at end of 2023. Cuenta Nu is a huge success, leaving other FinTechs in Mexico far behind in deposit gathering, despite offering similar yields.  2) Nu Mexico Credit growth picked up a little, with loans at US$850mn, but still lower market share than a year ago. As a result of much faster growth in expensive deposits than loans, the loan to deposit ratio has collapsed to 38%, and net interest margin is now barely positive, at 2.6% from 16% a year ago. 3) Nu (for a FinTech) has an unusual problem of excess liquidity, paying more on the liquidity (14.75%) than it can get on government securities (11%). And the collapse in NIM, write-offs and big OpEx has meant heavy losses. Nu Mexico lost US$30mn in 1Q24, versus US$20mn in 1Q23. Ouch.  4) But its easy to bring down the rates on deposits to manage excess liquidity. Expect Nu to cut deposit rates soon. No-one wants deposits reaching 3x loans, when paying over government rates for deposits. Bonkers. 5) But Nu is finally getting its NPLs (6.8% versus 11.8% a year ago) and cost of risk (loan loss reserves/loans) under control, now at 20%, versus 33% a year ago. if you can get customers to pay you back while controlling funding costs, credit cards is a great business in Mexico. Nu may be finally cracking this nut. 6) How? By putting the brakes on credit card growth and improving its data analysis. Here is a clue from the recently released Nu 20-F, even if need to adjust for Nu's standard over-the-top PR spin. “Consumer Credit Underwriting (Mexico) – We are already operating the 6th generation of our proprietary machine-learning underwriting models, which meaningfully increase our ability to accept new customers in a country.. . Compared to making decisions with generic credit bureau scores, the latest version of our credit engine allows us to lower risk by 70% for a comparable approval rate. On a YoY basis, our first payment default rate has dropped to 3.1% in the year ended December 31, 2023, from 5.7% in the year ended December 31, 2022, and from 7.4% in the year ended December 31, 2020. The velocity with which we implemented our proprietary underwriting models in Mexico is also ahead of our experience in Brazil at the same point in the journey.”  7) Still a long way to go, and as incumbent banks have lower cost of funding than Nu (albeit at a much higher cost to serve) do not expect them to sit still. Interest rates on good-paying clients will come down. Will Nu's lower cost to serve and "superior" data analytics then outweigh its higher cost of funding?   Información financiera (nu.com.mx) 

In #MexicoInTheForeign this week The Economist highlights the potential changes Sheinbaum term may bring to Mexico, and the possible benefits of a split Congress to a Mexican policy for the next term. In the Guardian, Linda Farthing’s hopeful story discusses the world-leading condition of Mexican forests under community or indigenous supervision. Avelino Rodriguez from The Lift Mexico in LBB (Little Black Book) writes how long-form journalism on Mexico is inspiring movies and series.   Andrés Manuel López Obrador will haunt his successor  30/04/2024, Economist, Staff  https://lnkd.in/eYjyQZta   Fewer wildfires, great biodiversity: what is the secret to the success of Mexico’s forests?  01/05/2024, The Guardian, Linda Farthing   https://lnkd.in/eMDM59nZ `Gringo go home´won´t solve Mexico City´s problems  30/04/2024, Bloomberg, Juan Pablo Spinetto   https://lnkd.in/e7zGS9MW Mexico´s wage hikes are a ´blessing´and curse for employers  03/05/2024, Bloomberg, Kelsey Butler  https://lnkd.in/eskFTJsJ   A quieter border eases pressure on Biden, with a hand from Mexico  30/04/2024, The Washington Post, Nick Miroff  https://lnkd.in/eafkAhR9    Mexico is heading towards its most violent election ever, with 30 candidates murdered, 77 threatened and 11 kidnapped  26/04/24, El Pais, Elías Camhaji  https://lnkd.in/exvGZQAp    Why the Jewels of Mexico's Journalism Are Becoming Hollywood Hits  01/05/24, LBB Online, Avelino Rodriguez  https://lnkd.in/enVqGms5   Ancient female ballplayer from Huasteca regin on exhibit  26/04/2024, The New York Times, Zoë Lescaze  https://lnkd.in/ebe2-efG   Ryan Reynolds and Rob McElhenney Buy Stake in Mexico’s Club Necaxa Soccer Team After Wrexham Success  29/04/2024, Variety, Cynthia Littleton  https://lnkd.in/eXS-WcW3   Mexico trade deal threat poses risk to prices of US pick-ups, warns Chrysler boss  27/04/2024, Financial Times, Peter Campbell  https://lnkd.in/ezJ8_6u3 A threat to Judicial Independence 02/05/2024. The Dialogue, Daniel Caballero https://lnkd.in/eCxGiJqx

In #MexicoInTheForeignPress Christine Murray highlights the dysfunction and corruption of the Mexican authorities working to stem the flow of migration into the USA, and how it may determine the results of the upcoming USA election. South of the border, JP Spinetto looks at the outlook for a possible Sheinbaum presidency, and the political and economic challenges she will face.    How Mexico’s ‘kabuki pantomime’ fails to stop US-bound migrants  21/04/2024, Financial Times, Christine Murray   https://lnkd.in/eS--GNWD Mexico´s elite are sleepwalking into a risky political transition  23/04/2024, Bloomberg, Juan Pablo Spinetto   https://lnkd.in/eXM97T4U Organized crime fuels Mexico’s election violence, plus Europe’s Southern Cone cocaine pipeline  24/04/2024, Council on Foreign Relations, Shannon K. O'Neil and Will Freeman   https://lnkd.in/eZdq_4K8 Mexico´s Sheinbaum says her Pemex debt refinancing plan includes new ventures  22/04/2024, Bloomberg, Maya Aberbuch, Scott Squires and Michael O´Boyle.  https://lnkd.in/e46iuD_x   Mexico lagging behind peer markets in natural gas storage  22/04/2024, Natural Gas Intelligence, Andrew Baker  https://lnkd.in/e_ayVaHY   How Chinese firms are using Mexico as a backdoor to the US  21/04/2024, BBC News, Will Grant  https://lnkd.in/eHjkperU   The Biden-Trump trade war with Mexico  21/04/2024, WSJ, Mary Anastasia O´Grandy  https://lnkd.in/eaqC7RMm   Mexico Needs a New Strategy for the Northern Triangle  22/04/2024, America’s Quarterly, Brenda Estefan  https://lnkd.in/eU6bKMCr

As always an excellent Opinion piece by JP Spinetto arguing members of Mexico's business elite (whoever they are) are underestimating the risks of a Claudia Sheinbaum Pardo presidency. Some questions, ahead of this Sunday's Presidential candidate debate on economic policy. - Are members of the Mexican elite really underestimating the risks, or just telling journalists there is not much to worry about, as it is in their interest to say that? - Are they underestimating the likelihood of the continuation of misguided populist policies under Claudia Sheinbaum or underestimating the prevailing fiscal / institutional / security / productivity etc. weaknesses of Mexico, or a combination? - Are Mexican businessmen really more optimistic than foreign investors? (I do not think so). - Do Mexican businessmen mainly think Claudia will just be politically weaker or easier to sway than AMLO? - Having mostly overreacted to the risks of an AMLO presidency, are they concluding that domestic politics is only one of many factors to consider when predicting the future in an economy as open, diversified, and US-driven as Mexico's? - Have they concluded that policies that raise the average and minimum wage, cut poverty, make big companies pay a larger share of taxes, reduce dependence on oil imports, promote public over private investment in energy, etc. etc. are the right way forward? (jaja) //https://lnkd.in/egJAbGps

  This week in #MexicoInTheForeignPress, America’s Quarterly highlights the continued violence against women, and the failures in policy offered by both candidates in response. Another thought-provoking article by Miriam Jordan and Lydia DePillis interviews the undocumented Mexican immigrants who have lived in America for years. They are calling for the same worker’s rights to be extended to them that are now being given to recent Latin American migrants to the United States. And on the other side of the border, Linda Pressly tells the story of extortion and exploitation many migrants face by ‘narco-coyotes’, when trying to cross into America. Violence Against Women Is at the Center of Mexico’s Security Crisis  16/04/2024, America’s Quarterly, Gema Kloppe-Santamaría   https://lnkd.in/eDkg84mN New Migrants Get Work Permits. Other Undocumented Immigrants Want Them  15/04/24, The New York Times, Miriam Jordan and Lydia DePillis  https://lnkd.in/e9uVEns9   Extortion and kidnap - a deadly journey across Mexico  04/18/24, BBC News, Linda Pressly   https://lnkd.in/e8AzzfaX What will Mexico´s energy future look like?  16/04/2024, Financial Times, Jayme Smith and Christine Murray   https://lnkd.in/ez7_M6qq After Mexico´s election AMLO will cast shadow over his successor  18/04/2024, Bloomberg, Walter Brandimarte and Maya Averbuch   https://lnkd.in/eBkTnCeM Why Ecuador risked global condemnation to storm Mexico´s embassy  18/04/2024, The Economist, Staff   https://lnkd.in/es3BM4_7   Fintech revolut bets on Mexico growth, expects remittances as driver  17/04/2024, Reuters, Diego Oré  https://lnkd.in/ekXT_KEz Where Next for Mexico 19/04/2024, NY Books, Nicolas Medina Mora https://lnkd.in/e264XSJJ The Maya Train Will Get You to All of Yucatán’s Best Spots. But Not Yet 19/04/2024, NY Times, Elisabeth Malkin https://lnkd.in/ewv834nR

Please subscribe to Whitepaper.mx to read my latest column, exploring options for the incoming President to overcome Pemex's debt and operational challenges. Intended to provoke debate. Here is how it starts.."When Mexico’s next President takes office on October 1st this year, perhaps the biggest decision she will face is what to do with Pemex. Should she continue to bail it out, unreformed and politicized, whatever the cost (the AMLO strategy)? Should she try to make it profitable via layoffs, asset sales, refinery closures (the opposition solution)? Or should she let it default, manage the inevitable contagion to other Mexican assets, and use the consequent financial crisis to restructure the company (the Blast Fix)? https://lnkd.in/eTtCGQAP

In #MexicoInTheForeignPress, Ecuador’s police raid on the Mexican Embassy in Quito caused headlines, with papers highlighting the personal feuds in Latin America. The Guardian highlighted a lesser discussed form of immigration, the growth of retirement-age Americans moving south of the border.     In Latin America, from nasty personal insults to an embassy raid  10/04/2024, NYT, Julie Turkewitz  https://lnkd.in/e3mqaJRW Latin America is beating the world at trading insults  10/04/2024, FT, Michael Stott   https://lnkd.in/eTSdzzF5 Biden says he is examining power to shut US border on his own 09/04/24, Reuters,   https://lnkd.in/e5J3tcYn Trump vs. Biden election and immigration: The president needs a "border emergency" policy to win in November. 10/04/2204, Slate, David Faris   https://lnkd.in/ekwUKnpA   The Americans retiring to Mexico for a more affordable life: ‘We are immigrants’  11/04/2024, The Guardian, Alexandra Villareal  https://lnkd.in/eJZdpzCh In Oaxaca, some residents are fighting back against gentrification  10/04/2024, Bloomberg, Rebecca Greenwald   https://lnkd.in/e4QkPu39 Candidates spar in Mexico's first presidential debate ahead of June 2 election  08/04/2024, WP, Megan Janetsky  https://lnkd.in/ezTDX9Kt Mexico’s 2024 General Election: What to Know  11/04/2024, NYTimes, Emiliano Rodriguez Mega  https://lnkd.in/e69Drm2z U.S.-China Trade War Is Delivering Big Wins for Mexico  9/04/2024, The Wall Street Journal, Dion Rabouin   https://lnkd.in/evgwdhhe Mexico’s Billionaires Piled Up Riches as AMLO Raged 9/04/2024, Bloomberg, Michael O'Boyle  https://lnkd.in/eF9BkvBU Synthetic Silk Road: Tracing China - Mexico Precursor Chemicals Insight Crime, 10/04/2023  https://lnkd.in/e77Ha4SH With Brute Force and Steel, This Artist Creates Works of Ephemeral Beauty - The New York Times (nytimes.com)  11/04/2023, New York Times, Rose Courteau https://lnkd.in/ecAfhShw