(Bloomberg) — In a surprise move, Javier Milei, the President-elect of Argentina, has shifted away from his advisors advocating for his most radical campaign promises and has turned to Wall Street veterans with closer ties to former leader Mauricio Macri.
At the forefront of Milei’s boldest campaign propositions of dollarization and closing the central bank, dramatic changes are already underway considering recent staffing shakeups. Milei’s distancing from his dollarization advisor, Emilio Ocampo, and the departure of another early campaign hawkish advisor, Carlos Rodriguez, signify a definite change of direction. Milei had previously indicated that he would appoint Ocampo to lead Argentina’s central bank, though he reiterated on Friday that the closure of the institution was “non-negotiable.”
Instead, Milei has brought in Luis Caputo and Demian Reidel, both former Wall Street veterans with significant roles during Macri’s presidency from 2015 to 2019, to lead his economic team.
Furthermore, local media reports suggest that Milei plans to appoint his former rival during the election, Patricia Bullrich, as security minister, a position she also held during Macri’s government.
The financial markets have responded positively to signs of Milei’s more moderate stance. The country’s dollar bonds have experienced an extended rally, with the benchmark stock index also significantly rising. Amidst these changes, Milei’s recent political developments indicate a potential shift from his initially radical campaign agenda.
According to Jeff Grills, Aegon Asset Management’s head of emerging markets debt in Chicago, Milei’s alignment with Macri’s team suggests that while change is imminent, it may not be as radical as initially promised during his campaign.
Market responses to Milei’s election suggest positive sentiments despite concerns about his pledge to dollarize the economy and a possible surge in withdrawals.
Additionally, speculation surrounding Caputo’s potential role in Milei’s government reflects Macri’s support and helps alleviate doubts about the transition. However, there is still a need for official confirmation of key members of Milei’s economic team.
From potential economic team members to foreign policy, Milei’s recent decisions indicate a more pragmatic approach to governance, potentially reflecting a need to work with the business-friendly opposition party to enact reforms in a fragmented congress.
–With assistance from Ignacio Olivera Doll.
(Adds context on market reaction and potential economic team starting in fifth paragraph.)
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