The Mexican Peso Is on the Verge of Collapse

History tells us the decline in one currency could spiral into a major collapse... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] The Mexican Peso Is on the Verge of Collapse By Brett Eversole --------------------------------------------------------------- It was a busy June in foreign elections – and the financial markets aren't happy about it... Last month, we looked at how Indian stocks sold off following [the nation's election](. And on June 2, a similar situation happened in Mexico. Mexican stocks dropped 6.1% the day after the country's elections. The results clearly shook investors' confidence. But the bigger story here is about Mexico's currency... The peso is down double digits in just the past month. And unfortunately, we shouldn't expect the currency to shake off those losses. Instead, history tells us the recent decline could spiral into a major collapse... --------------------------------------------------------------- Recommended Links: ['Nvidia Investors May Hate Me for Saying This...']( There's a massive shift playing out in U.S. stocks – one we've only seen a dozen times before, going all the way back to 1943... And now one Wall Street veteran is warning it'll impact every major stock you can think of, especially Nvidia. Today, he's sharing where the stock market's going next... what it could mean for your money in 2024... and the No. 1 investing strategy he's now recommending if you want to protect and grow your wealth in 2024. [See this before tomorrow's opening bell](. --------------------------------------------------------------- [The Presidential Candidate You Should REALLY Be Worried About]( Most Americans are overlooking the seemingly impossible candidate that should worry you. It's not Joe Biden... Donald Trump... Gavin Newsom... or even Michelle Obama. It's someone even worse. New evidence of a secret plan indicates he could soon return, and finish what he started. [Get the full story right here](. --------------------------------------------------------------- Claudia Sheinbaum won the Mexican presidency on June 2. She'll be the first female president in Mexico's history. And she won the election by a landslide – 32 percentage points to be exact. The sweeping victory gave Sheinbaum's left-wing Morena party a near supermajority in Mexico's equivalent of Congress. They're now just two votes shy of being able to change the country's constitution on their own. Investors are worried this could bring about an antibusiness environment. Mexican stocks crashed as a result. And the Mexican peso suffered a similar decline. The currency has dropped as much as 12% since May, hitting a year-plus low in the process. Take a look... As contrarians, we might be tempted to believe that this sell-off has gone too far. After all, investor fears rarely match up with the eventual reality. Mexico might not make the sweeping governmental changes that folks fear. Still, there's another reason to expect the decline to continue. That's because traders were overly bullish on the peso before the election... And they still are, even after the recent drop. We can see this by looking at the Commitment of Traders ("COT") report. This shows what futures traders are doing with their money. When these folks are all betting in the same direction, the opposite tends to occur... which makes this report a valuable contrarian indicator. Recently, trades on the peso hit some of the most bullish levels we've seen in the past 15 years. Take a look... Futures traders were all betting on a stronger peso. And despite the recent double-digit decline, that hasn't changed much... which means this currency likely has more room to fall. History brings us to the same conclusion. Here's what happened after similar setups over the past decade and a half... The peso has gone through its fair share of volatility since 2009. And looking back, sentiment setups like today's were a sure sign of losses ahead. After similar instances, the average decline was 20% in about eight months. That means we can expect the losses to continue... And in a worst-case scenario, the peso could collapse more than 30%. As a U.S. investor, you might not usually pay much attention to Mexican stocks or the peso. But this shake-up is worth keeping an eye on in the months to come. It could eventually set up a contrarian opportunity. But for now, it's best to steer clear. The losses are likely to continue. Good investing, Brett Eversole Further Reading French stocks sold off last month in the wake of a surprising election result. This turbulence won't last for long. But the current volatility could offer a solid contrarian opportunity... [Learn more here](. "The Japanese yen is in the middle of a collapse," Brett writes. Many investors have left the currency for dead as a result. But history tells us a sentiment reversal could likely happen soon – and a sustained rally is possible... [Read more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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