Argentina’s Senate Votes on Historic Labor Reform as Uruguay and Argentina Ratify EU-Mercosur Pact
Executive Summary
The Big Picture: Argentina’s Senate is expected to cast the final vote today on President Milei’s landmark labor reform—the most sweeping overhaul of Argentine labor law in decades. The 218-article bill has already cleared both chambers but returns for Senate ratification of a Deputies amendment that stripped Article 44. Extraordinary sessions expire tomorrow, making today’s vote a legislative do-or-die moment. The U.S. Embassy issued a rare demonstration alert warning of “heightened tensions and possible violence” outside Congress, and the CGT has pledged to challenge the law in court the moment it is signed. If enacted, Milei will celebrate the achievement in his March 1 state-of-the-nation address.
Uruguay and Argentina became the first Mercosur members to fully ratify the EU-Mercosur free trade agreement on Thursday, in a coordinated push to pressure Brussels into provisional implementation. Uruguay’s lower house voted 91–2; Argentina’s Senate followed with 69–3. Brazil’s Chamber of Deputies approved the pact on Wednesday, sending it to the Senate. The deal—signed in Asunción on January 17 after 25 years of negotiations—would create the world’s largest free trade zone linking more than 700 million consumers. Meanwhile, Minas Gerais floods have killed at least 53 people with 15 still missing, as Governor Zema declared three days of mourning and President Lula deployed military assets.
Mexico enters Day 7 of its post-El Mencho military deployment with the Wilson Center publishing the first institutional assessment of the operation—calling it a “meaningful assertion of state authority” while warning that CJNG’s violence is “organizationally embedded” and cartel fragmentation could trigger localized conflict. Schools and airports in Guadalajara have reopened. The IPC is recovering toward all-time highs. The World Cup is four months away and security confidence is the central question.
Global markets absorbed Nvidia’s record quarterly earnings with skepticism. Despite posting $68.1 billion in Q4 revenue (+73% year-over-year) and beating expectations across the board, the S&P 500 fell 0.54% on Thursday as investors entered “prove it” mode over AI capital expenditure sustainability. Nvidia itself dropped 5%, Broadcom fell 6%, and the semiconductor ETF (SOXX) lost 3.5%. The risk-off mood hit Latin American equities unevenly: Colombia’s COLCAP plunged 4.13% while Mexico’s IPC gained 0.35%.
Regional Mood
Legislative milestones define the day. Argentina’s labor reform vote could become the signature achievement of Milei’s presidency—or his greatest political vulnerability if street resistance escalates. Brazil’s EU-Mercosur ratification advances alongside Uruguay and Argentina’s full ratification—the region’s most important structural trade realignment in a generation, positioning Mercosur as a strategic counterweight to Trump’s tariff offensive. Mexico’s post-El Mencho stabilization is proceeding but the Wilson Center’s warning about fragmentation risk tempers optimism. Nvidia’s selloff despite a record beat signals that global risk appetite is narrowing—LatAm equities will feel the drag.
Risk Snapshot
| Country | Risk Level | Key Driver |
|---|---|---|
| Argentina | ELEVATED | Senate final labor reform vote TODAY; US Embassy demo alert; extraordinary sessions expire Sat; MERVAL −15% from ATH |
| Brazil | ELEVATED | EU-Mercosur: Uruguay & Argentina ratify, Brazil lower house passes; Minas Gerais floods: 53 dead; election dead heat (Lula 46.2% vs Flávio 46.3%) |
| Mexico | MODERATE | El Mencho Day 7; Wilson Center warns of CJNG fragmentation; schools/airports reopen; World Cup 4 months out |
| Cuba | CRITICAL | Speedboat shootout reverberating; Kremlin escalation rhetoric; FL AG probe; Nuestra América Flotilla targets Mar 21 |
| Colombia | MODERATE | COLCAP −4.13%; Mar 8 elections approaching; Petro-Trump tensions; floods across 22 departments |
| Peru | ELEVATED | PM Miralles sworn in after de Soto reversal; 700+ districts under emergency; El Niño Costero through Nov; Apr 12 election |
| Venezuela | ELEVATED | Amnesty law signed; 545 prisoners released; US sanctions eased; IMF warns economy “quite fragile” |
| Chile | STABLE | IPSA −0.75%; Kast inauguration Mar 11; orderly equity consolidation |
Argentina
What Happened
- —Labor Reform Final Vote Today: The Senate is expected to vote today on ratifying the Deputies’ amendment that removed Article 44—a provision that would have halved sick-leave pay for non-work-related illnesses. The Buenos Aires Herald confirmed Senate committees cleared the path for a floor vote on Thursday. The 218-article bill passed the Deputies 135–115 on February 20 and the Senate 42–30 on February 12. Extraordinary sessions expire Saturday February 28, making today the last viable legislative window before Milei’s March 1 state-of-the-nation address.
- —US Embassy Demo Alert: The U.S. Embassy in Buenos Aires issued a demonstration alert on February 26 warning of a “large-scale demonstration” outside Congress starting at 11:00 AM today. The embassy cited “heightened tensions and possible violence after recent related demonstrations” and advised avoiding downtown Buenos Aires throughout the day.
- —Union Resistance Deepens: The CGT has declared the law unconstitutional and pledged to challenge it in court once enacted. Judicial workers (UEJN) launched a 48-hour strike on February 23. This follows the fourth general strike of Milei’s presidency on February 19, which shut down flights, buses, and trains across the country. More than 21,000 companies have closed during Milei’s first two years in office, according to industry data cited by France 24.
- —Markets: The MERVAL fell 1.62% Thursday to 2,754,419—now down approximately 15% from its January 28 all-time high of 3,258,737. RSI at 38 signals bearish momentum. Markets are pricing the labor reform as a near-certainty; the question is whether passage triggers relief or sell-the-news.
Why It Matters
Today’s vote would give Milei the most significant labor reform in Argentina’s history—something no president has achieved since the Peronist-era labor code was established. Previous attempts collapsed in 1984, 2000, and 2017. For international investors, passage signals structural modernization; for unions, it represents the dismantling of hard-won protections. The CGT’s pledge to take the law to court means implementation uncertainty will persist beyond enactment.
The extraordinary sessions deadline creates genuine urgency—if the Senate fails to vote by Saturday, the bill dies and must restart from scratch in ordinary sessions beginning March 1. The U.S. Embassy’s demonstration alert suggests credible intelligence of escalation risk. Milei’s political capital is on the line.
Key Watch
Senate ratification vote result. Scale and character of today’s protest at Congress. CGT court challenge timeline. Milei’s March 1 state-of-the-nation address framing. Whether MERVAL finds a floor or selloff deepens.
Risk Level: ELEVATED
Brazil
What Happened
- —EU-Mercosur Advances: Brazil’s Chamber of Deputies approved the EU-Mercosur free trade agreement on Wednesday, sending the pact to the Senate. On Thursday, Uruguay became the first country to fully ratify (lower house 91–2), followed hours later by Argentina’s Senate (69–3). The deal was signed in Asunción on January 17 after 25 years of negotiations and would create the world’s largest free trade zone linking more than 700 million consumers. Mercosur will eliminate tariffs on 91% of EU goods within 15 years; the EU will lift tariffs on 95% of Mercosur goods within 12 years. Paraguay is expected to follow in early March. The European Parliament voted January 21 to refer the deal to the Court of Justice, but European Commission President von der Leyen has signaled provisional implementation could begin once Mercosur countries complete ratification.
- —Minas Gerais Floods: The death toll from catastrophic flooding and landslides in Minas Gerais rose to 53 on Thursday, with 15 people still missing and more than 230 rescued. Juiz de Fora—the hardest hit city—accounts for 40 of the fatalities. More than 3,000 people have been left homeless. Governor Romeu Zema declared three days of mourning. Inmet warned Thursday morning of continued rain with strong winds and risk of further flooding.
- —Election Dead Heat: The latest Atlas/Bloomberg poll shows the October 2026 presidential race in a statistical dead heat: Flávio Bolsonaro at 46.3% versus Lula at 46.2% in a runoff scenario. Flávio has gained ground in February while Lula lost several points in the first round. The BCB next meets March 17–18; Focus consensus projects year-end Selic at 15%.
- —Markets: The Ibovespa closed at 191,005 (−0.13%), holding near its all-time intraday high. USD/BRL at 5.1374, its lowest since May 2024, down 6.64% year-to-date. RSI at 70 signals the index is approaching overbought territory.
Why It Matters
The simultaneous ratification by Uruguay and Argentina on the same day—with Brazil’s lower house clearing the deal 24 hours earlier—represents the most significant structural trade realignment in Latin America in a generation. Coming as Trump’s Section 122 tariffs take effect, the pact offers Mercosur nations a strategic counterweight, deepening ties with Europe precisely when U.S. market access is contracting. Three of four Mercosur members will have ratified within weeks of signing—a pace that puts pressure on Brussels to authorize provisional implementation.
The Minas Gerais disaster evokes memories of Rio Grande do Sul in May 2024 (185 dead, R$10 billion in losses). Lula’s emergency response capacity will be measured against election-year expectations eight months before the first round. Every macro data point, disaster response, and geopolitical development is now filtered through the campaign lens.
Key Watch
Brazil Senate EU-Mercosur vote timeline. Whether von der Leyen triggers provisional implementation now that Uruguay and Argentina have ratified. Minas Gerais death toll trajectory and whether rain continues. BCB March 17–18 Copom rate decision signaling. Whether foreign inflows sustain the real’s rally or 5.10 acts as support.
Risk Level: ELEVATED
Mexico
What Happened
- —El Mencho Aftermath—Day 7: The Wilson Center published the first institutional assessment of the military operation that killed CJNG leader Nemesio Oseguera Cervantes (“El Mencho”) on February 20. The analysis characterized the operation as a “meaningful assertion of state authority” but warned that CJNG’s capacity for spectacular violence is “organizationally embedded” and that fragmentation of the cartel could trigger localized conflict in Jalisco, Michoacán, Guanajuato, and Colima.
- —Normalization Underway: Schools and airports in Guadalajara have fully reopened. The retaliatory violence that erupted in the 48 hours following El Mencho’s killing—including highway blockades, vehicle burnings, and attacks on military personnel—has largely subsided. Military deployments remain in place across Jalisco and surrounding states.
- —World Cup Security Question: With the 2026 FIFA World Cup four months away, the Wilson Center assessment explicitly raised concerns about Mexico’s capacity to guarantee security for international events. Guadalajara is one of the host cities. The speed of stabilization is encouraging, but fragmentation dynamics could produce new, less predictable armed groups.
- —Markets: The IPC rose 0.35% Thursday to 71,390.10—near all-time highs—as USMCA exemptions continue to shield Mexico from Trump’s 10% Section 122 tariffs. The peso remains stable.
Why It Matters
The transition from acute crisis to medium-term analysis is the critical phase. The Mexican state demonstrated it could decapitate the country’s most powerful cartel and contain the immediate backlash. The Wilson Center’s warning about fragmentation echoes the pattern seen after every major cartel leadership removal in Mexican history—from the Beltrán Leyva split in 2009 to the Sinaloa cartel fractures of 2024. The question is not whether CJNG fractures, but how the fragments behave.
For international stakeholders, the World Cup timeline concentrates the mind. FIFA, sponsors, and visiting delegations need security assurances that cannot be provided if fragmentation produces new armed groups in host-city corridors. The IPC’s recovery suggests markets are pricing in successful containment, but a single high-profile attack could reverse sentiment rapidly.
Key Watch
CJNG succession dynamics and whether fragmentation produces new armed groups. Military deployment duration and any drawdown signals. FIFA security assessment timeline. Any retaliatory attacks targeting government officials or infrastructure.
Risk Level: MODERATE
Regional Snapshot
Cuba
The speedboat shootout off Villa Clara province on February 25—in which Cuban border forces killed four and wounded six aboard a Florida-registered vessel—continues to reverberate. Russia’s Kremlin said Thursday that the “situation around Cuba is escalating.” Florida’s Attorney General launched a state probe. Representative Giménez called the incident a “massacre.” Havana maintains all 10 passengers were armed Cuban nationals with U.S. residency attempting an “infiltration for terrorist purposes.” The Nuestra América Flotilla is targeting Havana on March 21. Energy deficit exceeds 1,700 MW. Blackouts continue past 20 hours daily in parts of the island.
Peru
President Balcázar reversed his appointment of economist Hernando de Soto as Prime Minister in a last-minute power struggle, instead swearing in Denisse Miralles. More than 700 districts remain under emergency declarations due to El Niño Costero flooding. A 5.0-magnitude earthquake struck 36 km west of Lima on Wednesday. SENAMHI warns intense rainfall may return March 5–6. ENFEN reports the coastal El Niño pattern could persist through November 2026. The general election is set for April 12.
Venezuela
Acting President Delcy Rodríguez signed an amnesty law on February 20 that could release hundreds of political prisoners. As of February 24, 545 have been freed out of 800+ held before January. U.S. Energy Secretary Chris Wright visited Caracas on February 11—the first cabinet-level visit. Treasury eased sanctions February 13 with general licenses for Chevron, BP, Eni, Shell, and Repsol. The IMF warned the economy is “quite fragile” with triple-digit inflation and 180% debt-to-GDP.
Colombia
The COLCAP dropped 4.13% Thursday to 2,283.91—the sharpest single-session decline in weeks. March 8 congressional elections approach with Petro-Trump tensions as a background drag. Flooding continues to affect more than 251,000 people across 22 departments. The Ecuador-Colombia trade dispute continues with reciprocal 30% tariffs in force since February 1.
Chile
The IPSA fell 0.75% to 11,049.69 in an orderly pullback from recent highs. RSI at 50 suggests neutral momentum. Kast inauguration remains on track for March 11. Chile remains Latin America’s top-performing equity market over three months despite the consolidation.
Global Context
Nvidia reported record Q4 earnings ($68.1B revenue, +73% YoY, $1.62 EPS vs $1.53 expected) but the S&P 500 fell 0.54% Thursday as markets questioned AI capex sustainability. Nvidia dropped 5%, Broadcom −6%, SOXX −3.5%. VIX rose to 18.64. Trump’s 10% Section 122 tariffs remain in effect (with threats to raise to 15%); the 150-day clock means they expire in late July without congressional extension. The EU-Mercosur deal advances as the hemisphere’s primary structural counterweight to U.S. protectionism.
Markets at a Glance
| Index | Close | Change | Session |
|---|---|---|---|
| Ibovespa (B3) | 191,005.02 | −0.13% | (Thu) |
| USD/BRL | 5.1374 | +0.01% | (Thu) |
| MERVAL (BYMA) | 2,754,419 | −1.62% | (Thu) |
| IPC (BMV) | 71,390.10 | +0.35% | (Thu) |
| COLCAP (BVC) | 2,283.91 | −4.13% | (Thu) |
| IPSA (Santiago) | 11,049.69 | −0.75% | (Thu) |
| S&P 500 | 6,908.86 | −0.54% | (Thu) |
Market Note
Colombia’s COLCAP posted the sharpest decline across LatAm at −4.13%, erasing recent gains. Argentina’s MERVAL continues its correction from the January high, now down ~15%, with RSI at 38 in bearish territory. Brazil’s Ibovespa is consolidating near all-time highs with RSI at 70—overbought territory. Mexico’s IPC remains the steadiest performer, shielded by USMCA tariff exemptions. The Nvidia-driven U.S. selloff (S&P 500 −0.54%) may pressure LatAm futures Friday.
The Week Ahead
| Date | Event | Significance |
|---|---|---|
| Feb 27 | Argentina Senate labor reform vote | Final passage; extraordinary sessions expire tomorrow |
| Feb 28 | Argentina extraordinary sessions deadline | Bill dies if not passed by midnight Saturday |
| Mar 1 | Milei state-of-the-nation address | Opens ordinary congressional session; policy agenda for 2026 |
| Mar 7 | Trump hosts LatAm leaders (Miami) | Argentina, Paraguay, Bolivia, Ecuador, El Salvador, Honduras |
| Mar 8 | Colombia congressional elections | First electoral test of Petro era; Senate and Chamber races |
| Mar 11 | Kast inauguration (Chile) | Cabinet composition; migration and security policy direction |
| Mar 17–18 | BCB Copom rate decision (Brazil) | Focus consensus: Selic at 15%; easing signals critical |
| Mar 21 | Nuestra América Flotilla targets Havana | Exile maritime protest; escalation risk after speedboat shootout |
| Apr 12 | Peru general elections | Presidential and congressional vote under interim government |
| Late Jul | Section 122 tariffs expire | 150-day limit; Congress must act to extend or replace |