Peru’s De Soto Reversal Deepens Political Crisis as Mexico Stabilizes Under 10,000 Troops and Argentina’s Senate Advances Labor Reform Toward Thursday Vote
Executive Summary
The Big Picture: Peru’s transitional government descended into chaos Tuesday when President Balcázar reversed his own appointment of Hernando de Soto as Prime Minister, instead swearing in Denisse Miralles—the finance minister from the ousted Jerí government—in a last-minute ceremony that blindsided the country’s political establishment. De Soto, 84, told reporters his cabinet plan was “frustrated” by internal pressures to retain existing ministers. The reversal strips the transitional government of the international credibility de Soto’s name carried, 46 days before the April 12 elections.
In Mexico, the El Mencho aftermath entered Day 5 under 10,000 deployed troops. Schools and businesses reopened in Guadalajara, flights resumed from Puerto Vallarta, and the government declared all 250+ roadblocks cleared. Analysts warn the stabilization is fragile: Brookings’ Felbab-Brown cautioned violence could recur “for months to come” as the CJNG succession vacuum attracts rival groups.
Markets rebounded Tuesday from Monday’s Section 122 tariff shock. The Ibovespa surged 1.40% to 191,490—a new all-time closing high. The MERVAL rose 1.79% and the IPC gained 0.43%. The exception was Colombia: COLCAP reversed Monday’s ceasefire rally, plunging 2.95% as the market priced in the ELN ceasefire’s fragility 11 days before elections. Wall Street steadied, with the S&P 500 recovering 0.77% to 6,890.07 ahead of tonight’s Nvidia earnings.
Regional Mood
Peru’s de Soto reversal is the kind of institutional humiliation that reinforces the region’s crisis of governance. The country has had nine presidents in a decade, and now the transitional government cannot even execute a cabinet appointment it announced 48 hours earlier. For global investors, the signal is stark: Peru’s institutional framework is incapable of sustaining policy continuity even during a 47-day caretaker period.
Mexico’s stabilization is real but misleading. The absence of violence today does not mean the CJNG succession question is resolved—it means the cartel is regrouping. The Ibovespa’s all-time high reflects Brazil’s growing role as the hemisphere’s safe-haven equity market, but Lula returns from Asia to face tightening October election polls and sticky inflation. Tonight’s Nvidia earnings will set the global risk tone for the rest of the week.
Risk Snapshot
| Country | Key Driver | Risk Level |
|---|---|---|
| Mexico | El Mencho aftermath Day 5; stabilization fragile; CJNG succession vacuum; World Cup security under review; 10,000 troops still deployed | CRITICAL |
| Peru | De Soto reversal; Miralles sworn in as PM; ninth president in a decade faces credibility collapse; April 12 elections 46 days out | HIGH |
| Argentina | Senate committees advanced labor reform Tuesday; Feb 27 floor vote on track; CGT legal challenge pending; Milei March 1 speech | HIGH |
| Colombia | ELN ceasefire holding but COLCAP −2.95%; March 8 elections 10 days out; 170 municipalities at risk; CJNG domino effect on cocaine corridors | HIGH |
Peru
De Soto Reversal Strips Transitional Government of Credibility; Miralles Sworn In as PM After Last-Minute Power Struggle; April 12 Elections 46 Days Away
What Happened
Peru’s transitional President Balcázar, 83, stunned the political establishment Tuesday by abandoning his widely celebrated appointment of economist Hernando de Soto as Prime Minister. Instead, he swore in Denisse Miralles—the former finance minister from the ousted Jerí administration—in an evening ceremony at the Government Palace. De Soto was nowhere to be seen.
The Presidency issued a statement thanking de Soto for a plan it called “valuable and ambitious” but said “the necessary consensuses were not achieved.” De Soto himself told Canal N that his plan to bring in fresh faces from across the political spectrum had been “frustrated” by pressure to retain existing ministers. Vladimir Cerrón, the fugitive Peru Libre leader, mocked the episode as proof of de Soto’s “complex of genius.”
Miralles, an economic engineer from Universidad Nacional de Ingeniería with a master’s from Yokohama National University and training at Harvard Kennedy School, brings 22 years of public sector experience. Balcázar ratified six ministers from the Jerí government, signaling continuity over reform. The ceremony was delayed from 11 AM to 6 PM amid the backstage negotiations.
Why It Matters
De Soto’s appointment had been the single most reassuring signal to international markets and the diplomatic community. His reputation in property rights and economic formalization gave Balcázar’s leftist transitional government immediate centrist credibility. The reversal erases that signal entirely and replaces it with continuity from the very government Congress ousted.
Peru has now had nine presidents in a decade. The transitional government has 46 days to organize elections for president, 60 senators, 130 deputies, and Andean Parliament representatives on April 12. Balcázar allocated S/588 million ($175 million) for electoral operations this week, and Miralles has emphasized macroeconomic stability—but the cabinet’s political credibility is near zero. López Aliaga continues to lead presidential polls amid 34 candidates.
Key Watch
Miralles cabinet confidence vote in Congress. Market reaction to de Soto reversal. April 12 election preparations. Castillo pardon request status. Balcázar corruption trial (June 16). Whether de Soto’s departure signals deeper leftist consolidation in the transitional government.
RISK: HIGH
Mexico
El Mencho Aftermath Day 5: Guadalajara Reopens but Analysts Warn Succession Violence Could Last “Months to Years”; IPC Recovers 0.43%
What Happened
Mexico entered its fifth day under a 10,000-troop security deployment, with Guadalajara and most affected cities returning to functional normalcy. Schools reopened Tuesday in Jalisco, flights resumed from Puerto Vallarta, and President Sheinbaum maintained that the country “is calm.” All 250+ roadblocks erected by the CJNG across 20 states have been cleared. El Tuli, Oseguera’s right-hand man who coordinated the retaliatory violence and offered bounties on soldiers, was killed by security forces.
However, analysts issued increasingly dire assessments of the medium-term outlook. Brookings’ Vanda Felbab-Brown warned of violence “for months to come and potentially years” as the criminal landscape is redesigned. Dyami’s Chris Dalby compared El Mencho’s training model to “Genghis Khan in their approach to conquest” and said the removal of a figurehead does not dismantle the business. The key succession candidates—stepson Juan Carlos González Valencia, El Jardinero, and El Sapo—have not shown their hand.
The Wikipedia article on the 2026 Jalisco operation now documents the CJNG’s online propaganda campaign, including false reports of airport takeovers and building fires in Puerto Vallarta that Reuters verified as misinformation. More than 200 Oxxo stores and 18 Banco del Bienestar branches were damaged in Guanajuato alone.
Why It Matters
The IPC’s 0.43% recovery Tuesday suggests markets are pricing in a return to normalcy rather than prolonged disruption. But the structural question remains unresolved: the CJNG still controls territory across multiple states and retains the capacity to paralyze the country. CNN reported the killing could trigger a domino effect in Ecuador and Colombia’s cocaine corridors as rival organizations test CJNG-controlled supply chains.
The 2026 FIFA World Cup remains four months away with Guadalajara as a host city. USMCA review negotiations carry the weight of a security crisis that gives Washington additional leverage. Sheinbaum’s government faces the paradox of delivering the “cartel results” Trump demanded while absorbing the 70+ death toll that hawks will cite as proof Mexico cannot control its territory.
Key Watch
CJNG succession dynamics this week. Whether violence returns as troops thin out. IPC trajectory under combined security + tariff pressures. World Cup security review timeline. Sinaloa Cartel opportunistic moves in former CJNG territories. Ecuador and Colombia cocaine corridor realignment.
RISK: CRITICAL
Argentina
Senate Committees Advance Labor Reform; Floor Vote Thursday; MERVAL Rebounds 1.79% as Reform Passage Seen Assured
What Happened
The Senate’s Labour Legislation and Budget committees reviewed Milei’s amended labor reform bill Tuesday, advancing it toward a floor vote targeted for Thursday, February 27—one day before extraordinary sessions expire. The committees are expected to issue a favorable opinion, clearing the path for a final vote that is widely seen as a formality given the Senate’s 42–30 original approval.
The sole procedural question is whether the Senate ratifies the Deputies’ removal of Article 44, which would have halved sick-leave wages. Senator Patricia Bullrich confirmed willingness to accept the removal. Under Argentine constitutional procedure, even if the Senate rejects the change, the bill still becomes law. The CGT has declared the law unconstitutional and announced a legal challenge, but legal experts say the case faces an uphill battle.
MERVAL recovered 1.79% Tuesday to 2,812,413.88, partially reversing Monday’s 3.84% selloff. The rebound reflects growing confidence that passage is assured and that Milei will use his March 1 state-of-the-nation address to celebrate the reform as a crowning legislative achievement. The government also expanded RIGI investment incentives for oil and gas over the weekend, extending the regime to 2027.
Why It Matters
Thursday’s vote will deliver Argentina’s biggest labor overhaul since the 1970s. The 218-article bill rolls back decades of rules on hiring, firing, severance, and collective bargaining, aiming to formalize roughly half the workforce currently employed informally. The IMF has endorsed the reform’s job-creation potential while cautioning about transition costs.
The market’s attention now shifts to implementation. The CGT’s legal challenge, while unlikely to succeed, introduces procedural uncertainty. Milei’s March 1 speech will be the first major political event after passage, and how he frames the reform—as victory or as prelude to deeper structural changes—will shape investor expectations for the remainder of 2026.
Key Watch
Thursday Feb 27 Senate floor vote. Saturday Feb 28 extraordinary sessions deadline. March 1 Milei state-of-the-nation speech. CGT constitutional challenge filing timeline. MERVAL reaction to passage + Section 122 tariff convergence.
RISK: HIGH
Regional Snapshot
Colombia
The ELN ceasefire held through its third day but COLCAP gave back Monday’s entire rally, plunging 2.95% to 2,395.81—the sharpest single-day decline in weeks. Markets appear skeptical the ceasefire will survive through March 8. The electoral watchdog MOE reports 11% of municipalities face extreme risk of election violence. The government deployed additional forces for election protection. Presidential frontrunners Cepeda and de la Espriella are not in the primaries, making March 8 a coalition-strength test.
Brazil
The Ibovespa surged 1.40% to 191,490.40—a new all-time closing high—as the real strengthened to 5.15 per dollar. Lula returned from his Asia tour to face tightening October election dynamics: Flávio Bolsonaro polls within single digits. The Seoul summit delivered a strategic partnership with South Korea including 10 MOUs on critical minerals, AI, and defence. Copom rate decision March 17–18. Gold hit $5,185 and silver surged 3.86% to $90.49, benefiting Latin American mining exporters.
Trump Tariffs
Section 122 entered Day 2 with the rate ambiguity unresolved. The proclamation text sets 10%; Trump said 15% on Saturday via social media; Global Trade Alert confirms the surcharge was “raised from 10% to 15% on 22 February” but no amended executive order has been published. USMCA-compliant goods remain exempt. Section 301 investigations are being initiated on an accelerated timeline. The trade-weighted average U.S. tariff rate is 13.2% under the 15% scenario, down from 15.3% under the old IEEPA regime.
Chile
IPSA rose 0.63% to 10,991.76, continuing its steady climb toward the March 11 Kast inauguration. Secretary Rubio is expected to attend. Kast’s “Border Shield” plan promises a 3,000-strong force for northern border control from day one. The market has shrugged off the U.S. visa sanctions on outgoing Transport Minister Muñoz over the Chinese-linked undersea cable project.
Cuba
Aeroflot’s last scheduled Cuba service departed Monday, completing Russia’s aviation withdrawal from the island. The energy crisis continues with deficits exceeding 1,700 MW at peak hours. The Nuestra América Flotilla targets Havana by March 21 to challenge the U.S. blockade. Haiti’s child recruitment by armed groups surged 200% in 2025 according to UNICEF, with children comprising 30–50% of armed groups.
Venezuela
Amnesty law implementation continues under Acting President Delcy Rodríguez. The government claims 800+ political prisoners released since December; Foro Penal confirms approximately 340. OFAC expanded sanctions relief for upstream oil activities. Cuban security advisers continue departing under U.S. pressure. Energy Secretary Chris Wright visited Caracas—the highest-level U.S. energy visit in nearly three decades—signaling Washington’s interest in rebuilding Venezuela’s oil industry.
Markets at a Glance
| Index | Close (Tue) | Change | Context |
|---|---|---|---|
| Ibovespa | 191,490.40 | +1.40% | New all-time closing high; Lula returns from Asia tour |
| MERVAL | 2,812,413.88 | +1.79% | Partial recovery from Monday’s −3.84%; labor reform passage priced in |
| IPC | 70,934.82 | +0.43% | Stabilization as Mexico security crisis ebbs; tariff impact still unclear |
| COLCAP | 2,395.81 | −2.95% | Reversed Monday’s ceasefire rally; election risk repriced |
| IPSA | 10,991.76 | +0.63% | Steady climb toward March 11 Kast inauguration |
| S&P 500 | 6,890.07 | +0.77% | Tariff shock recovery; Nvidia earnings tonight; AI bellwether |
| Gold (XAU/USD) | 5,185.78 | +0.86% | Safe-haven bid; tariff uncertainty; LatAm mining tailwind |
| Silver (XAG/USD) | 90.49 | +3.86% | Industrial + safe-haven surge; Mexico/Peru/Chile mining exposure |
| BTC/USD | 65,115 | +1.65% | Partial recovery from sub-64K; risk-on rotation |
| USD/BRL | 5.1522 | −0.03% | Real steady near 5.15; strongest since late January |
Source: TradingView (Tier 0) for Ibovespa, MERVAL, IPC, COLCAP, IPSA, USD/BRL, Gold, Silver, BTC — charts provided by editor Feb 25. S&P 500 from Yahoo Finance. Equity indices reflect Tuesday, February 24, 2026 closing sessions. Gold, Silver, BTC, USD/BRL reflect intraday Feb 25 snapshots from TradingView.
The Week Ahead
| Date | Event |
|---|---|
| Wed Feb 25 | Nvidia Q4 FY2026 earnings (after close) • Miralles cabinet confidence vote pending |
| Tue–Fri Feb 25–27 | CARICOM Leaders’ summit |
| Thu Feb 27 | Senate floor vote on labor reform (target) |
| Sat Feb 28 | Extraordinary sessions deadline |
| Sun Mar 1 | Milei state-of-the-nation speech |
| Sat Mar 7 | Trump hosts LatAm leaders in Miami |
| Sun Mar 8 | Colombia: Legislative elections + presidential primaries |
| Wed Mar 11 | Chile: Kast inauguration |
| Mar 17–18 | BCB Copom rate decision |
| Mar 21 | Nuestra América Flotilla targets Havana |
| Apr 12 | Peru general election (first round) |
| Jul 24 | Section 122 tariff expires (150-day limit) |