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Bondholders are keeping faith with Javier Milei’s radical reforms as Argentina’s chainsaw-wielding president wraps up his first 100 days. Benchmark 2030 bonds have climbed to 50 cents on the dollar from less than 40 cents when Milei took office on Dec. 10.

Argentine legislators are less enthused. The Senate voted down Milei’s wide-ranging Decree of Necessity and Urgency 42-25 last week. The Chamber of Deputies will probably follow suit, killing the president’s Plan A for overhauling his country’s floundering economy. Milei withdrew a still more ambitious “omnibus bill” from the lower chamber for lack of support last month.

Investors applaud Milei’s unilateral actions, like slashing fuel subsidies and transfers from the central government to Argentina’s 23 provinces. He cut the peso’s official exchange rate in half, boosting key agriculture exports and easing currency flows.

Argentina reached a primary budget surplus (excluding debt service) in January and February for the first time since 2011, says Thierry Larose, portfolio manager for emerging markets local debt at Vontobel Asset Management. Inflation has halved to a still vicious 13% monthly on Milei’s brief watch. “From a pure financial perspective, he has been quite successful,” Larose notes.

Lawmakers are watching a different metric: poverty, which by some measures has soared from 40% to 60% in Argentina since last autumn. Milei needs Congress, where his Freedom Advances coalition holds a tiny minority, to push through structural reforms to pensions, labor, and state-owned enterprises, among other sclerotic sectors.

“If all Milei achieves is budget cuts, he will bring economic pain without fixing the source of recurring crises,” says Benjamin Gedan, director of the Wilson Center’s Latin America Program.

Milei has unveiled a political Plan B, end-running Congress to conclude a “May Pact” with the nation’s governors. While details are vague, cash-strapped regional leaders will probably sign on to something, which could make Congress more malleable, says Alejo Czerwonko, chief investment officer, emerging markets Americas, at UBS Global Wealth Management.

The key structural reform to watch is pensions, agree Czerwonko and Larose. The current system is inequitably tilted toward state employees and indexed in a way that embeds inflation. “You need to update the pension formula so that it doesn’t become a very strong headwind as inflation moderates,” Czerwonko says.

Milei may also find a relatively soft target in the “social movements” and unions that Peronist predecessors set up as middlemen for welfare payments to the population, Gedan says. “He could try to circumvent these patronage networks,” he adds.

Argentines seem willing to bear Milei’s painful reforms so far, judging by relatively muted popular protests. “After 100 days, the honeymoon is still more or less there,” Vontobel’s Larose says.

Nonetheless, Milei’s landslide defeat in the Senate marks the end of any expectations that he could wave a magic wand over Argentina’s manifold difficulties. “It is unlikely in one presidential term to undo 70 years of decline,” Czerwonko concludes.

Milei’s personal transition from firebrand maverick to horse-trading executive playing an exceedingly weak legislative hand looks imperfect at best. After withdrawing his omnibus bill, Milei declared he “wouldn’t negotiate with traitors” who had “swindled” their congressional seats.

The good news for bond traders is they don’t need Milei to succeed—with a capital “S”—for Argentine bonds to be worth 50% of par. The bull run reflects assumptions that the country’s next restructuring will be delayed by a year, Larose says.

Not exactly an achievement for the history books.

The London-based mining company produces copper ore, diamonds, and platinum, but its shares are treated more like lead. It offers shareholders two ways to win.

Mining stocks have lagged behind the market, and Anglo American has lagged behind mining stocks. Its shares, though, look like a buying opportunity for investors seeking a turnaround story.

London-based Anglo American is one of the world’s leading diversified mining companies, producing copper, iron ore, diamonds, platinum, and other metals on six continents. Its stock, down 24% over the past 12 months, hasn’t performed like one, trailing larger peers like Glencore and BHP Group. Operational problems and tough conditions in several key markets, including diamonds—where the company’s De Beers unit lost money in 2023—and a disappointing multiyear production outlook late last year have rattled investors and depressed the shares.

Anglo American’s future, however, looks bright. Metals prices are improving, and the company is vowing to cut costs, improve operations, and make a strategic review of all its businesses, including a capital-intensive fertilizer project it’s building in the United Kingdom. “Nothing is off the table,” CEO Duncan Wanblad told analysts on the company’s earnings call in February. That could even mean a sale of the $30 billion company, which would be easily digestible by one of its competitors. Most paths point to a rebound for Anglo stock.

“The status quo is not an option,” says Christopher LaFemina, a mining analyst at Jefferies, who notes that if the situation doesn’t improve, Anglo American could attract an activist or a buyer.

Because of its recent troubles, Anglo American’s stock looks inexpensive. The company’s U.S. shares fetch about $12 on the over-the-counter market under the ticker NGLOY. Right now, the stock trades at about 11 times projected 2024 earnings, in line with peers. The company’s earnings power is considerably higher, with depressed prices for platinum-group metals, as well as the weak diamond market. In 2022, it netted $2.49 a share. Like many non-U.S-based miners, it has a variable dividend pegged to 40% of profits, which has resulted in a 3.9% yield over the past 12 months. LaFemina has a Buy rating and a price target equivalent to $16.50 for the U.S. shares.

Anglo American, founded in 1917, was once the dominant company in South Africa, known for its gold mines. These days, copper is Anglo American’s best business, and most of its mining operations are located outside the country. It has a new, low-cost Peruvian mine and another two in Chile. Its production is around 1.2 billion pounds annually, about a third of industry leader Freeport-McMoRan , with low cash production costs of about $1.50 a pound.

Copper also has the best long-term outlook among metals, due to limited new supply and increased demand from green energy, leading Morgan Stanley analyst Alain Gabriel to call the assets the company’s “jewel in the crown.”

The stock isn’t trading that way. Shares of Freeport, a purer copper play, have gained 6% this year and recently hit a 52-week high as the metal topped $4 a pound. Anglo is down 2%. “Anglo is not getting credit for copper because of the other issues,” LaFemina says. “It’s the best way to play copper among the diversified miners.” He puts copper at about 40% of the company’s net asset value.

One of the knocks against the company is its ongoing exposure to South Africa, where its businesses are concentrated in Anglo American Platinum, 80% owned by Anglo American, and Kumba Iron Ore

KIO

-1.37%

, which is 70% owned. Both stakes could be spun off to shareholders. The country has been plagued by economic woes, crime, and power outages.

The diamond business is concentrated in southern Africa. De Beers, which sells a third of the world’s diamond production, was hit hard last year by weakening demand in key markets like China and the growth in lab-made stones.

Part of LaFemina’s bull case is a recovery in both diamonds and platinum-group metals. De Beers sells diamonds into the market 10 times a year, and the most recent sales were the best in about nine months. Palladium prices have gained 15% over the past six weeks.

The bigger challenge might be operational. Anglo American’s net debt rose by nearly $4 billion, to $10.6 billion, last year, and it could burn nearly $1 billion in cash in 2024, due in part to the $1 billion of annual capital expenditure on a giant underground fertilizer project in northern England that isn’t expected to come on-line until 2027. Analysts are lukewarm on that project, given a high projected cost of $7 billion and uncertain returns. It probably would be bullish if the company succeeds in bringing in a partner to pick up some of those costs.

Morgan Stanley’s Gabriel recently upgraded Anglo American to Overweight from Equal Weight, citing the portfolio review and potential operational improvements. His price target is only about 10% above the current price, but he puts the company’s sum-of-the-parts valuation at about $16 per share.

Ultimately, Anglo American offers shareholders two ways to win. It either cleans up its business this year, or it could find itself in the hands of a larger mining company that will develop its attractive resource base.

We’d call that striking gold.

Handbag authenticators are cashing in on buyers’ anxieties about fakes; hardware must be champagne not bronze; that pink leather is only made in France.

SAN ANTONIO, Texas—The handbag had all the hallmarks of a classic Chanel: sumptuous quilted leather, sparkling gold hardware, delicate stitching. Just a couple of things were off.

“The leather is too symmetrical,” said Zekrayat Husein, studying the bag through a microscope, “and each pebble is not supposed to be the same size.” It was a good fake, she said, but worthless compared with the $11,000 that the Chanel flap bag fetches at retail.

Many secondhand luxury shoppers say Husein, a 43-year-old Palestinian mother of three and a former esthetician who goes by the nickname Zeko, is the Coco Chanel of authentication. She has evaluated over 25,000 Chanel bags since she started her business in 2019, she said. She authenticates hundreds of bags a week.

Husein will tell you that Chanel bags sold in Japan from 1985 through 2016 have the bag’s date of purchase and boutique initials inside; that Chanel’s MSHLG (metal shiny light gold) hardware is closer to champagne than bronze, while its MPY (or metal pale yellow) has a darker tone of yellow; that Chanel classic medium flap bags in colors other than black are exclusively made in France and never in Italy; that 10218184 is the serial number counterfeiters use the most.

Chanel and Husein aren’t affiliated; she assumes the brand isn’t her biggest fan. “I make it safe for people to buy not-brand-new, and that’s not good for them,” she said of the company.

Chanel declined to comment on Husein or her business. A spokeswoman for the brand said it “recommends that customers buy our products from the Brand’s authorized points of sale, as training and knowledge regarding authentication of genuine Chanel-branded goods could only reside within Chanel and only Chanel skilled staff can know what genuine Chanel is.”

Most of her clients, who are buying used Chanel bags from boutiques or online resellers, will email Husein photos of their purchase, taking close-ups of stitching, hardware, and interiors. Husein charges $50 for her authenticity certificate based on photos and also does in-person inspections for $100.

The market for secondhand luxury soared to $49.3 billion worldwide last year, according to Bain & Co. Sites like The RealReal, eBay, and Vestiaire Collective offer a trove of coveted bags, some vintage and others in like-new condition.

The boom in resale comes as Chanel and other luxury brands are boosting their prices. A Chanel classic medium flap bag now costs $10,200, up from about $5,800 in 2019. In 2021, Chanel began limiting the number of its “Timeless Classic” quilted bags U.S. customers could buy two annually, a move a Chanel spokeswoman said were “appropriate measures” for highly sought-after items.

Price hikes and purchasing limits on bags haven’t kept wealthy shoppers away from Chanel. Its annual revenue rose 17% in 2022 to $17.2 billion. But the sticker shock is fueling the resale market as the best option for mid-priced customers, who can score a pre-owned Chanel bags ranging from $3,000 to $8,000.

What has followed is a cottage industry of independent authenticators who can easily tell a counterfeit from the real McCoy. But their jobs have gotten harder as the quality of fakes has reached new heights, so even high-end consignees may end up unwittingly selling knockoffs. Return fraud, where customers buy real luxury goods then get refunds by returning fake ones, also plagues the primary market.

“There are tons of really good fakes out there, and it’s scary to think about when you are making a purchase of this size,” said Tricia Jezierny, a 48-year-old executive in North Haven, Conn. She used Husein to authenticate a $6,000 rose gold Chanel bag she bought on Facebook.

Husein sometimes works as an intermediary between a buyer and seller, verifying the authenticity of a bag before a purchase. She said she’s gone head-to-head with banks, insurance companies and resale marketplaces to help customers who were sold counterfeits get their money back.

“It’s like a little treat for me when they win the case,” she said.

Born in Jordan, Husein grew up in Saudi Arabia and said she noticed glamorous Saudi women often carrying Chanel purses. She moved to the U.S. in 2000, when she got married and started flipping bags on eBay in 2005. A Chanel collector, Husein used to share free advice for buyers and sellers in a Facebook group she moderated before offering the service professionally.

Of the average 50 bags she reviews a day, around 10 are counterfeits, she said. She feels for clients who are devastated to learn this. “These women save for years for this bag,” she said. “It’s not just a Chanel bag for her, it’s the dream.”

Inside Husein’s home office, which is decorated with Chanel coffee table books and cheeky Chanel artwork (“home is where my Chanel is”), golden bookshelves held dozens of Chanel purses of all styles and colors. The bags all looked legit, but Husein deftly weeded out several bad fakes, good fakes, very very good fakes and a new kind of counterfeit Husein called a master fake.

“They use the exact same leather as Chanel,” she said of the brand’s high-quality lambskin materials. A spokeswoman for Chanel said the brand “is always working to improve the quality of its products, and is using the best, most expensive and rarest skins.”

Others who have turned their love of luxury into a marketable skill include Paola Tapia, 35, an Atlanta-based authenticator who checks Chanel, Louis Vuitton and Gucci goods for boutiques in the area and for shoppers online. Michelle Peeters, a 38-year-old reseller and authenticator in Brooklyn, said she examines around 30 Chanel bags a week.

There are tools of the trade for verifying the authenticity of a handbag. Tapia authenticates with Entrupy, a software that compares photos taken with a micro-lens gadget to those in a database. Laura Chavez-Sainz, senior authentication manager of Fashionphile, a luxury-resale site, said she likes to use a jeweler’s loupe, flashlight and dental tools.

Cici Mone, a 40-year-old content creator in New Jersey, said she paid $50 for Husein’s services after buying a $7,200 Chanel bag from Fashionphile. The bag was already authenticated by the luxury platform, but Mone was worried it was too light to be real.

“I just wanted another set of eyes and just to have peace of mind,” said Mone. Husein gave it her seal of approval.

Carly Mulvenna, a 29-year-old handbag seller in Chicago, uses the services of Peeters, whose business is called Designer Pawn. “When you say you are selling a bag that has Designer Pawn authenticity, or authentication from Zeko, people feel confident in buying the bag,” Mulvenna said.

Like Husein, Peeters also entered the authentication world as a reseller in 2009. Touching and seeing bags helped her become well-versant in Chanel’s language. She co-moderates a Chanel Facebook group with over 130,000 members and began authenticating Chanel bags in 2020. She charges $35 for certificates.

“It’s never one isolated thing that you are looking for, but a puzzle of pieces and how they all connect,” said Peeters. “The depth of the engravings, the silhouette, the interiors, the heat stamp, the foiling technique. You need a certain eye.”

Chanel is cracking down on the secondary market, alleging that vintage dealers are engaging in counterfeit sales. In February, Chanel won a lawsuit against the website and New York boutique What Goes Around Comes Around; a jury ruled Chanel was owed $4 million in damages related to counterfeiting. “Such infringements hurt consumers and harm the Chanel goodwill and brand,” said the Chanel spokeswoman in a statement. WGACA declined to comment.

A lawsuit Chanel filed against luxury-consignment giant The RealReal in 2018 is still pending. The company also recently filed new lawsuits against resellers in Atlanta, and has also gone after sellers in New York and on the China-based site DHGate. “We take inauthenticity allegations seriously and are constantly refining our systems to ensure we are addressing customer feedback and continually improving,” a spokesperson for The RealReal said.

Chanel declined to comment on pending litigation.

Megs Mahoney Dusil, co-founder of the handbag site PurseBlog, said she’s noticed more Chanel fans gravitating to smaller, independent resellers, making services from Husein or Peeters more in demand. Shoppers feverishly swap stories about counterfeits sold on big sites on blogs and social media.

These days, Husein said she’s on high alert for bags that have been redyed or refurbished with non-Chanel hardware, which can decrease their value.

Authenticators are also on the lookout for return fraud. There are some telltale signs, like sellers listing multiples of the same bag or items with tags. When Fashionphile noticed that a seller was doing this with Gucci bags, it flagged the seller internally and rejected her sales, said Chavez-Sainz. Fashionphile also contacted the retail store whose receipts the seller had shared as proof of authenticity. The store said they were building a case against the seller because she was bait-and-switching the bags.

“It was like ‘CSI,’ ” Chavez-Sainz said.

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