Ramblings of a Finance PhD Student
My week in discoveries - the graphs that made me stop scrolling, the songs that got stuck in my head, the ideas that shifted how I see things, and the trade that's got me curious.
The end of the “super” peso - July 19th, 2025
Hello from Philadelphia, currently writing this from a coffee shop where someone just ordered a "deconstructed latte", which, apparently, is just espresso and milk in separate cups. Peak 2025.
This week's topic: why the Mexican peso's strength is mostly an illusion and why I'm betting against it. My honest take on a trade that feels too obvious to ignore.
Why the Mexican Peso's "Super" Status Won't Last
The Mexican peso has been on fire in 2025, up 10% against the dollar. Media even went far enough to call it the "super peso." But here's the thing: most of this strength has nothing to do with Mexico.
It's Not You, It's Me (The Dollar)
Picture a marathon where the front-runner suddenly trips and stumbles. Everyone behind him appears to surge forward, but they’re running the same pace they always were.
That’s the peso today. The dollar has dropped nearly 11%, its worst performance in over 3 decades. In that context, the peso’s 5.5% rise is less a breakout and more a byproduct. Compared to the euro or Swiss franc, which gained over 10%, the peso is just keeping up.
Mexico's Economy Is Actually Struggling
While everyone's celebrating the "super peso", Mexico's economy is quietly falling apart:
Growth is dead: The IMF thinks Mexico's economy will shrink 0.3% this year. The World Bank says maybe 0.2% growth if they're lucky. That's recession territory.
Investment is fleeing: Companies aren't building factories or expanding. Investment fell 8% through April.
Remittances are drying up: Mexican workers in the US sent home $14.3 billion in Q1 2025, down from $16.4 billion in Q4 2024. That's a huge drop for an economy that depends on these transfers.
The government is running a deficit: Mexico ran a record 5.9% budget deficit last year. Now they need to cut spending to fix it. Cutting spending during a recession? Not the best outlook.
Political factors are worsening: US cartel-related sanctions and US Treasury money-laundering concerns could become a reality. Tariff related uncertainty is also a factor worth monitoring.
The Interest Rate Game Is Ending
Here's how the peso got so strong in the first place: Mexico was paying 11.25% interest while the US paid 5.5%. That 5.75% difference attracted tons of money chasing yield.
But that game is ending. Mexico’s central bank has cut its policy rate to 8% from 11.25% a year ago, narrowing the rate differential with the US to 3.5% from 5.75%. This makes the gap stand at its lowest level since 2016.
Given the weak economic outlook in Mexico, Banxico could be forced to drop the interest rate even further. They could drop rates to 7% by year-end while the Fed stays put.
That interest rate advantage? It's evaporating.
Positioning: Everyone's on the Same Side
Here's where it gets interesting. Speculators are holding near-record long positions in the peso. When everyone's betting the same way, the market has a funny way of doing the opposite.
When positioning gets this extreme, reversals can be violent.
The Technical Picture: A Base Forming
Looking at the charts (I know, I know, but stay with me), USD/MXN has been falling in a channel since April. But we're hitting critical support around 18.50-18.75.
Key levels to watch:
18.80: First resistance
19.00: The "oh god, the trend is changing" level
20.00: Major psychological target
20.50: Full reversal territory
The momentum indicators are starting to turn. It's like watching a rubber band stretch and at some point, it will snap back.
💰 Trade Idea of the Week
Disclaimer: This is not financial advice. I'm sharing my thoughts for educational purposes. Do your own research and consult with financial professionals before making investment decisions.
The Setup
So what am I doing? I think USD/MXN heads to 20.00-20.50 over the next 6-12 months. That's about a 7-10% move from current levels.
The catalysts:
Dollar sentiment improving as fiscal concerns ease
Mexico's recession becoming undeniable
Interest rate differential collapsing
Speculative positions unwinding
The risks:
Dollar weakness persists longer than expected
Mexico gets a growth surprise
Near-shoring benefits accelerate
The details:
Targets (6-12 months):
Conservative: $18.75 → $19.50
Optimistic: $18.75 → $20.00
Aggressive: $18.75→ $20.50
Stop Loss: < $18.25 - Below key technical support and momentum trends
📈 Tracking Past Trades
My portfolio's equal-weighted return: 10.97%
S&P 500 return (since June 28): 2.00%
OUTPERFORMING THE S&P BY 8.97%
🎵🎧📚 Music, Podcasts and Book Recs
Songs I liked this week
Car - Royel Otis
Why Bye - Baltazar Lora
Espresso triple j Like A version - Good Neighbours
Long Sardine x Mr. Brightside - Oxis
Link to recommended songs playlist
Link to recommended podcasts
📚 Book I Read this Week
Ego is the Enemy by Ryan Holiday (Goodreads, Amazon)
![Ego Is the Enemy [Book]](https://substackcdn.com/image/fetch/$s_!VMAp!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F2206dd22-a9e6-430f-b33a-c9b9a3aca041_1810x2560.jpeg "Ego Is the Enemy [Book]")
My rating: ⭐️⭐️⭐️⭐️⭐️ (5/5)
Ryan Holiday’s Ego is the Enemy explores how ego undermines success, relationships, and personal growth. Drawing from Stoic philosophy and historical examples, Holiday argues that ego blocks humility, learning, and resilience. He breaks the book into three stages of life (Aspire, Success, Failure) to show how ego sabotages us at every turn and how to counter it with discipline and self-awareness.
What Stuck:
The concept of “doing the work” without attachment to outcomes. Holiday emphasizes that ego drives us to seek validation or shortcuts, but lasting achievement comes from focusing on the process.
Why It Matters:
In a world obsessed with self-promotion and instant gratification, Holiday’s message is a wake-up call. Ego fuels division, burnout, and fragility, but cultivating humility and discipline builds enduring success and meaningful connections.
💭 Quote (Reflection) of the Week
"Deserve your dream" — Octavio Paz
We’re often encouraged to envision our future, where we would like to be in five, ten, or twenty years. But rarely are we asked what we’re willing to give up to make that vision real. Dreams don’t come cheap; they demand a price, paid in sweat, tears, or tough choices.
Chasing what you want means embracing the grind. It’s late nights, hard conversations, and letting go of comforts that hold you back. The path isn’t just effort; it’s sacrifice, discipline, and the courage to keep going when doubt creeps in.
To deserve your dream isn’t to wish for it, it’s to earn it. Because a dream worth having is worth fighting for.
What did you discover this week? Reply and let me know - I love hearing about other people's interesting finds. See you next week!
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