Everything you need to know about Claudia Sheinbaum’s new cabinet.
🇲🇽 We can learn a lot from Claudia Sheinbaum’s cabinet
Last week, Mexico’s president-elect announced six members of her cabinet, including the heads of the Ministries of Economics, Foreign Affairs, and the Environment.
Sheinbaum’s new cabinet has been seen by many as a sign of her independence and desire to do things differently in Mexico’s top executive roles.
Experts are still split on whether Sheinbaum will seek a more pragmatic tenure or follow the ideological decisions of her predecessor, Andrés Manuel López Obrador.
Her new cabinet seems to suggest the former, packed with former academics and career politicians recognized across the aisle.
So, this week, we took a closer look at her cabinet and what it means for Mexico.
As always, you are reading ConteNIDO, your go-to place for all things startups, VCs, and LATAM.
Nido Indicators 🇲🇽🇺🇸
Mexico - United States Trade Balance: In March 2024, the international sales from Mexico to the United States were US$115B, while international purchases reached US$60.1B. The above results in a trade balance of US$54.9B. (📉 8.80% QoQ)
Auto Exports: 310,655 units in May 2024( 📈13% YoY)
Consumer Confidence Indicator in Mexico: 46.7 (📉1.05% MoM)
Consumer Confidence Indicator in the United States: 65.6 (📉 5.06% MoM)
Mexican Remittances: 14105.40 USD Million in the first quarter of 2024 (📉 13.07% QoQ)
Federal Reserve Interest rate: The Federal Reserve left the fed funds target range steady at 5.25%-5.50% for a 7th consecutive meeting in June 2024.
Bank of Mexico Interest rate: The Bank of Mexico maintained its benchmark interest rate at 11.00% during its May 2024 meeting, aligning with expectations following the first rate cut in the previous session after seven consecutive pauses.
USD-MXN Exchange rate: 17.96 (📉 0.94% DoD)
S&P/BMV IPC: 52,788.50 points (📉 544.53 points DoD)
Inside Nido: What we are doing
Last week our Managing Partners spent the week in Monterrey meeting with legacy industry leaders and attending FEMSA Ventures event. Antoine Colaco Carlos Torres de la Cuba Jose Pablo Torres Reyes Alberto Eugenio Garza Castro Juan Sebastián Obregón Zapata Fernando Elizondo Junco Fernando Carrillo
Want to Work for a Nido Portfolio Company?
In the Know with Nido: What we are reading
📱 Huawei Technologies Co. is nearing a billion active consumer devices, driven by its in-house HarmonyOS, which is now on 900 million gadgets. Sales of premium smartphones rose 72% in the first five months of 2024. (Bloomberg)
🕶️ Meta CTO Andrew "Boz" Bosworth announced a major restructuring of the company's hardware division. Now, it will now consist of two groups: "Metaverse," including the Quest headset line, and "Wearables," covering other hardware efforts like smart glasses with Ray-Ban. (The Verge)
👨💻 A cyberattack on CDK Global, affecting over 15,000 auto dealers across the US and Canada, has disrupted operations and caused significant business losses. The attack began on June 19 and continues to impact dealership management systems, hindering sales, financing, and inventory management. This comes as the US government has increased its crackdown on malicious online activity, including the official ban of Kaspersky Lab security software across all federal agencies due to national security concerns. (Bloomberg)
💸 Mexico’s payments startup Clip raised $100 million from Morgan Stanley Tactical Value and a large West Coast mutual fund manager. The funds will support growth in Mexico, maintaining a $2 billion valuation for Clip (the second Mexican startup to reach unicorn status). (Bloomberg)
🚘 BYD plans to build a manufacturing plant in Mexico, creating around 10,000 jobs, rivaling the largest auto factories in the country. The company is in final negotiations for the location with the plant’s size will surpass many existing carmaker facilities. (Bloomberg)
📞 The Federal Telecommunications Institute (IFT) has launched the National Information System of Infrastructure (SNII), a geo-referenced database for telecom and broadcasting infrastructure in Mexico. The SNII received its first data from broadcaster XEHB S.A DE C.V. on June 12 and is now open for other obligated entities to report their infrastructure data. (El Economista)
🧠 Ilya Sutskever, co-founder of OpenAI, has launched Safe Superintelligence Inc. (SSI) with former Y Combinator partner Daniel Gross and ex-OpenAI engineer Daniel Levy. Sutskever, previously OpenAI’s chief scientist, has long focused on AI safety, predicting in a 2023 blog post that superintelligent AI could arrive within the decade and might not be benevolent. (Techcrunch)
🏦 It’s not all startups in LATAM! Alejo Czerwonko, the Chief Investment Officer of Emerging Markets Americas at UBS Global Wealth Management, highlighted the appeal of Latin American (LatAm) assets, particularly Argentinian dollar-denominated sovereign bonds and Latin American corporate bonds, during the Reuters Global Markets Forum. (Reuters)
⛴️ DP World completed a $400 million expansion at the Port of Callao in Peru, enhancing its container handling capacity by 80% to 2.7 million twenty-foot equivalent units (TEUs), and expanding the container yard to 40 hectares. The port's pier extension now allows it to accommodate three ships or two mega-ships simultaneously, reinforcing its role as a major trade gateway on South America's west coast. (The National News)
❗The US Surgeon General issued a statement calling for a warning on social media apps, after teenagers were found to spend an average of 4.8 hours on them a day. This comes just as Roots, a new iOS app co-founded by Clint Jarvis, offers advanced tools to combat app addiction, such as a "digital dopamine" tracker that evaluates the quality of screen time and features like "Monk Mode" to enforce strict usage limits. (The New York Times)
In-depth with Nido: What we are thinking
Everything you need to know about Claudia Sheinbaum’s new cabinet
Mexico just got a hint of what its future might hold—at least, an idea of what the next six years are likely to look like. Last week, the nation’s newly elected president, Claudia Sheinbaum, announced six cabinet picks that will accompany her as chief executive to the country (more in El País). With them, Mexico was able to grasp the answer behind one of the key mysteries around Sheinbaum: now that she is president, how will she rule?
But, before looking at her picks to some key ministries, let’s take a step back to understand why this moment matters. The presidential cabinet is, in the broadest form, an extension of the president. It is the people who will advise the president most closely throughout her tenure and who will hold immense power to shape Mexico in years to come. Oftentimes, cabinets are easy to predict and tend to be based on party support or long-standing loyalties.
With Sheinbaum, however, there had been ample speculation around potential cabinet picks (more on Reforma). Some would even say fear and excitement. You see, most experts would agree that there is a fundamental tension in Sheinbaum’s past between her pragmatism as a scientist seeking to employ the most qualified personnel, and her ideology as a left-wing activist close to Mexico’s current president and political mentor Andrés Manuel López Obrador (Politico). More explicitly, some see Sheinbaum as a mere extension of López Obrador tenure and feared she could be a “puppet” to the exiting administration (more on El Financiero). The question, simply stated, was whether Sheinbaum would be her own person or follow the line of her mentor.
At least, from these first cabinet picks, we seem to get the former. Instead of looking at party loyalty (even at loyalty to her own person), Sheinbaum gathered a team of qualified individuals with a strong bend towards academia. If anything, this resembles her early days as mayor of Mexico City, prioritizing capability over past loyalty.
The first pick, and arguably the most surprising one, was Marcelo Ebrard, a long-time politician who will now serve as Secretary of Economics. Amongst his achievements, Ebrard has served as a Congressman, Mayor of Mexico City (just like Sheinbaum), and Secretary of Foreign Affairs under President López Obrador (more on Expansión). He is widely regarded as one of the most capable and technical profiles within Morena—the party founded by López Obrador that propelled Sheinbaum to the presidency. Most importantly, he has been a strong opponent to Sheinbaum, openly running against her in Morena’s party primaries to secure the presidential nomination and even accusing her of fraudulent behavior during the campaign (more on El País). By choosing—and convincing—Ebrard to the Economics Ministry, Sheinbaum is putting behind all tensions and giving way to a capable politician—so much so that, moments after Ebrard was announced, the Mexican peso appreciated in value (more on El País).
Ebrard will have one key mission in the Economics Ministry: renegotiating the USMCA—the free trade agreement connecting the economics of Mexico, Canada, and the US (more on Expansion). Here, he will be joined by another of Sheinbaum’s picks, Juan Ramón de la Fuente, the next head of the Ministry of Foreign Affairs. Differing from established politicians, de la Fuente first made his career in academia as a clinical psychiatrist who rose to the presidency of Mexico’s largest public university: UNAM (more on El Financiero). After his career in UNAM, he joined Mexico’s diplomatic efforts as ambassador to the UN, giving him ample experience in the international field. Together, the two will negotiate a new treaty with the US, where it remains unclear whether Joe Biden will repeat his term as president or Donald Trump will return to the White House (more on FiveThirtyEight).
The next set of surprises in Sheinbaum’s cabinet were all related to Mexico’s environmental and scientific future. In a clear sign of support to the scientific community, Sheinbaum elevated Mexico’s National Council for Humanities, Sciences, and Humanities (CONACHCYT) to the status of a ministry—the first time in the nation’s history when science is put on equal standing to economics or foreign affairs (more on El Economista). The head of the ministry will be Rosaura Ruiz, a biologist by training who previously served as president of the Mexican Academy of Sciences and head of Mexico City’s Ministry for Science, Education, Technology and Innovation (more on CNN). Together with Ruiz, comes Alicia Barcena who will now head the Ministry of the Environment—one of Sheinbaum’s top priorities. While most of Barcena’s career has been in the international sphere—most recently heading the country’s Ministry of Foreign Affairs—she began her life as a biologist who later pursued a politics degree from Harvard (more on Infobae).
Sheinbaum’s last two announcements were slightly more ideological. First, she chose Julio Berdegué San Cristán to head the Ministry of Agriculture and Urban Development. Berdegué is a long-time expert in agricultural matters, even serving as Latam’s representative to the Food and Agriculture Organization of the UN. However, he has often taken an ideological stand, tying agricultural development to battling inequality (more on CNN). Although, it is worth noting that he does have all the needed experience to hold the position, starting with an undergraduate degree in agricultural sciences from the University of Arizona to a PhD in social sciences from Wageningen University in the Netherlands (more on El Sol de Mexico).
The final announcement was, by far, the least technical of the bunch: Ernestina Godoy, a close supporter of Sheinbaum will now head the Judiciary advisors to the president. Godoy is most famous for spying on Claudia Sheinbaum’s rivals when she headed Mexico City’s equivalent to the Department of Justice, signaling a lack of impartiality when it comes to administering justice (more on Aristegui Noticias). But, at least, one could say, Godoy has the silver lining of being closer to Sheinbaum than current president López Obrador, signaling that Claudia is still more lenient in supporting loyalty to her own career than that to Morena in general.
Much remains to be seen. Sheinbaum still has to appoint some of the key ministries Mexico has to offer (amongst them, the Secretary of Government, Education, and Public Safety). But, for the time being, Mexico’s newest president seems to be betting on talent and experience. We will see how these picks translate into further actions and how they aid Sheinbaum in her first one hundred days in the presidency. But, for now, it seems as though Mexico’s next president will be surrounded by experts and not just supporters.
Written by José Luis Sabau Fernández