Brazilians to elect a new president in an atypically sour mood

October 24, 2014

Paulo Sotero – The Brazil Institute, 10/24/2014

With their country’s economy at a standstill, Brazilians go back to the polls this Sunday in an atypically sour mood to decide whether to extend the mandate of President Dilma Rousseff for four more years or replace her with Senator Aécio Neves, a popular former governor of Minas Gerais, Brazil’s second richest state after São Paulo. Opinion polls released this week showed Rousseff gaining on Neves for the first time, who pulled a stunning turnaround to end in second place in the October 5th first round of vote, way ahead of once favorite candidate, environmentalist Marina Silva. Failures in first round opinion polls were made. However, the unusual volatility of the race even made analysts that seemed convinced of Rousseff’s reelection hedge their bets by avoiding making definitive predictions. One pollster who worked for campaigns of gubernatorial candidates of the president’s coalition told former president Luiz Inácio Lula da Silva at a rally held in the Southern capital of Porto Alegre on Wednesday that his analyses indicated Aécio Neves could win the race.

Three weeks of second round campaigning that ended Friday, October 24th, with a nationally televised debate between the two contenders did little to lighten the poisonous political atmosphere created in the race’s initial 40-days of highly negative electoral tactics used by all major candidates, but especially by Rousseff’s camp. Read the rest of this entry »


In Brazil Election, a Stark Choice on Economic Direction

October 24, 2014

James B. Stewart – The New York Times, 10/24/2014

Sunday’s presidential election in Brazil may be too close to call, but investors have already voted with their reais and dollars — and it’s Aécio Neves in a landslide.

Rarely, if ever, has such a pro-growth, market-friendly candidate emerged as a serious presidential contender in a developing country, let alone one as large and influential as Brazil, which has the world’s seventh-largest economy as measured by gross domestic product. With every twist in the polls, the Brazilian stock market surges (if Mr. Neves is ahead) or plunges (if not) while largely ignoring fundamentals like commodity prices, the faltering Brazilian economy or global crises.

Perhaps nothing has more endeared Mr. Neves to investors than his announcement on Oct. 5, right after qualifying for this weekend’s presidential runoff, that he would name Arminio Fraga his finance minister. Mr. Fraga is an unabashed champion of market capitalism and pro-growth government policies. He has a Ph.D. in economics from Princeton and drew international praise as the head of Brazil’s central bank from 1999 to 2002, steering the Brazilian economy through a difficult period that coincided with the implosion of the dot-com bubble and a recession in the United States. He was a managing director at George Soros’s fund in New York, and after leaving Brazil’s central bank, he helped start the hedge fund Gávea Investimentos. A unit of JPMorgan Chase acquired a controlling stake in 2010.

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Brazil Election Poll 2014: President Rousseff Seen As Likely Winner Against Aecio Neves

October 24, 2014

Connor Adams Sheets – International Business Times, 10/23/2014

Brazilian President Dilma Rousseff appears likely to beat Senator Aecio Neves as Sunday’s presidential runoff nears. Recent polls show Rousseff leading Neves by about 4 percentage points in what is widely seen as a referendum on the country’s economy, Reuters reported Thursday.

Rousseff, who is seeking her second term, appears to have the momentum three days before voters go to the polls, but the result is anything but guaranteed, as her lead is close to the margin of error and Neves’ fiscally conservative policies have generated excitement among many voters. But financial markets appear to be going on the assumption that Rousseff will win, according to a Forbes analysis.

Brazil’s major polling firms, Ibope and Datafolha, show Rousseff with a lead greater than the margin of error, which is plus or minus 2 percentage points for both. Rousseff has 49 percent against 41 percent for Neves, according to Ibope, and 48 percent over 42 percent for Neves, according to Datafolha.

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Real Drops to Lowest Since 2008 as Rousseff Leads in Voter Polls

October 24, 2014

Paula Sambo and Filipe Pacheco – Bloomberg, 10/23/2014

Brazil’s real fell to the lowest since December 2008 after polls showed President Dilma Rousseff led candidate Aecio Neves three days before the election runoff.

The real declined 0.5 percent to 2.50 per dollar at the close of trade in Sao Paulo after earlier today falling 1.2 percent. The Ibovespa tumbled 3.2 percent, leading losses among major stock benchmarks and erasing this year’s gain.

“Investors are more and more pricing in a victory for Rousseff,” Andre Perfeito, the chief economist at Gradual Investimentos in Sao Paulo, said by telephone. “Many traders are still cautious, but these polls show she is ahead, and people are considering that in trading the currency.”

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What Should Brazil’s Next President Do?

October 24, 2014

The New York Times, 10/23/2014

President Dilma Rousseff is facing a runoff on Oct. 26, in one of the most tightly contested presidential elections in Brazil. A surge in support for her main opponent, Aécio Neves, reflects widespread disenchantment among many voters with her and the ruling party.

What should the next leader of Brazil do to jump-start the sluggish economy, improve social services and fix a political system seen as corrupt and dysfunctional?

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What Will Happen Monday, After Brazil Election?

October 24, 2014

Dimitra DeFotis – Barron’s, 10/23/2014

The Brazil equity market has tumbled nearly 8% this week and has slipped into negative territory for the year.

The iShares MSCI Brazil Capped ETF (EWZ) is down more than 8% this week, and has fallen more than 7% year to date. Among Brazil equities, even shares that should be somewhat more immune to Sunday’s election have been hit hard in recent days, including airplane maker Embraer (ERJ) and meat producer BRF (BRFS and BRFS3.Brazil).

The odds are with Brazil’s incumbent Pres. Dilma Rousseff, if ever so slightly, to win Sunday’s runoff presidential election and defeat Aecio Neves, a former governor who is more conservative and the investor favorite. Here’s Societe Generale’s Benoit Anne on anything denominated in Brazil’s currency. He is on the sidelines at this juncture, even if the election outcome is a binary one:

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Brazil and its backyard

October 24, 2014

The Economist (print edition),  10/25/2014

Like voters in most democracies, Brazilians pay little heed to foreign policy when choosing leaders. Yet the presidential election on October 26th matters not just to Brazil but to the region. Over the past two decades Latin America’s giant has overcome its introversion and wielded growing influence in its backyard. And on foreign policy, as on economics, there is a clear gap between President Dilma Rousseff of the centre-left Workers’ Party (PT), who wants a second term, and her rival, Aécio Neves, of the centre-right Party of Brazilian Social Democracy (PSDB).

Brazil’s greater assertiveness began under Fernando Henrique Cardoso of the PSDB in the 1990s and continued under the PT’s Luiz Inácio Lula da Silva, the president in 2003-10. Both gave importance to the Mercosur trade block (founded by Brazil, Argentina, Paraguay and Uruguay), to South America and to ties with Africa and Asia. Both had reservations about a 34-country Free-Trade Area of the Americas, a plan that Lula helped to kill.

But there were differences, too, partly because of Brazil’s changing circumstances. Lula put far more stress on “south-south” ties and on the BRICs grouping (linking Brazil to Russia, India, China and later South Africa). In Latin America he emphasised “political co-operation”. Relations with the United States were cordial but distant, especially after Lula tried brokering a nuclear deal with Iran which the White House opposed.

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