{"id":120980,"date":"2018-10-29T12:00:24","date_gmt":"2018-10-29T12:00:24","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=120980"},"modified":"2018-11-05T11:16:46","modified_gmt":"2018-11-05T11:16:46","slug":"american-executives-election-of-far-right-jair-bolsonaro-in-brazil-is-a-bullish-opportunity-for-us","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2018\/10\/american-executives-election-of-far-right-jair-bolsonaro-in-brazil-is-a-bullish-opportunity-for-us\/","title":{"rendered":"American Executives: Election of Far-Right Jair Bolsonaro in Brazil Is a \u201cBullish Opportunity for Us\u201d"},"content":{"rendered":"
\"\"<\/a>

Brazil\u2019s right-wing presidential candidate for the Social Liberal Party, or PSL, Jair Bolsonaro, prepares to cast his vote during the general elections in Rio de Janeiro, Brazil, on Oct. 7, 2018.
Photo: Mauro Pimentel\/AFP\/Getty Images<\/p><\/div>\n

25 Oct 2018 – <\/em>Financial markets appear\u00a0more than happy to overlook the authoritarian impulses and violent promises of Brazilian presidential candidate Jair Bolsonaro, hoping he will deliver decisive, pro-business economic policies.<\/p>\n

In a giddy investor call on today,\u00a0Timothy Hassinger, chief executive officer of Lindsay Corp., the Nebraska-based farming equipment manufacturer, referred<\/a> to\u00a0the far-right politician\u00a0as \u201cconsidered strongly as pro-ag,\u201d calling his likely election victory a \u201cbullish opportunity for us.\u201d<\/p>\n

Bolsonaro surprised political observers with a strong 46 percent showing<\/a> in the first round of the country\u2019s election, and\u00a0is expected to\u00a0easily defeat\u00a0Workers\u2019 Party candidate\u00a0Fernando Haddad in\u00a0an October 28 runoff vote.<\/p>\n

Many human rights advocates are alarmed by Bolsonaro\u2019s\u00a0repeated praise for Brazil\u2019s military dictatorship and a platform calling for a more\u00a0repressive approach to the country\u2019s crime and social problems, which includes reintroducing the death penalty<\/a>\u00a0and\u00a0making it harder to investigate and prosecute cops who\u00a0kill in the line of duty.<\/p>\n

But the global\u00a0financial community is pleased by his strong performance, heartened by his choice of\u00a0Paulo Guedes as his chief economic adviser. A\u00a0right-wing, University of Chicago-trained banker<\/a>, Guedes would take charge<\/a> of finance, planning, trade, and other domestic policies. Bolsonaro\u2019s economic record in the Brazilian Congress was more moderate, and he has been criticized for his lack of economic literacy, but his choice of Guedes has been seen as a signal that he will embrace the neoliberal consensus that investors have been pressuring Brazil to execute.<\/p>\n

Guedes has promised<\/a> to sell off state assets, cut the public pension system, revise the tax code, and deregulate the economy. Another Bolsonaro adviser, Nabhan Garcia,\u00a0told Reuters<\/a> that the administration would slash fines for farmers who violate environmental rules in sensitive areas like the Amazon.<\/p>\n

Last year, The Intercept covered<\/a>\u00a0a campaign event in Deerfield Beach, Florida, at which Bolsonaro told the crowd, \u201cThe press says I do not understand the economy. Look, as far as I know, Ronald Reagan didn\u2019t either, and he was one of the best American presidents.\u201d<\/p>\n

In\u00a0September, when polling numbers suggested that Haddad was gaining steam, the Brazilian currency, the real, plummeted to multiyear lows<\/a>, but has since bounced back<\/a>\u00a0by more than\u00a012 percent against the U.S. dollar.<\/p>\n

\"\"<\/a>As news of Bolsonaro\u2019s performance spread, investors immediately responded. CNBC noted that \u201cthe benchmark\u00a0Brazilian Bovespa\u00a0index gained 4.6 percent\u201d the Monday after the election, while the \u201ciShares MSCI Brazil exchange-traded fund (EWZ) jumped 6.74 percent its biggest one-day gain since May 19, 2017, when it rose 6.75 percent.\u201d<\/p>\n

A number of finance industry analysts took to the airwaves to lay out how impressed Wall Street investors are with the prospects of a Guedes-guided Bolsonaro administration.<\/p>\n

Julia Leite, a Bloomberg News reporter who covers Brazil, appeared<\/a> on Bloomberg Markets on October 8 and offered that view. \u201cMarkets are reacting really well,\u201d she said. \u201cMarkets have a clear preference for Bolsonaro, whose economic adviser is very liberal, who wants to privatize everything, wants to have a smaller state. \u2026 So for markets, this is really clear-cut. They want Bolsonaro.\u201d<\/p>\n

Leite noted that, after the first round election results came in,\u00a0Bolsonaro did a Facebook Live show featuring not his vice presidential candidate\u00a0Hamilton Mour\u00e3o, but Guedes. \u201cYesterday evening, Bolsonaro didn\u2019t hold a presser but he held a Facebook Live, sitting next to him, not his VP, but his economic adviser,\u201d she noted.<\/p>\n

\u201cFascinating symbolism there, that\u2019s terrific,\u201d Bloomberg Markets anchor David Westin replied.<\/p>\n

The Wall Street Journal editorial board heaped praise<\/a> on Bolsonaro, calling him the \u201cBrazilian Swamp Drainer\u201d and downplaying his violent and antidemocratic rhetoric. At a rally on Sunday in S\u00e3o Paulo, he said<\/a> he would \u201cwipe the map of these red bandits,\u201d referring to his political opponents. At a previous rally<\/a>, he said, \u201cLet\u2019s shoot the petralhada<\/em> here,\u201d using an offensive term for\u00a0Workers\u2019 Party\u00a0voters.<\/p>\n

JPMorgan Chase & Co. Latin America strategist Emy Shayo told<\/a> Bloomberg Markets on October 8\u00a0that the market appreciates certain aspects of a potential Bolsonaro government. \u201cI guess what we know is that he has appointed an economic guru that the market appreciates with a liberal economic policy, and this is better than the alternative at least from what the market knows at this point. So the market has embraced this view from Bolsonaro, and we are seeing stocks and currency rally on the back of that,\u201d she said.<\/p>\n

Shayo also commented on the Brazilian federal legislature, which shifted even further to the right as a result of the elections. \u201cWhat we saw, especially in terms of Congress composition, is an important backing for Bolsonaro\u2019s parties, which had no representatives virtually and now will have a decent number of representatives, over 50. And I also expect to see many of the parties that are at the center of the political spectrum to join Bolsonaro and help build this urgent agenda of reforms that Brazil needs,\u201d she said.<\/p>\n

The JPMorgan Chase strategist also offered some commentary on what she hopes Bolsonaro would achieve in his first term, if he is indeed elected. She pointed to his willingness to cut social security programs.<\/p>\n

\u201cOur view is that this election is his to lose at this point,\u201d she said. \u201cBeyond this, we need to see a clear up of his economic proposals especially vis-\u00e0-vis social security reform and if there will be willingness from Congress to vote [for] this agenda.\u201d<\/p>\n

Bloomberg Markets followed up by asking if this right-wing agenda would be imperiled by a potentially split Congress.<\/p>\n

\"\"<\/a><\/p>\n

\u201cI am not too worried about this. In the beginning, indeed the Congress is fragmented, but it tends to join together the forces of a president that is elected especially in the first term. Something that we have not seen in Brazil for eight years. So at the beginning, at least Bolsonaro should have a decent, very, very decent support. We have seen the opposition gathering about 30 percent of the vote. This is significant. But he will be able, I think, I hope so at least, to have a margin of maneuver to get the reforms going, which is what Brazil urgently leads.\u201d<\/p>\n

Not everyone is on board, however.\u00a0Some Brazilian economists question Bolsonaro\u2019s commitment to the neoliberal vision that Guedes represents,\u00a0citing\u00a0his own statements as proof.\u00a0Earlier this month, in an interview with TV Bandeirantes<\/a>, the candidate contradicted his economic advisers and said he was against the privatization of state-led electric company Eletrobras and the core\u00a0operations of the\u00a0Petrobras oil company. \u201cImagine you have a henhouse under your home and live off of it. When you privatize, you don\u2019t have the guarantee of eating a boiled egg.\u201d He added, \u201cChina isn\u2019t buying in<\/em> Brazil, it\u2019s buying<\/em> Brazil. You\u2019re going to leave Brazil in the hands of the Chinese?\u201d By noon the following day, Eletrobras stock dropped<\/a> 14 percent.<\/p>\n

\u201cThe market believes what it wants. But for 30 years, he had a statist posture. That\u2019s not going to change overnight,\u201d economist Sergio Vale<\/a> told\u00a0the conservative Estado de S\u00e3o Paulo newspaper.<\/p>\n

The Economist<\/a>\u00a0called Bolsonaro \u201cLatin America\u2019s latest menace,\u201d adding that \u201che would make a disastrous president,\u201d citing human rights concerns.<\/p>\n

On CNBC\u2019s Squawk Box, pundits mused<\/a> that critics are too focused on Bolsonaro\u2019s explicit threats to return Brazil to a military dictatorship; rather observers should view his economic\u00a0policies as the true barometer of freedom.<\/p>\n

\u201cYou\u2019re going to read a lot about what a threat to democracy this individual is,\u201d said CNBC contributor Michelle Caruso-Cabrera. \u201cBut what I find astounding, people are very worried about lack of political freedom and a return to a political dictatorship in Brazil, but they have been unwilling to acknowledge that there\u2019s been an economic dictatorship in Brazil for decades.\u201d<\/p>\n

The other guests agreed that Bolsonaro\u2019s candidacy represented \u201ceconomic freedom.\u201d Earlier this month, Brazilian investment firm XP Investimentos polled 187 institutional investors<\/a> who, on average,\u00a0rated Bolsonaro as the most economically liberal of the top four contenders.<\/p>\n

CNBC host Joe Kernan asked if it would be fair to compare Bolsonaro\u2019s opponent,\u00a0Fernando Haddad, as just as \u201cfar left\u201d as Sen. Bernie Sanders, I-Vt. Caruso-Cabrera agreed it was apt, noting that both believe in single-payer health care. \u201cAbsolutely,\u201d she said.<\/p>\n

Lack of access to quality public health care is consistently the most cited problem<\/a> in polling. Seventy percent of Brazilians are against privatizations<\/a>, according to a Datafolha poll from last December. Earlier this year, a government-funded poll found that only 14 percent of the population supports social security\u00a0reform. Popular opinion forced President Michel Temer and Congress to put many unpopular measures on the shelf until after the election. They are expected to take them on again during the lame-duck session<\/a>\u00a0this year, but Temer told allies on Sunday that he does not expect to be able<\/a> to push through social security reform\u00a0with the current Congress. Previous attempts brought workers into the streets in mass demonstrations<\/a>.<\/p>\n

\u201cAgain the market is grossly underestimating future risks,\u201d said Paulo Leme, the former president of Goldman Sachs in Brazil, in an interview<\/a> with Estado de S\u00e3o Paulo. \u201cThe market is falling into a new error by underestimating the difficulty of governing,\u201d he continued, adding that he felt both Bolsonaro and Haddad are \u201cterrible.\u201d<\/p>\n

____________________________________________________<\/p>\n

\u00a0<\/em>Zaid Jilani<\/a> – zaid.jilani@\u200btheintercept.com<\/a> <\/em><\/p>\n

Lee Fang<\/a><\/em> – lee.fang@\u200btheintercept.com<\/a><\/em><\/p>\n

Related:<\/em><\/p>\n