In the weeks leading up to the election’s runoff-stage between far-right Jair Bolsonaro and center-left Fernando Haddad, financial markets were in a frenzy as Mr. Bolsonaro enjoyed a comfortable lead in the polls. However, on the Monday following the election, the stock market actually went down – as did the Brazilian Real.
Why, you ask? Well, because the bets made on the former Army captain’s win had already turned a profit – and many investors decided to cash in on their winnings. From now on, the stock market will follow the markets’ reactions to the moves made by the future administration.
After the president-elect, all eyes will be on Paulo Guedes, the ultra-libertarian Chicago School economist who has been appointed as Mr. Bolsonaro’s future financial tsar. He will head the Ministry of the Economy, a merger of three existing ministries: Finance, Planning & Budget, and Industry & Foreign Trade. That will make Mr. Guedes the most powerful member of any president’s economic team since the failed administration of former President Fernando Collor – the last to have a Ministry of the Economy.