Good morning. Political volatility is the new normal in Brazil. Bolsonaro heads to Israel with a pickle. Brazilians lose faith in the economy. Brazil’s Navy chooses Embraer.
Volatility is the new normal in Brazil
After a horrendous Wednesday, Brazilian assets
made a recovery yesterday—following an apparent truce between President Jair Bolsonaro and House Speaker Rodrigo Maia. But investors should keep their seat belts fastened, as the markets are reacting more abruptly to the news coming from Brasília (positively or negatively), and the appetite for risk seen over the first quarter is unlikely to be repeated in the upcoming months. The Bolsonaro administration has eroded some of the trust in itself.
Despite Mr. Bolsonaro and Mr. Maia announcing they’ve buried the hatchet, the truce could be short-lived. Mr. Maia declined an invitation to join the president in taking part in an event of the military courts. In Brasília, nobody believes that the president will change his divisive demeanor. In private meetings with market operators, members of Congress warn that a watered-down version of the pension reform is the likeliest scenario.
The bill to overhaul Brazil’s expensive pension system has lurched forward in Congress, with a rapporteur being chosen at...