Nova presidenta: a analise sobria dos banqueiros do Citi

Na verdade, de alguns economistas brasileiros, mas a serviço dos mesmos banqueiros, que antigamente os aliados da nova presidenta (estou esperando a designação oficial, mas parece que ela já se declarou favorável a essa horrível designação) chamariam de especuladores de Wall Street. Hoje, eles já não acham mais isso: são aliados, e como...
Paulo Roberto de Almeida

Brazil Macro Flash: Outcome of Presidential Elections Reflects Desire for Continuity
Marcelo Kfoury
Stephan Kautz
Leonardo Porto

Bottom Line
As expected, Ms. Dilma Rousseff won the presidential race and will replace President Lula on January 1st. This result represents the overall desire to continue with current policies, meaning strong economic growth and social programs. Overall, the PT and its alliance had a strong showing in Congress, granting a majority at both houses while the opposition, especially the PSDB, managed to come out strong at gubernatorial elections. Therefore, the next administration shouldn’t have much difficulty dealing with Congress, but the opposition might start breeding the future leaders for upcoming elections. The focus of market attentions now should be on the cabinet formation and potential reforms agenda.

Key Points
Ms. Rousseff had 55 million votes while Mr. Serra received 43 million, the tightest presidential election since 1989. Ms. Rousseff had 10 million votes less than President Lula had back in 2006. In spite of a holiday tomorrow, attendance was not much different from previous elections, with absenteeism just slightly higher. Ms. Rousseff won in 15 states, mostly focused on the Northeastern region, while Mr. Serra led in 11 states, with stronger showings in the Southern regions.

Regarding gubernatorial elections, the PSDB consolidated as the main opposition party, winning eight states, which represent over 46% of the total population. In the second round, the PSDB won four of five state elections in dispute and governs two states more than in 2006. The PT and PMDB elected five states’ governors each, while the PSB won in six states.

At Ms. Rousseff’s first press conference, she was accompanied by the former Minister of Finance Antonio Palocci, in a signal that he might have a key post in her administration, likely the Chief of Staff. The economic policy team was also present, including current Minister Mantega and BCB chairman Meirelles. Both are likely to be around in the transition until the end of the year and even in the beginning of Ms. Rousseff’s administration. Finally, she mentioned little about the future, highlighting to keep campaign promises and keep inflation low.

We believe markets will focus now on FX and fiscal policies, namely whether there will be any change coming. So far, until the end of the year we expect no meaningful changes in both. Yet, the Congress needs to finish voting on the 2011 Budget Law, which could provide an opportunity to check whether more conservative spending estimates could be included, opening room for taming the current expenses growth.