The scenario of political uncertainty and its effects on the economy until the 2022 elections are worrying investors, who are reviewing growth projections for Brazil. However, one of the main names in the Brazilian financial market, Luis Stuhlberger, manager of Verde Asset, recommends attention with the improvement of some indicators.
He assesses that, although there are, in fact, plenty of reasons for caution, the prices of Brazilian assets do not seem to adequately reflect the improvement in the debt scenario, the real situation of court orders from the perspective of public accounts and the possibility that a third way changes the electoral game — and the economic outlook.
According to Stuhlberger, part of the market even predicted that the ratio between debt and GDP (Gross Domestic Product) would reach 100% during the most acute phase of the pandemic. However, it should end the year around 80%. In his opinion, although high inflation helps this result, it is necessary to keep in mind that it is positive.
“Our fiscal situation is not as bad as the markets are saying today,” said Stuhlberger, during an online event promoted this Tuesday (14) by the investment analysis house Eleven Financial Research.
According to the manager, the court orders, which concentrate analysts’ concerns, bring a fiscal impact of around R$ 40 billion, according to market calculations, against a gain closer to R$ 1 trillion caused by the recent evolution in the debt trajectory. “I don’t think they are equivalent quantities”, says the manager.
The fact that public debt is well below projections “is simply being forgotten by the markets,” said Stuhlberger. The manager also highlighted the yield rates of long-term inflation-linked government bonds, which are around 5% per year in Brazil, in a world in which the main developed countries offer negative real returns.
In an exercise of possibilities that may materialize, and which today do not seem to be on the radar of the market’s main bets, the manager of Verde understands that, depending on the political development in the country in the coming months, it cannot be completely ruled out a scenario in which President Jair Bolsonaro (no party), seeing himself with little chance of being reelected, opts for a candidacy for another elective office.
Stuhlberger emphasized that, in this hypothetical scenario, the election completely changes its picture, with the opening of a large window for the emergence of a candidate who could represent the third way.
“The president [Bolsonaro], instead of trying to capture those 40%, 50% undecided, he prefers to continue causing every day to preach to converts”, said the manager, adding that this vision predates the note stitched by former president Michel Temer in which Bolsonaro backed off in attacks to the Judiciary.
For Stuhlberger, the electoral debate, which should only gain strength in mid-2022, was anticipated by recent signs of a populist character coming from the government and which clouded the analysis of specialists.
Also present at the event, Carlos Woelz, founding partner of the asset manager Kapitalo Investimentos, expressed some discomfort with the breach he understands that the BC (Central Bank) left open regarding its commitment to controlling inflation.
Statements this Tuesday (14) by BC president Roberto Campos Neto that he will not react or change the flight plan to each high frequency inflation data that is released were received with some surprise and represent a significant change in the direction of monetary policy, pointed out the manager of Kapitalo.
“The market can interpret this [as declarações de Roberto Campos Neto] as a way to [o BC] to get away from the responsibility of fighting inflation,” said Woelz.