Brazil Election - 5 October 2014

[buritobr]

This evening, I went to the Dilma's rally in downtown Rio de Janeiro.
Neither Dilma nor Lula were there. The campaign considered that according to the ongoing situation, Rio de Janeiro is not the biggest priority anymore, because they consider that she will have some margin here. Rio Grande do Sul and Mato Grosso do Sul became priority, because there is a PT candidate running for governor. Lula visited both states today. Dilma went to Minas Gerais, because it is the second biggest state and the race will be close there.
In this rally in Rio de Janeiro, PT, PDT, PSB and PCdoB leaderships participated. I posted the pictures here

http://blogdomarcelobrito.blogspot.com.br/2014/10/ato-pro-dilma-na-cinelandia-rio-de.html

.

[Paleobrazilian]

The TSE says they believe it'll be possible to call the election immediately after polls close in Acre, so here's why we'll have no exit polls this time out. IBOPE will be back with them in 2018

[jaichind]

Incumbent Dilma Rousseff’s lead over Aecio Neves will be bigger than margin of error, Veja columnist Lauro Jardim reports today without saying where information was obtained.

[Paleobrazilian]

This would be consistent with tracking polls I've heard about, 53-47 is a good bet. Most undecideds have moved into Dilma's hands over the last few days. My last glimmer of hope is tomorrow's debate, that will probably have an audience much larger than the average.

[Paleobrazilian]

Needless to say, Ibovespa sinks 3% further with Dilma inching close to reelection. All state owned companies are losing value in a alarming pace. I understand most PTists are happy with Dilma's reelection prospects, but I can't help but feel pessimistic about everything that's been going on.

[jaichind]

Just to echo Paleobrazilian

Brazil’s Real Drops to Nine-Year Low on Election Runoff Outlook
By Paula Sambo
Oct. 23 (Bloomberg) -- Brazil’s real fell to a nine-year low on concern new voter poll results will indicate that Senator Aecio Neves is struggling to overtake President Dilma Rousseff three days before the election runoff.
The real declined for a fourth straight day, sliding 1.1 percent to 2.5144 per dollar at 3:14 p.m. in Sao Paulo, the weakest level on a closing basis since April 2005. The drop was the biggest among 24 emerging-market currencies. The Ibovespa tumbled 3 percent, leading losses among major stock benchmarks and erasing this year’s gain.

[Paleobrazilian]

Datafolha has it 53-47 Dilma, IBOPE 54-46.

[politicus]

What turned this around?

[MASHED POTATOES. VOTE!]

What turned this around?

Lindsay Lohan's endorsement for Aecio, obviously.

[Paleobrazilian]

What turned this around?

Ads implying Aecio uses drugs and hits his wife.

[MASHED POTATOES. VOTE!]

What turned this around?

Ads implying Aecio uses drugs and hits his wife.

I believe it's not the first time we're witnessing allegations about Aecio using drugs, right?

[Paleobrazilian]

What turned this around?

Ads implying Aecio uses drugs and hits his wife.

I believe it's not the first time we're witnessing allegations about Aecio using drugs, right?

Those rogue rumors have long existed. The rumor about his wife was started by a famous sportswriter with strong links to left wing parties called Juca Kfouri. The allegations he made were denied the same night by four people who were in the place, but sometimes a rogue rumor is enough in a tight campaign.

One thing that also hurt Aecio with women is that Dilma ran ads saying Aecio was rude with women just because he called Dilma "leviana", a polite and formal word in Portuguese to call someone "a liar". The problem is, many people don't know what the word "leviana" means, so they thought Aecio used a insult word against her. Sometimes Aecio used a vocabulary that's too formal on debates, a mistake when over 30% of all voters have no more than a primary school degree.

[buritobr]

No suprisse. In all the polls between July and September which considered a runoff scenario between Dilma and Aécio, Dilma was ahead, with a margin between 4 and 10 points. There was a brief Aécio surge, after he had performed very well and Dilma very bad in the Globo debate before the first round. This surge appeared in the first round, and then, after two weeks, the poll results returned to the levels of July, August and September.
Furthermore, the PT base became more mobilized in the second round, than it was in the first round.

Now, the approval rates of Dilma's administration is
45% Good/very good
31% Regular
23% Bad/very bad

Considering that everyone who consider Dilma's administration good or very good vote for her, and everyone who consider Dilma's administration bad or very bad vote for Aécio, he needs huge majority of the votes of the ones who consider Dilma's administration regular.
I consider Dilma's administration regular and I will vote for her.

Concerning the prospects for Sunday, I like the philosophy of soccer commentators: "o jogo só termina quando o juiz apita" (the game is over only when the refree whistles)

[buritobr]

Bovespa has very little impact on the Brazilian economy.

Unlike what happens in the USA, in Brazil, very few people buy stocks. So, a decrease of the value of the stocks does not have great impact on the purchasing power of the population.
Most of the Brazilian enterprises use their own resources in order to invest in new plants. Or they use BNDES loans. Capital markets are not relevant source of resouces for investment in Brazil.

The recessions in Brazil are not caused by devaluation of stock markets. They are caused by currency crisis. Examples: 1981-1983, 1998-1999, 2002-2003.

The real has been devaluating, but this is until now not a big problem, since the Central Bank has lots of dollar reserves. The government wants that real devaluates a little bit more, because this devaluation is necessary. The trade surplus was US$46 billion in 2006 and it will be almost zero this year.

[Paleobrazilian]

According to Veja, Dilma and Lula knew about all the wrongdoing in Petrobras. This won't matter Sunday, but could become big over the next 4 years. I'd bet Michel Temer knew all as well

[Paleobrazilian]

According to multiple sources the tape where the whistleblower tells it all will be shown in national TV tomorrow. Now that could be huge.

[Paleobrazilian]

If the rumors I've heard over the last 2 hours are true, Dilma won't make it to the end of a (now probable) second term, and neither will Michel Temer. Much worse than Collorgate. Much worse than Watergate I'd say.

[Paleobrazilian]

Neymar endorsed Aecio! lol

[Keystone Phil]

Neymar endorsed Aecio! lol

Ugh.

[MASHED POTATOES. VOTE!]

If the rumors I've heard over the last 2 hours are true, Dilma won't make it to the end of a (now probable) second term, and neither will Michel Temer. Much worse than Collorgate. Much worse than Watergate I'd say.

Well, IIRC in case of both Dilma and Temer not making it to the end of a term, President of the Chamber of Deputies would become presidente interino pending special election, right?

[jaichind]

If Dilma wins the next big blowup might be the emerging fiasco from the central bank $101 billion derivatives position.   14 months after Brazil began selling massive amounts of derivative  swaps contracts to shore up BRL, the strategy is proving ineffective and raising concern in financial markets. BRL fell to a six-year low yesterday and is the world’s most volatile currency. Some analysts say the swaps, which are equivalent to selling dollars in the futures market and now amount to 27% of foreign reserves, are approaching critical levels. Aecio has indicated he’d discontinue their use.  BRL has weakened 11% versus the dollar since the end of August, the second-worst performer among 31 major currencies after the ruble, even as the central bank boosted the sales to $101 billion.   Declines in BRL will probably accelerate in the short term should Dilma win re-election in this weekend’s runoff vote, prompting the central bank to increase the use of swaps.  In such a case the losses might be quite significant and might force the central bank to eat the loss before it gets worse.  This will have an affect of pushing down BRL even more making the losses even worse and could also worsen inflation.  I guess only the 1% in Brazil electorate would understand how a bad situation this is. 

On the flip side, it seems that options traders have and equal number of calls and puts in the equities markets which implies they are still seeing this election as a tossup. 

Whoever wins Brazil’s presidential runoff election this Sunday won’t have much good news to deliver on the outlook for the world’s second-largest emerging market. Brazil is in recession, and annual inflation is above the ceiling of its target range. A widening budget deficit threatens the country’s investment-grade status, and business confidence hovering around five-year lows has driven investment to a low rate by emerging economy standards.  Regardless of who wins, you’re looking at a bleak post-election environment for the average Brazilian. 

[Paleobrazilian]

If the rumors I've heard over the last 2 hours are true, Dilma won't make it to the end of a (now probable) second term, and neither will Michel Temer. Much worse than Collorgate. Much worse than Watergate I'd say.

Well, IIRC in case of both Dilma and Temer not making it to the end of a term, President of the Chamber of Deputies would become presidente interino pending special election, right?

Exactly. If the vacancy of both the Presidency and the Vice-Presidency happens until December 31st 2016, a new General Election would have to be realized 90 days later to choose a ticket to fill in the rest of the term. If the vacancy happens From January 1st 2017 forward, Congress would hold an indirect election, on an unicameral session, to choose the new President and the new Vice President to fill in the reminder of the term.

[jaichind]

A Sensus poll published today on the website of magazine IstoE showed Neves has support of 54.6 percent among valid votes compared with 45.4 percent for Rousseff.  Ibovespa Futures Climb after this polls comes out.  I wonder if the Ibovespa Futures traders understands the concept of house effect.  It seems clear that Sensus seems to have a pro-Neves bias relative to the other polls. But all of them seems to be moving in the same direction, away from Neves.  So not sure why this is seen as good news in light of the results of other polls that came out yesterday.

[Paleobrazilian]

A Sensus poll published today on the website of magazine IstoE showed Neves has support of 54.6 percent among valid votes compared with 45.4 percent for Rousseff.  Ibovespa Futures Climb after this polls comes out.  I wonder if the Ibovespa Futures traders understands the concept of house effect.  It seems clear that Sensus seems to have a pro-Neves bias relative to the other polls. But all of them seems to be moving in the same direction, away from Neves.  So not sure why this is seen as good news in light of the results of other polls that came out yesterday.

Well, while they could be just joking, according to some statisticians I've read the methodology they use is very different of the one used by Datafolha and IBOPE. I've seen some sharp criticism of IBOPE and Datafolha lately, specially of their margin of error, which supposedly doesn't make sense on a scientific basis.

[Paleobrazilian]

If Dilma wins the next big blowup might be the emerging fiasco from the central bank $101 billion derivatives position.   14 months after Brazil began selling massive amounts of derivative  swaps contracts to shore up BRL, the strategy is proving ineffective and raising concern in financial markets. BRL fell to a six-year low yesterday and is the world’s most volatile currency. Some analysts say the swaps, which are equivalent to selling dollars in the futures market and now amount to 27% of foreign reserves, are approaching critical levels. Aecio has indicated he’d discontinue their use.  BRL has weakened 11% versus the dollar since the end of August, the second-worst performer among 31 major currencies after the ruble, even as the central bank boosted the sales to $101 billion.   Declines in BRL will probably accelerate in the short term should Dilma win re-election in this weekend’s runoff vote, prompting the central bank to increase the use of swaps.  In such a case the losses might be quite significant and might force the central bank to eat the loss before it gets worse.  This will have an affect of pushing down BRL even more making the losses even worse and could also worsen inflation.  I guess only the 1% in Brazil electorate would understand how a bad situation this is. 

On the flip side, it seems that options traders have and equal number of calls and puts in the equities markets which implies they are still seeing this election as a tossup. 

Whoever wins Brazil’s presidential runoff election this Sunday won’t have much good news to deliver on the outlook for the world’s second-largest emerging market. Brazil is in recession, and annual inflation is above the ceiling of its target range. A widening budget deficit threatens the country’s investment-grade status, and business confidence hovering around five-year lows has driven investment to a low rate by emerging economy standards.  Regardless of who wins, you’re looking at a bleak post-election environment for the average Brazilian. 

That's pretty much the narrative. There's a great article from a large investment advice company called Empiricus explaining the bleak scenario that awaits the next president. It's based on the "The end of the US" text that became viral a few years ago. Try to google-translate it, it's a very interesting read. The writers of the article recently wrote a book explaining in detail their projected outlook for the next 4 years, which quickly became a best-seller.

http://www.empiricus.com.br/o-fim-do-brasil/