HALISTER1: Brazil Carwash Probe, Reforms Are Challenges for Temer: Analysts

Brazil Carwash Probe, Reforms Are Challenges for Temer: Analysts

(Bloomberg) -- Ongoing investigation into Carwash scandal linked to Petrobras is a risk for the political strength of Acting President Temer, which will be needed to approve fiscal reforms in the Congress, analysts say.
  • “Carwash is unpredictable. Should new accusations break against people in the new administration, Temer may weaken politically, making it harder to pass reforms in the Congress,” Daniel Weeks, chief-economist at Garde Asset Management, says in a phone interview
  • Also challenging for Temer is the fact that some important reforms, such as cutting pension regime costs, aren’t popular, Andre Perfeito, chief-economist at Gradual Investimentos says
    • Positive aspect for reform approval outlook is that Temer, a longtime politician, shows a “friendly approach” with members of Congress, Weeks says
  • While the chances are low that Rousseff will come back to power after being temporarily ousted by Senate for 180 days, the possibility can’t be totally ruled out if Temer fails to implement reforms, Luiz Eduardo Portella, partner at Modal Asset Management, says
  • Current low external rates offer an “opportunity window” which Temer needs to take advantage of, implementing reforms and gaining credibility to eliminate any chance of a Rousseff return, Portella says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
PETR4 BZ (Petroleo Brasileiro SA)

People
Andre Perfeito (Gradual Corretora de Titulos e Valores Mobiliarios Ltda)
Daniel Weeks (Garde Asset Mgmt)
Luiz Portella (Banco Modal SA)
Michel Temer (Federative Republic of Brazil)
Modal Asset (Banco Modal SA)

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