Halister News

(Bloomberg) -- Charges were already expected, but they test coalition loyalty in a scenario of low presidential political capital and with formal questioning regarding the execution of the mandate, says Rafael Cortez, a political analyst at Tendencias Consultoria.

• There will be an increase in uncertainty due to the fate of the president and to the progress of reforms
  • Coming days should have high volatility
  • How long it will last will depend on signals that economic policy continues in the right direction and govt’s ability to take steps of normality
• Pension reform should be almost paralyzed in the short term, pending the solution to political crisis
  • Prospect for reforms is negative
  • Labor reform should advance in Senate to avoid that uncertainty becomes aversion to risk and market starts having positive view on a Temer exit
• From the political point of view, work will now be to do strategic analysis and identify who can actually support Temer’s permanence
  • Political feasibility for government strategy is deteriorating
• Government can get support to veto instauration of proceedings against Temer
• NOTE: Brazil’s President Michel Temer was charged with corruption by the chief prosecutor on Monday evening