Halister News

(Bloomberg) -- Yday’s defeat of suspended House leader Cunha in the Ethics Committee may create risks for acting President Temer’s govt if Cunha is condemned or arrested, Ricardo Ribeiro, political analyst at MCM, says in a phone interview; will affect assets as investors work to reevaluate risk.

• No immediate setback is expected for Temer’s govt
• Gains of Brazilian assets such BRL and stocks in recent months reflect a “balanced” view on political developments, not a “euphoric” view; investors have recognized that Temer’s efforts to approve reforms would face hurdles
• Risk for Temer govt could emerge if Cunha opts for a plea bargain and discloses embarrassing information that could hurt the acting president
  • “This is a risk, despite being unpredictable”
• If no allegations emerge against Temer, his govt may continue to have better conditions to approve fiscal measures in Congress than Rousseff’s govt did
  • Temer likely to see measures approved after deals with lawmakers to get their support; it will be almost impossible to approve measures on a fast track or with no changes
  • Mkt assessment on Temer govt is not euphoric at all; investors recognize hurdles for Temer to get 100% wins in Congress; it is a “balanced” view
  • Rousseff comeback remains unlikely; Congress doesn’t want her govt back, and not even her own party PT and ally Lula want it back, Ribeiro says