HALISTER1: Temer Sees No Honeymoon; Rousseff Comeback Unlikely: Analysts

Temer Sees No Honeymoon; Rousseff Comeback Unlikely: Analysts

(Bloomberg) -- Political setbacks suffered by Brazil’s acting President Temer highlight risk of a potential struggle to get reforms approved in Congress, though a reversal of Rousseff impeachment is still unlikely, analysts say.
  • Brazil’s Senate doesn’t want Rousseff reinstated, as Temer seen as more able to deal with Congress, Lucas de Aragao, partner at Arko Advice consultancy firm in Brasilia, says in a phone interview
  • NOTE: O Globo reported that 2 senators are mulling a change to their anti-Rousseff votes for the final decision about impeachment after 2 ministers resigned in the first 19 days of the Temer government
  • Potential change of votes doesn’t mean that Rousseff’s ouster will be reversed, since other senators that voted against impeachment also may change their stance to pro- impeachment, Aragao says
  • Accusations against the new govt “definitely don’t help. It makes it obvious that more of these could come to light, which will impair the new government’s efficacy,” Sacha Tihanyi, a senior EM strategist at TD Securities, says
    • “If Rousseff returned to her post, markets would react very, very badly”
  • While a Rousseff comeback scenario is still premature, the latest political developments add to market uncertainty, Gustavo Pereira, a strategist at Guide Investimentos, says
    • “The political backdrop brings noise, as Temer’s measures require support from Congress”
  • “There’s no honeymoon period for Temer, it seems,” Mike Moran, head of economic research for the Americas at Standard Chartered Bank, says
    • The resignation of ministers “does not come across well and is a timely reminder that the corruption investigations transcend party lines”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Lucas De Aragao (Arko Advice)
Michel Temer (Federative Republic of Brazil)
Mike Moran (Standard Chartered PLC)
Sacha Tihanyi (TD Securities USA LLC)

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