A political crisis usually affects markets, increasing volatility and risk aversion.
This time, however, it is being different.
The relationship between the government Lula and Congress deteriorates in view. The Planalto decided to judicialize the revocation of the increase in IOF Approved by the legislature, and what was already an institutional noise became a declared crisis.
The bet on STF It is risky and, at the limit, counterproductive. If you get lost, Lula suffers political and legal defeat. If you win, you tend further the relationship with an increasingly less willing congress to dialogue. Worse: all this to support a tax frame already admitted as unsustainable even by the authors themselves.
Reading on the market is still contained. The external flow continues to support local assets. But complacency has expiration date.
- Check it out: What is the recommended wallet for your investor profile? Simulate with Money Times the best investment options for you
The policy inspector It became a tangle of gambiarras. The government has lost the window to a serious adjustment and now tries to cover the sun with the sieve. Wear is inevitable – and, as we have seen before, it can be politically terminal.
Lula repeats the mistakes he criticized in Bolsonaro: isolation, improvisation, confrontation. The difference is that this time Congress has more appetite to react. The climate soured for good.
Lost, the government seems captured by the most extreme supporters. Thus he decided to radicalize, rescuing the “we against them” who talks to his base only, alienating the center voters, fundamental in the victory of 2022.
The vain attempt to reverse the wreck in opinion polls resembles a disorganized football team, promoting showers in the area of an organized defense, opening flanks for goals in the counterattack.
Feeling the boat sink, parties such as União Brasil and PP already signal remove. Hugo Motta It becomes the target of the official narrative, which labels it as another representative of the rich. Thus, the executive sees collapsing the fragile coalition he tried to build.
About that, Tarcísio de Freitas Note. In silence, it occupies the vacuum left by a government that lost the timing, support and narrative.
More technical than charismatic, more manager than the stage, Tarcisio consolidates himself as the antithesis of polarization. It does not promise miracles. Predictability delivery. And in an exhausted country of promises, this may be sufficient.
For 2026, it is the name that gains strength. The market has already understood and begins to believe. The right, fragmented in 2024, tends to regroup around it in 2025. If Lula continues in this tune, he will deliver the tray plateau.
April six, 2026. This is the deadline for the consolidation of the board, as it is the deadline for Tarcisio to unzip from the São Paulo government, launching his candidacy for Brasilia.
On the other side, nothing guarantees that Lula goes to the end. An adverse, economic, political and isolation scenario can lead the petista to give up reelection.
Without Lula in the dispute, the country can watch the most serene presidential election since 1998. And in the face of this new, more rational and less emotional environment, Tarcisio seems increasingly prepared to be the name of the transition.
While I finish this newsletter, I receive the survey of the Gerp Institute, published by Exame magazine, showing Lula behind all opponents with the intention to vote for the second round of the election.
With the crisis of the current government, a reversal of this framework is unlikely.
Are you prepared for a post laula Brazil?
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
