Temer’s Honeymoon Ends Prematurely

25.05.2016 • Emerging Markets

From the Daily Pro (BRAZIL) –

Before the troops of political correctness start a morning rebellion, I clarify – as if it were  necessary: the title of this article is a joke, alluding to the infamous audio note from Eduardo Paes with former President Lula. I love Marica.

If the early days of Temer’s government would represent a “honeymoon with the financial market,” I will review my interpretation of the honeymoon expressi on.

Let me be honest. I do not like honeymoons. You go to paradise with the wife and you are treated like a king at the resort in Trancoso, blurring out all of the everyday problems. Then when you go back you think it will always be like that.

An illusion about what marriage is quickly broken by the need to separate the garbage, to wash the dishes and see, under somebody else’s watch, the Masterchef.

Now, at the beginning of the Temer Government, there is a general frustration about the behavior of the markets. The headlines show that, through the “Juca crisis,” the honeymoon with the capital markets ended. It seems that the government ended without even having started. They all run frantically to increase their positions, reducing the exchange and selling long term interests.

I disagree with these people. I argue that the end of the honeymoon may be good for the markets. Following the metaphor I try to convey with the above lines, honeymoon is an illusion. It is the market taking into consideration something the Temer Government cannot give. You find that the PMDB is the bastion of ethics and morality in Brazilian politics. It is waiting for a reform approval without friction…

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