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Speaker 1: Hello, Stephanomics here the podcast that brings you the global economy.

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Speaker 1: This week focused on two very important elections, one coming

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Speaker 1: up and the other just happened. The one that's happened,

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Speaker 1: which will probably turn out to be more important for

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Speaker 1: the planet, was the Brazilian presidential election, and the winner,

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Speaker 1: as you'll definitely all know by now, was lauish in

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Speaker 1: Nasciodis Silva, universally known as Lula. He's already served two

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Speaker 1: terms as president up until he also served prison time

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Speaker 1: barely two years ago for corruption and money laundering. Investors

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Speaker 1: had been frightened when this left wing populist was elected

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Speaker 1: the first time around. Now they seem to be relieved.

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Speaker 1: But what happens next? Maria Eloisa Carburero in Brazilia has

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Speaker 1: an on the ground report in a few minutes. But

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Speaker 1: first I thought we should talk about the US mid

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Speaker 1: term elections on November eight, which you'd think would be

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Speaker 1: heavily influenced by what's happening in the US economy, but

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Speaker 1: maybe not. Let's talk it all through with Bloomberg Chief

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Speaker 1: US Economists and A Wong and Bloomberg's White House reporter

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Speaker 1: Nancy Cook. Now, Anna, we have every congressional seat and

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Speaker 1: a third of the seats in the Senate up for

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Speaker 1: grabs in this election. Before we get to how the

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Speaker 1: economy has or has not changed the race in different

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Speaker 1: parts of the country, I guess you should just paint

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Speaker 1: a scene for US. Inflation is obviously the highest we've

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Speaker 1: seen in many years in the US, but it's not

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Speaker 1: a straightforward um sort of economic crisis story. Im in

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Speaker 1: the US is not in recession. We're not seeing a

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Speaker 1: big rising unemployment. So so how's the economy looking? Well,

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Speaker 1: First of all, people feel very gloomy about the future,

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Speaker 1: But if you look at the fundamentals, such as the

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Speaker 1: actual spending, how much people have in the bank account,

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Speaker 1: UM jobs out there, the actual labor income growth for

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Speaker 1: the past twelve months, it's actually better than UM many

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Speaker 1: many years, for decades, in fact, the best in a

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Speaker 1: couple of decades. And the reason why people feel gloomier

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Speaker 1: than the fundamentals would predict that they would feel it

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Speaker 1: is because of inflation. And I know research on people's

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Speaker 1: psychology is not strong suit of economists, but sociologists and

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Speaker 1: other fields have shown that people just feel like they're

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Speaker 1: cheated whenever inflation is high, Right, you even if your

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Speaker 1: nominal income rise at the same pace as inflation. People

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Speaker 1: just feel cheated when inflation is eroding their nominal income.

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Speaker 1: I guess we should just clarify because there has been

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Speaker 1: I mean, I know Larry Summons has talked about how

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Speaker 1: most people's real wages have been going down even though

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Speaker 1: the nominal is high. So for for a big chunk

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Speaker 1: of the workforce, I guess it wages are not quite

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Speaker 1: keeping up with inflation, or you would say if they

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Speaker 1: are keeping up well, I would say for the lower

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Speaker 1: income household, we see that nominal income growth at the

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Speaker 1: bottom quartile of workers are actually catching up with inflation.

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Speaker 1: The wage growth was at ten or eleven percent at

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Speaker 1: the bottom of the workers. So for those workers, I

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Speaker 1: would say their real income is catching up to you know,

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Speaker 1: actually has been positive over the past twelve months. Be

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Speaker 1: for the top half of the workers, I would say

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Speaker 1: that the real real wage has been declining over the

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Speaker 1: past twelve months. So, and Nancy, we heard from an

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Speaker 1: on paper, although we have this high inflation, we do

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Speaker 1: have still an extremely low unemployment rate. Incomes have either

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Speaker 1: been keeping up with inflation or almost keeping up with inflation.

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Speaker 1: You've paid a lot of attention to to these campaigns

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Speaker 1: and how the White House has been dealing with them.

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Speaker 1: How how would you what's been more salient on the

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Speaker 1: campaign trail, inflation, jobs, or other things entirely like the

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Speaker 1: change in the abortion rules. So we've seen lately in

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Speaker 1: poll after poll, voters um are really saying that the

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Speaker 1: most dominant issue to them and the one that they

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Speaker 1: plan to vote on is a combination of the economy

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Speaker 1: and inflation. In the closing weeks of this campaign, inflation

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Speaker 1: has really become the dominant issue. I would say over

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Speaker 1: the summer, Democrats were very hopeful actually, and they felt

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Speaker 1: like their messages on abortion rights, threats to democracy, what

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Speaker 1: they saw as extremism on the part of Republicans in

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Speaker 1: terms of some of their policy proposals. Democrats really felt

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Speaker 1: like that would help them potentially stave off much larger

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Speaker 1: losses in the midterms. So you know, historically the party

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Speaker 1: in power always loses some seats in the mid terms.

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Speaker 1: But I think Democrats in July and August really felt

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Speaker 1: much more optimistic. You've seen a real sea change. It's

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Speaker 1: altading in September, I would say, uh into October, where

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Speaker 1: Democrats are starting to grow much more pessimistic. The economy

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Speaker 1: has become the main issue. Gas prices have fluctuated and

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Speaker 1: that has definitely hurt people's perception of the economy. And

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Speaker 1: another thing that we've seen is the housing market in

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Speaker 1: the US has started to cool as the FED keeps

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Speaker 1: raising interest rates, and so that is also affecting people,

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Speaker 1: and the White House is aware that that. You know,

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Speaker 1: while some economists believe inflation has peaked, things like food

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Speaker 1: prices and also the prices for you know, housing have

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Speaker 1: remained high, and those are really what the majority of

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Speaker 1: Americans spend their money on. And so even if you

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Speaker 1: have you know, some wonky White House economist on TV saying, look,

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Speaker 1: we think inflation has peaked, that doesn't necessarily mean that

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Speaker 1: these key voters that the White House needs to win over,

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Speaker 1: like women, suburban women, independence, that's a message that they're

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Speaker 1: going to be receptive to if they're seeing high prices

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Speaker 1: at the grocery store, fluctuating gas prices, and like maybe

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Speaker 1: let's say their rent has gone up a lot. I

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Speaker 1: do remember when various attempts earlier in the year by

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Speaker 1: President Biden to talk about the putin price hike and

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Speaker 1: too blame President putin for high inflation. That hasn't really stuck, right,

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Speaker 1: I mean, have Republicans successfully been able to blame the

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Speaker 1: Biden administration for high inflation. The Republicans are trying to

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Speaker 1: make this election a report card on President Biden and

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Speaker 1: his leadership of the economy. What the White House has

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Speaker 1: been trying to do is make this, particularly lately into

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Speaker 1: a choice between the two parties. And they're trying to say,

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Speaker 1: you know, look, we understand inflation is high, but we're

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Speaker 1: doing all these things. You know, We've released u of Danas,

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Speaker 1: strategic released from the Strategic Petroleum Reserve. We passed this

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Speaker 1: sweeping legislation in August that's meant to bring down inflation

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Speaker 1: and control some prices, particularly for seniors on prescription drugs.

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Speaker 1: The inflation reduction exactly many people another country sounded a

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Speaker 1: bit silly, but anyway, well it was branded with the

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Speaker 1: elections in mind. Um. But and what they're trying to

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Speaker 1: say is like, look at the things we've done. We

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Speaker 1: know that you're in pain but with the high prices,

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Speaker 1: but we've tried to do all these things and we're

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Speaker 1: doing everything we can. And by the way, the White

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Speaker 1: House says, you know, inflation is really the purview of

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Speaker 1: the Federal Reserve, And what they're trying to say is

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Speaker 1: if Republicans control things again like Congress, they don't have

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Speaker 1: a plan to cover inflation. Meanwhile, Republicans just keep sort

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Speaker 1: of bringing up things that are happening every day, like

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Speaker 1: the everyday costs, and they're really hammering the White House

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Speaker 1: on this, and they have just had a great amount

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Speaker 1: of success in recent weeks sort of driving the inflation

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Speaker 1: economy message home, combined with a renew focus on crime.

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Speaker 1: There's a lot of crime in American cities now, and

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Speaker 1: I think that those are messages that are really speaking

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Speaker 1: to voters doing mid terms. That you can have very

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Speaker 1: different campaigns in different parts of the country for specific

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Speaker 1: Senate seats or or even specific congressional seats. So are

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Speaker 1: our economic geographical economic differences playing into different kinds of campaigns.

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Speaker 1: They certainly are. And you see also different candidates trying

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Speaker 1: to tail their tailor their message to different voting groups.

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Speaker 1: So for instance, um, you know, Bloomberg Economics did this

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Speaker 1: great thing called the Misery Index, which looks at where

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Speaker 1: Americans are most miserable, and so what we've seen in

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Speaker 1: the Midwest part of the country. Uh, you know, the

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Speaker 1: combination of sort of inflation and employment is not as bad.

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Speaker 1: But in other places where there are key Senate races,

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Speaker 1: like Arizona and Nevada, the misery index is very high.

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Speaker 1: And so, for instance, in Arizona, we've seen the Democratic

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Speaker 1: candidate there, Mark Kelly, really try to tailor his message

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Speaker 1: and steer clear of Biden. You know, Biden has not

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Speaker 1: gone anywhere near Arizona and really try to tailor his

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Speaker 1: message to the huge number of Latino voters that Democrats

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Speaker 1: are trying to woo, who polsters tell me have been

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Speaker 1: very concerned about inflation, and so he is trying to

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Speaker 1: talk to that group specifically. We've seen in Nevada Democrats

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Speaker 1: really trying to turn out to union forces. There's a

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Speaker 1: you know, a bunch of the casino workers are unionized,

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Speaker 1: so they're really trying to speak to those groups and

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Speaker 1: and appear friendly to labor um and speak to those

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Speaker 1: people about high prices. But again President Biden has steered

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Speaker 1: clear of Nevada too, So so it's an interesting thing

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Speaker 1: where the economy is being experienced differently in different states

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Speaker 1: of the country, and each Senate race is sort of

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Speaker 1: its own little microcosm of what is happening in the

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Speaker 1: economy and what those themes are. Well, Anna Wong, that's

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Speaker 1: a there's a good segue to you. I guess you

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Speaker 1: should remind us what the misery indexes, and I think

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Speaker 1: also remind us of this discussion that we've had I

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Speaker 1: think in the past about how how you can it

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Speaker 1: could potentially be that that higher inflation is more politically

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Speaker 1: damaging than high unemployment because of the larger number of

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Speaker 1: people that affects. Yeah, So misery index is the sum

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Speaker 1: of unimployed i'm in rate and the inflation rate. And

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Speaker 1: whereas unemployment uh as I mean, as Stephanie said, unemployment

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Speaker 1: um affect only a small portion of the population. Inflation

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Speaker 1: is felt by every household, and in fact, in the

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Speaker 1: lower income household who spent a higher share of their

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Speaker 1: budget on gasoline and food, they feel it more. And

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Speaker 1: to Nancy's point about the geographic distant distribution of this

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Speaker 1: misery that's being felt differently in this country, we have found,

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Speaker 1: based on misery index at state level, that the Red

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Speaker 1: States misery was higher and in fact worsened more under

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Speaker 1: the Biden years than during the Trump years, and it

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Speaker 1: is a very clear trend, and that could explain why

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Speaker 1: Red states are the voters here are more passionate about

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Speaker 1: UM going out to the vote. And the reason why

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Speaker 1: missoury has worsened in Red state it's more so than

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Speaker 1: the Blue States, was because the Red States never really

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Speaker 1: locked down as hard as the Blue States. So they're there,

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Speaker 1: their local economy was already growing at sort of capacity

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Speaker 1: before UM everybody opened up right then after everybody opened

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Speaker 1: up that and with the American Rescue Act, the inflation

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Speaker 1: impulse further hit these Red states more because they were

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Speaker 1: operating close to capacity even before. Hence we see that

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Speaker 1: Red States has generally higher inflation than Blue states. You know,

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Speaker 1: you've been that really ahead of the game, ahead of

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Speaker 1: many other forecasters this year, not only in predicting where

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Speaker 1: that Federal Reserve interest rate was going to go, way

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Speaker 1: ahead of anyone else, expecting that to maybe get as

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Speaker 1: high as five, but also expecting inflation to go higher

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Speaker 1: for longer than many expected. So two years time general election,

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Speaker 1: what what do your forecast say is the economy that

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Speaker 1: President Biden potentially will be trying to get re election on.

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Speaker 1: So our base cases for the for a recession to

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Speaker 1: begin in the third quarter of so by November four

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Speaker 1: I would predict that economy would be gradually improving. But

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Speaker 1: given that my forecast is also for the FED to

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Speaker 1: only begin to cut rates in perhaps around you know, springtime,

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Speaker 1: at the economy would only be in the nascent stage

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Speaker 1: of turning around. Unemployment would be at five percent at

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Speaker 1: that point. It will be pretty bad for Biden's election campaign. So, Nancy,

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Speaker 1: we have now kind of been started to look into

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Speaker 1: the future. So tell us what's your best guess of

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Speaker 1: the election outcome, the mid term election outcome, and briefly

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Speaker 1: what that might mean for US economic policy making over

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Speaker 1: the next couple of years. So I've talked to a

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Speaker 1: bunch of posters and Democratic strategies this week, and there

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Speaker 1: is sort of a wide concert says that Democrats will

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Speaker 1: lose the House. It's just a matter of by how

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Speaker 1: wide of a margin. Um. A lot of people think

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Speaker 1: that the Democrats it. The Senate is a little bit

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Speaker 1: more unclear, um. But I think if they have divided government,

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Speaker 1: even if Republicans just control the House, it means that

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Speaker 1: there will be very little economic policy making within the

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Speaker 1: Biden White House. There won't be any big legislative sweeping packages.

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Speaker 1: And what typically happens in year three and four of

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Speaker 1: a presidency if there's divided government is that the economic

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Speaker 1: policy making is really relegated to just regulatory stuff, so

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Speaker 1: things done out of agencies, rules being rewritten. The president

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Speaker 1: will turn much more to foreign policy, and perhaps there'll

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Speaker 1: be some things done on some international economic issues. Um

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Speaker 1: he can continue to talk about the Chips Act. Maybe

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Speaker 1: they will do something on trade, although they've been very

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Speaker 1: reluctant to do anything on the Chinese tariffs. But those

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Speaker 1: will really be the areas that I will be looking for.

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Speaker 1: I don't think there will be much happening out of

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Speaker 1: the White House and the domestic economic France. We don't

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Speaker 1: know whether it will be good news for America's but

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Speaker 1: it's bad news for people covering US economic policy. Nancy

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Speaker 1: Cook and Anna Wong, thank you so much. Now, Even

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Speaker 1: by US standards, the battle for the Brazilian presidency was brutal,

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Speaker 1: almost certainly the toughest contest in Brazil's forty odd years

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Speaker 1: of democracy, and the margin of victory was small, just

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Speaker 1: under two percentage points, but two percent of the vote

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Speaker 1: in Brazil equates to two million extra votes cast for Lula,

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Speaker 1: and despite some complaints about fraud in the electoral system

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Speaker 1: and demonstrations on the streets by supporters of the now

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Speaker 1: outgoing president Jao Boltonaro, it looks like two million votes

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Speaker 1: is going to be enough to secure a peaceful transfer

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Speaker 1: of power. But what kind of economy does president elect

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Speaker 1: Lula inherit? Does he have the team the resources to

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Speaker 1: deliver on his promises. Here's Maria Eloisa Caporo in Brazilia

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Speaker 1: M M. Louise in Ala da Silva. Lula, as Brazilians

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Speaker 1: known him, is returning to the presidency after two prior

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Speaker 1: terms in office. In geology two thousand's the intervening years

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Speaker 1: having colorful to say the least. He spent more than

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Speaker 1: a year in jail for accusations of his involvement in

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Speaker 1: a corruption scheme known as car was Wash, and his

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Speaker 1: presidential campaign was tighter than expected, with supporters of incumbent

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Speaker 1: Jairbelsonao a majority in Congress. But Lula has promised vertier

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Speaker 1: times health and his supporters are hopeful he'll deliver. Here's

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Speaker 1: some of them singing one of the most famous campaign slogans.

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Speaker 1: Just after Rula was declared president with fifty point nine

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Speaker 1: percent of the books. The next four years are in

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Speaker 1: charge of challenges. Latin America's largest economy will face lower growth,

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Speaker 1: high interest rates, and persistent inflation. Here's Unstravisia held Latin

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Speaker 1: American economists at City Group. It's never good news when

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Speaker 1: the fat heights rates for emerging markets. So Brazila will

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Speaker 1: be facing head winds going into next year with lower

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Speaker 1: commodity prices, tighter financial conditions, and as lower as lower

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Speaker 1: global growth in China, in Europe and in the US.

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Speaker 1: We're forecasting relatively low growth for all of Latin America,

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Speaker 1: but for in particular for breast in three. This is Gabriella,

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Speaker 1: a self declared Bolsonado support I talked to at a

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Speaker 1: coffee shop in Brazilia prior to election j We are

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Speaker 1: so eclusive e Columbia. The economy is one of the

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Speaker 1: things that I think about the most when I cast

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Speaker 1: my vote. I'm an independent worker and I need the

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Speaker 1: economy to perform well. Only now after the pandemic, we

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Speaker 1: are seeing that there's an economic bounce back, and I

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Speaker 1: fear that things will change in the economy, could stall.

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Speaker 1: I'm here would who was working at a clothing store

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Speaker 1: in the Southwest neighborhood of Brazilia. Today prior to elections,

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Speaker 1: are they going you see? Politics are an embarrassment this year. Really,

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Speaker 1: I've never seen anything like this, and this impacts businesses.

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Speaker 1: I'm really worried about unemployment and security. There's a lot

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Speaker 1: of people going hungry and without jobs. No stray. Interest

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Speaker 1: rates in Brazil at at the highest since two thousand seventeen.

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Speaker 1: Central bankers were ahead of the curve and raised interest

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Speaker 1: rates in the wake of the pandemic. Last September, they

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Speaker 1: stopped an eighteen months long tiding cycle, which took rates

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Speaker 1: to thirteen point seventy five. Inflation fell from earlier this

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Speaker 1: year to forecast of five point six percent by December.

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Speaker 1: But it wasn't monetary policy that helped hold price increases.

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Speaker 1: It was tax cuts, temporary tax cuts that lower transportation costs,

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Speaker 1: including gasoline, and most of them are set to expire

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Speaker 1: by the end of the year. He's Roberto Zazamski, brazilianalysts

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Speaker 1: at Vartes. So we have seen a significant decline and

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Speaker 1: headline inflation. In fact, we experienced three months of deflation

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Speaker 1: in Brazil between July and September, but now in October

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Speaker 1: we already started to see monthly prices rising again. So

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Speaker 1: when you look at what we call co inflation that

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Speaker 1: basically focus on the less volatile prices in the economy,

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Speaker 1: that measure continues to be quite high and it will

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Speaker 1: take longer for them to improve. Brazil's economy has proven

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Speaker 1: resilient to high interest rates. Many Brazilians are concerned of

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Speaker 1: what comes next for the economy. Sa Samski Divarkle's analysts

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Speaker 1: expects the nation's economy to grow by just one percent

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Speaker 1: next year, down from two points seven percent, and the

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Speaker 1: big question is how the government will respond to persist

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Speaker 1: in inflation. Here's five Amendous, a doorman in the southwest

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Speaker 1: neighborhood of Rassilia. Economy. May God bless whoever wins, because

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Speaker 1: the economy is really weak. It's not performing as it should.

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Speaker 1: I worry about prices of food, gasoline and cooking gas.

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Speaker 1: We'll see what the next president does and if he

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Speaker 1: manages to lower prices, because if not, we won't even

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Speaker 1: have enough to eat. And then there's all the complained

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Speaker 1: promises that need funding. That's Lula in an event in

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Speaker 1: the city of Jewist you Porda speaking to a crowd

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Speaker 1: of supporters before election day, he's promising to raise minimum

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Speaker 1: wages so they match inflation. During the campaign trail, he

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Speaker 1: also promised to cut taxas for those with the lowest income.

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Speaker 1: He promised object reform that will increase taxes on the

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Speaker 1: regist and he promised paytricks to the poor of six

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Speaker 1: hundred eyes, which is about a hundred and sixteen U

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Speaker 1: S dollars. But the now elected president hasn't said how

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Speaker 1: all of that will be financed. Resist public that has

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Speaker 1: risen through most of the past decade and is now

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Speaker 1: the highest among the major emerging markets, what investors need

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Speaker 1: from the government is some sort of reassurance, that is,

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Speaker 1: that will be paid back at some point. Here's Adriana Upita,

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Speaker 1: Brazil economist at Bloomberg Economics. The big problem for Brazil

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Speaker 1: right now is that none of its fixical rules is credible.

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Speaker 1: Governments from the right and the left political spectrum have

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Speaker 1: circumvented each of these rules. So the first question for

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Speaker 1: the new presidential mandate it's to propose a new, credible,

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Speaker 1: enforceable and feasible fiscal group. The second second question is

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Speaker 1: to make sure that the counter can fund the many

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Speaker 1: promises made on the campaign trail, especially on social aid

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Speaker 1: and incomplex cuts. Latin America has seen a wave of

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Speaker 1: products erupt as governments have failed to deliver the promises

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Speaker 1: of helping easy the pain of high inflation and low growth.

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Speaker 1: So it's not just the market but Brazilians themselves who

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Speaker 1: will be looking at how Lunar navigates the challenge of

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Speaker 1: increasing social aid while keeping Brazil's death levels stable. And

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Speaker 1: they are likely to keep tabs on their new president,

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Speaker 1: who could come under pressure if he doesn't fulfill all

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Speaker 1: those promises he made on the campaign trail. For Bloomber News,

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Speaker 1: this is my yellow so I'm delighted to talk a

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Speaker 1: bit more about the prospects for Brazil with Richard Back,

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Speaker 1: who's head of political analysis and strategy at XP Investimentos

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Speaker 1: in Brazil. Um, but I should say he's joining me

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Speaker 1: from a mountaintop in what is a public holiday in Brazil.

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Speaker 1: So thank you very much for having this having this

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Speaker 1: conversation with me on your on your day off, Richard.

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Speaker 1: It's been a busy week, I know, and we've had

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Speaker 1: quite a lot of uncertainty at various times over whether

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Speaker 1: the current president, John Bersnaro had actually admitted defeat. So

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Speaker 1: I guess could you just give us an update on

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Speaker 1: where things stand. Sure, yeah, good afternoon. It is a

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Speaker 1: pleasure to talk to you today. Um, you know, Lulas

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Speaker 1: is getting some kind of short vacations from today until Sunday,

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Speaker 1: So I'm really happy with this. So I could come

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Speaker 1: to this hunting and take a breath for a couple

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Speaker 1: of days and then we'll be back. He's on he's

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Speaker 1: on the beach. Yes, that's this very nice place I recommend.

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Speaker 1: And but yeah, we we are living these days after

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Speaker 1: the elections that Bosonaro half recognized the result of the election.

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Speaker 1: But we're seeing this role being blocked by boson narvistic

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Speaker 1: truck drivers and militants from his cause. And um, yeah,

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Speaker 1: I think it works in a coordinated way because Bosonaro

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Speaker 1: was delaying to talk to to make a first speech

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Speaker 1: after the elections because he was hoping that people will

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Speaker 1: go to the streets and make protests in favor of

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Speaker 1: him and then he could be politically stronger than he

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Speaker 1: is right now. But the other side of this, this

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Speaker 1: coin is if people doesn't go and they are not

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Speaker 1: going in this multitude that he was hoping. Um, he

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Speaker 1: will be in a weak situation and very isolated by

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Speaker 1: the establishment in Brazil, media, political establishment, judiciary establishments. They

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Speaker 1: are just leaving Boston, Nario. So, um, this I don't

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Speaker 1: think this is will work in a good way for him,

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Speaker 1: But I think it's done. What I'm saying to our

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Speaker 1: clients since uh, the last month, I think think seems

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Speaker 1: since September is I think we are forecasting this. You know,

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Speaker 1: truck drivers, people in the streets, protesting, but we never

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Speaker 1: we never took this as a real threat to democracy

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Speaker 1: in Brazil. So this is the thing that democracy can support.

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Speaker 1: I'm not saying they should support, but can support. And um,

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Speaker 1: it is happening. But I think that the end is

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Speaker 1: one week, two weeks we were free from this thing. Yes,

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Speaker 1: so you can have demonstrations on the street, but that

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Speaker 1: doesn't necessarily mean a real challenge to the rule of

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Speaker 1: law or to the police. Full transfer of power. And

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Speaker 1: just to remind us, when would that transfer of power happen?

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Speaker 1: When would when would president elect I guess Lula become

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Speaker 1: president again? Yeah again the third time. Um, this is

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Speaker 1: these two moments, one moment in December, maybe December tenth.

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Speaker 1: It is a date that supermanatural court defines in December

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Speaker 1: when they give him a kind of certificate that he

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Speaker 1: won the elections. So and then this first moment official

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Speaker 1: and the second moment is generally the one when you

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Speaker 1: have officially the new president it is constitutional, you have

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Speaker 1: officially the new president becoming president, working in the office officially,

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Speaker 1: and the Congress in Brazil one month after that is

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Speaker 1: generally is February the one. What kind of constraints do

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Speaker 1: you see on him? And of course there's a lot

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Speaker 1: of people hoping that he can achieve great things and

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Speaker 1: be focusing on the poorest in society and other things

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Speaker 1: that he's been sort of known for. Is he going

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Speaker 1: to be very constru train and what he can do? Yes,

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Speaker 1: he will. I think he will have the same constraints

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Speaker 1: that also Naro faced in the last four years UH

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Speaker 1: in this this more ideological agenda in terms of behavior

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Speaker 1: especially Butsonar you couldn't approve a lot of things in

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Speaker 1: the right wing side and Lula would not approve a

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Speaker 1: lot of things from the left wing side. Agenda. I

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Speaker 1: think he will have a majority in Congress, UH, like

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Speaker 1: two hundred seventy congressmen in the House, like a forty

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Speaker 1: congressman UH, senators in in Senate. It is very, very

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Speaker 1: very easy to see the numbers in favor of Lula UH.

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Speaker 1: Not a big majority, but majority in both houses. But

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Speaker 1: it doesn't mean he will do anything he wants. He

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Speaker 1: cannot be his own party administration. He knows that he

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Speaker 1: will have to bring more people and will have to

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Speaker 1: deal with the Congress and the judiciary, because this is

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Speaker 1: a mess, the situation that judiciary is in Brazil today.

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Speaker 1: So he's saying this is positive that he knows that

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Speaker 1: he cannot be a radical or revengeful against the institutions

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Speaker 1: because he can be removed from from the presidency as

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Speaker 1: Tuma was in the past. He nominated Arguming, his vice

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Speaker 1: president of very conservative men Um, for the coordination of

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Speaker 1: the process of transition, which is a very good sign

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Speaker 1: because he could nominate someone from his own party. So

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00:28:30,800 --> 00:28:34,320
Speaker 1: he is opening this thing a little bit because it

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00:28:34,400 --> 00:28:38,040
Speaker 1: doesn't mean much, but he knows and he reads Lula

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00:28:38,960 --> 00:28:41,800
Speaker 1: very well. Does kind of signals that he has to

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00:28:42,080 --> 00:28:45,400
Speaker 1: give to the society. So he's doing that from a distance.

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00:28:45,600 --> 00:28:48,640
Speaker 1: It looks surprising, you know, when Lula was first elected

437
00:28:48,720 --> 00:28:52,320
Speaker 1: and here's this left wing firebrand, former trade unionist and

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00:28:52,600 --> 00:28:56,000
Speaker 1: metal worker. Um I seem to remember, investors and the

439
00:28:56,080 --> 00:29:00,440
Speaker 1: financial markets were pretty worried. And yet this result, uh

440
00:29:00,880 --> 00:29:03,560
Speaker 1: of his his winning the presidency seems to have gone

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00:29:03,600 --> 00:29:07,160
Speaker 1: down reasonably well. So so briefly, how would you how

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00:29:07,200 --> 00:29:10,680
Speaker 1: would you describe the reaction of kind of international investors

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00:29:10,880 --> 00:29:15,120
Speaker 1: to this result and what is it that that investors

444
00:29:15,160 --> 00:29:18,200
Speaker 1: are thinking when they look at Lula. It was interesting

445
00:29:18,320 --> 00:29:22,720
Speaker 1: because since the last year, um, after the opening, the

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00:29:22,800 --> 00:29:25,800
Speaker 1: general opening, and uh, finally we could travel to the

447
00:29:26,000 --> 00:29:30,040
Speaker 1: US and the UK and make contact with the personally

448
00:29:30,120 --> 00:29:33,440
Speaker 1: with our clients and investors in Brazil, and they were

449
00:29:33,560 --> 00:29:37,959
Speaker 1: more more comfortable with Lula winning the elections before the Brazilians.

450
00:29:38,320 --> 00:29:41,280
Speaker 1: So the foreigners, they were more comfortable with this this thing. Yeah,

451
00:29:41,320 --> 00:29:44,280
Speaker 1: we know Lula. He will make distortions, but he's not

452
00:29:44,440 --> 00:29:48,400
Speaker 1: a guy that will blow everything and make a very

453
00:29:48,520 --> 00:29:53,800
Speaker 1: red government, red administration, left wing orientated. During the campaign,

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00:29:54,120 --> 00:29:58,440
Speaker 1: we haven't this this volatility that many people were expecting

455
00:29:58,680 --> 00:30:01,320
Speaker 1: during the elections, you know in the markets in Brazil,

456
00:30:01,400 --> 00:30:05,760
Speaker 1: because you know, you know, the investors in Brazil they

457
00:30:05,840 --> 00:30:09,640
Speaker 1: used to say, we know already know the good part

458
00:30:09,720 --> 00:30:11,960
Speaker 1: and the best part of both of these guys, Lula

459
00:30:12,000 --> 00:30:15,280
Speaker 1: and Bosonardo. So we've have seen the wars from Lula

460
00:30:15,360 --> 00:30:17,760
Speaker 1: and the best from Lula, the wars from Bosonaro, the

461
00:30:17,840 --> 00:30:23,240
Speaker 1: good part of Bossonaro. So not that surprising situation, right,

462
00:30:24,760 --> 00:30:29,000
Speaker 1: that's interesting. And finally, I mean for the region and

463
00:30:29,120 --> 00:30:32,000
Speaker 1: for the sort of broader economy, do you think it's

464
00:30:32,040 --> 00:30:35,440
Speaker 1: good news to have Lula reelected? And we are in

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00:30:35,520 --> 00:30:38,120
Speaker 1: a very difficult situation for the global economy, lots of

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00:30:38,200 --> 00:30:44,280
Speaker 1: emerging market economies dealing with a stronger dollar, which traditionally

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00:30:44,400 --> 00:30:47,480
Speaker 1: is quite a bad thing, and also rising interest rates

468
00:30:47,560 --> 00:30:49,760
Speaker 1: by the Federal Reserve. We've been talking earlier in the

469
00:30:49,800 --> 00:30:53,560
Speaker 1: show about the the US interest rates that's in the

470
00:30:53,760 --> 00:30:58,000
Speaker 1: past often been a recipe for for crises in places

471
00:30:58,080 --> 00:31:03,000
Speaker 1: like Brazil. Um. But we also have some possible pluses

472
00:31:03,160 --> 00:31:06,480
Speaker 1: and advantages coming to South America from the fact that

473
00:31:06,560 --> 00:31:10,280
Speaker 1: the US is sort of distancing itself and potentially decoupling

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00:31:10,440 --> 00:31:13,680
Speaker 1: from from it some of its trade relationships with China.

475
00:31:13,840 --> 00:31:17,160
Speaker 1: So just a Lula presidency make it more likely that

476
00:31:17,320 --> 00:31:20,080
Speaker 1: Brazil will come through this in relatively good health and

477
00:31:20,160 --> 00:31:23,360
Speaker 1: maybe to see some opportunities from the current state of affairs.

478
00:31:24,200 --> 00:31:28,880
Speaker 1: I think so um, they diagnosis that his party and

479
00:31:29,160 --> 00:31:32,920
Speaker 1: people and his inner circle is getting more matured, because

480
00:31:33,400 --> 00:31:36,600
Speaker 1: he was scaring me personally because six months ago when

481
00:31:36,760 --> 00:31:40,720
Speaker 1: you asked them about the foreign situation, they fed all

482
00:31:40,760 --> 00:31:44,840
Speaker 1: that stuff. He wasn't in their political or economical calculations,

483
00:31:44,880 --> 00:31:47,640
Speaker 1: you know, and he was kind of surprised for them.

484
00:31:47,760 --> 00:31:50,920
Speaker 1: So you at this point, I was looking at a Wow,

485
00:31:51,080 --> 00:31:54,200
Speaker 1: this is this is weird. You know, they should be

486
00:31:54,280 --> 00:31:58,880
Speaker 1: aware about that. But they are increasing this understanding that

487
00:31:59,000 --> 00:32:03,240
Speaker 1: the foreign situation Asian can be not good for Brazio.

488
00:32:04,400 --> 00:32:09,120
Speaker 1: So but but Lula, he he's already doing better in

489
00:32:09,280 --> 00:32:15,080
Speaker 1: this foreign relationship, uh than Bosonaro because Bossonaro he's not

490
00:32:15,400 --> 00:32:20,320
Speaker 1: very fond of this international negotiations and Bluela he loves

491
00:32:20,400 --> 00:32:22,520
Speaker 1: that thing, you know, he loves to be loved. So

492
00:32:23,040 --> 00:32:27,240
Speaker 1: he uh and Macron they have a very good relationship.

493
00:32:28,000 --> 00:32:32,120
Speaker 1: I'm pretty sure that he will meet with Mr Joe

494
00:32:32,200 --> 00:32:38,040
Speaker 1: Biden before even being the office. In terms of negotiations,

495
00:32:38,040 --> 00:32:41,280
Speaker 1: I think Lula has advantage in terms of reading the scenario,

496
00:32:41,840 --> 00:32:46,040
Speaker 1: acting according to the scenario. I think Bossonaro has a

497
00:32:46,120 --> 00:32:49,800
Speaker 1: better team than Lula can nominate. That's interesting. So right

498
00:32:49,840 --> 00:32:53,120
Speaker 1: now the sort of economic expertise would would still favor

499
00:32:53,240 --> 00:32:57,240
Speaker 1: the current the current president. But if what you're standing

500
00:32:57,280 --> 00:33:01,000
Speaker 1: in the international community means anything at all, President Lula

501
00:33:01,040 --> 00:33:03,240
Speaker 1: is going to be better off as not least because

502
00:33:03,280 --> 00:33:05,280
Speaker 1: he's he's going to go off and be the hero

503
00:33:05,560 --> 00:33:10,560
Speaker 1: at the cop meetings I see in in Egypt. So

504
00:33:10,720 --> 00:33:13,280
Speaker 1: many concerns globally about what was going to happen to

505
00:33:13,400 --> 00:33:17,720
Speaker 1: the Brazilian the rainforest if if President Boltonaro stayed in power.

506
00:33:18,080 --> 00:33:20,640
Speaker 1: Richard Bach, and thank you so much for doing this

507
00:33:20,840 --> 00:33:22,760
Speaker 1: on your day off. We really appreciate you coming on.

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00:33:23,280 --> 00:33:35,320
Speaker 1: Thank you very much. Thank you for the dpication. That's

509
00:33:35,360 --> 00:33:37,800
Speaker 1: it for Stephonomics. I have no idea what we're going

510
00:33:37,840 --> 00:33:40,040
Speaker 1: to talk about next week, but check out the Bloomberg

511
00:33:40,120 --> 00:33:42,640
Speaker 1: News website for more economic news and views on the

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00:33:42,680 --> 00:33:46,840
Speaker 1: global economy, and follow at economics on Twitter. This episode

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00:33:46,920 --> 00:33:50,200
Speaker 1: was produced by Sammer, Sadi Young Young and Magnus Hendrickson,

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00:33:50,560 --> 00:33:55,240
Speaker 1: with special thanks to Eloisa, Maria, Richard Bach, Nancy Cook,

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00:33:55,360 --> 00:33:59,040
Speaker 1: and Anna wat. Mike Sasso is the executive producer of

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00:33:59,080 --> 00:34:03,360
Speaker 1: Stephonomics four