Dilma is so tarnished by multiple corruption scandals, it is hard to see how she can continue. How low did Nixon's approval ratings get during Watergate? Seems like Dilma has set a new low. The single digit approval she is getting is probably the recipients of the sweetened pensions she doled out. Even her Vice President is distancing himself from her.
I think most Brazilian stocks will rally hard as soon as the visibility improves (even after the 255 run up the past 3 weeks). While there are negatives, Brazil has a lot of positives that many countries would be envious of. For Example:
Their debt to GDP is 56%, half that of the US. They are a demographically young country, with a high ratio of young workers to those over 60. The currency is beat up making their goods cheap on global markets. Imports are expensive due to the currency, thus this situation generally acts to result in trade surpluses over time (assuming commodity demand picks up to normal levels).
Brazil's Central Bank interest rates are over 14%. At some point the stagflation will subside enabling the opportunity to cut rates. This will provide a tailwind at a time when most of the developed world is at 0 rates (i.e., anticipating future hikes). Brazil will need to reduce dependence on China for its primary source of commodity demand however, the Real devaluation should enable Brazil to be a low cost producer.
In short, removing Rouseff would address one of the major impediments to the Brazilian economy.
FL
