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By Tyler Durden

“Of course Brazil’s problems aren’t going to be fixed if Lula and Rousseff are kicked to the curb. After all, 26% of Congress faces active criminal investigations.”

That’s what

But a closer look at exactly who’s buying reveals something rather telling: domestic investors seem to know something that foreign investors don’t. Or, as Bloomberg puts it, “the flows highlight a key difference in how the two groups view Brazil’s crisis.” Here’s more:

“Investors monitoring the political drama from afar are betting a Rousseff impeachment could be the only way out of a months-long political quagmire, allowing lawmakers to shift their focus back to closing a crippling budget deficit and pulling Brazil out of its two-year slump.

But the folks watching the action up-close aren’t so sure. The process of impeaching a president can be messy. And long. Meanwhile, Brazil’s economy sinks deeper into its recession, fiscal accounts deteriorate and a corruption scandal that has left the business and political establishment in shambles shows no signs of abating.

International investors poured 5.97 billion reais into stocks during the first half of the month, as Brazilian funds, companies and individuals yanked an equal amount out.

“The biggest mistake markets are making is thinking that impeachment will give clarity one way or the other,” said Christopher Garman, the half-Brazilian head of country analysis at political consulting company Eurasia Group in Washington. “The notion that a new government can easily turn the corner on this crisis is overstated.”

It’s not just “overstated.” It’s patently absurd. The economy has fallen completely apart as Brazilians suffer through what we’ve quite accurately described as a “stagflationary nightmare.” Here’s what that looks like visually:

Meanwhile, unemployment is soaring and real wages are collapsing:

This week will bring still more political drama as the Attorney General has politely asked the Supreme Court to make a final decision on whether Lula can hold a ministerial position or not. The request comes after Justice Gilmar Mendes blocked the appointment Friday evening. As things stand now, firebrand federal judge Sergio Moro who is running the car wash probe and who released damaging wiretapped phone calls between Lula and Rousseff last week is free to arrest Lula up to and until he officially becomes minister.

Meanwhile, a new poll from Datafolha doesn’t bode well for Rousseff’s political future. Here are the results:

• 68% of those interviewed support the impeachment of president Dilma (up fro 60% in February);
• 65% believe president Dilma should resign (up from 58% in Feb);
• 27% oppose the impeachment of president Dilma (down from 33% in Feb)
• 69% rate the Rousseff administration as Bad/Very Bad (vs. 10% as Good/Very good);
• 35% believe a Michel Temer government would be Bad/Very Bad …read more

  Source: Spot The Sucker: Brazil Stocks Edition

      

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  Posted March 21st, 2016 in Uncategorized.