The financial market in Brazil continues to believe in the economic team of the current government, even with the continuous negative results of the economy in 2019

Speaking at the Finance and Taxation Commission of the Chamber of Deputies, Brazil's economy minister, Paulo Guedes, defended the pension reform as the only way to reposition the country on the path of growth. The speech was viewed positively by the Brazilian financial market. Guedes said that it is necessary to disinfect the public machine and "slow down hiring" of more public servants.

The minister's speech was well received by the financial market, so much so that at the end of yesterday (04.jun.2019) the Stock Exchange (Bovespa) closed close to the high of the day. Therefore, Brazilian financial actors continue betting on the economic team of the current government, even after the continuous negative numbers of the economy.

As I have already written here, "the truth is that the Brazilian Financial Markets (analysts and economists) and the Brazilian businessmen bet very high on a government that was not able to respond to the height to that bet".

Many analysts and economists continue to make the same error of analysis and do not see or do not want to see the undeniable distance between the speech and the actual capacity of the current government to deliver reforms and public policies capable of taking Brazil out of the crisis.

Guedes again confuses some things. The creation of a digital government, where some services are being offered via the internet, does not necessarily mean hiring fewer public servants. When compared to other OECD countries, the level of public servants in Brazil is much lower than in most other countries. The country lacks, for example, the necessary number of doctors, teachers, and police to meet the basic needs of the country.

Articulation of the Brazilian government will determine the behavior of the Brazilian financial market in the coming days

The first three months of the government still produces some optimism among some agents of the Brazilian financial market.

The lull in the international financial market, with Central Banks acting and China and US relation showing a more positive picture, helps maintain a certain optimism among Brazilian investors.

The Brazilian government began to move more to approve the Pension Reform. However, the government has not yet been able to consolidate an allied base for approval of its projects.

It all depends on the Brazilian government's ability to do politics. However, it appears that there is no such bargaining power in government.

There is also the danger that Bolsonaro or his sons may again publicly quarrel with some important political actor, as happened weeks ago the quarrel between the President of the Republic, Jair Bolsonaro, and the president of the Brazilian National Congress, Rodrigo Maia.

Decreases optimism with the Brazilian economy after 100 days of Bolsonaro's government

A Datafolha survey, released today (May 8, 2019), indicates that the Brazilian population optimism about the economy fell from 65% in December 2018 to 50% in April 2019.

Because of this, the financial market begins opens a quieter week in Brazil after the beginning of a larger dialogue between President Jair Bolsonaro and the National Congress.

Until now, the first 100 days of the Bolsonaro administration were a major mess. This picture spread to the financial market, which initially had a very positive expectation of the new government.

Several investors reviewed their positions and the Stock Exchange saw the dollar reach the price of $ 4.00 last week.

This week, the financial market and risky assets start in much less optimistic expectation. There is much more caution today for buying, for example, the kit Brazil.