Lula’s signals for the economy are terrible, but the market knows how to differentiate, says banker

Banker Ricardo Lacerda, founding partner of BR Partners Banco de Investimento, sees no chance of a third way capable of weakening the leadership between Lula and Bolsonaro in the election.

Neither does Simone Tebet, unlike a part of the business community that still believes in the strengthening of an alternative name.

“The third way must result from a movement coming from the voter, with someone who grows in the polls and shows electoral competitiveness. You can’t invent a third way out of nothing”, he says.

A less unlikely scenario, according to Lacerda, is the probability that the election will be defined in the first round. “In the event of Lula’s victory in the first round, the risk is that the ideological and physiological sectors of the PT feel empowered and gain a lot of space in the government”, he says.

In Lacerda’s opinion, the signs that Lula has been sending out on the economic agenda are terrible, but they have not caused much impact because the market knows how to differentiate between PT’s campaign speech.

“It is unimaginable these days for someone to defend the end of the spending ceiling and renationalization. There is nothing more anachronistic. On the other hand, Lula chose Alckmin as his deputy and has sought to talk to various sectors. of Lula president, so this speech has not caused much impact”, says the banker.

Bolsonaro’s threats to the polls are worrying. He assesses that the instability scenario is not yet in the asset price, but it can turn into a negative surprise.

Lacerda lists names he considers most suitable in the economy in a possible Lula government: Jorge Viana, Rui Costa, Pérsi​o Arida, Henrique Meirelles and Mansueto Almeida. In the case of Bolsonaro’s re-election, he talks about Paulo Guedes or Gustavo Montezano.

Datafolha showed a reinforcement of the scenario of antagonism between Lula and Bolsonaro in the election. like mr. evaluate this portrait at this point in the championship? I think the polarization scenario is irreversible. Both have a very solid foundation. I don’t see anyone capable of changing that dynamic. I had high hopes for Eduardo Leite’s candidacy, a young politician with solid management experience, capable of changing the country. But once again the PSDB changed its footing, letting the internal fights overcome the greater objective.

What did you think of the latest moves in the third way? Is Doria’s departure a sign of the difficulty in putting a third way up? Or is it a necessary bottleneck to make it possible? Doria was very worn out. Despite having made a good government and being a serious and competent politician, his artificial behavior ended up generating huge rejection. The same happened with Moro, who ended up confusing the voter with a sequence of incoherent positions. His departures change the overall picture very little, unless a new name emerges that can generate some traction. But I don’t see that today.

And the expectation around the name of Simone Tebet? Do you find it interesting? Simone is a good name. But I see with reservations the attempt to place it with forceps as a third way. First, because she belongs to the MDB, a party with a long history of corruption, which is not even convinced to give her the caption. Second, because the third way must result from a movement coming from the voter, with someone who grows in the polls and shows electoral competitiveness. You can’t invent a third way out of nothing.

Recently, Mr. told Folha that the market should focus on the probability of the election being defined in the first round. What would this scenario be with Lula’s victory? What risks do you see in this scenario? I think the election will be close. Lula now has an artificially low rejection rate, given the PT’s history of corruption and disastrous economic policies. In the heat of dispute, your rejection will increase. But in a scenario of only two competitive candidates, the probability of the election being defined in the first round, in my opinion, is around 30%. If Lula wins in the first round, the risk is that the ideological and physiological sectors of the PT will feel empowered and gain a lot of space in the government.

And does Bolsonaro’s speech against the polls scare the market? What scenario does the market project in view of the risk of a coup against the electoral process? I see with concern a scenario of close defeat by Bolsonaro. What happened in the United States, with the defeated candidate casting doubt on the transparency of the election, could happen here and generate enormous institutional instability. There is a bad climate against the Supreme and an unknown in relation to the behavior of the Armed Forces. I think that this scenario of instability today is not in the price of assets, but it could become a negative surprise later on.

A year ago, in an interview with Folha, Mr. said that, if only Lula and Bolsonaro were left, it would be necessary to assess how each of them got there, what are the signs of both and commitments towards the center. After a year, what do you think? I remain focused on helping Novo, the party to which I am affiliated, and our presidential candidates, Luiz Felipe d’Avila, and São Paulo governor, Vinicius Poit. ​O Novo is the only party in the country truly fulfilling its role, with a brilliant management by Zema in Minas and a combative performance by our bench in Congress. I want to help Novo grow and I still don’t think about the second round. When the time is right, I will decide calmly. With all our faults, we are a true democracy, and the country has to be able to accept the results of the polls.

How do you evaluate the messages that Lula’s campaign has been sending on the economic agenda? Has this made a price on assets? Lula’s speech so far has been terrible. It is unimaginable these days for someone to defend the end of the spending cap and the renationalization of companies. There is nothing more anachronistic, more out of place. On the other hand, Lula chose Alckmin as his deputy and has sought to talk to various sectors. The market already knows how to differentiate Lula candidate from Lula president, so this speech has not caused much impact.

like mr. evaluate the Bolsonaro government? Allies of the president saw in the result of Datafolha an urgency to focus on the economy, blaming external causes such as a pandemic and war on inflation. Is the narrative enough? The Bolsonaro government is better than President Bolsonaro. Good work was done in infrastructure, agriculture, management of state-owned companies and some sectors of the economy. We approved the Social Security reform and the privatization process advanced, albeit more timidly than initially envisioned by Paulo Guedes. But the post-pandemic scenario is very difficult, especially in terms of inflation, and it is not enough to blame external causes. The behavior of inflation and economic growth until the election will be crucial to Bolsonaro’s performance at the polls.

Do you think Paulo Guedes should remain a minister in a second Bolsonaro term? Who could replace him? I hope so. Paulo Guedes’ agenda ended up being harmed by the pandemic, but he has the right ideas for the country: reforms and especially reducing the size of the state. If he does not remain in an eventual second term, the best name to replace him would be the president of BNDES, Gustavo Montezano, who has been doing an exceptional job.

And what would be the best names for the economy in a Lula government? There are good names in the PT, if the decision is political, like Jorge Viana or Rui Costa. There are also names closer to the market, such as Pérsi​o Arida and Henrique Meirelles, who are not PT members but transit the spectrum of the alliance formed by Lula. And there is also the name of Mansueto Almeida, in my view, the most prepared of all for any government. Mansueto has a deep knowledge of the public machine, he moves very well in Congress and is a brilliant economist.