Turim Insights

The results of the U.S. elections, their market impacts, and Brazil’s fiscal challenges were some of the main topics discussed in this month’s Turim View webinar.

Trump’s victory, with a wide margin and Republican control of both houses of Congress, is expected to facilitate the adoption of measures related to deregulation, corporate tax cuts, increased tariffs on imports, and stricter immigration policies.

Although expectations around “Trump trades” were already priced into the market even before the election results, last Wednesday was marked by a strong appreciation of the dollar and U.S. stocks, especially in assets more exposed to the real economy, such as small caps. Conversely, emerging markets faced pressure, as did fixed income, with interest rates rising due to an increase in implied inflation.

In Brazil, the market awaits the announcement of new fiscal adjustment measures. The expectation is that a credible package of spending cuts will help meet the fiscal framework rules in the coming years, although this does not eliminate the need for structural reforms in government spending in the medium and long term.

Uncertainty around public policy management has been one of the main factors driving up risk premiums on local assets recently, as highlighted in the latest Copom statement, which raised the Selic rate by 50 basis points this week, as expected.

The webinar featured Fernando Verboonen, CIO; Henrique Santos, CFA, Portfolio Manager; and Pedro Hokama, Head of Liquid Assets.