As I have presented here, quarterly, the results of the polls of YPO As of April 2016, regarding the 1st quarter of this tumultuous and politically confusing year. Impeachment process in its last moments, leaving no room for the present government, and the possible future Temer administration coming to power as of next week, much have changed since my last YPO Pulse report. I will show here the results of January 2016 (12 months hence forecast) in comparison with the newest poll:
We can see a slight improvement in the mood of the Brazilian CEOs (national and multinational companies) concerning Sales, and a much-improved mood regarding investments. The consensus behind the Fixed Investments variation is that CEOs are a little less cautious regarding the repositioning of their companies vis-à-vis a brightest future, if the Temer administration shows a minimum efficiency in three main aspects: a)passing confidence to the market regarding the quality of its decisions; b)showing more independence to Central Bank as to define interest rates and other aspects of monetary policy; c)willingness, and mainly political strength to pass bitter measures in the houses (lower chamber and senate).
This timidly increasing confidence is expressed in numbers as below:
…While with respect to the general confidence, Brazilian CEOs recovered a bit of confidence (all things considered)…
Source – YPO Global Pulse 41st Quarter 2015
It seems that the bottom has already passed, as we can see below – ma non troppo. Looking backwards, Fixed Investment still suffered in the last months:
What can we extract from the above? As in January 2016, CEOs are full of better expectations for the future – the message seems to be the same we collect from the streets – “anything is better than this government”. This seems to be a big too optimistic. General belief is that the Temer administration will have a lot of difficulty to put together a good government team and obtain results in 6 months (time for the impeachment to be definitely judged by Senate). Besides this, Workers’ Party (PT) will be back to its original function – opposition – which is what they do, unfortunately, very well. With all the money accumulated in the 13+ years of administration, PT won`t lack the means to make the lives of Michel Temer and crew a living hell. Third but not the least, the flavor of the medicine that has to be taken by the Nation is quite bitter. Every thinking soul in the country knows that the measures to put Brazil back on track are very unpopular, and will take more than 6 months to take effect.
The good thing is that Michel Temer already declared that he does not plan to run for a second (first?) term in Office. This is always a good thing – not having to dispute an election, therefore not falling to the temptation of postponing hard measures.
As everything in Brazil, it`s just about waiting and seeing. As former finance minister Pedro Malan used to say, “in Brazil even the past is uncertain…”.
Wesley Montechiari Figueira
Managing Partner at Valuconcept