Brazil's Lula pledges policies in place within 100 days, reassures markets

kutaytanir/E+ via Getty Images

Petrobras (NYSE:PBR) +2.5% and Eletrobras (NYSE:EBR) +2.3% in Thursday's trading as Brazil President Luiz Inacio Lula da Silva sought to ease investor concerns about his Workers Party government.

Responding to the ransacking of Brazil's Congress, Supreme Court and presidential palace by supporters of defeated president Jair Bolsonaro, the new president said he plans to have policies ready within 100 days so the country "runs at normal speed" again.

ETF: (NYSEARCA:EWZ)

Earlier this week, Petrobras (PBR) announced an average 11% Q/Q reduction to its natural gas prices sold to distributors for the February-April quarter, as part of its quarterly review of prices.

Petrobras (PBR) shares plunged nearly 40% since Lula's October election and proclaimed policy goals, including the company's removal from a list of state-controlled businesses that had been scheduled for privatization.

The new government has telegraphed a doubling of Petrobras' (PBR) capex to invest in renewables and refining capacity while reducing fuel margins and cutting dividends to a minimum, Ricardo Fernandez writes in a bearish analysis posted on Seeking Alpha.

Comments

[Russom]

We are approaching 90 days and so far Lula did nothing but spread nonsenses ….. how can anybody administer a country with 37 secretaries of state and holding meetings regularly with 7 only. What about the 33 million people Lula claimed that were starving during the campaign so far since Jan 2st he did nothing about, meaning they died already or did not exist except 5% of that, even though he did nothing about that. It is a government of narratives, no plans, no execution and keeping everybody distracted with secondary issues. The facts are Brazil grew 2.9% in 2022, inflation is down to 5.8% from 12%, unemployment down to 7.9% from 14%, country debt was stabilized at 77% of GDP. I want to see Lula’s government to top that

[Rocksmani_00]

It will go up no doubt! Just buy n enjoy!

[APatrickP]

I like the fear. Let the right wing pearl clutches "flee", I'll buy and enjoy Brazilian prosperity under a competent administrator, which Bolso was not 🤙🏻

[user northwest]

@APatrickP I agree. Binary thinking gets you nowhere.

[tinbox]

@APatrickP I agree...in that I like the fear. But it's become less clear that the policies ahead will be competent. I'm out.

It was a great run up to start the year, but you have to cut your losses. (Or at least manage position size so that volatility has little effect.)

[User 24724833]

@tinbox ...or Brazil just gets more interesting.....to sell when Turkey introduced unorthodox policies was not smart..

[Seriol]

Flee. Any and all Bras stocks. Long way down to go. First the piggybanks, PBR and EBR. Then then divis. Then general taxation to raise welfare funds. Bras isn't able to endlessly print like the US to fund Lula's irresponsibility.

[Simeroth1]

How can promising to put in disastrous policies in 100 days be encouraging?

[Clauser1960]

In less than 2 years, Brazil will become the new Argentina. Less than 2 years!

[SolmonFIRE]

Buy! Buy! Buy! Take advantage of this great momentum. I love it!

Divs are coming!!!

[Rocksmani_00]

@SolomonFIRE it will fall below 9 n i will grab it then :) institution’s dumped it bcz of political uncertainty

[SolmonFIRE]

@Rocksmani_00 what these far right people infiltrated in this community don't tell you is that there is hardly any stock that had positive trend since Bozzo became President in 2018, none!

If you read this, you should bet on the Brazilian country and the private institutions. It will come back to the golden years of 1998-2017.

[PianoCat]

@Rocksmani_00 Yeah it may fall to $9, or it may not. And while you are waiting you might miss out on the big dividends.

[JoeNorton]

Lula is the most corrupt politician in South America. PERIOD.
Don't waste time about things he should or shouldn't do.
Brazilian public companies' shares are in serious risks.

[Clauser1960]

@JoeNorton In max 2 years Brazil will be the new Argentina

[SolmonFIRE]

@JoeNorton please provide market insights and not what team you cheer for. What stocks went well with Bolsonaro? Name one please. Now do you want me to give you the list from Lula's term?

[JoeNorton]

@SolomonFIRE what are you talking about? who's bolsonaro? Lula is a corrupt President meaning a huge risk for all public companies listed. PERIOD.

[USER679580]

Ricardo Fernandez - Do you feel PBR will announce a 4th qtr dividend payment? if so how much? more in-line (2022) or a deep discount?

[AByrth]

@USER679580 I guess dividend is on jeopardy. Please translate this article: www.moneytimes.com.br/...

[alextay]

@AByrth lol, article from March 2022, nice try

[USER679580]

@AByrth done and gone, the article was talking about the 3rd qtr payment which PBR paid fully, will Lulu suppress or reduce the dividend to pennies or do nothing to interfere with the full payment?

[mgmmdjd]

Strong buy. Could not be stronger, for reasons I have been articulating for weeks as the stock has risen relentlessly from its post-election lows. Much further to go, with a >$20 share price within 6-12 months.

[SolmonFIRE]

@mgmmdjd and PE of 2???????????????????????!!!!!!!!!!!!??????????????

Hahahahahahaha!

[mgmmdjd]

@SolomonFIRE Does that mean you are amazed or that you don’t believe it? I’m pretty sure the p/e is in fact somewhere between 2 and 3. By contrast, Chevron and Exxon are in the 7–8 range.

[brocktune]

@mgmmdjd Yeah, I have no idea what he's trying to imply.

CVX, XON PE's in the 9-10 range, SU, which I own, in the 7-8 range. A lot of risk has been discounted around a 2 PE here, but that is based on a trailing twelve months. Sign me up for 1/2 last years payout and a 4 PE please, though I think they're projecting 1/3 last years payout and a 6 PE. Still a good investment for me, have nearly 2x my shares since Covid from reinvestment alone.

I just continue to hold for dividends along with the supply imbalance. Political noise is static, but the PBR dividend policy needs to remain upheld.

[PianoCat]

Yeah Lula is going to raid Petrobras' cash by asking Petrobras to distribute large dividends. Lula is not stupid. If he lets Petrobras accumulate cash he's just giving those cash for free to the next administration who is going to raid Petrobras by asking Petrobras to pay big dividends.

[Strong&Long]

@PianoCat He can take the money by taxes or special deductions and so bypass dividends to foreign investors. Which is cash-out of Brazil.

[PianoCat]

@Strong&Long Show me some precedents or this is purely your imagination.

[Strong&Long]

@PianoCat I'm not your advisor and have no need to persuade you about anything. You can look in Europe and you'll find plenty of precidences. Windfall taxes to TTE, RDS and most recently MOL being slashed by 95% (!) special profit tax...

[Finding Your Retirement]

just give away free money again. why is it so hard?

[Zinho47]

I told you.... LuLa would not be as so stupid to mess with PBR again....He has learned his lesson and so have the others !!!

[cenc]

@Zinho47 wait for it.

[Tellurium128]

@Zinho47 hahahaha.
Socialists never learn from their mistakes.

[mike in montana]

@Tellurium128 , fool me once, shame on you; fool me twice.....lololol. Guy's an avowed Marxist and wrecked the economy once already, but, ....nooooot this time.

[No Guilt]

Far left Lula.

Politicians lie, and specially ones that spent years in jail for corruption.