Following Monday's decision by a special committee to commence the impeachment process against president Dilma Rousseff, all attention had been focused on the number of Congressional votes that the pro-impeachment movement would have ahead Sunday's critical vote. As a reminder, impeachment would require two-thirds support, or 342 of the 513 lower-house lawmakers, to send the case to the Senate.
And then, following a failed attempt to stall the impeachment process last night when Brazil's Supreme Court allowed the impeachment process to proceed despite Rousseff's protests, moments ago, Brazil's Folha newspaper reported that this critical 342 threshold had been met.
- BRAZIL PRO-IMPEACHMENT VOTE TALLY REACHES 2/3 THRESHOLD: FOLHA
The result: Brazilian stocks, which had already surged today, and were up 22% YTD not to mention up 44% from January's lows, extended the rally of what has been this week's best performing market ahead of this weekend's impeachment vote.
Citing Ari Santos, a trader at brokerage H.Commcor in Sao Paulo, Bloomberg reports that "the market is anticipating the improvement of the economy with new policies," said "That’s the main driver for Brazil’s stocks today as it has been in the past weeks."
However, such an optimistic assessment may be premature: first, not only is Rousseff going to fight the process, which next goes to the Senate, tooth and nail, but a political crisis just 4 months ahead of the Olympics will hardly be beneficial for the Brazilian economy, which as we have been reported for the past year, is now openly in a depression.
"The view that Sunday’s impeachment vote will be some sort of a denouement is wide of the mark," Nicholas Spiro, a partner at Lauressa Advisory Ltd. and previously a consultant on sovereign-credit risk, said from London. "Irrespective of the outcome, it is bound to raise more questions than answers. Markets are far too confident that Brazilian politics is moving in the right direction as far as political stability and economic reforms are concerned."
For now, however, as the chart below shows, traders are pushing green first, and asking questions later.