Full transcript
0:01Hello , everyone . The financial market
0:03celebrated Flávio Bolsonaro's victory
0:05in the first round of Brazil's
0:07presidential elections . The stock
0:09market hit a historical record , the
0:11dollar fell , and the future interest
0:13rate curve also dropped . After all ,
0:16what does this mean for your life ? This
0:19is the topic of today's video . Well ,
0:31folks , first of all , don't forget to
0:33subscribe to the channel here , and if
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0:41And also , if you like it , click the
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0:47to share this video with those you care
0:50about . Let's get to today's topic . Well
0:53, as everyone already knows , this
0:55Monday , the first business day
0:57following Brazil's presidential
0:59elections , the financial market
1:01celebrated the first-round victory of
1:03Flávio Bolsonaro and also his likely
1:05victory in the second round . The market
1:08was euphoric with the stock exchange
1:10rising , hitting a historical record ,
1:12and surpassing the 200,000 - point
1:13barrier . The dollar fell and the future
1:16interest rate curve also dropped . But
1:18isn't this good news , Cobori , for the
1:21economy ? It depends . I will provide a
1:24didactic analysis of why this happened
1:26and also what the impact is , whether
1:28you are middle class , upper class , or
1:30lower class . The euphoria that caused
1:32the stock market to rise is an
1:34expectation that companies will improve
1:36their results , in other words , they
1:37will have more profits . And this caused
1:40investors to buy more shares than
1:42investors who were selling . It's the
1:44law of supply and demand . If you buy
1:46more , stocks tend to rise . And it rose
1:49a lot because there were many more
1:51people buying shares than selling . And
1:55the dollar fell precisely because it
1:56was also a movement of foreign
1:58investors entering Brazil to buy shares
2:00on the Brazilian stock exchange . So ,
2:03with foreign investors coming in , they
2:04have to sell their dollars and buy
2:06reais to be able to trade on the
2:07Brazilian stock market . A sale of
2:10dollars greater than those buying
2:12pushes the dollar down and the real up .
2:15So this is the movement that explains
2:17both the dollar and the stock market .
2:19And the future interest rate curve , why
2:21did it fall ? Because there is also an
2:23expectation that there will be lower
2:25inflationary pressures , right ? And with
2:28lower inflation , the interest rate can
2:30fall , right , Cobori ? But translate this
2:33from " economese , " won't you ? Financial
2:36market jargon , because of this
2:37expectation that companies will improve
2:39their profits and that inflation could
2:41fall , and with that , interest rates
2:43will also fall , precisely because what
2:45triggered this whole movement was the
2:47possibility of Flávio Bolsonaro's
2:49victory and his economic team
2:51implementing what he thinks , what he
2:53projects , and what he plans for the
2:54economy . That is quite clear . Even
2:57though his campaign is now , out of
2:59caution between the first and second
3:01round , saying it will only detail the
3:04plan after the elections , it’s
3:05precisely because if they detail it now
3:08, it will have a negative impact ,
3:09because the details of Flávio
3:11Bolsonaro's economic planning , which is
3:13coordinated by Daniela Marques , who was
3:16also an advisor to Paulo Guedes , are
3:18exactly what was done during his
3:20father's administration . In other words
3:22, they are going to freeze minimum wage
3:24increases , meaning the minimum wage
3:26will stop rising above inflation . They
3:29will also try to de-index pensions and
3:32everything else linked to the minimum
3:34wage , so there will be no adjustments
3:37to pensions either . And this , in
3:39reality , will signal that there will be
3:41some fiscal breathing room , this
3:43so-called fiscal austerity , this fiscal
3:45target — they are going to make these
3:47cuts . The coordinator of Flávio
3:49Bolsonaro's economic team , Daniela
3:52Marques , has already explicitly said
3:54that there will be a plan to cut 1.5 % of
3:56GDP in expenses and also to cut taxes .
3:59Well , she will need to provide details ,
4:01because cutting taxes is also cutting
4:02revenue . So you might have to increase
4:06that 1.5 % cut , which is around 200 to
4:09300 billion . And where will these
4:12expenses be cut ? Obviously , with this
4:16de-indexing of pensions and the
4:18freezing of real minimum wage increases
4:21, all of this will perhaps generate
4:23this 200 to 300 billion in breathing
4:26room . So they have this plan , and in
4:29reality , this is a good sign for big
4:30companies , right ? So , because it is a
4:33signal for big companies , it is quickly
4:35reflected in company profits , because
4:37the minimum wage is the foundation of
4:39income for the entire country . Not that
4:42you earn the minimum wage , but all
4:44salaries are indexed in some way to the
4:46minimum wage , not just those who
4:47receive it , right ? I have worked with
4:50companies , I was a corporate executive ,
4:52and I conducted company valuations . My
4:54specialty is doing what is known as
4:56valuation , right ? how much companies
4:58are worth precisely so the investor
5:00knows how much they should pay , what
5:02the fair price of a stock would be . So ,
5:05because of this experience , all wages
5:07in the economy are somehow indexed to
5:09the minimum wage . If you are looking
5:12for a job , if you earn R $ 5,000 , your
5:13salary is also indexed to the minimum
5:15wage . The minimum wage is the basis for
5:17everything . So , companies have in their
5:19human resources department how much
5:21they can pay for each position held in
5:23the company . And they use the minimum
5:25wage as a parameter . So , if you earn R
5:27$ 3,000 , it is very likely that it's
5:29stated there that this position must
5:30pay two minimum wages , right ? If you
5:32earn R $ 15,000 , it says X minimum
5:35wages . So , when you freeze the minimum
5:37wage , in reality , you are freezing all
5:39income in the economy , all wages in the
5:41economy begin to act based on this
5:43minimum wage indexer , right ? So , if you
5:47are going to look for an office job , or
5:49in the accounting department of any
5:50company , it is in the company's job and
5:52salary plan that you will earn two
5:54minimum wages , right ? This other
5:56position pays three minimum wages , that
5:58other position pays 10 minimum wages ,
6:00right ? You are a manager at the company
6:02, this position pays 20 minimum wages .
6:04So everything is indexed to the minimum
6:06wage . So , in a way , you freeze the
6:08entire wage bill of the economy , the
6:11entire income of all workers in the
6:14economy . So , when a company is going to
6:16redo its calculation , which was my
6:18specialty , right ? Projecting company
6:21profits , which is always projected ,
6:23analysts review this every three months
6:25, right ? In those quarterly reports ,
6:28you as an investor , who are going to
6:30buy a company's stock , have the
6:31company's valuation there and the
6:33quarterly reports that they update ,
6:35because a company , in reality , has
6:36salary expenses , right ? So it has the
6:39account of the revenue it will generate
6:41with its business and obviously then
6:43all operating expenses . And the biggest
6:45of the operating expenses is personnel
6:47expenses . So when you make the
6:50projection again , already anticipating
6:52this wage freeze in the economy , that
6:54goes straight to profit . Companies will
6:57immediately see an increase in the
6:59profit line that will be left for the
7:00shareholder . So , if you were projecting
7:03that salaries would rise 10 % next year ,
7:06they will no longer rise 10 % . So , this
7:0910 % turns directly into profit . That’s
7:11why , right , this euphoria in the
7:13financial market buying , uh , shares of
7:15listed companies , obviously , companies
7:17listed on the stock exchange . And then ,
7:21since the total payroll will stop
7:22growing , income will stop growing , at
7:24least for the next 4 years , what will
7:26happen to the economy as a whole ? It
7:29will cool down economic activity ; there
7:31will be less income to be spent in the
7:33economy in general . Less income in the
7:36economy also means a cooling of demand .
7:39Exactly what the interest rate tries to
7:41do , cool down demand to , uh , avoid
7:43inflationary pressures . So , just with
7:46this action of freezing the minimum
7:48wage and all income in the economy ,
7:49it’s already a signal to the market
7:51that price pressure will be lower , and
7:53with this lower price pressure , the
7:55interest rate will also be able to fall
7:56. That’s why future interest rates
8:00also , uh , had , uh , this result right
8:03after the elections , right ? The
8:05interest rate curve fell , stocks rose ,
8:07and the dollar dropped . It was
8:08precisely because of this action , right
8:10? Uh , not action , but this expectation
8:13regarding the victory of Flávio
8:14Bolsonaro , and the effects it will have
8:16on the economy , okay ? But is this good ?
8:19Good for whom , right ? Well , it’s
8:21clear that it’s good for the large
8:22companies listed on the stock exchange ,
8:24because they will have higher profits
8:25now . Uh , but is it good for everyone ?
8:28Then the guy says : " Well , I am a
8:30shareholder , right ? I am a shareholder
8:31of the company , I’m an investor , so
8:32for me , it was good , okay ? " " But are you
8:34a shareholder who earns a salary , or
8:36are you a shareholder who is super rich
8:37, doesn’t work , and lives off
8:39investments ? " All of this analysis
8:40needs to be done . So , if you are middle
8:42class and have a job , did you make
8:44money with this , uh — well , this is
8:47theoretically , right ? You only , you
8:49only gain after you sell the stock , but
8:50you were left with the expectation that
8:52your stocks got a boost , right ? They
8:55went up , you look at your stock
8:56investments , they went up , but if you
8:58are middle class and earn a salary , you
9:00have to calculate that your salary also
9:01, uh , your income tends to decrease in
9:03the coming years . So it is good for
9:06large companies and good for their
9:07shareholders . But in this range of
9:09shareholders of these companies , where
9:11do you fit in , right ? you are either a
9:14super-rich person living off investment
9:16income from stocks , fixed income , or
9:18whatever it may be , or you are a small
9:20investor who lives on a salary and
9:22invests whatever you manage to save . So
9:25you have to realize that on the other
9:27end , you might be getting hurt , right ?
9:30If you are a retiree , it goes without
9:31saying , your pension will be frozen . If
9:34you earn minimum wages or government
9:36benefits , you will also have all your
9:38income frozen . And wages , as I said ,
9:41generally across the economy , have a
9:43tendency to recover more slowly , right ?
9:47Either you will stop getting raises ,
9:48the increases you used to have , you
9:50won't have them anymore , or your income
9:52will stop being adjusted by the minimum
9:54wage above inflation , and over time ,
9:56you will have a lower income . All of
9:59this is reflected in the value of these
10:01companies ' shares . Now , if you are not
10:04an entrepreneur with a company listed
10:06on the stock exchange , which is the
10:07case for thousands , millions of
10:09businesses across Brazil , if the
10:10economy cools down , you will sell less ,
10:12your business will sell less , right ? If
10:16people start earning less and economic
10:18activity drops , small and medium-sized
10:20businesses and even large ones will
10:22suffer . Why ? Because they will sell
10:25less , right ? They will have less
10:27economic activity , they will have fewer
10:29customers , and fewer customers with
10:31less income to buy their products tends
10:33to cool the economy . And that is what
10:35ends up happening over time . As I
10:38always say , crises are cyclical , right ?
10:41These capitalist crises are cyclical .
10:43Why ? Because many small and
10:45medium-sized companies will face
10:47difficulties , and companies that are
10:49already large will get even bigger ,
10:51because they take advantage of this
10:54moment to liquidate those companies , to
10:56buy them out , or simply , in fierce
10:58competition , it is better for them to
11:00have fewer competitors , for companies
11:02to go bust or go bankrupt , because they
11:04will benefit from this cyclical
11:06movement of the economy . So , in general
11:10, very few people will come out on top ,
11:13right ? Especially because this Daniela
11:15Marques looks to Milei's model in
11:17Argentina as an example . And what is
11:18Milei doing in Argentina ? Exactly that .
11:21More and more people pushed into
11:23poverty , fewer and fewer companies ,
11:25right ? Small and medium-sized companies
11:26suffering . And that is exactly what is
11:28going to happen . Then you would say : "
11:30Cobur , but I don't live , uh , on a
11:32salary . I don't have a salary . I'm an
11:34app delivery driver , right ? I'm an app
11:36driver , uh , will my life be impacted ?
11:39Yes , because a cooling economy will
11:41have less income in the economy . Uh ,
11:45and you will very likely have fewer
11:47rides to do , you will have fewer
11:49deliveries to make , because people will
11:51eat less , right , or will order less
11:53food through apps , or the people who
11:56used , you know , app drivers , will take
11:58fewer rides , right , they will try to
12:00get by in another way . So , in reality ,
12:03this ends up impacting the economy as a
12:05whole . If you are an app driver , to
12:07maintain your income , you will have to
12:09work more . You used to work 10 hours ,
12:11you'll have to work 12 to try to keep
12:13the same income , right ? Especially
12:16because the big platforms , in a
12:17scenario like this , won't improve , uh ,
12:19the percentage , I don't know , that they
12:20pass on to you , right ? If restaurants
12:23are selling less , they also won't
12:25improve the app delivery driver's pay .
12:28And so maybe , to maintain the same
12:30income you had , you'll have to work
12:32more , right ? You worked 10 hours ,
12:33you'll work 12 . You worked 12 , you'll
12:35work 14 . So , uh , the economic model
12:38works this way . And with an aggravating
12:42factor : if we have a government that is
12:44submissive to the interests of the
12:45United States , the United States '
12:47interest is to keep us as a country
12:48that exports raw materials . They won't
12:52want our economy to develop . Because
12:54one way — and now speaking a bit more
12:56broadly about the economic model — for
12:58our economy to develop and improve
13:00everyone's income is for us to
13:01reindustrialize the country , for us to
13:03invest in science and technology , for
13:05us to invest , uh , in health and
13:07education , for us to invest in what
13:09should be invested in . Because , with a
13:11reindustrialization of the country ,
13:13investment in science and technology ,
13:14we start to create better-quality jobs ,
13:16jobs that pay more . Given that ,
13:19unfortunately , with the precariousness
13:22of work , this range of workers , right ,
13:24who today work as app drivers , as app
13:26delivery drivers , is because there are
13:29no quality jobs . So they prefer to work
13:32, uh , in these apps , partly because
13:34there might be more flexibility . But
13:38certainly , right , if we had large
13:40industries in Brazil paying , uh , much
13:42better , much more qualified wages , uh ,
13:44surely these people , uh , would have
13:47this , this option , right , of having a
13:49job , uh , with greater security , working
13:51less , with all the , the labor
13:53guarantees , right , and they would
13:55sacrifice less , sacrifice their family
13:58less , would have more time to spend
14:00with their family with a quality job ,
14:02with a better salary . So , in reality ,
14:06the future that awaits us in this case ,
14:08right , of a far-right victory , is
14:10precisely this , right : that our country
14:13, uh , be subordinated to the interests
14:15of the United States . What the United
14:18States wants is to keep us as an
14:20underdeveloped , peripheral economy ,
14:23because their interest in Brazil , is in
14:25our raw materials , in our natural
14:27resources , which Brazil is very rich in
14:30. Fortunately , right , we are a
14:33continental country and we have these
14:35riches , but these riches must be
14:37explored and bring economic benefit to
14:38the Brazilian people themselves and not
14:40to the people of other countries , of
14:42other superpowers . So , what we have to
14:46keep in mind , is this country project ,
14:48what is the country project we want ,
14:50right ? Do we want to continue , as I
14:52already said , dreaming , right , of a
14:54country that can have economic
14:56development or are we simply going to
14:58give everything up and let go of this
14:59dream , right ? Let go of this dream . Are
15:02we going to return to a past in which
15:04we are just a colony , right ? A colony
15:07that has , uh , products and natural
15:09resources to be offered , uh , to the , uh
15:11, economically more developed countries
15:14and are we going to give up on
15:16industrializing our country , uh , and
15:18take us to another level of wealth , of
15:20wealth distribution . So the financial
15:23market celebrates because very few
15:25people will gain from this situation as
15:27a whole , okay ? We cannot have this
15:29illusion that this will be good , that
15:31the stock market is rising , it's good
15:33for the economy , no . It is good for the
15:34companies that are listed on the stock
15:36exchange . And the companies are listed
15:38on the stock exchange , are exactly in
15:39this euphoria , because their profit
15:40will increase . If their profit is going
15:42to increase , who is going to end up
15:44losing ? When companies increase
15:46overnight with the news of profit
15:48expectations , it is because there are
15:49many more people , uh , who will earn
15:51less , will have a lower salary , that
15:53will provide this profit for these
15:54large companies , right ? And obviously
15:58for all the other millions of companies
16:00that are not on the stock exchange , it
16:02will be harmful because they will have
16:04less economic activity , less income in
16:06the economy , lower wages , fewer
16:08customers , and will sell fewer products
16:10in their businesses . So , uh , this is
16:13the scenario that awaits us , uh , this
16:15reaction from the financial market . It
16:17is what it is signaling in the life of
16:19every citizen , in the life of each one
16:22of us . Whether you are middle class ,
16:24whether you are lower class , and even
16:26if you are upper class . If you don't
16:29live off passive income , right ? If you
16:32don't live only on the capital you have
16:34accumulated , if you still have some
16:35type of activity , if you work , you will
16:37certainly be harmed in an economic
16:39scenario like this . So , I hope to have
16:43translated , right , exactly uh what this
16:45euphoria of the financial market means
16:47in the life of each one of us . I hope
16:50to see you all here in the next video .
16:53Don't forget to subscribe to the
16:55channel , turn on notifications , click
16:56the like button , leave comments down
16:58below , and share this video . A big hug
17:01and see you in the next video .