One of the most influential bankers in Brazil believes that the market is more pessimistic than it should be.
In a conversation with a group of investors yesterday in New York, André Esteves, the founder and chairman of BTG Pactual, said he disagrees with the prevailing market thesis that Lula’s government is heading towards the economic disaster of Dilma’s government.
Esteves – who has had private conversations with Lula at least twice this year – pointed out that Brazil is growing 3% without a significant increase in the current account deficit, something that has never happened before.
Esteves’ statements are summarized from his conversation with managers that went viral yesterday on Faria Lima and were confirmed by the Brazil Journal with people who were there. Some quotes used in this text are not exact, but reflect the spirit of what Esteves said.
According to the banker, inflation has risen from 3.5% to 4.1% “and everyone thinks the world has ended, everyone thinks we are in a Dilma-like situation.” Esteves disagrees.
Additionally, “everyone thinks the BNDES has worsened again.” Esteves doesn’t think so. “The BNDES is okay.”
According to the banker, Lula’s anti-market rhetoric, particularly at the beginning of his term, has generated this negative sentiment among investors, a view he considers “exaggerated.”
On the margin, Esteves believes that Lula’s willingness to listen has improved since taking office. For him, the President started the government “resentful” of the lack of support from businessmen during the Lava Jato. Now, he may be more open to listening. Proof of this is that he invited Febraban for a meeting next week – the first of his third term.
Esteves believes that fixing the fiscal situation is also easier than the market believes.
“This idea that the fiscal situation is stuck is not true,” said the banker. “It can be fixed easily. Tightening the fiscal situation is easy. If you had asked at the beginning of the year, everyone would have thought this year’s deficit would be higher.”
On the Brazilian assets, he thinks they are distorted, and “foreigners are on the trigger.”
At BTG, according to Esteves, 19 of the top 20 shareholders are international investors. “And most of the buyers of the shares are foreigners. They are excited.”
Furthermore, the international investor is still “protected with this exchange rate of R$ 5.60” if they want to take a position in Brazil.
Esteves also talked about the “significant” outcome of Sunday’s election, in which “the left and the crazy right” were defeated.
Regarding this, Esteves believes that the message is clear for the left that the center is more popular – that is, moving towards the political center “seems like a good deal.”
For the banker, Lula’s biggest political legacy would be to “reinvent the PT” as a center-left party, supported by new leaders such as the reelected mayor of Recife, João Campos (who is from the PSB), or the Governor of Piauí, Rafael Fonteles. “They must try to do this to save the party.”
For him, “institutionally, Brazil has evolved.”
Analyzing the 2026 election, Esteves believes that the left will not be the favorite.
He thinks that if Jair Bolsonaro runs again, “it would be very bad.” The Bolsonaro government was “good,” but a new candidacy would increase the chances of Lula winning.
“Tarcísio knows that the opportunity is now,” and would have massive support in the campaign, said the banker, for whom “there is no chance Tarcísio won’t be a candidate. He has the unanimous support of the business sector.”
Esteves believes that if Tarcísio wins, Brazilian assets will experience “the mother of all rallies.”
Nevertheless, he thinks that the probability of Lula running for reelection “is not obvious.”
“At 81 years old, starting a new cycle is not obvious. There will be people around him begging him to run. But it’s not obvious. The most obvious alternative to Lula would be Haddad,” who has the President’s trust.
In the case of a Haddad X Tarcísio face-off, Esteves already knows what to do: take three weeks off and go to Italy.
“It’s going to be an insane showdown.”
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
