Market Impact From Brazil Riots Limited as Investors Worry About Fiscal Spending Explosion Under Leftist Lula

Though the ongoing mass protests in Brazil are a cause of worry for investors, many are more concerned about the Lula government’s socialist economic policies, which they fear could worsen the fiscal spending situation and already-high inflation.
Brazil has been seeing mass protests against President Luiz Inacio Lula da Silva ever since he assumed power in October, with many rejecting his narrow win against the previous conservative president, Jair Bolsonaro, from the Liberal Party. However, it is the current government’s fiscal and other economic policies that are on top of investors’ minds.
During his campaign, Lula, from the Worker’s Party, had pledged to raise spending for social assistance programs. This month, the country passed a constitutional amendment that will allow the Lula administration to circumvent a spending cap rule and hand out roughly $116 per month to families under a social welfare program….