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Lula da Silva: Brazil is back

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Brazil’s former president Lula da Silva (2003-2010) won the second round of presidential election that was held on October 30th, with 50.83 percent. Left-wing candidate Lula da Silva, who defeated incumbent right-wing leader Jair Bolsonaro, said he would restore his country to its rightful place in the international arena.

In Brazil, Latin America’s largest country with a population of over 212 million, about 156 million voters went to the polls on Sunday. 

Labour Party candidate Luiz Inácio Lula da Silva won 50.83 per cent of the vote, compared to 49.17 per cent for Liberal Party candidate and incumbent President Jair Bolsonaro, according to polling results published by the Superior Electoral Court (TSE).

Lula da Silva also surpassed Bolsonaro (43.20 percent) with 48.43 percent of the vote in the first round of the presidential election held on October 2nd.

Lula, who previously ruled Brazil for two terms, will take over the presidency from Bolsonaro on January 1st, 2023.

A single country, a single people…

Lula da Silva addressed to his supporters after winning the election “as of January 1st, 2023, I will govern for 215 million Brazilians, and not just for those who voted for me. There are not two Brazils. We are a single country, a single people, a great nation.”

Referring to the corruption charges and spending time in jail, Lula said “I think I am experiencing a resurgence in Brazilian politics. They tried to bury me alive, but now I’m here to rule the country. We are in a very difficult situation, but I am sure that with the help of the people, we will find a way out and restore peace.”

The most urgent task is to fight hunger

Emphasizing the fight against hunger, Lula said, “Our most urgent commitment is to end hunger again, we cannot accept it as normal for millions of men, women and children to go hungry or consume less protein than necessary in this country. We are the third largest food producer and the first in animal protein.”

“We are able to export all over the world and we have a duty to ensure that every Brazilian can have breakfast, lunch and dinner every day,” Lula reiterated. “This will once again be my government’s number one commitment,” he said.

Referring to the housing problem, Lula said, “We cannot accept that families are forced to sleep on the streets as normal, so we will continue the ‘my home is my life’ program and bring back the participation programs. Brazil can no longer live with this huge wall of inequality.”

Lula listed the demands of the people as follows: “The Brazilian people want to have a good job, a salary which is always above inflation, a quality public health and education system. They want books instead of guns. Brazilian people want to regain hope.”

Democracy message

Describing the election victory as a “victory of democracy”, Lula said, “This is the victory of an enormous democratic movement founded beyond political parties, personal interests, and ideologies for the victory of democracy,”

Lula shared the Brazilian flag on his Twitter account with a “Democracy” note.

Foreign policy remarks:

Prestige in the world

“Today, we are telling the world that Brazil is back and is too big to be relegated to the sad role of a pariah,” Lula said, “What I hear the most in my international trips is that the world misses that sovereign Brazil that spoke on equal terms with the richest and most powerful countries and, at the same time, contributed to the poorest countries.” 

Regional integration

“We are going to reconquer the credibility, predictability and stability of the country so that investors regain confidence in Brazil, so that they stop seeing our country as a source of immediate and predatory profit and become our allies in economic growth,” Lula said, recalling that in his previous terms, he had strengthened Mercosur and other regional integration organizations.

New standards with the US and EU

Talking about forming partnerships with US and EU on new standards, Lula da Silva added “We are not interested in trade agreements that condemn our country to enter the role of the seller of commodities and raw materials. We are going to reindustrialize and invest in the green economy.”

Lula also raised the issue of five permanent members of the UN, which undermine the balance between countries and prevented the enlargement of the General Assembly and the Security Council.

Fighting the climate crisis

“We are ready to re-engage in the fight against hunger in the world,” Lula da Silva stated and added that Brazil is ready to gain its leading role in the fight against the climate crisis by protecting all rainforests, especially the Amazon rainforest.

“We are open to international cooperation to preserve the Amazon, but always under Brazil’s leadership, without giving up our sovereignty,” Lula said, stressing that the growing deforestation and destruction in the Amazon rainforest will end.

Rise of the left in Latin America

The “pink tide” continues to rise in Latin America, which has defeated US-backed coups.

Following the elections in Peru, Bolivia, Argentina, Chile, Honduras, and Colombia, victory of yet another left-wing candidate in Brazilian elections too have raised the expectations on the strengthening of regional integration efforts. Lula da Silva’s emphasis on regional integration in his victory speech also points to this. Lula and Brazil are expected to boost cooperation among other governments, such as Argentina, Chile, Mexico, and Colombia, which share similar perspectives.

So much so that the leaders of Latin America, who strongly embraced Lula’s victory, shared enthusiastic congratulatory messages, and emphasized that this victory would strengthen the unification of Latin America.

Full support from Latin American leaders

Argentine President Alberto Fernandez shared his photo with Lula on his Twitter account, saying: “Congratulations, Lula da Silva! Your victory opens a new era for the history of Latin America. A time of hope and future that begins today. Here you have a partner to work and dream big for the good life of our peoples. After so many injustices that you experienced, the people of Brazil have elected you and democracy has triumphed.”

Venezuelan President Nicolas Maduro also tweeted: “We celebrate the victory of the Brazilian people, who this October 30th, elected Lula as their new President. Long live the peoples determined to be free, sovereign, and independent! Today in Brazil democracy triumphed. Congratulations Lula!”

Cuban President Miguel Diaz Canel said in his post, “They delayed your victory with heinous methods, but they couldn’t prevent you from winning with the vote of the people. Social justice will return.”

Mexican President Andres Manuel Lopez Obrador also shared his photo with Lula on his social media account, saying, “Lula won, blessed people of Brazil. There will be equality and humanism.”

Bolivia’s President Luis Arce Catacora, emphasizing integration in his Twitter account, said: “Congratulations, brother Lula, Brazil’s elected president! Your victory strengthens democracy and Latin American integration. We are sure that you will lead the Brazilian people along the path of peace, progress and social justice.”

Honduras President Xiomara Castro also shared her photo with Lula and posted “He faced the most conservative powers in history, and together with the people of Brazil he has defeated them. Latin America is reborn with hope in a true humanist process of change and liberation.”

Colombian President Gustavo Petro, who posted “Yay Lula” on his social media account, emphasized integration in Latin America in his following posts.

President of the Republic of Chile, Gabriel Boric retweeted Lula’s post and added “Lula. Happiness!”

Peru’s President Pedro Castillo congratulated Lula on his victory, saying: “Peru congratulates the president-elect of Brazil, the comrade Lula, worker, trade unionist, fighter. His victory is essential to strengthen the unity of Latin America and the social justice of the Great Homeland.”

With Lula taking over in Brazil, most of the Latin American countries will be governed by leftist governments. In addition, Brazil, Argentina, Chile, and Colombia together with Mexico constitute the 5 largest economies of the continent.

Relations with China expected to improve

Chinese President Xi Jinping congratulated the winner of the election, Lula da Silva, stressing that “deepening long-term friendship and mutually beneficial cooperation serves the fundamental interests of both countries.”

Xi said he highly values the development of China-Brazil relations, and he is ready to work with Lula to push forward China-Brazil comprehensive strategic partnership to a higher level to benefit to the two countries and their people.

Speaking to the Global Times, Chinese experts expect Lula’s return to significantly improve the atmosphere of cooperation between China and Brazil in terms of trade, investment, and global governance. It’s also emphasized that Lula’s return also means the strengthening of the autonomy of Latin American diplomacy.

“Lula’s return is likely to bring back a smoother China-Brazil relationship” Zhou Zhiwei, an expert on Latin American studies at the Chinese Academy of Social Sciences, told the Global Times on Monday. Zhou said this would allow both sides find more space and improve economic and trade cooperation, especially in agriculture and infrastructure construction.

“Brazil may also seek to participate in the Belt and Road Initiative (BRI) under Lula” Zhou said.

Lula and BRICS could be more compatible

Given that Lula was instrumental in the establishment and launch of the BRICS mechanism during his last stint in office, the Chinese expert believes that he will continue to be active and positive about BRICS.

According to the Chinese expert, cooperation between Lula and BRICS countries and communication on international hotspot issues and global affairs will be smoother and more stable than under Bolsonaro.

Regional integration and rejection of US hegemonism

Yang Jianmin, another Chinese Latin American expert, told the Global Times about the rising “pink tide” in the region.

Stating that the “pink tide” that continued with Lula’s election can be viewed as the opportunity to support regional integration, to reject US hegemony in the region, and to advocate independent diplomacy, Yang stressed that this is also China’s opportunity to develop a more profound bond with these countries.

He may also follow a more pragmatic policy…

Wang Youming, director of the Institute of Developing Countries at the China Institute of International Studies in Beijing, pointed out that unlike others, Lula could also pursue a more pragmatic policy.

“Lula’s emphasis on South-South cooperation and bonding with emerging powers does not mean that he will reject the US” Wang noted and added that it’s very likely that Lula will may have a more pragmatic style and less anti-American voice in his third term. According to Wang, instead, Lula may prioritize more practical tasks such as stabilizing the economy and mitigating the negative impact of COVID-19.

Brazil and China may explore new areas of cooperation

Tatiana Prazeres, director of trade and international relations for the Federation of Industries of the State of São Paulo, told the Atlantic Council on China’s policy, which Lula would likely to pursue, that despite negative rhetoric against China during the Bolsonaro administration, trade and investment between the two countries developed largely undisturbed, but the political unrest created by the anti-Chinese rhetoric prevented the deepening of bilateral relations in other areas such as science and technology.  Under Lula, Prazeres said, he expects Brazil and China to explore new areas of cooperation.

Lula may also be more enthusiastic about BRICS and the Belt Road, Prazeres said, adding that he may prefer to leverage Chinese investments and technologies to help reinvigorate Brazilian industry.

Biden may try to get closer through climate

Another expert spoken to the Atlantic Council is former secretary of foreign trade of Brazil, senior researcher Abrão Neto.

Lula’s election would lead to a significant change in Brazil’s environmental agenda, among other things, Abrão Neto said, adding that this would enable Brazil to improve its relationship with the United States.

Arguing that US-Brazil economic relations during the Lula era would continue to be driven by pragmatic mutual interests, the expert said: “A renewed stance from the Brazilian government on climate change and other environmental issues might offer an extended avenue for bilateral cooperation, with positive spillovers for the overall political and economic relationship between the United States and Brazil.”

Experts comment that Biden will try to get closer to Lula to lure Brazil into intense power rivalry.

It’s commonly expressed that Lula’s idea of strengthening the protection of the Amazon forests could be compatible with Biden’s climate policy.

US President Joe Biden was among the first world leaders to congratulate Lula.

On Sunday, Biden congratulated Lula on his victory following “free, fair and credible elections” and said he looked forward to continuing the cooperation with Brazil.

‘CIA’ plot against Lula

Lula da Silva, 77, who chaired Brazil for two terms in 2003-2010, was indicted for corruption in 2016. Lula, who argued that the case was political, applied to the court, but was sentenced to 9 years and 6 months in prison in 2017. He went to prison in 2018 and spent a year and a half in prison.

Lula was unable to run for president because he was in prison and could not run in the 2018 election. The lawsuits against Lula paved the way for Bolsonaro’s election.

In 2021, Lula’s convictions and cases were dismissed by the Supreme Court, which ruled that the judge responsible for these cases, Sergio Moro, was biased and political, paving the way for him to participate in the elections.

At the time, some messages about this investigation were leaked to the press by a Brazilian news site. The leaked messages revealed that federal judge Sergio Moro, who was conducting the investigation at the time, collaborated with prosecutors in ways that overstepped ethical lines and affect the decision on prison sentences.

It was understood that the corruption cases were conspiracy against Lula da Silva. The Brazilian federal prosecutor’s office announced that prosecutors conducting the investigation have been assigned to other units.

It was alleged that the CIA was behind the conspiracy against Lula at the time.

Lula, who followed policies to end the neoliberal impositions of the USA in Brazil and the region, IMF dependence, made Brazil the 10th largest economy in the world, improved relations with China, made the country one of the founders of BRICS, advocated regional integration, gained the love of the people by ensuring that approximately 30 million Brazilians got rid of poverty with the social policies he implemented.

The trial and imprisonment of Lula was described as a US-backed coup that brought the right to power.

AMERICA

Fed cuts interest rates, dollar surges to two-year high

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The U.S. Federal Reserve reduced interest rates by a quarter percentage point but signaled a slower pace of easing next year. This move drove the U.S. dollar to its highest level in two years and triggered a sell-off in both domestic and international stock markets.

The Federal Open Market Committee (FOMC) voted on Wednesday to lower the benchmark interest rate to 4.25–4.5%, marking the third consecutive cut. The lone dissenting vote came from Cleveland Fed President Beth Hammack, who favored maintaining the current rates.

Officials highlighted concerns about persistent inflation, projecting fewer rate cuts for 2025 than previously expected. Reflecting these worries, policymakers also raised their inflation forecasts for the coming year. Following the announcement, Fed Chair Jay Powell remarked that the current policy settings were “significantly less restrictive,” indicating the Fed’s inclination to adopt a more cautious approach to further easing.

“This decision was a ‘closer call’ than prior meetings,” Powell noted, emphasizing that inflation trends remain “sideways” while risks to the labor market are “diminishing.”

Aditya Bhave, senior U.S. economist at Bank of America, described the Fed’s message as “unabashedly hawkish.” He pointed to the shift in officials’ 2025 forecasts, which now anticipate just two quarter-point rate cuts instead of three, calling it a “wholesale shift.”

JPMorgan Chase, a key player in U.S. bond markets, noted that money markets are pricing in only a 0.31 percentage point rate cut in 2025. This outlook, significantly tighter than the bank’s earlier 0.75-point forecast, underscores the magnitude of the Fed’s policy shift.

The decision triggered a sharp sell-off on Wall Street, with the S&P 500 falling 3% and the tech-heavy Nasdaq Composite dropping 3.6%. High-profile winners of the 2024 rally were hit hard, including: Tesla, down 8.3%; Meta (Facebook’s parent company), down 3.6%; Amazon, down 4.6%.

Smaller companies, often seen as more sensitive to US economic fluctuations, also suffered. The Russell 2000 index declined 4.4%.

In Asia, stocks fell in early Thursday trading. Benchmarks in South Korea and Taiwan dropped 1.8% and 1.6%, respectively. Meanwhile, U.S. government bond prices fell, driving the yield on two-year Treasuries—sensitive to Fed policy—up by 0.11 percentage points to 4.35%.

The U.S. dollar surged 1.2% against a basket of six major currencies, reaching its strongest level since November 2022. According to Wells Fargo senior economist Mike Pugliese, the currency had already been rising on expectations of inflationary pressures following Donald Trump’s election victory last month. However, Wednesday’s Fed decision “poured more petrol on the fire.”

The South Korean won dropped to a 15-year low against the dollar, while the Japanese yen weakened 0.5%.

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AMERICA

Amazon pledges $1 billion to Trump inauguration fund

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Amazon confirmed on Thursday that it will contribute $1 million to Donald Trump’s inauguration fund, a move mirroring similar actions by other major tech companies, including Meta, the parent company of Facebook and Instagram. Amazon also plans to broadcast Trump’s inauguration via its Prime Video service.

This announcement comes as major tech executives seek to establish ties with the incoming U.S. president, despite Trump’s longstanding criticisms of Big Tech. Trump has frequently accused technology companies of censorship and bias against conservative media.

Jeff Bezos, Amazon’s founder and CEO, is reportedly planning to meet Trump at his Mar-a-Lago resort next week, according to The Wall Street Journal, which first reported Amazon’s donation. Similarly, Google CEO Sundar Pichai and Apple CEO Tim Cook have expressed their congratulations to Trump since his election victory in November.

Trump’s relationship with Amazon has been fraught with challenges. During his first term, he accused the company of undercutting competition and criticized its tax policies. In 2018, Trump ordered a review of U.S. Postal Service package pricing, claiming the agency acted as Amazon’s “courier.”

Apple, meanwhile, faces potential risks from Trump’s proposed tariff policies, which could disrupt critical supply chains in China. However, during Trump’s first term, Cook secured exemptions for certain Apple products.

Meta’s CEO, Mark Zuckerberg, and other tech leaders have also engaged with Trump. According to The Information, Zuckerberg dined with Trump after the election. Pichai is also expected to meet Trump this week.

While Trump scrutinized Big Tech during his presidency, Amazon now faces mounting regulatory pressure under President Joe Biden. The U.S. Federal Trade Commission (FTC), led by Lina Khan, has been investigating Amazon for alleged monopoly practices, with several states filing lawsuits last year. The FTC is also examining major cloud service providers, including Amazon, over partnerships in artificial intelligence.

Despite earlier conflicts, Bezos recently praised Trump for his “tremendous grace and courage under real fire” in a post on X (formerly Twitter) following an assassination attempt. Bezos, who also owns The Washington Post, reportedly prevented the newspaper from endorsing Trump’s Democratic opponent Kamala Harris in the 2024 election.

Speculation about a tacit agreement between Bezos and Trump has surfaced, allegedly tied to Blue Origin, Bezos’s rocket company competing with Elon Musk’s SpaceX.

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AMERICA

Investors poured $140 billion into U.S. equities following Trump’s victory

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Nearly $140 billion has flowed into U.S. equity funds since last month’s election, as investors anticipate Donald Trump’s administration will implement sweeping tax cuts and regulatory reforms.

According to the Financial Times (FT), which cites data from EPFR, U.S. equity funds have seen inflows totaling $139.5 billion since Trump’s victory on November 5. This surge in investment made November the busiest month for equity inflows since records began in 2000.

The massive influx of funds has driven major U.S. stock indexes to a series of record highs, as investors appeared to shrug off concerns about potential economic risks, including inflation and its implications for the Federal Reserve’s interest rate policy.

“The growth agenda that Trump has put on the table is being fully embraced,” said Dec Mullarkey, Chief Executive of SLC Management. He added that Trump’s picks for top administration posts have been seen as “very market friendly.”

Trump has promised to fill his administration with financial experts, including Scott Bessent as Treasury Secretary, and Paul Atkins, a cryptocurrency advocate, as Chairman of the Securities and Exchange Commission (SEC).

The president-elect has outlined a pro-growth agenda, emphasizing reduced taxes, deregulation, and economic expansion. These proposals have spurred optimism among investors, fueling a rally in the market.

The S&P 500, Wall Street’s primary stock market indicator, has risen 5.3% since Election Day, bringing its total gains for the year to 28%. Smaller companies, which are often seen as more responsive to changes in the U.S. economy, have outperformed larger firms during this period. The Russell 2000 index recently hit a record high for the first time in three years.

While U.S. equity funds have enjoyed record inflows, other global markets have experienced outflows emerging market funds have seen net withdrawals of $8 billion, with China-focused funds accounting for $4 billion; funds investing in Western Europe have lost $14 billion; and Japan-focused funds have seen outflows of approximately $6 billion.

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