While Rousseff’s popularity will dip in the next opinion polls, the soccer defeat is unlikely to have an impact on the election, according to Joao Augusto de Castro Neves, an analyst at political consulting firm Eurasia Group in Washington.
“It has a short-term impact,” Neves said by phone from Washington. “Dilma’s bigger worry is the economy.”
The cost to insure Brazil’s government debt against default in the swaps market for five years fell three basis points, or 0.03 percentage point, to 144 basis points. The extra yield investors demand to own Brazilian bonds instead of Treasuries fell two basis points to 2.08 percentage points.
’Historic Loss’
Since Rousseff took office in 2011, growth has decelerated to an average annual rate of 2 percent, while annual inflation has exceeded 6.5 percent, the upper limit of the government’s target range. The benchmark Ibovespa gauge has advanced 19 percent from a low on March 14 as Rousseff’s declining popularity sparked speculation she might be defeated in October.
“Brazil’s historic loss in the World Cup to Germany is nothing short of a national humiliation,” Tony Volpon, the head of Americas research at Nomura Holdings Inc. in New York, said in an e-mailed note. “For a country that defines so much of its national character around its footballing prowess, losing at home cannot but have major repercussions.”
After the match, officials reported isolated disturbances, with military police in Rio de Janeiro saying some fans fled a viewing party on Copacabana beach after a fight broke out. Globo News showed images of buses burning in Sao Paulo, though it wasn’t immediately clear if the vandalism was a reaction to the game.
25% Rally
Thousands of protesters demonstrated before the World Cup, decrying $11 billion in spending to host the tournament in a country where 7.2 million people still live on $1.25 a day or less.
The game may ultimately cost Rousseff the election, which will in turn spur a 25 percent rally in Brazilian stocks, according to Alberto Bernal, the head of research at Bulltick Capital Markets.
“This is going to be catastrophic for the national mood,” Bernal said by phone from Miami yesterday. “If the market sees the potential that Dilma will not be re-elected, then it will rally in a big way.”