Luiz Inácio Lula da Silva’s influence in Brazil has shown signs of weakening recently, as indicated by polling data, political challenges, and public sentiment. A May 2025 AtlasIntel survey reported his disapproval rate at 53.7%, the highest in his current term, while a June 2025 Quaest poll pegged disapproval at 57%, a record low for his presidency. These figures reflect growing dissatisfaction, even among traditional supporters, such as women, young people, and low-income groups. Despite economic growth exceeding IMF forecasts, Lula’s fiscal policies have sparked concern. His administration’s focus on revenue increases without significant spending cuts led to a budgetary credibility crisis by mid-2024, with the Brazilian real hitting record lows against the dollar. The failure to pass key revenue-generating measures, like corporate tax credit limits, and the reliance on social spending. Lula’s foreign policy stances (e.g., ties with Venezuela, comments on Israel) and perceived missteps, like blaming the central bank for high interest rates, have fueled criticism. Social media reflects growing frustration, with posts calling Lula “outdated” and noting public booing. Meanwhile, Jair Bolsonaro’s far-right base remains active online, amplifying opposition. Bolsonaro, meanwhile, took the stand on Tuesday, June 10th, in a trial at Brazil’s Supreme Court, where he and seven associates are being tried on allegations of a coup plot after losing the 2022 election to Lula. This came after an earlier corruption conviction against Lula was annulled in 2021, allowing him to run. Brazilian politics is certainly a colorful affair. Positive for stock market? A shift to the right in Brazilian politics could be positive for the stock market, particularly the Bovespa index . Still, the outcome depends on the nature of the change and the specific policies implemented. In 2018, when Lula’s corruption conviction was initially upheld, barring him from the presidential race, the Bovespa surged to a record high above 83,000 points. Investors viewed this as reducing the likelihood of a left-wing, anti-austerity government, which would favor market-friendly policies. By contrast, Lula’s 2022 victory led to a dip in Brazilian assets. Since the beginning of Lula’s third term in January 2023, iShares MSCI Brazil ETF (EWZ) has underperformed S & P 500 by 46.5%. However, as Lula’s popularity has dropped, EWZ has surged, up more than 25% year-to-date, significantly outperforming the S & P 500. EWZ YTD mountain iShares MSCI Brazil ETF YTD Even after accounting for this outperformance, Brazilian equities appear relatively inexpensive, trading at just 8.5 times forward earnings compared to 23.5 times forward earnings for the S & P 500. Lula’s leftist principles don’t align very well with many of the populists and anti-globalists who have been gaining traction recently, and he has been critical of President Trump compared to Mexico’s President, Claudia Sheinbaum, who has taken a more diplomatic approach. Incidentally, EWW, the MSCI Mexico ETF, has performed even better than EWZ. The trade Suppose one is inclined to believe that the Brazilian president will need to move further to the right to maintain power, or may be replaced with a more business-friendly President, thus propelling Brazilian equities further. In that case, purchasing EWZ calls, such as the slightly in-the-money August $28 strike calls for approximately $1.00. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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