Wall Street analysts spent the week building models to predict what happens if Lula wins versus what happens if Bolsonaro wins. Groundbreaking stuff. Really earning those expense accounts.
The methodology works like this: Take current market conditions. Add one candidate. Predict the market goes up. Take those same conditions. Add the other candidate. Predict the market goes down. Publish both. Claim expertise regardless of outcome.
Brazil holds an election Sunday. Two people are running. Wall Street has prepared two predictions. This passes for analysis in 2022.
Lula represents the left. Bolsonaro represents the right. One of them will win. The other will lose. Traders have been furiously pricing in both scenarios simultaneously, which is another way of saying they have no f*cking idea what they're doing but need to look busy.
The predictions are "starkly different" according to people who get paid to notice that different candidates might pursue different policies. These same brilliant minds will spend Monday explaining why the market moved for reasons having nothing to do with Brazil.
Some firm published a note saying Brazilian assets could rally under one outcome. That same firm published a different note saying Brazilian assets could sell off under the other outcome. Both notes carry the same logo. Both analysts keep their jobs.
Retail traders read these predictions. They split their portfolios. Half on Lula. Half on Bolsonaro. They diversified themselves into guaranteed mediocrity while paying twice the spread.
The election happens Sunday. The result gets announced. One prediction gets memory-holed. The other gets cited as proof of analytical rigor. By Wednesday everyone will be trading on Chinese manufacturing data and pretending they never cared about Brazil in the first place.
Photo by Matheus Câmara da Silva on Unsplash
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