Dilma faces impeachment, but Brazil far away from political recovery

Yesterday, Brazilian stock index outperformed all of global peers, rallying more than 4%, on the news that Impeachment of President Dilma Rousseff has cleared first hurdle. Since March, Bovespa has rallied 22%, making it’s the best performing stock index this year after Peru. Brazilian Real is up more than 13% since March, now up around 12% for the year.

Congressional committee voted 38 to 27, in favor of impeachment of President Rousseff, which has now paved way to the next vote to be held in lower house, where two-third members will have to vote to push the impeachment to Senate.

After Petrobras Scandal erupted, engulfing government, protest has been taken to the streets, demanding resignation from her. Now, she closing in to impeachment, Market is in joyous mood. She is accused of making budgetary payments that has not been authorized by Congress.

President Rousseff however denied any wrong doing and blamed political conspiracy and coup. Since March two of her important partners PMDB and PP have left her government and increasing the possibility that she will be impeached. Her impeachment, will be a immensely beneficial to Michel Temer, leader of PMDB, who is widely expected to assume presidency, once Rousseff resigns during impeachment process. One of leaked audio in WhatsApp, sounded that he is preparing to address the nation.

Market rallying in relief, but that can be short lived, even if Mr. Temer turns out as a pro-market president.

Country’s Supreme Court ordered the congress to open another impeachment process against Michel Temer, the presidential hopeful. So it is possible that Mr. Temer also face impeachment, which will make Eduardo Cunha, the house speaker as serving President.

To add to the uncertainty is a new kind of protest in the streets. Since last year, we have seen people on the streets, with national flag, while Dilma supporters came out wearing red, resembling her workers party. Now a new kind of movements can be seen, called Fora Todos, calling for ousting of existing political class and elect fresh leaders through new elections.

All in all, it would be fair to say, Brazil is far from political stability.