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Gary Meyers is joined by Carlos Legaspy and Robert Genetski for a discussion of Brazil, markets, inflation, interest rates, and the midterm elections. Gary also presents Don Day’s weather report.
DISCLAIMER: All opinions expressed by the presenters in this video are solely their opinions and do not reflect the opinions of The Meyers Report, its directors or officers.
DISCLAIMER: All opinions expressed by the presenters in this video are solely their opinions and do not reflect the opinions of The Meyers Report, its directors or officers.
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NewsTranscript
00:07good morning welcome to the myers report fast 15 it is friday october 9th 2026
00:15don day is still at the albuquerque balloon festival and today i am going to be the weather
00:22delivering don's report heaven help us carlos lagaspi our expert on everything latin american
00:30will update us on the results of the latest brazilian elections and dr bob janetsky our
00:38chief economist will follow up with the markets hurricane isaias is now a major hurricane while
00:47it is serious this is not another katrina hurricane hunters have found that the top winds this morning
00:54were at 120 miles per hour it is a category three storm about 240 miles south of pensacola
01:02and moving northeast at a rate of about 15 miles per hour landfall is expected tonight or early
01:10saturday morning between ocean springs mississippi and the florida panhandle where the hurricane
01:17warnings are now in effect evacuations are underway along the the alabama and florida coasts and
01:26nearly two-thirds of the gulf of mexico oil production excuse me gulf of america oil production
01:33was shut down ahead of the storm the surge forecast went up this morning uh six to nine feet of
01:42water
01:42from alabama to the florida line and to great and beach and four to seven uh feet toward the in
01:49toward
01:50indian pass if you are told to leave leave the week ahead there is a fire the fire danger is
01:57high
01:57in montana wyoming and idaho and montanas and montana all could get a foot of snow by sunday next
02:06week looks warmer than normal for the south and east cooler in the northeast and wet for the most of
02:13the rest of the country okay carlos brazil's first round of voting on october 4th sent two candidates to a
02:23runoff set for october 25th uh flavio bolsonaro finished first with a with 47 percent ahead of
02:33president lula with 45 percent latest polls now show lula leading who do you think is going to win
02:41we still think that it's going to be bolsonaro um primarily because the uh the third and fourth place
02:52candidates have come and endorsed bolsonaro so their followers um if they show up for to to the polls
03:01will side on bolsonaro and it was not that far away from the the majority um so it's only two
03:08choices
03:09so that we believe so lula only hope right now is to um try to get his base to show
03:19up we had a
03:20um the abstention rate in the election even though election voting is mandatory still you had about
03:2934 million votes that did not show or invalidated we had about 6 million ballots that the person showed
03:37up and then kind of voted against everybody um and so unless lula convinces them to show up that's his
03:47only hope the endorsements you think you think it's also now carlos yeah i i have a question i'm just
03:53curious it's mandatory but 35 million don't show up what is the punishment there's normally and it's
04:00it's one of those things there's some like a monetary fine um and they're you know they're things that
04:07you know if you go and try to do some sort of government uh you know process and things like
04:13what happens is that if you live in extreme poverty uh that those get waived or you know
04:19say like i'm not going to buy property so things like that so that's so the penalties have no teeth
04:25when you're really uh so if you were to see who didn't show it's probably more on the blue left
04:31side so that's why it says that if they show up they'll probably vote for lula
04:35uh carlos either way what are the economic and political ramifications for brazil south america
04:43and the u.s so we is obviously the uh the market really uh cheered so we have the brazilian
04:51currency appreciated about five percent um the uh bovespa which is the equity index went up about
04:5910 percent once it went over what period of time it was immediate once it was announced so i'm just
05:07using i'm not using the year-to-date performance it's just where it was before and after the election
05:12so this is like in a week yeah wow and and uh and uh where we did not see um
05:22a positive movement
05:24was on the um on the interest rate on the dollar denominated debt it um the 10 brazilian 10-year
05:35dollar denominated the nominated bond went up about half a percent in yield 50 basis points
05:41about 25 basis points explained by the treasuries itself that they also went up 25 basis points but
05:49that's still a 25 basis point widening and and the concern is what's that what what rate are they at
05:55now uh right now it's in dollars it's about when like from like six and 6.6 one to 7
06:04.1 on the 10-year
06:06dollar denominated and interest rates local interest rates are still in the low double digits and that's
06:13been one of the you know it it is not really influenced by by the um by the government it's
06:21more central bank and inflation dynamics but again it's an anti-incumbent so it really played against
06:28lula that interest rates remain high as one of the highest real rates in the world in brazil
06:34what are the implications and ramifications now for south america and the u.s if bolsonaro wins
06:42well the perception is that relations will improve with the u.s because of the ideological
06:47alignment between bolsonaro and trump um so that's always kind of good you don't ever want to be
06:54you know adversarial with uh with the u.s the um the widening and the bond kind of is indicative
07:02that
07:02that the market does not believe there's going to be too much change in the fiscal trajectory
07:09and that is explained because in brazil the presidency is a relatively weak presidency though
07:16a lot of the power resides in congress and congress yes it um it shifted in favor of of of
07:26of the right
07:27but still not enough because it still needs to form coalition and when you form coalition that here
07:34comes the pork and you know government spending is what it is and a lot of it is mandated by
07:40pensions
07:40and things like that so so the the fiscal picture continues to be challenged and the change of
07:50government doesn't really mean all that much um and for us what we're watching is is the rally sustained
07:59or will it come back um still within an uptrend brazil was a very good performing market even before the
08:08election uh well it's it will continue on that same range um so we're we're we're kind of
08:18cautiously optimistic we're long but uh we did trim some some exposure just because you know you see a
08:24rally that move you know you got to sell something by discipline so we still think that's going to be
08:29on a positive trajectory just maybe a little bit uh overdone in the short term well thank you dr bob
08:37oil prices are coming down but inflation still seems to be high is it where are we well we're at
08:44just checked 91 now for oil um is it high yes it's high relative to what you and i believe
08:54is
08:54the fundamental fundamental price which is closer to sixty dollars and or maybe seventy dollars but
09:01the point is at ninety dollars we're high are we as high as the peak of 115 or something like
09:07that
09:08no we've come down from there so there's been some relief but certainly not a whole lot and it doesn't
09:14show up in the inflation rates and won't show up until maybe at least another month when the rates
09:21will be down from the 97 high 90s hopefully down to at least 90 if not even lower the stock
09:29markets
09:29are still high even if they've had a little bit of a pullback they're still close to record uh levels
09:35uh are corporate profits driving them up what is doing i believe that's one of the key factors driving
09:42it up the analysts have had very optimistic forecasts for the past year or two
09:49and the problem is they were they were far less optimistic than the actual markets came
09:56there's been an absolute explosion in corporate profits and this year the we're just starting to
10:04see third quarter profit reports the analysts are projecting that they will be up uh 25 to 30 percent
10:12from a year ago so just spectacular profits again but the analysts have been burnt because they haven't
10:19been optimistic enough with these extraordinary figures so uh i i think that there is a great deal
10:27of optimism in the market that as these numbers come out especially the numbers for the ai companies
10:33that we're going to see very very significant increases in profits as the numbers come out and
10:40that's driving the market up carlos are you seeing similar optimism uh with markets and the people in
10:48south america yeah right now you know we talked a little bit about it in the conference how growth and
10:55profits has outpaced the rise in the market so on a p basis the market gotten cheaper so it's um
11:03and
11:04there's a seasonal aspect uh right now that because the markets have gone up in spite of everything
11:13gets thrown against it you know the um the war the inflation the interest rates all of those
11:21price of oil all those things and the market keeps going up um it's been a fairly hated rally
11:27and what happens is that active managers um do the fomo if you're missing out so we normally
11:36anticipate that buying will continue between now and the end of the year for the window dressing at
11:41the end of the year so we're remaining long right now um between now and december between then the
11:48santa claus came in early and we think is going to continue between now the end of the year
11:53bob where are interest rates heading and what do you think the fed's going to be doing i think
11:59interest rates in the long-term area are close to their highs right now i think they've been hit
12:04by the inflation and the inflation from my perspective is temporary it's the result not of
12:11excessive monetary production or excess growth in the money supply it's a result of the shortages
12:17which are related to the war in iran so we we've got a situation where um they you know we've
12:27got a
12:27very unusual temporary thing that's kicking the inflation up as soon as that subsides the inflation
12:33will come back down and the interest rates will come back down in terms of what the fed's going to
12:39do
12:39with the short-term rates we've talked about this before my judgment all along was that they're not
12:45going to raise rates at their next meeting which is in about another week or two uh and the reason
12:51for that is if you look at the indirect measures of inflation such as there's an inflation figure
12:59that's implied in the financial markets because we have a 10-year treasury uh rate that is uh adjusted
13:09for inflation so you can actually figure out what the financial markets are suggesting inflation
13:15should be at the moment uh when you use a combination of the actual rates and the inflation
13:22adjusted rates and those figures come out to about 2.4 percent inflation so the financial markets have
13:29not been caught up with this three percent four percent inflation they are looking over that
13:34and saying that what we're seeing now is a temporary factor long term the inflation rates will come down
13:41now when they actually come down that's going to drive all the interest rates down and we don't know
13:47when that's going to be but it's going to be related to the war in iran and whether or not
13:52there's some
13:52sort of settlement or some sort of significant movement toward peace in that area i believe it's
13:59going to happen it's just a matter of time so basically the markets are in agreement with what we see
14:04i believe so yes okay our question for the week we are three and a half weeks out from the
14:12midterm
14:13elections carlos uh what do you think is going to be the key issue for most people when they vote
14:22affordability affordability and affordability
14:26bob yeah i'm concerned about the election because even though the inflation is temporary
14:34it's real and people feel it and interest rates since the start of the war and we're now into
14:40seven months um or the inflation rate has really helped to drive down living standards it's an off
14:48year election i think it's going to be very difficult for the uh for the republicans to keep
14:55control of the house and the senate i think they've got a chance to control the senate but it's a
15:00long shot
15:01uh and i doubt whether they're going to control the house with living standards going down
15:07and an off offbeat election carlos do you agree with uh bob yeah yeah yeah for us it's we're pretty
15:16much uh forecasting the house flips uh and and in the senate uh it's a coin toss right now so
15:26that's that's
15:26okay i'm going to disagree with you guys i think the republicans are going to keep the house and the
15:32senate both and i hope you're right i hope so too well we shall see very soon all right with
15:39that i want
15:39to say thank you for everybody be well stay safe have a good weekend and god bless america
15:59you