저자: David Lin · 외국인
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이 영상은 David Lin 채널에서 Azurite Capital의 공동창업자 타비 코스타와 나눈 대담으로, 룰라 다 시우바의 브라질 대선 승리 직후 브라질 증시가 하루 만에 큰 폭으로 하락한 배경을 다룬다. 출연자는 선거 전 시장이 보우소나루 재선 가능성을 80% 이상으로 반영하고 있었다고 보며, 실제 결과가 그 기대와 어긋나면서 정치적 프리미엄이 빠르게 되돌려졌다고 설명한다. 그는 룰라의 나이와 향후 정권 교체 가능성, 보수 세력이 상·하원에서 우위를 얻은 점 등을 언급하면서도, 시장이 이를 충분히 반영하지 못했다고 평가한다. 브라질의 핵심 문제로는 높은 금리와 자본비용이 지목된다. 기업들이 25~30%대 이자로 자금을 조달하는 현실을 예로 들며, 금리가 내려가지 않으면 소형주 시장의 회복이 어렵다고 말한다. 또한 중앙은행 개입 가능성과 금융억압 논리, 그리고 통화 헤지 필요성도 함께 다룬다. 미국 쪽으로는 장기금리와 달러가 전환점에 있다는 시각과 함께, 현재 금리 수준이 지속 가능하지 않다는 주장이 나온다. 재정적자와 이자비용 증가를 근거로 긴축 정책의 한계를 지적하고, AI 설비투자 둔화 가능성과 이란 전쟁에 따른 유가 상승도 변수로 제시한다. 귀금속에 대해서는 과매도 상태이지만 장기 강세장의 조정일 수 있다는 견해를 밝힌다. 다만 이 영상은 전문가 개인의 전망과 해석이 중심이며, 투자 판단은 시청자 스스로 신중히 검토해야 한다. 또한 영상 중 스폰서 광고 부분은 요약에서 제외했다.
다듬은 글
If any country cannot afford interest rates at these levels, that is the US. These levels of rates uh the system doesn't doesn't, you know, doesn't survive. And I think we're we're in a very important turning point of the market right now. All eyes are on the midterm election results in the US. So, it's important to understand exactly how political events like elections will impact not just the economy in the short and long run, but also the market.
The immediate market impact of of elections is often very clear. Take a Brazil as an example. Last week's Brazilian election saw the uh Brazilian ETF our stock market index rather drop the most double digits in years. I think it was the biggest drop since the pandemic. So, we're going to find out what happened and what's next for not just the Brazilian economy, but also the US economy.
And we'll go over an overview of precious metals and markets overall. So, we have today Tavi Costa, co-founder and CEO of Azurite Capital. Welcome back to the show, Tavi. Good to see you. Thanks for having me, David. Looking forward to talking about markets with you. Tavi, you're Brazilian. And as a Brazilian, you have a lot to say about what happened in your home country last week.
So, I'll just show on my screen right now the EWZ Brazilian stock market ETF dropped 20% in one day following the result of the Brazilian election, which saw uh the sitting president who is uh Luiz Inácio Lula da Silva win for the fourth non-consecutive term. He beat his opposition leader uh conservative leader Bolsonaro by quite a narrow margin, 51.8% of the votes to 48%.
But, the markets did not like that. Like I said, 20% drop in the drop in the stock market in one day, the worst I think since the pandemic. So, we know that Lula, as he's called in the media, is left-leaning. He's uh he used to be a union leader. He supports social programs, higher wages. Uh he supports a significant government role in the economy.
But what was surprising to everybody was A, the fact that he won, and B, uh markets did not anticipate this. Clearly, what exactly happened? Yeah, I mean, there's there's lots of things to discuss here, but I think one of the main issues with the market was coming into the second term. Well, first of all, we had the first term of elections where Bolsonaro won.
Uh and it was completely unexpected. So, you saw a huge move in the market, uh where most of the Brazilian shares, uh in some cases, were up like close to 30 to 40%. That was a a huge move. Uh so, coming into the second term of elections, Bolsonaro had about 80-plus percent of probability of winning the the second term.
If you if you do the calculation on the very first part of elections, you had about nine percentage uh of votes that needed to be converted to each each I know, one of the two parties. And so, uh what we saw was that the majority of those nine percent of of folks actually went to Lula. Now, you know, and not majority, I should say 70% of the 9% went to Lula.
Now, keep in mind that within the 9%, there were three Most of them were across three different parties. Of those three parties, uh two of them gave full support to Bolsonaro. Okay, so the fact that 70% of the 9% went to the other side is is on itself a huge question. What I didn't like about elections, and you can read on my own Substack, it's all recorded, on the Thursday evening, I posted that I didn't like the the the setup for elections like I saw it in the first first round.
The second round was very different, uh where you had 80-plus percent of probability of him winning. Uh you know, I I I'm from there. I know how it is, and it's it's you know, you Nothing is an 80 89% 85% probability of winning in in a place like Brazil. There's lots of corruption as we probably saw, and I I would be extremely cautious to to come into elections with that much of a heavy exposure into it.
So, we reduced our exposure substantially there. Uh almost nearly 70% of exposure has been was was was reduced prior to elections. Um which was in hindsight, I should have done 100%. But but that's part of the game. Um and the main reason for it wasn't because I didn't believe that he was going to win, but I thought that the race was going to be a lot closer.
I did not think Lula was going to win. I'm just being very honest. I did not think that he was going to take the uh and you know, and we would have see a shock like we saw. That was not what I believe it But let's say you had predicted let's say you thought in advance Lula was going to win. And No, that made sense the decline that we saw.
It it makes a ton of 100% of sense. I mean Would you have taken more off the table if you that's what you thought? Uh yeah, I would have taken more off the table, but I would also be adding to this exposure here because we have to step back and think about what's happening now. There's a lot of things on the table.
So, basically the political premium that we had coming in ahead of elections has been wiped out. That's what you know, if you look at the chart you showed, take a 5-year chart or whatever, you can see that that that probability of him winning Bolsonaro winning uh that you know, the the potential shift that we would have seen in terms of a more of a a market-oriented environment has been wiped out, right?
Like that part has been wiped out. However, if you look at the upper and lower house after the first round of elections, we now have you know, a pretty a much more supportive conservative party in place than what we used to have 12 months ago. And so, that's a positive. That is completely you know, ignored by the market today.
Like if you looked at the environment today versus 12 months ago, Lula is still in place, so that hasn't changed, that won't change. And then on top of it now you have a upper and lower house that is much more supportive of the conservatives. Okay, well, that's something that we should be aware of. Now, I think this is the beginning of the end of Lula, personally.
That's my two cents, and if I would I feel very strongly about this. His His second His vice president is someone who used to be in the His opposition back, you know, a few a few decades plus ago. And you know, it's somebody that you know, Lula's 81 years old. You know, nobody's thinking about that.
He I'm not wishing anybody bad things. I'm just saying logically, he's 81 years old. And in my view, if if we ever see something like the vice president becoming the new president, that would be a huge shift in markets again. So, I think that political premium that was excessive at that time, now we're seeing the opposite of that.
Everyone went from ultra optimistic to ultra bearish. And I pay you know, I pay close attention to that shift when the underlying thesis was never about elections to me. And I've said this multiple times. I'm not sure how many times I said this. This is not about elections, it's about the commodities trade.
If you believe that this is a long-term hard assets thesis, you know, nobody owns more hard assets than Brazil. There's some other countries that also own a ton, but you know, if you believe in that thesis, that alone is is what makes the the strong case to invest in the place. Back in early 2000s when Brazil saw a a secular bull market, it was on the back of a support of Lula.
Believe it or not, the leadership was Lula. It was no different. And we still saw a major bull market. I'm not saying Lula was an incredible president back then. I'm just saying it it's not what what forms a bull market. And so, you know, I There That's That's the way I would interpret what happened.
A lot of people disagree with me, that's fine. I've been on this for for long enough that I feel comfortable being a contrarian, but um I I do think this is a very significant opportunity here. Before we continue with the video, let's talk about a company that's building serious gold leverage for the long term.
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I have to show you the US President Donald Trump's response. He was asked by a reporter to respond to the Brazilian election and I just want to get your comment here. Take a listen. Mr. President, who, in your mind, is the legitimate winner of the Brazilian election? I don't want to comment right now, but I thought the election was a very great embarrassment to the people of Brazil.
I watched the election. I didn't take sides. I let it be. I was asked not to take sides by the president. The current president. I didn't take sides, but when I watched what went down in Brazil, it was a disgrace Well, the market says Just take a look at the market. I mean, their market went down through the floor.
I I thought I thought it was a very disgraceful situation. Okay, he said he's not taking sides, but also called this a very disgraceful situation for Brazil. What's your response here? Well, I I think I think it's obvious his views and I I agree with him actually. I I think we lost an opportunity to make incredible changes in the country and um it would have been transformative.
Would have been one of one of the biggest uh shifts in in Latin America that we needed to have. I think that we're still seeing that shift happen in the region. I don't think that ends it's a huge setback. Let's not kid ourselves here. It's huge setback in the story. Is it the end of it? No, it's not the end of it either.
And Lula doesn't control the country as much as people think he does. Does he have, you know, lots of uh ideas that that are very much against free markets and other things? Of course, you know, he's not your, you know, socialist uh of, you know, of of uh of the Nordics economies and all all sort of like this you're talking some level of of of uh total totalitarian regime that that I think is is is is to be aware of and and the potential for something like that is is there, but I also think that there is a uh a floor of safety and security that comes from the intervention of the US and others if something bad ever happens that I think people are also under appreciating.
And the US needs Brazil, Brazil needs the US, and they're going to play ball in my opinion. And regardless if Lula or somebody else. And the big question now is who's going to be taking care of the central bank? Uh that's a big question locally. What we're seeing is the potential uh you know, uh more of a intervention in the interest rate market in Brazil taking it from 15% or so to 5% and trying to adjust the fiscal balance by doing that.
And uh that is your financial repression 101 that we tend to see in countries. That could be, you You a little problematic for the currency, but extremely bullish for the market locally, despite of our views on Lula. Again, I mean, who cares about that if if you have that type of set up, it could be positive for the equity market in Brazil.
So, I am you know, I'm I'm still you know, I I have that 70% has not that I that I reduce is not I'm not 100% yet. Yeah. Um and I've been thoughtfully putting back money back to work. I don't think you need rush either. Like it's not how I I invest. I I gradually come back. Um I think we're seeing some you know, this is going to take a while for things to sort of stabilize in my opinion.
But it's also an opportunity. You know, it's a thesis that is being tested. A secular thesis being tested that I love being part of it. And nothing like a secular thesis being tested like the metals and mining today as well. So, those two are are very interesting right now in my opinion. I think to sum up if someone were to use the Brazilian election that happened last week as a case study for how politics impacts markets, how would you summarize this?
Well, I I think first of all, um uh you always looking for The case study is not something that is new, I guess. It is something we've seen in the past. Like if you coming into an elect like we're seeing now in the US, what's the expectation? Is that we're going to see a blue sweep, right? Yes. Everybody expects that.
Well, you know, if we do see one, like you know, the the the the the the I guess the outcome in the markets may not be as as as severe as everybody else is expecting. That but just because there's a lot of expectation to that outcome to you know, to to to happen. But I I don't want to speak so much about the US in that sense because in Brazil, the the the the probability was 80 plus percent, okay?
We're not talking 60, 70 like in the US or something like that. We're talking 80 plus. So, it's like it's already priced in he's going to win. When you know, Brazil is a mess. Like, you know, it's electronic voting. Um you know, there's so many so many other uh uh factors, external factors outside of the normal that you should be aware of.
And, you know, a setup like that, yeah, bothers me. I don't like to come into uh something like that because I I know that the thesis of Brazil wouldn't be playing out in one day. Like, it's Some people think that elections is everything changes on one day. That's not how it works. Um and when you set up to to see something like that, where I saw, you know, what what made me change my view was like, well, I think we're going to see kind of a That was my opinion, all right?
I thought we're going to see a buy the news uh or a buy the rumor, sell the news kind of event. That's what I thought we were going to see. I thought Bolsonaro was going to get elected and the market would actually decline on the day of him getting elected. That was my two cents on what the story would play out.
And so, this is why I plan to sell my position. Now, we obviously saw something even more severe than I thought. And, you know, how do you the case study is is don't be fully invested in in in stories that are in emerging markets that have that type of certainty in markets um that you know it's nothing is certain.
Like, it's, you know, it's it's an emerging market. We see a lot of corruption, lots of things could have happen. And it was it was dealt as a developed market, of which in developed markets you also have corruption. But, in emerging markets it's just another degree, you know? It's just like you multiply that by a factor of three or four or five.
And so, that's what we saw. You know, it's a a Do I think he was legitimate? He won? No, I don't think so. I think I think that was probably um you know, that elections were uh were rigged. And, you know, but but I'm, you know, I'm not I can't do anything to change that either. So, uh it it wasn't my thesis that this was going to happen either.
So, now you have to take a more prog- pragmatic approach and and and think about is is Is this a setback? And at these prices can you can you invest and do you feel comfortable? You know, then, you know, that's a that's that's an assessment each person have to do. I already told you my opinion, but people people probably differ on that.
In other places around the world where you have countries with higher debt and rising deficit levels, if the government imposes, let's say, uh measures to cut spending, uh you see a dramatic response from the populace. Let's take France, for example. So, the French government announced a plan to cut 50 cut spending by, I think, 54 billion euros.
Let me just double-check that. Yeah, 54 billion euros. And that resulted in, I mean, among other things, that resulted in massive protests and riots. I'm not saying the Brazilians would have rioted if Bolsonaro won and had similar policies, but the fact remains, you look at something like France happening right now, do you think politicians around the world in Western countries will look at that example and say, "Hey, you know what?
We probably shouldn't cut spending because we don't want massive unrest." Uh I think it's very unique to each story, but you're not wrong. It's uh the issue with the high levels of debt to GDP globally is that, and why that creates wars, is because it becomes harder to create growth when you have so much debt in the system.
And and then you start seeing politicians come up with these magic solutions that are I mean it, they're magic. They're not like there is nothing you can do about it. And and they are radical solutions. And uh and I could shouldn't call solutions, they're they're just alternatives. And and and just unrealistic.
And when you start seeing those kind of radical uh alternatives, um that's what is called populism. And you see this in the right and the left. And that eventually creates nations to uh have conflicts with each other or within their own countries with inequality. And so, to me, that's kind of the core of the problem.
Uh with Brazil, specifically Brazil, I think that the biggest issue here that that is suffocating the country is the cost of capital. It really comes down to that. Like the debt is so the sorry, the interest rate is so high that you just cannot survive as a company. You know, you can't you can't borrow money.
It is it is really difficult to run a business when when you don't have that you know, you can only dilute your story over time. And and so it is it is a problem. Obviously, again, I think the market will force Lula to make decisions. Not the other way around. Lula will make this this you know, his calls until until the market begins to rebel against him, which is happening now already.
And as we see more and more of that, he's going to be forced to make decisions that are more in favor of what the market would like to see. It's always been the case and probably will be the case here moving forward. This is very different in Venezuela where you you had the the entire conservative party, you know, be away from from from the country and you saw a complete shift.
You know, I don't think that's happening there. And I I I that's that's where I think the extreme is is is been taking place in terms of views that I disagree. And I I know I know people in the comments are going to say that that's what's happening and I disagree. These are people that are not there.
They're not living there. They I you know, I live part of the year there. I I'm not seeing that. Like if I was seeing that, I would be the first one to get out of the country. But I not I don't I disagree with that view as well. But but but the Brazilian Central Bank decision is coming up. That's something to watch.
Do you think that with Lula winning again, they're going to have to remain tight with the Central Bank? They're you know, they're looking to to lower rates cuz they understand that that's what the market is worried about. Like locally, that's all people talk about. You know, a few months ago, that was my concern when I went to see I was at a few investment banks back in Brazil and I one specific where they wanted to you know, pitch me a a an investment.
It was a food company. I'm not going to name things, but they pitched me a convertible bond and a convertible bond had a interest rate of about 25 to 30% and I was like, how are you guys surviving? Like that's crazy. I mean, who pays 25 to 30% interest rate? Like that's crazy. And so, you know, they were like, well, that's normal.
You know, and you know, I was just shocked by it and you know, and and I you know, that's that needs to change. That needs to be addressed. This small cap world in in in Brazil is is being is depressed because of rates and because of the cost of capital. And so, that to be changed requires a shift of the interest rates and what we would have seen with the new with the new the other president would have seen better prospects for the country.
That would have been reduced the rates by, you know, who call it 5 to 7 percentage points it would be my estimate that we would have seen a course of 12 months. Now, we're seeing you know, on the back of a strong currency. Now, what we're likely to see is is a a currency that would be most likely you know, impacted by a central bank that will need to enforce financial repression and as we see that, that could be positive for for companies.
Don't get me wrong. It would be very positive for companies, but you know, you if you're just if you're if you're just enforcing financial repression and and it's not led by the market, then if you're not the reserve currency of the world like the US, you know, it and it happens even with the US, but especially in emerging market where it needs to be worried about its its currency, it will become problematic.
So, I I think that it you know, I I probably wasn't thinking too much about hedging currency, you know, a month ago. Now, I'm thinking a lot more about that because it's it's something to be aware of, but I still like the case, but it's you know, it changes a bit of how you how you allocate the money.
Good segway. When you think about currency hedging, you have to think about uh interest rate differentials between in this case Brazil and other countries. Let's take the US. Now, let's move on to the US. You had written on your Substack uh here I'll put this chart on the screen, but you wrote on your Substack, "The Fed is in the final stretch of this suicidal tightening cycle." Why are you calling this a suicidal tightening cycle and then pairing it with this image of uh interest expenses rising as a percentage of government expenditures here?
Well, cuz I think you know, if you just do the math, we can't we can't hold these rate uh rate uh setting that we have currently here in the US. I mean, the US is is if any if anyone if any country uh cannot afford interest rates at these levels, that is the US. I mean, uh the chart you're seeing is is is basically a cancer in the system.
It's a cancer that keeps growing and and it needs to be addressed by financial repression as well. And so, it is very likely that eventually you can be a hawk, you know, you can be Paul uh Volcker as much as you want until things break. And then when things break, you you have to adjust your your your uh your policy.
And uh things were breaking last week. We don't know if they will continue to break, but I I suspect that at these levels of rates, uh the system doesn't doesn't you know, doesn't survive. I mean, every So, so right now we have nominal rate nominal growth at a very high level. Um and that's not going to sustain be sustainable uh uh you know, eventually we're going to see deceleration of growth.
And at the current level of rates, the the nominal growth it's okay. Everything is fine, but eventually when growth is not there, you know, uh you know, we're going to like right now we're growing the economy about 5% just to pay down the debt. 5% growth of of just to pay down the debt. So, if that growth is gone, let's just say that growth goes from five to three or two percent or zero or negative like we've seen usually in recessions, then the market is is going to be very painful here.
So, I I think that this uh this policy that we're seeing is is suicidal and and it is completely unsustainable. And uh if if a market is being impacted by that, not like gold, like precious metals being impacted by a tightening cycle that everyone is perceiving as sustainable, I'll take the other side of that all day long.
And I really think that we're going to see a big shift there and we're more towards the end of that than the beginning. Real uh third quarter real GDP came out 3.4%. A lot of that was from the data center build-out. Now, I think my opinion and some other analysts on my show probably slow down in hyperscale growth next year as capital becomes a little more scarce.
That's Nvidia CEO's Jensen Huang's words, not mine. And uh a lot of these companies have already reported earnings that have underperformed investor expectations. So, they're probably going to slow down CapEx. If we do see the slow down here, the tech sector slow down, GDP slows down, what happens to the economy?
What happens to uh the Federal Reserve? They have to respond to a slow down, but at the same time the Iran war is pushing up oil prices. Yeah, I I personally think that one of the most uh mispriced things out there outside of, you know, there's I think we're we're in a very important turning point of the market right now.
Uh um and there's lots of things that are about to move in a in a significant way that people are just uh ignoring. Uh and these things are, you know, obviously uh the the interest rate environment, particularly the long end, the you know, that people are so concerned about. It's been rolling over. It's rolling over for some time now.
And I I think that's the beginning of the end of a move. Um so, I think that we're going to see much lower long-term rates here uh compared to what people are saying uh as we see this deceleration you're referring to. If we do see this deceleration you're referring to, rates are really mispriced. Um secondly, I would say that the dollar is also starting to roll over.
After a big move on the dollar that we've seen, the dollar's rolling over alongside long rates, okay? Long-term rates. So, those two are are at a turning point. And then you look at things that tend to benefit from a lower rate environment and a lower or a weaker dollar. And at its core, it's precious metals.
And precious metals is also extremely oversold. I mean, by any metric you look at, these things are so oversold. Uh the miners are breath is is one of the worst we've seen in history. And so, you know, do I think that that's sustainable? No, I don't think that's sustainable either. So, more likely that those things are going to see a some sort of find some sort of a bottom here in my opinion.
So, yeah, things are choppy, but but that's, you know, if I had to take a 12-to-24-month view, I think this is a very important window of opportunity. You know, you know, you can ask me in 12 months from now if that was wrong, but I think what we're seeing is a very important window of opportunity. Gold, let's finish off on gold and silver.
If this if the narrative that we've been following for this year is that gold has been going up because of rising fiscal and deficit concerns, then potentially a divided Congress or government rather, if the Democrats do sweep the midterm elections, a divided government, what would that do to fiscal policies and ultimately how would that impact precious metals?
Yeah, look, a gridlock is always you know, something that has a impact on lower spending, believe it or not. Which logically that wouldn't be very good for gold. However, people are going to start also increasing their estimates of what presidential elections will look in the future depending on how this pans out because it's going to have an impact on that that.
And I think that's going to Trump the the near-term impact of midterm elections in my opinion uh we're going to have a better picture of what that's going to look like in terms of elections in the future. Um and potentially, if we have things swinging left in a day way, uh I think that's probably going to be extremely positive for precious metals in my opinion, if I would have to guess.
Um because of inflation? Yeah, so of course. I I think I think that I think that that's certainly going to have an I mean, look, the the beauty of precious metals is both parties add to the inflation problem uh in a big way. And it's not, you know, sure, there there is issues with this, uh but also it's it's almost inevitable that everyone is going to continue to spend in order to not let uh such an addicted economy to fiscal stimulus stop growing.
Because if we stop the spending, we're going to stop the growth. And so, that's simple as simple as that. So, uh you know, I I know we often tend to take a uh uh a stab on each uh party, but uh at the end of the day, both parties are go adding to the the fiscal issue, uh uh you know, and and I think I think that's uh uh you know, they're both going to hit a wall regardless.
Um so, you know, with that in mind, uh I don't I don't think that changes uh the the the the narrative for precious metals here. I think the precious metals are in a secular bull market. This year has been a consolidation or a difficult year, whatever you want to call it, uh which is normal. Uh markets don't go up every year.
Um the same thing you should expect eventually for oil prices, right? Like, oil prices are going up a lot here, and if you see a consolidation, you shouldn't be shocked, right? I mean, uh it's been a tremendous move. And so, same thing is happening here. Treasuries, it was a big move, and now we're adjusting for that move.
Does that mean the end of the the the interest rate rise? No, but we need a a pause and now things are rolling over because there's changes of the use regarding um regarding elections, regarding growth, regarding also potential slowdown of data centers and others AI related investments. And if that happens, that should have an impact on long-term rates.
And so, yeah, I'm you know, I I think I think there's like I said, there's plenty things that are kind of an inflection point right now. You don't have a lot of moments like this in markets. Uh in in you know, every year you got a a few of those, maybe one in some cases. And I think we're kind of seeing one of those right now.
Okay. Well, excellent thoughts. I encourage people to check out Tavi's Substack, by the way. Subscribe if you haven't. He lays out his bull case thesis in a lot more detail in his recent piece, The Bull Isn't Dead, in which he talks about gold and silver in a lot more detail than we have time to cover today.
We'll follow up next time, Tavi. Appreciate your thoughts. Thank you. Thanks for having me. Appreciate it. Thank you for watching. Please do like, subscribe. I'll put links to Tavi Costa's Substack and social media links down below. So, make sure to give him a follow there.
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