Salient to Investors:

Geoffrey Dennis at UBS said Brazil’s 7-1 soccer loss to Germany was so crushing that it upends the conventional theory that World Cup defeat would be positive for Brazil’s financial markets because it would cause voters to oust Rousseff, who has sunk the economy into stagflation. Instead, Dennis says such a humiliating defeat could damp investor and consumer confidence, and he does not foresee a knee-jerk rally in markets.

Tony Volpon at Nomura said the defeat is nothing short of a national humiliation in a country that defines so much of its national character around its footballing prowess.

Alberto Bernal at Bulltick Capital Markets said the defeat may ultimately cost Rousseff the election, causing a 25 percent rally in Brazilian stocks.

Eamon Aghdasi at Societe Generale said Brazilian markets may come under pressure if the defeat sends protesters to the streets while failing to put a meaningful dent in Rousseff’s popularity, and recommends selling Brazil’s real versus the Mexican peso.

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