Can you give us a bit of a lay of the land? What are the latest developments out of Brazil since Lula won last Sunday?

Yes, Dasha, this was a double whammy for Brazil and for the markets.

On the first round, Bolsonaro was expected to trade Lula, the leftist incumbent, and he surprised with a 4% lead ahead.

This was unprecedented.

Investors reacted very aggressively, very bullish.

BRL gained 4%.

The Brazil equity ETF soared 11%, and rates repriced 180 basis points in easings in just two sessions.

What does all of this mean for BRL? Is there still potentially a path for a BRL positive story, or has that gone completely out of the window at this point?

How crowded is that position at the moment?

That's a very good question.

So we just got some reports that last week the ETF for Brazil saw the biggest inflows.

This is in the equity market.

There were $2.8 billion of inflows.

We have also seen a number of investors go into the bond market, but they are hedging their assets by being short VRL, so long dollar Brazil.

Our report says that the market is short 18% of the max historic, but this is not truly reflecting the positioning because, as I mentioned, some of the key investors in equities and fixed income are playing long dollar Brazil as a proxy hedge into the second round, which is on October 25th.

Okay, so closely watching Brazilian politics, but taking a step back, what do you think are the biggest risks to hedge into the turn of the year, Luis?

So why are you not seeking carry there for now?

Good question, Abbas.

Brazil exposure and high carry are supportive, but BRL is no longer trading purely on economics.

US Treasury yields are testing new highs, making EM carry hard to own.

At the same time, the recovery in Japanese yen signals that investors may be reducing leverage carry positions.

And Brazil election is among the way.

And given this backdrop, Brazil is particularly sensitive.

Luis, how do you think trade tensions between the US and Canada can affect Mex in the medium term?

What is the status of this theme since our last update?

Hi, Dasha.

Unfortunately, the summer of soccer theme is over early.

We're back in a risk-off regime driven by mainly three forces, the AI equity volatility, the renewed Federal Reserve hiking fears, and the rising oil prices.

In a word, geopolitics are driving macro.

If you recall, by mid-July, Fed hiking expectations had dropped towards zero.

But as soon as the Iran war hostilities restarted and all spiked, Latin American currencies surrendered most of their earlier July gains as risk sentiment deteriorated.

What is your current view on high-yielding currencies in Latin America, and specifically the Brazilian real?

Luis, what are your thoughts on the outcome and the market implications of that outcome?

Good question, Abbas.

The first round for the presidential elections will take place next, uh, Sunday, 31st.

For a candidate to win, he or she needs more than 50% of the votes.

There are three main candidates.

In first place is the left-wing candidate, Iván Cepeda, who's representing President Petro, and whose Petro is, uh, very strongly campaigning for him.

Cepeda is ahead on the polls.

Luis, how do you see the potential Strait of Hormuz reopening impacting LatAm assets?

What do you think the market is pricing as the base case for the Iran conflict, and where do you see the risk-reward in Latin America into the summer months?

Hi, Dasha.

Our base case remains de-escalation as the likely path of Iran negotiations.

Markets have recovered significantly from the lows seen in late March, and in some cases, even surpassed pre-conflict levels, Brazil being a clear example.

We're cautiously expecting the Strait of Hormuz to reopen and the conflict to shift into a phase where markets focus on second-order effects.

However, given the current pricing and positioning, we observe that the risk-reward is becoming less attractive.

Our key theme remains carry BRL oil exporters.

What about the region's central banks? How are they responding to the energy shock?

What is our view on the impact of these tariffs rollback on Latin America?

I think Dasha was, uh, quite comprehensive on the framework on the short-term and the long-term effects of this tariff rollback.

I want to drill down on two countries, Brazil and Mexico.

Brazil was, on the surface, the biggest winner.

The FT estimated Brazil saw, uh, the largest construction in their net tariff rate, around thirteen percent, which helped fueled Real's outperformance yesterday.

But there is a nuance: Only about twenty percent of Brazil's exports to the US were actually subject to these higher tariff.

Fifty-one percent of them were exempt, and some other twenty-three percent had a different, uh, reference for the tariff.

Does this view still hold?

Luis, what are the key dates to watch for FX investors?

Richard, market cares less about election day and more about the early signals.

The first and most important one, I think, is Colombia.

March 8th, congressional elections will matter ahead of the May presidential round.

Secondly, in Peru, April 12th, when we will have their first, eh, election round, usually FX benign, but we can see surprises.

Uh, number three, very important, in Brazil, April, this is when we get the clarity of who's gonna be running for presidential candidates, and this is something there's a lot of speculation around.

And one more thing.

What's our preferred trade in Latin America in twenty twenty-six?