"...and by the time the warrant hit the wires I had fourteen screens open and all of them were the same colour," said the managing partner of Capitulation Capital, speaking from a stairwell in São Paulo. His fund runs the Bolsonaro Family Freedom Index, which tracks how many members of the family are not currently wanted by a court. On Thursday a Brazilian Supreme Court justice issued an arrest warrant for Eduardo Bolsonaro, brother of a presidential candidate. The index fell fourteen percent before lunch.
Sell-side desks (the people paid to find a bright side) called it an isolated event. I have heard that before. Bear Stearns was an isolated event. So was the first tulip.
Watch the second-order effects, which are the things that happen after the thing that happened. The warrant names one brother. The market has priced in one brother. Anyone who has looked at a family tree knows that is not how family trees work. (Lehman also had siblings.)
Capitulation Capital says it has hedged by going long the hearing calendar, a bet that the courts will stay busy. That is not a hedge. That is a prayer with a Bloomberg terminal attached.
