The market is unsettled by Lula’s plan to increase spending in Brazil.

Luiz Inácio Lula da Silva campaigned to maintain a generous welfare
program, raise the minimum wage, and increase funding for health care and
schools. Now that he has taken office, Brazil’s new president is trying to
deliver on his campaign promises, and investors are getting nervous.

On Wednesday night, Da Silva’s transition team gave Congress a summary of a
proposal to circumvent a constitutional spending cap by carving out an
exception for welfare. Later on Thursday, he reinforced this stance during
the climate talks in Egypt, saying that he cares not to know if his
aspirations to head a socially responsible administration cause nervous
speculators to sell off.