Brazil Acting President Hailed by Markets But Hands May Be Tied

Brazilian Vice President Michel Temer is pictured during a meeting at the Senate official residence in Brasilia, on April 27, 2016. Brazilian President Dilma Rousseff is fighting for her political survival at home following allegations that she used illegal accounting maneuvers to mask budget deficits during the 2014 election year. / AFP / EVARISTO SA (Photo credit should read EVARISTO SA/AFP/Getty Images)

To many investors, he seems to be riding in on a white steed, a seasoned insider who will turn around an economy of epic failure and enormous potential.

Michel Temer has been the number two to President Dilma Rousseff of Brazil and now, with her temporary ouster, takes charge, buoyed by an almost evangelical market faith in him, as seen by the real’s spike — the world’s best-performing currency this year — and bond yield’s plunge. It is widely expected that Rousseff will not return to power.

But the conviction that Temer simply can’t fail is belied by the extraordinary challenges this 75-year-old constitutional lawyer faces: near double-digit inflation, rising unemployment, the worst recession in over a century and a multi-billion-dollar scandal that is lapping at his heels.

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