Brazil’s Bolsonaros Are Back

The Sun of Brazil's imprisoned former president teased up a potential comeback for the Bolsonaro's. Plus, we'll look at the multiple security failures that allowed a fly-do-by pilot to nearly bring down an Israeli-bound plane last week. "Why did he never appear in any regional database when he was born from flying because it's considered a risk?" And the Euro slips as Spain heads for snap elections amid nationwide affordability protests. It's Monday, October 5th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Get ready to hear the names Bolsonaro and Lula again in the coming weeks. Brazil held a first round of elections yesterday with Flavio Bolsonaro, the eldest son of an imprisoned former president, Jair Bolsonaro, netting the most votes. Trailing him, 80-year-old incumbent Luis Sinacio Lula de Silva, both will now head to an October 25th run-off. Our Brazil correspondent Samantha Pearson says that's a surprise result, and major victories by conservatives and congressional and state elections yesterday show the strength of right-wing sentiment in Brazil that no major pre-election polls had captured. Brazilian conservatives scored victories across the country. Jair Bolsonaro himself is by his running. He was convicted of plotting a coup after the 2022 election and his underhouse arrest serving a 27-year prison sentence. But his political movement is quite literally breeding. His son Carlos was elected to the Senate on Sunday. His youngest son, 28-year-old Jair Hinnon, he also won a seat in the lower house. His son Carlos' wife, Micheli, was also elected to the Senate and his brother Hinnon at all, won a seat in the lower house too. Now, the race is not over. There are three weeks of campaigning left. A lot could happen, but history is not on Lula's side here. So every time the Brazil has had a presidential run-off, the candidate who came first in the first round has gone onto in the election. So Lula faces a very difficult fight for me. And a loss now for Lula would be devastating for him the end of his political career, but it would also be devastating for the left more generally, given that his workers' party still has no obvious successor. And Samantha added that the White House is likely to be watching the presidential run-off with great interest. Trump has not officially endorsed the candidate, but he has closed ties to their Bolsonaro family. They're aligned on issues such as public security or other world issues. South America, as a whole, has shifted sharply to the right over recent years with conservative candidates winning a string of presidential elections in Argentina, Colombia, Peru. But Brazil is left in America's biggest country, its biggest economy. So if the right wins here on October 25th, it would perhaps be the most significant victory yet in the region's rightward shift and bring its biggest remaining holdout much closer into alignment with President Trump. The U.S. has removed all of its B1 bombers from the U.K. military base that had been a hub for launching airstrikes in Iran. American officials said the planes were sent back to the U.S. over security concerns following the arrest of six men on suspicion of plotting a terror attack against the facility. U.S. officials have said they were aware of an Iran-linked plot to recruit U.K. citizens to attack the bomber aircraft and kill personnel at the base. The suspects were released on bail, a decision that President Trump has criticized. Some British officials have questioned the level of sophistication of the planned attack. The U.K. Ministry of Defense declined to comment. And we've learned that security failures in three countries enabled a fly-do-by pilot to overcome a flying ban imposed by Oman and re-enter the cockpit before nearly bringing down an Israel-bound flight last week after stabbing his co-pilot. Our Middle East correspondent, Benoit Foucault, has the latest. Failure number one is he was training, you know, to be a pilot in Oman. The authorities discovered he was browsing his web sites, put him on the desk job and him to fly. And that wasn't shared when he got hired at fly-do-by a few years later. Second failure is he got hired in fly-do-by because they only do criminal checks. And the issue was not criminal in nature, so he got the job. And the third failure is that he was allowed to fly to Israel. Israel doesn't allow pilots from countries who don't recognize Israel to fly into a territory. The manifest for every of these flights and the list of crew is shared with Israel by the UAE and other countries. And yet, as an Omani from one of these countries that is banned, he was allowed to fly this time, but also last week and several times. Israel's tax authority maintains a database of flyer information, but the country's ministry of transportation, which oversees foreign carriers, said it didn't believe it had the authority to vet flight crews and had never asked for a passenger or a crew list since the database was set up in 2023. The UAE declined to comment while an investigation is ongoing, and a spokeswoman for the Omani government didn't immediately respond to a request for comment. The euro is slipping and stocks in France and Spain have sold off amid concerns over budgets and political unrest in both countries. This morning, Spain's Socialist Prime Minister Pedro Sanchez called snap elections amidst nationwide protests over high housing costs. Last week, opposition parties joined forces to block two emergency measures in parliament aimed at reducing evictions and real estate speculation. polls suggest that the conservative popular party would win the most votes in an election and could command a parliamentary majority alongside the far right vox party. The election will be held at the end of November. A similar political standoff in France last week over the country's budget pushed French yields higher with other indebted countries like Spain and the UK also seeing their bonds sell off. A trend that's continuing this morning with Treasury yields ticking lower as a result. Looking to the week ahead, the Fed's September meeting minutes are set to arrive on Wednesday, offering investors clues on whether another interest rate hike is coming. Prospects for an October rate increase fell to just 18 percent after last month's US job growth came in weaker than expected. An earnings season is kicking into gear with the likes of Levi Strauss, Delta Airlines and PepsiCo, reporting third quarter numbers this week, but that may soon become a thing of the past as the Securities and Exchange Commission continues to consider cutting quarterly reporting obligations for public companies instead making them semi-annual. Former SEC enforcement attorney Mark Steinberg spoke to WSJ's Take on the Week podcast about how the controversial proposal could impact US capital markets. The mandatory disclosure framework with its relatively vigorous enforcement by the SEC has helped enable the US capital markets to remain the foremost markets in the world. What the Commission is doing here is taking the risk of upsetting the US prominent stature, a risk that is utterly unnecessary to take. Furthermore, Chairman Atkins, one of his missions is to induce companies to go public. And he thinks that this type of going to semi-annual reporting will help induce companies to do this. Along, first of all, the companies are already engaging in these quarterly financial review activities. The cost savings are minimal as shown by the Commission's own studies, and thirdly, if the Commission really wants to encourage and facilitate companies to go public, what they must do is to restrict the private offering rules. President Trump has long been a proponent of the idea and briefly exported in his first term. And despite public backlash, the SEC is expected to move forward with a version of its proposal. Coming up, the US says that Iran is getting better at targeting oil tankers in the Strait of Hormuz, making transits riskier just after oil had started to flow again. That story, after the break. A fresh wave of attacks on ships in the Strait of Hormuz is threatening to derail the recovery in Middle Eastern oil exports. We reported last week that crude shipments are back at pre-war levels thanks to US naval escorts through the waterway. But now, Britain's maritime security agency says there have been at least seven strikes on vessels in the past week. The hit tankers are conducting so-called shuttle runs where they deliver the oil to ships waiting off of the coast of the UAE and Oman. Over analysts say that practice is expensive, and with the new attacks may not be sustainable. Meanwhile, dozens of Iranian-linked tankers that are participated in the shadowy trade of getting sanctioned oil to China are stuck in the waters near Sri Lanka and Malaysia. That since the US reimposed its blockade of the Strait of Hormuz in July. Journal correspondent John Emont has been tracking Iranian oil tankers since the start of the war, including the oil-laden ships that got through the strait transferred that oil to other ships at sea and ultimately delivered Iranian oil to buyers in China. But now, the practice of subterfuges ending. holes, so they're just stranded there in the waters waiting. Many of the ships went from the coastal waters near Malaysia to to waters near Sri Lanka where they've traditionally been able to get provisions and get crude changes, but the U.S. government has borne down in recent weeks, so as part of Operation Outcast, which the U.S. lost in late August, they're really trying to cut off any avenues of revenue for the Iranian regime, and that has included networks that are supplying and provisioning these ships. And Sri Lanka is terrified of getting sanctions. They've got a fairly vulnerable economy that's very annoying on the U.S. dollar, and so the Sri Lanka government has made it much more difficult, someone saying possible, to actually provide provisions to these Iranian ships. So they're floating there and then without fresh food, in many cases, without fuel changes. But as John explains, the floating ships are a sign that the U.S. blockade is working. "The lifeblood of the Iranian economy is being cut off. Analysts who track this think that Iran is going to run out of almost any oil to sell in the next few weeks. That means revenues are going to stop not long after, and that's going to be really tough for the Iranian economy. And of course, the regime has been resilient, so this isn't to say that things will just collapse overnight or anything, but definitely this will be tougher and certainly it will be tougher for the Iranian people." Well, adding to those concerns says the prospect of a global food crisis, according to the International Chamber of Commerce. While public attention has largely focused on surging oil prices, shipping disruptions in the Strait of Hormuz are choking off exports of fertilizer, one-third of which run through the waterway. Fertilizer stockpiles have fallen by nearly 40 percent since the Strait was disrupted, forcing farmers to delay purchases or cutback on crop nutrients. If no progress is made, the Chamber predicts that prices of food staples like cereal could soar up to 80 percent. And Warner Bros. knew $125 million political satire digger, starring Tom Cruise as a polluting oil tycoon, among other roles, has flopped at the box office with an estimated $8 million domestic opening. That dismal debut highlights the growing difficulty of drawing audiences to original non-horror films. That says A24's eerie back rooms opened with more than $80 million at the box office. And obsession, the horror film written and directed by a 26-year-old film school dropout opened with more than $26 million and only cost around $700,000 to make. Digger marks the final release from Warner Bros. before its acquisition by Paramount closes tomorrow. And that's it for what's news for this Monday morning. Today's show was produced by Hadi Moyer and Daniel Bach, our supervising producer, Sandra Killhoff, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a news show, and until then, thanks for listening.