Legal Insecurity and AI: The invisible risk to the market ahead of elections

The Superior Electoral Court's (TSE) indecision regarding the use of artificial intelligence just five days before free electoral airtime is not merely a legal hurdle, but a vector of institutional volatility directly impacting the business environment. The Court's hesitation to consolidate rules on deepfakes creates a predictability vacuum that reverberates through the market, increasing the risk premium on Brazilian assets. With the Selic rate fixed at 14.00% per year, investors are already operating under maximum capital cost pressure; adding uncertainty regarding the integrity of the electoral process provides the fuel for foreign capital—observing the USD/BRL at R$ 5.16—to resume a stance of extreme caution or flight to more stable markets. Historically, the Brazilian capital market reacts with liquidation whenever institutional clarity is replaced by noise. We have observed a 0.46% downward trend in the dollar over the last 30 days, a sign of respite that could be quickly reversed if electoral ambiguity escalates. The persistence of 4.44% inflation over 12 months already imposes a severe challenge to purchasing power and the real profitability of investments. When the TSE postpones crucial decisions on generative technology, it affects the backbone of economic agents' confidence, who seek stability to allocate resources in a scenario of structurally high interest rates. This is the sixth consecutive negative analysis in our records regarding institutional fragility and its impact on social costs, reinforcing that 'Brazil risk' is not only fiscal but operational.