The lion of the Latin American left pulled off yet another impossible comeback, but now he has to accomplish what he’s failed to do for the past four years.

By Martha Beck, Simone Iglesias, Augusta Saraiva and Vinicius Andrade Lula lies in a satin-lined coffin, looking almost saintly. Then, in an instant, he is rising and grabbing his opponent, Flávio Bolsonaro, by the throat. The viral video, one of countless AI memes that followed Brazil’s historic vote on Sunday, captured the evening’s astonishing reversal: Luiz Inácio Lula da Silva cheated political death to become the only man ever to win four Brazilian presidential elections. The question now is, what kind of leader have voters resurrected?

In front of a sea of supporters on Sunday night, Lula insisted that even an octogenarian can change. The veteran leftist, who turns 81 on Tuesday, pledged to adapt his approach to governance and to bridge the stark divides that define modern Brazil. But from Sao Paulo’s financial sector to the halls of power in Brasilia, investors and even some allies are betting the opposite is true, that the scale of Lula’s win will only deepen his belief that he alone understands what it takes to steer Latin America’s largest economy.

Markets sold off in record fashion on Monday morning, fueled by fears that Lula will pursue tepid measures to address Brazil’s fast-deteriorating fiscal situation. Some $6 billion in equity sales that had been lined up for after the vote, which investors and bankers thought would go in Bolsonaro’s favor, were thrown into disarray.

Two decades ago, Lula’s economic stewardship led to rapid growth, a reduction in poverty and budget surpluses — a combination that turned him into “the most popular politician on Earth,” as then-President Barack Obama called him. Today, Brazil’s fiscal strains are no longer an abstract concern for investors and policymakers. High interest rates are beginning to suffocate the economy, and households are drowning in record debt, threatening poor and working-class voters who make up Lula and his Workers’ Party’s primary support.

Even just three weeks ago, few in Brazil were thinking about another four years of Lula. Bolsonaro won a first round of voting on Oct. 4, and since Brazil returned to democracy in the 1980s, every candidate who’s done that has prevailed. The prospect of a right-wing administration excited investors, who saw the son of former President Jair Bolsonaro as more likely to cut spending and balance budgets.

Faced with the prospect of defeat, Lula overhauled his electoral strategy. According to one person with knowledge of the campaign’s inner workings, who asked not to be named in order to talk about private matters, Lula’s allies sat him down after the first-round results for a heart-to-heart. One adviser asked Lula to think of the largest rally he had ever attended. The candidate recalled a demonstration in the 1980s that drew some 500,000 Brazilians. The adviser then showed him a single Instagram video his campaign had posted. It had 9 million views.

Lula ultimately put younger advisers in charge of his social media strategy and even got his first mobile phone, adopting technology he’d long insisted he didn’t — and would never — need. He started recording selfie-style videos on social media and joined a WhatsApp channel dubbed “Lula’s Army,” where some 11 million supporters rallied behind him.

Part of the comeback didn’t require Lula to leave his comfort zone. Ahead of the first round of voting, the government increased benefits under Brazil’s flagship social welfare program by 15%. After the results came in, it decided to move up the date of payouts to ensure beneficiaries received them before the second round of voting. Lula also announced debt relief for “microentrepreneurs,” the latest in a wave of largesse throughout the year.

It was a use of public machinery that has served Lula well in the past, but one that’s becoming increasingly difficult to pay for. It also suggested that the president, who has long believed in spending to drive growth, may continue that strategy over the next four years. No matter that Brazil’s deficits have grown to an enormous 10% of gross domestic product and that public debt has risen above 80%.

Lula, who was first elected amid Latin America’s so-called Pink Tide of leftists in 2002, won over markets during his first presidency by maintaining budget surpluses even as he expanded welfare spending. It was easier back then, when Brazil was a chief beneficiary of a global commodities bonanza. Several allies say the Lula of that era was more willing to listen to a diverse array of voices, even when they challenged him, and to reach out to investors and business leaders he’s largely shunned over the past four years.

During his first presidency, Lula also regularly held weekend barbecues with ministers and politicians from other parties, and forged coalitions with congressional leaders over whiskey in his office. But after returning in 2022, he chose cabinet ministers in part based on the loyalty they’d shown while he was in prison. Multiple people said he turned to a smaller group of allies, many of whom lacked the courage to challenge him.

Several people close to the campaign told Bloomberg News that Lula’s near loss taught him that he now needs to reach beyond his inner circle and rebuild relations with segments of Brazil he’s ignored, including middle-class voters. That, some allies said, will require giving investors and business leaders a greater role in defining his agenda. Edinho Silva, the head of the Workers’ Party, said in a television interview on Monday that Lula wants to meet with business leaders and will be fiscally responsible.

Still, the president isn’t likely to alter the way he views fiscal policy. He’s made clear that he intends to pursue modest adjustments over the next four years, with a goal of achieving a primary budget surplus, excluding interest payments, of 1.5% of GDP by the end of his next term, far short of what investors want.

Across trading floors from Sao Paulo to New York, the scale of the upset stunned seasoned money managers, with some calling it one of the biggest political shocks they had witnessed in their careers. Investors who had spent weeks positioning for a Bolsonaro victory suddenly found themselves on the wrong side of the trade and watched portfolios suffer their worst day of the year.

The turmoil also laid bare investors’ fears about which Lula they will get. The largest exchange-traded fund tracking Brazilian stocks plunged as much as 26%, its biggest intraday decline since the fund was introduced in 2000. The real suffered its steepest drop in more than two decades, while interest-rate swaps surged so drastically that the exchange was forced to widen trading limits.

One early sign of which direction Lula may take will be who he chooses to run Brazil’s economy. Among the names being discussed are Vice President Geraldo Alckmin and Piauí Governor Rafael Fonteles, who helped bolster Lula’s campaign during the runoff, according to two government officials with knowledge of the situation.

Some in business are fond of Fonteles, seeing him as someone who governed capably and would represent a new generation of leaders from within Lula’s Workers’ Party. Alckmin is a veteran of Brazil’s centrist establishment who made friends with Lula, a former political nemesis, after the rise of the Bolsonaros. He’s generally viewed favorably in market circles.

Lula, in what will be his final term in office, is unlikely to want his legacy defined by fiscal austerity, according to allies and people in financial markets. Instead, they expect him to prioritize economic growth and efforts to reduce inequality. While Lula returned to power in 2023 at the head of a broad coalition, he still entrusted the Finance Ministry to Fernando Haddad, a longtime Workers’ Party ally. People close to the president expect him to follow a similar approach this time.

That doesn’t mean Lula is expected to abandon fiscal discipline altogether, the people said. The president will have considerably less room to accommodate large increases in spending than he did at the start of his previous term, and allies don’t expect a repeat of the so-called transition amendment, which allowed his government to significantly expand expenditures. Instead, additional spending would have to be accommodated within a much tighter budget, forcing the administration to balance Lula’s push for growth and social policies against increasing fiscal constraints.

The ultimate answer to the overarching question of Lula’s final term will likely lie in the lesson he takes away from the most improbable comeback of his career. He’s spent his life overcoming bad odds. Born into abject poverty and with little formal education, he rose from the factory floor to Brazil’s highest office. He survived cancer and a corruption conviction that sent him to prison for almost two years before it was ultimately annulled. And he has now twice vanquished members of a family whose entire political identity is based on opposition to him. Few politicians in Brazil, or elsewhere, could command so many adoring supporters.

And yet, the election may have gone his way in large part because the advisers who took command of Lula’s social media understood the vote was less about Lula himself than it was a repudiation of Bolsonaro.

In any case, cooperation and moderation may be forced upon Lula. Brazil’s new Senate is set for a sharp turn to the right, after Bolsonaro’s party made sweeping gains in downballot races earlier this month. That will leave Lula little choice but to once again find ways to work with centrist and right-wing parties if he wants to get anything done.

Lula’s biggest global frenemy weighed in on Monday afternoon. US President Donald Trump, who hammered Brazil with tariffs in a bid to help the Bolsonaros over the past two years, said that from his perspective, the election looked as if it may have been “rigged.”It appeared to echo claims from Bolsonaro, who’s said he’ll challenge the results. But then Trump added: “I like Lula.”