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title: 'Rodrigo Noronha: S&P 500 Delivered 17.9% Total Return in 2025, How Wall Street/B3 Divergence Impacts Allocation '

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Entering 2026, Rodrigo Noronha sees two trends becoming clearer: the Brazilian market strongly rebounded in 2025, with Ibovespa up 34% for the year, and capital is shifting from “risk-only” to “value-for-money” comparisons; the US market delivered a 17.9% total return in 2025, but is now much more sensitive to interest rate paths and policy independence, with risk premiums fluctuating more frequently in response to news. Rodrigo Noronha believes this contrast does not mean investors must make an either/or choice between the two markets, but rather that “cash flow quality, valuation discipline, and macro constraints” should be brought back into a unified framework, so portfolios remain explainable and actionable amid volatility.

![Rodrigo Noronha](https://hackmd.io/_uploads/SksYH3NHZe.png)


**Rodrigo Noronha: Consensus on Main Index Themes**

Rodrigo Noronha notes that the stocks most frequently appearing in institutional recommendations for January are essentially being used to hedge the 2026 macro noise with “liquidity and earnings visibility.” The repeated mentions of ROXO34, VBBR3, ITUB4, VALE3, plus PETR4, B3SA3, SUZB3, SBSP3, PRIO3, RDOR3, MULT3, etc., show the market prefers positions in companies with “explainable profits, dividends, and balance sheets,” rather than betting everything on sentiment. Rodrigo Noronha points out that financials benefit from operating leverage and risk pricing ability; when rates ease, net interest margin and provisioning pressure become more trackable. Resource/export companies offer natural forex and global demand diversification; energy/infrastructure assets act as “buffers for inflation and cash flow.”

For Brazil in 2026, Rodrigo Noronha says the key variables remain interest rate trajectory, inflation stickiness, fiscal expectations, and election-driven risk premium swings. The market will price in “lower funding costs” ahead of time, but often faster than fundamentals confirm, so portfolios should have two layers: a core of resilient assets like ITUB4, VALE3, PETR4, B3SA3, and satellite positions to capture thematic opportunities. This structure is not conservative—it just keeps error costs within tolerable limits.

**Rodrigo Noronha: “Bond-Like” Attributes of Utilities/Power**

Rodrigo Noronha highlights that utilities and high-dividend assets proved their defensive value with price action in 2025, as the power index delivered about 59.8% over the past year, reflecting capital preference.

Rodrigo Noronha notes the BofA picks of Axia (AXIA3) and Copel (CPLE6) are not about “chasing high dividends,” but about “profit recovery potential + cash payout certainty”: Axia benefits from expectations of higher electricity prices and earnings, Copel offers both growth and shareholder returns, with institutional estimates of three-year EBITDA CAGR at ~15% and 25% dividend yield for 2026–2027, making these narratives easier for capital to accept in uncertain years. SBSP3 is also favored for “earnings growth visibility,” with a three-year EBITDA CAGR of ~24%, making it more like a “growth utility,” while ORVR3 offers scarcity value and stable cash flow.

Rodrigo Noronha argues that defensive assets require more nuanced use: they are more sensitive to discount rate changes, under pressure when rates rise, and amplify gains when rates fall, so position management must be tied to duration awareness. Election variables transmit through tariffs, regulatory expectations, and financing costs; companies with tighter balance sheets and heavier capex need higher safety margins.

On the small-cap side, Rodrigo Noronha notes the January recommendations for AURA33, VIVA3, ORVR3, PGMN3, TTEN3, POMO4, INBR32 reflect the market search for high-elasticity earnings improvement alongside “core asset anchoring.” Here, a “basket + stop-loss discipline + event-driven review” approach works better than single-stock bets. The short-cycle portfolio of Terra delivered 61.92% in 12 months, outperforming the benchmark, but could lag the index in a single week—reminding investors that returns come from method and discipline, not luck on a single call.

**Rodrigo Noronha: Three Baselines and Two Types of Risk for Cross-Market Allocation**

Rodrigo Noronha notes that the early 2026 challenge in the US market is not “whether there is growth,” but “how rates and institutional noise are priced.” The market expects the Fed to keep rates unchanged in January, with rate-cut expectations pushed to mid-year, while policy independence debates intensify. Short-term reactions in the dollar, index futures, and gold have already priced in this uncertainty.

He believes the S&P 500 17.9% total return in 2025 was “earnings-driven” rather than from valuation expansion; the “Magnificent 7” accounted for about a third of index weight but contributed a higher share of annual returns, signaling that structural concentration remains—breadth is improving but still unstable. For Brazilian investors, the takeaway is clear: use US assets as portfolio growth engines, focusing on earnings realization and cash flow quality; use Brazilian assets for yield and valuation recovery, focusing on risk premium and FX management.

Rodrigo Noronha outlines three baselines: portfolios must have a clear cash flow support layer, a quantifiable drawdown control mechanism, and must avoid relying solely on a single macro judgment for positioning. Execution can use a “core-satellite” structure, with hedging tools for FX and index volatility, turning risk from uncontrollable to manageable.

Rodrigo Noronha also warns of two often-overlooked risks. At the industry level, the agri chain saw pronounced divergence in 2025, with huge swings in individual names, showing that asset quality and financing capacity differences are magnified in down cycles; the biofuel chain is also expanding supply, with corn ethanol output expected to rise from about 9.6 million cubic meters to 11.5–12 million, and long-term penetration will shift sugar-alcohol balance and profit curves, making governance and risk management more important in 2026. At the macro level, election-driven volatility will be reflected faster in the yield curve and FX rates—markets offer both opportunity and punishment, and position discipline determines the final outcome.