"Flávio Bolsonaro has moved marginally ahead of Lula in a potential run-off, with the race effectively tied," Daniel Lavarda, HSBC's head of Brazil macroeconomic research, wrote in a note to clients on Tuesday. 

Lavarda said, "Worsening approval ratings weigh on Lula's prospects, reducing probability of re-election to 18% (per to our model)," adding, "With the race tied up, the outcome will hinge on late-campaign developments, turnout and ability to mobilize voters." 

Lavarda's latest note on the Brazilian election continues the theme that the right-wing challenger, Bolsonaro, has a real chance of defeating the unhinged socialist, President Luiz Inácio Lula da Silva. That theme largely began when Polymarket's election odds flipped to a Bolsonaro lead on September 10.

Now, the Polymarket bet, with nearly $154 million traded, shows Bolsonaro leading at 59% versus Lula's 41%.

On Tuesday at the United Nations General Assembly in New York, Lula cried foul, saying that countries shouldn't interfere in the internal affairs of other nations.

"We will not allow the enemies of democracy, whether domestic or foreign, to undermine popular will. Brazilian democracy belongs to Brazilians. Brazil will continue to be a sovereign country," Lula said. "Nobody will turn us away from this path."

Meanwhile ... 

Lula's speech comes as the prospect of a Bolsonaro win has shifted foreign capital flows back to Brazil. Goldman analysts found, after surveying 70 global investors, that EWZ, the US-listed Brazil equity ETF, could be set up for a 20% surge if the right-wing candidate wins.

Our technical analysts at The Market Ear see far greater upside in Brazilian stocks if a Bolsonaro win materializes early next month:

A Bolsonaro win would cement a rightward shift across much of South America as millions reject nation-killing progressive experiments.