Analysts from Brown Brother Harriman, warned again investor about being overly bullish about the growing likelihood of a new government. Key Quotes: “Reports suggest Rousseff is willing to exhaust all legal avenues against impeachment, which would include appeals to the Supreme Court. She has also portrayed the impeachment as a coup, which is a highly charged term in Brazil. This will likely lead to further protests and heightened social unrest as the impeachment process continues. “What could markets expect from a new government? With the odds now seeming to favor Vice President Temer eventually taking power, press reports suggest he has begun drawing up plans to form a transitional government.” “Yet we still think markets have gotten overly optimistic on Brazil from the potential for political change. Whoever the next president is, they will be saddled with a weak economy and terrible fundamentals. Going forward, we posit that the days of massive BRL (and Brazil) outperformance are likely over for now.” “With the central bank conducting reverse swaps and oil down 3% today, we may not get a clean read on BRL until later this week. For spot USD/BRL, recent lows near 3.46 are likely to provide a near-term floor. Retracement objectives from the January-April drop come in near 3.7325, 3.8165, and 3.90.” For more information, read our latest forex news.