US elections, 'Brexit times ten'? We will find out in just over 24hrs - Westpac

Analysts at Westpac noted that the parallels between the UK referendum and the US election run deep, indeed Trump has described the US election as “Brext times ten”.

Key Quotes:

"Clinton’s campaign and the UK  “remain camp” both represent continuity and an “establishment” approach to trade and immigration. The “leave camp” and Trump have been portrayed as insurgent outsiders tapping into economic insecurity and deep antipathy to governing “elites” who favour restrictions on trade and immigration. Demographic trends supporting each side (i.e. urban vs non-urban voters, college degree vs non-college degree) follow similar trendlines too.

The parallels extend to polling and prediction markets as well. The FT’s poll of polls in the days into the UK vote gave a 2pt spread to the remain camp (48%-46%), while Real Clear Politics’ poll of polls favours Clinton with a 2.9pt spread (47.2%-44.3%). Prediction markets are similar too – the remain camp was given a 20% probability in the days just ahead of the UK vote while Trump is about a 1 in 5 chance according to Betdata.

We can’t take the Brexit parallels too far though – the US tax code is set to undergo far reaching changes under a Trump win and much depends on the outcome of down ballot House and Senate races, neither of which were considerations in the UK vote. A Trump victory is arguably a bigger deal for the global economy and markets than Brexit too. The US’ hegemonic position in the global economy - the largest economy and the main reserve currency - ensures an outsized and potentially more sustained global impact from a Trump presidency than Brexit."

 

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