As we’ve discussed the Trump administration has been very good for the broad stock market. It’s been even better for certain industries, and certain stocks that have been drawn into the periphery of the administration.
Goldman Sachs has been well represented in the auditions for cabinet members. And now we have an incoming Treasury Secretary with a Wall Street background as a partner at Goldman. That stock is up 27% since November 8th.
Today, the President-elect met with the Japanese billionaire investor Masayoshi Son. Over the past 35 years, Son has built one the largest and most powerful technology conglomerates in the world, a company called Softbank. He told the new incoming President that he planned to invest $50 billion into U.S. companies behind Trump’s economic plan.
So what does Son own that could benefit from a good relationship with the Trump administration? He owns the wireless carrier Sprint. In fact, he (Softbank) owns more than 80% of the company. No coincidence, Sprint was up 4% today on the news of his successful meeting.
Son is likely posturing put a Sprint/T-Nobile merger back on the table. Sprint walked away from efforts to acquire T-Mobile in 2014 after it was clear it would be blocked under increased antitrust enforcement under the Obama administration.
The combined entity would slingshot a “Sprint/T-Mobile” into a three way horse race for first place in the wireless carrier industry. Though the market is only valuing the combined entity at 15%, rather than one-third of the market. That makes both stocks potential doubles. We own Sprint in our Billionaire’s Portfolio.
Source: Statista.com
The Obama administration had its winners and losers (among the winners, outright funding to Tesla, Solarcity … partnerships with Uber and Facebook). Trump will as well. Keeping an eye on who walks into Trump Tower seems to be a good clue.
Follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up more than 24% this year. Join me here.
On Friday, we looked at five key charts that showed the technical breakout in stocks, interest rates, the dollar and crude oil.
All of these longer term charts argue for much higher levels to come. Remember, the big event remaining for the year is the December 14th Fed meeting. A rate hike won’t move the needle. It’s well expected at this stage. But the projections on the path of interest rates that they will release, following the meeting, will be important. As I said Friday, “as long as Yellen and company don’t panic, overestimate the inflation outlook and telegraph a more aggressive rate path next year, the year should end on a very positive note.”
On that note, today we had a number of Fed members out chattering about rates and where things are headed. Did they start building expectations for a more aggressive rate path in 2017, because of the Trump effect? Or, did they stick to the new strategy of promoting a view that underestimates the outlook for the economy and, therefore, the rate path (a strategy that was suggested by former Fed Chair Bernanke)?
The former is what Bernanke criticized the Fed as doing late last year, which he argued was an impediment to growth, as people took the cue and started positioning for a rate environment that would choke off the recovery. The latter is what he suggested they should move to (and have moved to), sending an ultra accommodative signal, and a willingness to be behind the curve on inflation — letting the economy run hot for a while (i.e. they won’t impede the progress of recovery by tightening money).
So how did the Fed speakers today weigh in, relative to this positioning?
First, it should be said that Bernanke also recently criticized the Fed for the cacophony of chatter from Fed members between meetings. He said it was confusing and disruptive to the overall Fed communications.
So we had three speakers today. New York Fed President William Dudley spoke in New York, St. Louis Fed President James Bullard spoke in Phoenix, and Chicago Fed President Charles Evans speaks in Chicago. Did they have a game plan today to promote a more consistent message, or was it a more of the disruptive noise we’ve heard in the past?
Fortunately, they were on message. Only Dudley and Bullard are voting members. Both had comments today that spanned from cautious to outright dovish. Dudley, the Vice Chair, wasn’t taking a proactive view on the impact of fiscal stimulus — he promoted a wait and see view, while keeping the tone cautionary. Bullard, a Fed member that is often swaying with the wind, said he envisioned ONE rate hike through 2019. That would mean, one in December, and done until 2019. That’s an amazing statement, and one that completely (and purposely) ignores any influence of what may come from the new pro-growth policies.
This is all good news for stocks and the momentum in markets. The Fed seems to be disciplined in its strategy to stay out of the way of the positive momentum that has developed. And that only helps their cause. With that, if today’s chatter is a guide, we should see a very modest view in the economic projections that will come on December 14th. That should keep the stock market on track for a strong close into the end of the year.
We may be entering an incredible era for investing. An opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more. For help, follow me in my Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 24% year to date. That’s more than three times the performance of the broader stock market. Join me here.
Tomorrow we get the last jobs report of the year. And unlike the other 11 this year, this one doesn’t have the same buzz surrounding it, even though we have a big Fed meeting coming in just two weeks.
Why? It’s no longer a Fed-driven (monetary policy-driven) world. The switch has been flipped. With the Trump presidency bringing structural change and fiscal stimulus to the table; the markets, the economy, sentiment that has hinged so tightly to each data point has become far less fragile.
Earlier in the week, I talked about the inflationary effect of an OPEC cut. That’s continuing to reflect in the interest rate market. The 10 year yield ran up to just shy of 2.50% today. On a relative basis, it’s a huge move. Given where it has traveled from, it looks like an incredibly dramatic and even a destabilizing move. But on an absolute basis, a 2.5% interest rate on lending your money for 10 years is peanuts (i.e. it remains a highly attractive borrowing environment).
And if we step back and consider where we were last December, when the Fed made its first move on rates, the market had priced in the rate hike, and stood at 2.25% going into the decision. Following the Fed’s move, the bond markets started expressing the view that the Fed had made a mistake in its projection that the economy could withstand four hikes over the subsequent 12 months. That’s what they were telegraphing. And for that, the bond market began telegraphing chances of a Fed-induced recession.
Given the events of the past month, and the outlook for a more pro-growth environment for next year, the message that the bond market is sending is simply a perfectly priced in 25 basis point hike by the Fed this month, into an economy that can withstand it. Imagine that.
The fact that the jobs numbers and the Fed are becoming a smaller piece of the market narrative is very positive. In fact, I would argue there hasn’t been a jobs report, with a Fed meeting nearby, that has been less scrutinized in eight years.
We may be entering an incredible era for investing. An opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more. For help, follow me in my Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 24% year to date. That’s more than three times the performance of the broader stock market. Join me here.
Over the past year we’ve talked a lot about the oil price bust and the threat it represented to the global economy. And in past months, we’ve talked about the approaching OPEC meeting, where they had telegraphed a production cut – the first in eight years. Still, not many were buying it.
Remember, it was OPEC created the oil price crash that started in November of 2014 when the Saudis refused a production cut. Ultimately the price of oil fell to $26 a barrel (this past February).
Their strategy: Kill off the emerging threat of the U.S. shale industry by forcing prices well below where they could produce profitably. To an extent it worked. More than 100 small oil related companies in the U.S. filed for bankruptcy over the past two years.
But it soon became evident that cheap oil threatened, not just the U.S. shale industry (which also turned out to threaten the global financial system and global economy), but it threatened the solvency of OPEC member countries (the proverbial shot in the foot).
The big fish, the Saudis, have lost significant revenue from the self-induced oil price plunge, starting the clock on an economic time bomb. They derive about 80% of their revenue from oil. With that, they’ve run up their budget deficit to more than 15% of GDP in the oil bust environment. For context, Greece, the well known walking dead member of the euro zone was running a budget deficit of 15% at worst levels back in 2009.
So OPEC members need (have to have) higher oil prices. Time is working against them. With that, they followed through with a cut today. Remember, back in the 80s when OPEC merely hinted at a production cut, oil jumped 50% in 24 hours. Today it was up as much as 10% on the news. But this cut should put a floor under oil in the mid $40s, and lead to $60-$70 oil next year.
All of this said, given the increase in supply from bringing Iran production back online, and from increasing U.S. supply, no one should be cheering more for the pro-growth Trump economy to put a fire under demand than OPEC, especially Saudi Arabia.
Now, as we discussed this week, oil has been a huge drag on global inflation. With that, the catalyst of a first OPEC cut in eight years driving oil prices higher could put the Fed and other global central banks in a very different position next year.
Consider where the world was just months ago, with downside risks reverting back to the depths of the economic crisis. Now we have reason to believe oil could be significantly higher next year. That alone will run inflation significantly hotter (flipping the switch on the inflation outlook). Add to that, we have a pro-growth government with a trillion dollar fiscal package and tax cuts entering the mix.
As I said yesterday, we may find that the Fed will tell us in December that they are planning to move rates more like four times next year, instead of two.
The market is already telling us that the inflation switch has been flipped. Just four months ago, the 10 year yield was trading 1.32%, at new record lows. And as of today, we have a 10-year at 2.40% — and that’s on about a 60 basis point runup since November 8th.
With that said, there has been a shot in the arm for sentiment over the past few weeks. That’s led to the bottoming in rates, bottoming in commodities and potential cheapening of valuations in stocks (given a higher growth outlook). As a whole, that all becomes self-reinforcing for the better growth outlook story.
And that reduces a lot of threats. But it creates a new threat: The threat of a collapse in bond prices, runaway in market interest rates.
But what could be the Fed’s best friend, to quell that threat? Trump’s new Treasury Secretary said today that he thinks they will see companies repatriate as much as $1 trillion. Much of that money will find a parking place in the biggest, most liquid market in the world: The U.S. Treasury market. That should support bonds, and keep the climb in interest rates tame.
We may be entering an incredible era for investing. An opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more. For help, follow me in my Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 24% year to date. That’s more than three times the performance of the broader stock market. Join me here.
Yesterday I talked about how an OPEC cut on oil production would/should accelerate the Fed’s plan for interest rate hikes next year.
Interestingly, the former Fed Chair himself, Ben Bernanke, wrote a post today on the internet talking about the Fed’s rate path and its quarterly projections (which we looked at yesterday).
Like his post in August, where he interpreted a shift in the Fed’s communications strategy for us, the media, which is always following the latest shiny object, didn’t pick up on it then, didn’t pick up on his message about the Bank of Japan’s actions in September, and has barely reported on his new post today (to this point).
When Bernanke speaks, for anyone that cares about the direction of markets, interest rates and the economy — we should all be listening.
Let’s talk about some of the nuggets Bernanke has offered in recent months, to those that are listening, through simple blog posts. And then we’ll look at what he said today.
Remember, this is the man with the most intimate knowledge of where the world has been over the past decade, what it’s vulnerable to, and what the probable outcomes look like for the global economy. He advises one of the biggest hedge funds in the world, the biggest bond fund in the world and one of the most important central banks in the world (the BOJ), and clearly still has a lot of influence at the Fed.
Back in August he wrote a piece criticizing the Fed for being too optimistic in its projections for the path of interest rates. He said that the Fed’s forward guidance of the past two years has led to a tightening in financial conditions, which has led to weaker growth, lower market interest rates and lower inflation. In plain English, consumers and businesses start playing defense if they think rates are on course to be dramatically higher, and that leads to lower inflation and lower growth. The opposite of the Fed’s desired outcome.
With that, Bernanke thought they should be taking the opposite approach, and suggested it may already be underway at the Fed (i.e. they should underestimate future growth and the rate path, and therefore possibly stimulate economic activity with that message).
It just so happens that Yellen has been speaking from this script ever since. They’ve ratcheted down expectations of the rate path, and in her more recent comments she’s said the Fed should let the economy run hot (to give it some momentum without bridling it with higher rates).
Then in September, after the BOJ surprised with some new wrinkles in their QE plan, Bernanke wrote a post emphasizing the importance of their new target of a zero yield on their 10 year government bond. The media and markets gave the BOJ’s move little attention. It was as if Bernanke was acting as the communications director for the BOJ.
He posted that day saying that the BOJ’s new policy moves were effectively a bigger QE program. Instead of telling us the size of purchase, they’re telling us the price on which they will either or buy or sell to maintain. He said, if the market decides to dump Japanese government bonds, the BOJ could end up buying more (maybe a lot more) than their current 80 trillion yen a year.
Bernanke also called the move to peg rates, a stealth monetary financing of government spending (which can be a stealth debt monetization). The market has indeed pushed bond prices lower since, which has pushed yields back above zero, and as Bernanke suggested, the BOJ is now in unlimited QE mode (buying unlimited amounts of bonds as long as the 10 year yield remains above a zero interest rate). That’s two for two for Bernanke interpreting for us, what looks like a complicated policy environment.
So what did he talk about today? Today he criticized Fed members for sending confusing messages about monetary policy through their frequent speeches and interviews that take place between Fed meetings. But most importantly, he seemed to be setting the table for another 180 from the Fed on their economic projections at their December meeting.
Remember, they went from forecasting four hikes for 2016, to dialing it back dramatically just three months into the year. Now, with the backdrop for a $1 trillion fiscal stimulus package finally coming down the pike, to relieve monetary policy, the outlook has changed for markets, and likely the Fed as well.
With that, Bernanke seems to be trying to give everyone a little heads up, to reduce the shock that may come from seeing a Fed path, in it’s coming December projections, that may/will likely show expectations of more aggressive rate hikes next year — perhaps projecting four hikes again for the year ahead (as they did into the close of last year).
We may be entering an incredible era for investing. An opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more. For help, follow me in my Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 24% year to date. That’s more than three times the performance of the broader stock market. Join me here.
In my November 2 note (here), I talked about three big changes this year that have been underemphasized by Wall Street and the financial media, but have changed the outlook for the global economy and global markets.
Among them was Japan’s latest policy move, which licensed them to do unlimited QE.
In September they announced that they would peg the Japanese 10 year government bond yield at ZERO. At that time, rates were deeply into negative territory. In that respect, it was actually a removal of monetary stimulus in the near term — the opposite of the what the market was hoping for, though few seemed to understand the concept.
I talked about it earlier this month as an opportunity for the BOJ to do unlimited QE, and in a way that would allow them to keep stimulating the economy even as growth and inflation started moving well in their direction.
With this in mind, the Trump effect has sent U.S. yields on a tear higher. That move has served to pull global interest rates higher too — and that includes Japanese rates.
You can see in this chart, the 10 year in Japan is now positive, as of this week.
With this, the BOJ came in this week and made it known that they were a buyer of Japanese government bonds, in an unlimited amount (i.e. they are willing to buy however much necessary to push yields back down to zero).
Though the market seems to be a little confused by this, certainly the media is. This is a big deal. I talked about this in my daily note the day after the BOJ’s move in September. And the Fed’s Bernanke even posted his opinion/interpretation of the move. Still, not many woke up to it.
What’s happening now is the materialization of the major stimulative policy they launched in September. This has green lighted the short yen trade/long Japanese equity trade again. It should drive another massive devaluation of the yen, and a huge runup in Japanese stocks (which I don’t think ends until it sees the all-time highs of ’89 — much, much higher).
Follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 20% this year. That’s almost 3 times the performance of the broader stock market. Join me here.
As the Trump rally continues across U.S. stocks, the dollar, interest rates and commodities, there are some related stories unfolding in other key markets I want to discuss today.
The Fed: Janet Yellen was on Capitol Hill today talking to Congress. As suspected, she continues to build expectations for a December rate hike (which is nearly 100% priced in now in the markets). And she did admit that the economic policy plans of the Trump administration could alter their views on inflation — but only “as it (policy) comes.” I think it’s safe to say the Fed will be moving rates up at a quicker pace than the thought just a month ago. But also remember, from Bernanke’s suggestion in August, Yellen has said that she thinks it’s best to be behind the curve a bit on inflation — i.e. let the economy run hotter than they would normally allow to ensure the economic rut is left in the rear view mirror. That Fed viewpoint should support the momentum of a big spending package.
The euro: The euro has been falling sharply since the Trump win, for two reasons. First, the dollar has been broadly strong, which on a relative basis makes the euro weaker (in dollar terms). Secondly, the vote for change in the America (like in the UK and in Greece, last year) is a threat to the euro zone, the European Union and the euro currency. With that, we have a referendum in Italy coming December 4th, and an election in France next year, that could follow the theme of the past year — voting against the establishment. That vote could re-start the clock on the end of the euro experiment. And that would be very dangerous for the global financial system and the global economy. The government bond markets would be where the threat materializes in the event of more political instability in Europe, but we’ve already seen some of this movie before. And that’s why the ECB came to the rescue in 2012 and vowed to do whatever it takes to save the euro (i.e. they threatened to buy unlimited amounts of government bonds in troubled countries to keep interest rates in check and therefore those countries solvent). With that, the events ahead are less unpredictable than some may think.
The Chinese yuan: As we know, China’s currency is high on the priority list of the Trump administrations agenda. The Chinese have continued to methodically weaken their currency following the U.S. elections, moving it lower 10 consecutive days to an eight year low. This has been the trend of the past two years, aggressively reversing course on the nine years of concessions they’ve made. This looks like it sets up for a showdown with the Trump administration, but as history shows, they tend to take their opportunities, weakening now, so they can strengthen it later heading into discussions with a new U.S. government. Still, in the near term, a weaker yuan looked like a positive influence for Chinese stocks just months ago — now it looks more threatening, given the geopolitical risks of trade tensions.
Follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 20% this year. That’s almost 3 times the performance of the broader stock market. Join me here.
Yesterday we talked about the missing piece in the pro-growth rally in markets. It’s oil. A pick-up in demand and growth, tends to also accelerate demand for oil.
But the market is holding out for the November 30 OPEC decision. They’ve told us they plan to cut. The inventories have jumped in recent weeks, suggesting producers are ramping up production into a cut (taking advantage while they can). And Russia’s energy minister said today he thinks OPEC members will agree to terms on a production cut by the November 30 meeting.
With that, oil spiked this morning, but fell back from the highs — still hanging around the $45 area.
Today I want to talk about the performance of small caps over the past week compared to the broader market. If we consider a Trump economy where regulation will be peeled back, a few areas come to mind as being among winners:
Banks: Banks have been crushed by Dodd Frank, made into utility companies. This is the legislation that responded to the global financial crisis — where banks had become hedge funds, taking massive-leveraged-speculative bets against their deposit base. When the black swan event occurred, they became exposed and were bailed out to keep the financial system alive. Those days should never return, but the pendulum swung too far in the other direction on Dodd Frank. In a Trump economy, risk taking will almost certaintly return to the banking system again. The XLF, bank ETF, is up 10% in the past week.
Energy: The energy industry has been crushed under the weight of clean energy policies. Billionaire Carl Icahn, one of Trump’s biggest advocates and once thought to be a candidate for Treasury Secretary, penned a letter to the EPA a few months ago saying their policies on renewable energy credits are bankrupting the oil refinery business and destroying small and midsized oil refiners. Icahn happens to own a controlling stake in one, CVR Energy (CVI). The stock is up 30% in the past week.
Small caps: The common theme in the above two industries is that all companies have been hurt, but the burden of increased regulation hasbeen far a greater economic and financial cost to small companies. That’s why the Russell 2000 (small cap index) is racing higher in the President elect Trump era. The small cap index is outperforming the S&P 500 by 5 to 1 since Tuesday of last week.
Follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 20% this year. That’s almost 3 times the performance of the broader stock market. Join me here.
We talked last week about the Trump effect on stocks. With a new President promising aggressive growth polices and a supportive Congress in place to make it happen, the Trump plan is now being coined as Trumponomics.
As we discussed last week, the markets are reflecting this hand-off, from a Fed driven economy to a pro-growth government driven economy, positively — pricing in a period of hot growth. And it couldn’t come at a better time — in fact, it may come at the perfect time.
The Fed has been able to manufacture stability but not demand and inflation. Fiscal stimulus is designed to fill that void — to boost aggregate demand and inflation. That’s why the bond market has shifted gears so dramatically, now reflecting a world with a trillion dollar infrastructure spend on the table, tax cuts, deregulation and incentives to get $2.5 trillion of U.S. corporate capital repatriated. Prior to last week, despite all of the best efforts from global central banks, and a Fed that was telegraphing a removal of emergency policies, the bond market was reflecting a world that was in depression, with the 10-year yield well below 2% in the U.S. and negative rates throughout much of the world. Today the U.S. 10 year traded above 2.25%, returning to levels we saw last December, when the Fed made its first post-crisis rate hike.
As we’ve discussed, growth has a way of solving a lot of problems, including our debt problem. Politicians and economists love to scare people by emphasizing the enormity of our debt (close to $20 trillion). But our debt size is all relative — relative to the size of our economy, and relative to what’s going on in the rest of the world.
You can see, in a major economic downturn, debt tends to rise. And it has for everyone. The downturn has been global. And the rise in debt has been global.
The fears that a big debt load will lead to a dumping of the dollar, hyper-inflation and runaway interest rates don’t fit in this picture of a broadly weak recovery from a paralyzing global debt bust. Coming out of the worst global recession since World War II, inflation hasn’t been the problem. It’s been deflation. Inflation will be a concern when the structural issues are on the mend, employment is robust, confidence is high and the real economy is working. That hasn’t happened. But an aggressive and targeted government spending plan can finally start changing that dynamic.
And the markets are telling us, an inflationary environment is welcomed – it comes with signs of life.
Gold is the widely-loved inflation hedge. And gold isn’t rising out of concerns of overindebtedness. It’s falling hard in the past week, in favor of growth.
With this in mind, we may very well be entering an incredible era for investing – after a long slog. And an opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more. For help, follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks. Our portfolio is up 16% this year. That’s 2.5 times the performance of the broader stock market. Join me here.
As we head into the election, everyone involved in markets is trying to predict how stocks will perform on the results. When the Clinton email scandal bubbled up again, the stock market lost ground for nine straight days, the longest losing streak since 1980. Since the probe has allegedly ended, stocks have been up.
Does it mean Clinton is good for stocks and Trump is bad for stocks? Not likely.
Big institutional money managers think they have a better understanding of what the world will look like under Clinton than Trump, and therefore feel more compelled to go on with business as usual heading into the event (i.e. allocating capital across the stock market) with the expectation of a Clinton win, and conversely, they’re not as compelled to do so with the expectation that Trump might win (i.e. they sit tight and watch).
When they sit on their hands, liquidity in markets shrinks, and speculators can push the stock market around.
With that, is there any predictive value in the either moves in stocks of the past two weeks? Not likely. No matter what the outcome, your 401k money will continue to flow to Wall Street, and stocks will be bought with that money. Moreover, central banks have been in control and remain in control. They’ve been responsible for the global economic recovery of the past nine years, and for creating and maintaining relative economic stability. And stable to higher stocks play a big role in the coordinated strategies of the world’s biggest central banks. Neither the economic recovery, nor the stock market recovery can be credited much to politicians.
If anything, politicians (both parties) have been a drag on recovery, which has lead to the threatening “stagnation forever” malaise that is saddling economies across the globe. From mis-spending early fiscal stimulus, to ignoring central banks cries for much needed targeted spending programs, they’ve proven to be an impediment in the economic recovery.
In this environment, in the long run, the value of the new President for stocks will prove out only if there’s structural change. And structural change can only come when the economy is strong enough to withstand the pain. And getting the economy to that point will likely only come from some big and successfully executed fiscal stimulus.
Now, as we head into tonight’s results, as we’ve been told, a Clinton win remains the clear favorite (a known quantity). And Trump has always represented the vote that the unknown is better than the known.
This vote for some time has looked very much like the Brexit vote (the UK’s vote to leave the European Union), and the Grexit vote (Greece’s vote against austerity). As with the Trump vote, the buildup to both Grexit and Brexit were accompanied by threats from trusted officials of draconian outcomes for the people. But as we know, the Greek and British shocked the world by voting for the unknown, over the known.
Let’s take a look at how things looked going into those votes and how it compares to today’s election…
As we headed into the Greek vote in July of last year. It was thought to be a done deal that the Greek people would vote in favor of another bailout package from the European Union (and accept more austerity for fear of an apocalyptic outcome from voting no). The bookmakers put the “yes” vote at 71% chance of occurring. A UK bookmaker paid out those voting “yes” four days before the vote. The “no” vote won, shocking the world with 61% of the vote.
And then there was Brexit …
The UK vote was about trade, immigration, ability to work and live in other EU countries — perhaps mostly about control and politics.
The bookmakers had the chances of a “leave” vote as slim (at about 70/30 favoring the ‘stay’ camp). When voting day arrived, the chances of a “leave” vote had dropped to just 25%. But the British people shocked the world, voting to leave by 52% to 48%.
Going into today’s vote, the chances they’re giving Trump are spot on with the Brexit odds going into the day of the referendum. Of course, it’s not a popular vote. The electoral vote creates a bigger hurdle for voting the candidate of the “unkown” in this case.
