UK voters shocked just about everyone when they voted Thursday to leave the European Union. The Brexit shows the weakness not only of the EU and globalization — but also of polling. And doesn’t Donald Trump love that!
Wall Street too was caught completely off guard because it appeared that firms did independent polling that they believed showed the "remain" votes would win, traded the pound sterling up on that notion and then got crushed when the news came out the other way. It really was a rejection of the British establishment by the voters, with a great deal of voting falling along class lines. There are many exceptions, but generally Brexit voters tended to be working class while the "stay" crowd was more upper-crusty.
What does this mean for the US? Not much directly — our trade with Britain is less than 1% of GDP, except that it suggests nativism, populism and me-firstism have a great deal of traction.
This bodes well for Donald Trump. And it was ironic then that Trump is in Scotland (coincidence or not?), today where he gave a press conference that was classic Trump, full of golf course promotion and braggadocio (replete with ducks quacking in the background), coupled with a bit of credit-taking for Brexit, but more importantly and correctly, linking Brexit to his thinking and campaign.
”I felt it was going to happen,” Trump said the press conference at one of his golf courses in Scotland Friday morning ET. “There are great similarities between what happened here and my campaign. People want to take their country back.” He also suggested that he would be for the breakup of the entire EU.
Speaking of Europe, it could fracture more. Look out for split off sentiment in Spain and Italy. A few weeks ago I spoke with former British Prime Minister Tony Blair, and he told me he believes the negatives of a potential Brexit outweigh the positives.
“We’re part of the single market in Europe, which is the largest commercial market in the world,” he tells Yahoo Finance. “Half of our goods get sold into that market. If we leave, we will then spend the next years in the uncertain position of having to renegotiate our way back into the single market.” That they will.
Brexit is a sharp rebuke for globalism, which as been a decade-long trend since World War II, as well a slap in the face to what General Wesley Clark calls the “shareholder class.” His thinking is that the global economy has been optimized for, well, shareholders through tax cuts, deregulation and low interest rates. All that has benefited the wealthy, Clark argues, at the expense of working-class people in America and the rest of the world.
This puts the focus squarely on politics for the financial markets, which isn’t a good thing, because of all of the uncertainty that comes with political process. Today at least uncertainty abounds, nay, rules.
Read more:
Currency expert warns the British pound faces a 'grave danger' in the weeks ahead
A single word explains why financial markets everywhere are nosediving
The UK may have commited 'an act of economic self-harm with global ramifications'
One chart captures the night of insanity as the Brexit vote counts trickled in
Credit Suisse: The US stock market won't be safe from a 'full Brexit'