How Many Would-Be Trump Voters Have The Polls Missed?

How Many Would-Be Trump Voters Have The Polls Missed?

How Many Would-Be Trump Voters Have The Polls Missed?

Good Morning

UK manufacturing seems to be going nowhere fast, as data yesterday showed it well clear of the 50 marker, boosted by an increase in export demand. Price pressures are growing though, with 90% of surveyed firms saying that materials costs had increased, which is only to be expected.

Increased import costs has led to a slowing in the fall of shop prices, according to the British Retail Consortium. Last month's numbers saw a slowdown in the price falls and the BRC expect to see price rises filter through in the first quarter of 2017. The BBC cites the NIESR, who say that inflation could reach 4% by the end of next year, a whole percentage point higher than they'd predicted back in August, and four times higher than where we are now. Inflation isn't the only figure the NIESR have revised upwards. They say that economic growth will be 1.4%, up from their previous prediction of 1%. The revision comes as the UK economy is likely to finish this year on a stronger note than thought, which provides a firmer footing for Q1 2017.

Of course, all this good news means that Philip Hammond doesn't need to unleash the big guns at his autumn statement later this month. Mr. Hammond's approach will apparently be a flexible framework where he can react swiftly to the considerable uncertainty that lays ahead. Already there's talk of infrastructure spending being reduced to the low billions (barely enough to resurface the M25) and without the need to pump in a lot more in other areas, we could see a continuation of the Osborne theme, to further pare back public spending, or at best, keep it the same.

Understandably, most of the US news is election focused, with the main topics of conversation being; how many would-be Trump voters have the polls missed? and; what happens if it goes completely Hillary's way and she takes the White House and the Democrats take the House and the Senate? For the former, the concern is there are a lot of would-be protest voters that say one thing and do another, which is something you can't factor for and already the polls are averaging just a 2.5 point lead for Hillary.

The latter is an interesting point, because we don't think Hillary wants full autonomy and the ability to make sweeping change, she'd probably far rather have the 'the Republicans held me back' card to play over the course of her presidency instead of the ability to make bold reforms. If she gets full control though, there will be plenty of policies brought to her attention that we don't think she can ignore and that could lead to plenty of uncertainty for the markets -something they hate.

Overnight we've seen Asian markets carry over the risk-off theme and stock markets trade lower. There's a big disconnect at the moment though, with stock markets only down a couple of percent over the last week and the VIX volatility index up almost 40% – so something's going to have to give.

Today we look at UK construction numbers – where we're hoping for more good news – followed by US employment numbers, manufacturing data and oil inventories – the latter proving possibly problematic for oil bulls, as stockpiles seem to be the thorn in the market's side at the moment. FOMC announcement tonight is likely to be a non-event and Yellen and co. will probably play sit safely on the fence, ahead of next week.

Have a great day

©Hamilton Court FX

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