Gauging whether Monday’s presidential debate actually swayed voters is challenging, particularly those all-important “undecideds” who could ultimately swing the election. But the stock market offered a clearer verdict: Hillary Clinton, declared the currency trading and betting markets.
CBS News curated research and spoke with stock market experts to get their take on the faceoff between Hillary Clinton and Donald Trump.
Here’s what happened:
Oil prices slid, but the Mexican peso saw more than a two-percent increase against the U.S. dollar--meaning the currency lost value-- the morning after the first debate, a trend experts are associating with a Clinton debate “victory.”
The strengthening of the Mexico peso is significant because over the course of the election, its value has waxed and waned with the likelihood of Donald Trump becoming the 45th president of the United States, Professor Stanley Nollen, a professor at Georgetown’s McDonough School of Business, explained. The Mexican peso devalues, or becomes weaker, if people think Trump will lose the presidential election, he added.
That’s mostly due to Trump’s policies on trade, in which he calls for renegotiating, or even scrapping, the North American Free Trade Agreement, a trilateral trade agreement between the United States, Mexico and Canada. During the debate, the GOP nominee described NAFTA as the “worst trade deal maybe ever.”
“[The renegotiation of NAFTA] would mean that [Trump] would impose tariffs against the import of Mexican goods, like cars, coming into the United States,” Nollen told CBS News. “That would raise their prices [and] it means Americans would buy less of them. There would be less employment in Mexico, less income generated in Mexico, and therefore, a weaker economy. A weaker economy means a weaker exchange rate.”
Nollen also described uncertainty as a major driver of the currency exchange rate. Since it’s nearly impossible to predict how Trump will act on any given day, it’s also difficult to imagine what the U.S.-Mexico relationship would look like under a Trump presidency. As a result, American investors are unlikely to make as many investments in Mexican stocks and bonds, leading to a weaker peso.
Is a two-percent increase really that big?
Yes, according to Nollen, who also mentioned that the peso has seen a significant decline in its value since January. Ahead of the debate, it hit an all time low at 19.3.
What does it mean in short term and long term?
In the short term, it provides some clarity in an election that has become increasingly close, suggesting how the American public and global investors react to Trump’s presidential policies.
“Clinton’s policies at stand have no adverse implications for Mexico...so she’s neutral,” Nollen said. “It’s a win for her because it’s a loss for Trump.” He went as far as to describe a weaker peso as “inevitable” up until Election day.
“Of course many forces affect the exchange rate in the stock market,” he said. “Nobody can predict the future exchange rate very accurately, but we do know that Trump’s policies are going to weaken the peso compared to what it would have been without Trump’s policies.”
James Athey, Investment Manager at Aberdeen Asset Management, saw these moves as “insignificant,” but agreed that the markets will remain “choppy and directionless” as candidates continue to divulge additional details regarding their economic policies.
The cards favor Clinton:
Political wagering websites also show Clinton getting a bump from the debate. Known as “prediction markets,” these sites effectively distill the wisdom of the crowd by allowing investors to bet on the outcome of a range of events, including presidential elections. Such sites have generally topped opinion polls in accuracy.
At one such market, PredictWise, the likelihood of Clinton taking the White House surged to its highest level since Sept. 11, the day she was forced to leave a 9/11 ceremony after falling ill and later being diagnosed with pneumonia. Another site, PredictIt, also showed Clinton getting a boost from the debate.
CBS News’ Alain Sherter contributed to this report.