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Stocks, Bonds, Sterling and House Prices Forecast Conservative UK Election Win

ElectionOracle / UK General Election May 06, 2015 - 03:37 PM GMT

By: Nadeem_Walayat

ElectionOracle

The opinion pollsters eager to sell their services to the mainstream press, who just as eagerly enjoy publishing attention grabbing headlines of the UK set for the mother of all indecisive election results, one of neither major party even with the Lib-Dems being able to form a government without the aid of the SNP insurgency that is determined to destroy Britain through bankruptcy by going on a debt fuelled spending spree on the UK's credit card before declaring independence.


Market Oracle May2015 .com Electoralcalculus .co.uk ElectionForecast .co.uk The Guardian
 

28th Feb

5th May 5th May 5th May 5th May
Conservative 296 273 282 281 274
Labour 262 268 275 267 270
SNP 35 56 52 51 54
Lib Dem 30 28 18 26 27
UKIP 5 2 1 1 3
Others 22 23 22 24 22

The opinion pollster seats forecasts average to:

  • Conservatives : 277
  • Labour : 270
  • SNP : 53
  • Lib Dems : 25
  • DUP 8

If the opinion polls are correct then the UK is heading for an extreme hung parliament -

Conservatives + Lib Dems = 302 - FAIL

Add DUP 8 seats = 310 - FAIL

Labour + Lib-Dems = 295 - FAIL

Labour + Lib-Dems + Plaid Cymru + Greens = 302 - FAIL

The only workable outcome would be one of Labour + Lib Dems with the the SNP convinced to either vote with Labour or to abstain from voting against a Labour Queens Speech i.e.

Labour + Lib Dems, SNP abstaining = 295 vs Conservative + DUP 285.

One would imagine that such a potentially disastrous outcome of a weak Labour government dancing to the Scottish Nationalists tune would have the markets in state of panic! Instead what has been missing from the whole mainstream media election noise has been any signs of negative market response, because there hasn't been any market response, not a whimper out of the financial markets for the whole of this year that political pundits and politicians could have pointed to as a sign of this, that or the other, as there clearly would have been were Britain actually heading towards the chaos of an extreme hung parliament of a weak Milliband Labour minority government dancing to the highly destructive SNP insurgents tune.

The FTSE's bullish stock market trend for the whole of this year illustrates that investors expect a continuation of Britain's economic fundamentals rather than the uncertainty of a nationalist driven outcome.

Sterling against the dollar is smack bang in the middle of its tight range of the past 6 months of less than 9% volatility.

Whilst sterling against the Euro following a strong bull run into Mid March has been calmly marking time. Though of course where the euro is concerned the main focus there is when Greece explodes out of the Euro-zone which is probably imminent i.e. before the end of May.

Its only in the bond markets we see some signs of worry. Though even here is it not exactly earth shattering, there is no mega-spike of several percentage points instead the 10 year yield is back where it was about 5 months ago.

"Its the Economy Stupid" - And of course stable markets are just reflective of a relatively strong UK economy which 'should' favour the party of Government.

So Britain's calm financial markets and relatively strong economy are painting a picture for the continuation of the Conservative government be it in Coalition with the Lib-Dems or not.

UK House Prices

House prices momentum has picked up from February's +6.6%, to +7.7% for March, though has missed the headline grabbing new all time high in average UK house prices just prior to election day, probably due to ongoing weakness in house prices in the South East.

Therefore the Conservatives mini election boom appears to have failed to spike to a +10% inflation rate for election day, where my expectations were that it could have ranged to as high as +12% for an outright 30 seats majority inducing result as my long-standing analysis of seats vs house prices trend trajectory forecast.

16 Dec 2013 - UK General Election Forecast 2015, Who Will Win, Coalition, Conservative or Labour?

The following graph attempts to fine tune the outcome of the next general election by utilising the more conservative current house prices momentum of 8.5% which has many implications for strategies that political parties may be entertaining to skew the election results in their favour.

The updated election seats trend graph suggests that the Conservatives are on target towards achieving a single digits outright majority which is completely contrary to every opinion poll published this year. Which if it materialises then I am sure for Election 2020 everyone will be staring at the house prices indices rather than the opinion polls. Though as is usually the case that when the consensus becomes focused on an particular indicator then it usually stops working.

In terms of what I actually see as the most probable outcome for the general election primarily based on economic and market analysis rather than opinion polls, I refer to my in-depth analysis of 28th Feb that was most recently iterated in the following video:

UK General Election May 2015 Forecast Conclusion

My forecast conclusion is for the Conservatives to win 296 seats at the May 7th general election, Labour 2nd on 262 seats, with the full seats per political party breakdown as follows:

Therefore the most probable outcome is for a continuation of the ConDem Coalition government on 326 seats (296+30) where any shortfall would likely find support from the DUP's 8 seats.

The alternative is for a truly messy Lab-Lib SNP supported chaotic government on 327 seats (262+30+35) which in my opinion would be a truly disastrous outcome for Britain, nearly as bad as if Scotland had voted for independence last September.

Another possibility is that should the Conservatives do better than forecast i.e. secure over 300 seats but still fail to win an overall majority, then they may chose to go it alone with the plan to work towards winning a May 2016 general election.

The bottom line is that the opinion polls do not reflect how people will actually vote on May 7th when they are faced with a stark choice of steady as she goes ConDem government or take a huge gamble on Ed Milliband's Labour party. So in my opinion several millions of voters will chose to play it safe with ConDem which thus is the most probable outcome.

Also available a youtube video version of my forecast:

The bottom line is that a continuation of the Coalition government is the most probable outcome which means a combined total of at least 323 seats. Therefore come May 8th virtually all pollsters will have egg on their faces as the mainstream media will have flushed untold millions down the drain on commissioning opinion polls that turned out to be WRONG just as the polls were wrong in the run up to the Scottish referendum that was never a 50/50 proposition which at the time I concluded was mainly so as to allow pollsters to sell opinion polls and the mainstream press to sell copy and so it is the case with today's election campaign.

UK Saved From I.S. Threat But Scottish Independence Nightmare is Not Over!

There is another reason as well for why the polls were so close and that is one of SALES, the polling industry SELLING a tight election so that the gullible mainstream press would buy their polling services. Therefore painting a picture of a tight race by manipulating the data will have turned out to be a huge money spinner for the polling agencies.

My article concluded in the most probable forecast for the outcome of the result would be for at least show a 10% gap between NO and YES, and definitely not reflective of the mass hysteria.

Therefore the most probable outcome is inline with the polling ranges of before the YES campaigns intimidation and fear phase began to play a prominent role in the frenzy of campaigning of September that rather than a 50/50 tight race is more probably going to result in at least a 55% NO vote victory, and I would not be surprised if the NO vote even breaks above 60%!

Ensure you are subscribed to my always free newsletter for continuing in-depth analysis and concluding trend forecasts.

Source and Comments: http://www.marketoracle.co.uk/Article50555.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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