One narrative getting a lot of attention of late is whether the UK referendum marks a tipping point toward populism that will define politics in the Western world—and set up a new political backdrop for investors. "The Brexit vote was a shock to Wall Street because an electorate in a country with no economic or financial crisis voted to dramatically change its political status quo," wrote Bank of America Merrill Lynch Chief Investment Strategist Michael Hartnett. "This partly reflects the fact that economic recovery in recent years has been a. deflationary and b. unequal. Wall Street has prospered; Main Street has not." Here are the three ways investors should brace themselves for a new populist era in politics, according to Hartnett. 1) Buy gold. And volatility. 2) Long "Main Street" plays (such as regional banks and mass retailers); short Wall Street plays (such as broker-dealers and luxury retailers). 3) Play the tails of deflation and attempted-reflation trades. (VIEW LINK)
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