If there’s a country stock market around the world whose price action investors might have looked to as a predictor of the eventual outcome of this Tuesday’s US Presidential election, it’s Mexico.  From trade to immigration to “the wall,” the consensus has been that Clinton=good for Mexico and Trump=bad for Mexico.  On Monday and Tuesday this week, we saw Mexico’s stock market jump nearly 10% as Clinton’s lead in the polls solidified and her odds on the betting sites ticked up towards 90%.  But the action for Mexican stocks was following the polls just like everyone else, and the action of the stock market both in Mexico and around the world completely failed to predict that the polls had it wrong.  As shown below, Trump’s win quickly erased all of Monday’s and Tuesday’s gains for Mexico’s stock market, and since Wednesday’s open it has only fallen more.  At this point, the EWW Mexico ETF is down 20% since Tuesday’s close.

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With Mexico’s market dropping 20% and US stocks actually rallying since the election, we’ve seen the ratio of SPY (S&P 500) to EWW spike to its highest level in more than ten years.  Below is a chart of this ratio since 2005.  What’s noteworthy to us is that the spike in the ratio since Trump won is only a continuation of a trend of outperformance we’ve seen for the US that began more than three years ago at the start of 2013.

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