The Bank of Montreal recently used the cult-classic Rocky Horror Picture Show to examine how the election of either Donald Trump or Hillary Clinton could affect the economy.
With the U.S. presidential election just over two weeks away, BMO Nesbitt Burns chief economist Douglas Porter released a report Friday looking at the economic issues raised during the campaign and how the markets could react to a Trump or Clinton presidency.
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The Democratic nominee has a double-digit lead according to some polls against Trump, and the embattled GOP nominee’s path to the White House is looking increasingly difficult in the final weeks of the campaign. So with Halloween landing between now and the election, BMO used Rocky Horror Picture Show to simplify things.
“Heading into the final two weeks (mercifully), here’s a quick recap of what could be affected most by the election results (with a Rocky Horror theme reflecting the lack of decorum, at least from one candidate),” Porter writes.
Trade: ‘It’s just a jump to the left…’
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In a reference to the featured Rock Horror song “The Time Warp,” Porter outlines how Clinton and Trump have campaigned on staunch protectionist policies that have included tearing up or disavowing major trade deals – which also affect Canada – like the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP)
“By far the most remarkable, and troubling, aspect of this year’s election campaign from an economics standpoint was the lurch toward protectionism by both parties,” Porter said.
Clinton has reversed course on TPP and said she would no longer support it despite calling it the “gold standard.” She has also talked about revisiting NAFTA.
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Meanwhile, Trump has strongly opposed the TPP, calling it a “bad deal” and said he would renegotiate the NAFTA treaty with Canada and Mexico to secure more favourable terms for the U.S.
“Of course, many candidates have talked tough on trade during the campaign, and then quickly moved back to middle ground after the election,” Porter said.
Taxes: ‘…and then a step to the right’
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On the issue of taxes, while both candidates say their plans will help the middle class they differ on how they’ll affect wealthier Americans.
“Trump’s plan calls for deep cuts, while Clinton will raise rates on the very wealthy (by 4 ppts on incomes above $5 million) and increase social security charges on upper incomes,” Porter writes. “Trump has also pledged to slash corporate tax rates.”
The Fed: ‘Dammit Janet’
A reference to both the famous Rocky Horror musical number and Federal Reserve Chair Janet Yellen, Porter said the Fed has managed to work its way into the election cycle.
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Trump has vowed to replace Yellen if elected and in September criticized the Federal Reserve for keeping interest rates low for political reasons saying Yellen should be “ashamed” of herself.
“For her part, Clinton has expressed no concerns about monetary policy, but the Democrats have fretted about the lack of diversity at the Fed,” Porter writes.
‘Wild and Untamed Thing’: will Donald accept the election outcome?
In an homage to one of the final musical acts, Porter looks at how Donald Trump has upended a pillar of American democracy by refusing to say whether he would accept the outcome of the Nov. 8 election.
Trump has since stated he would accept the election results “if I win” a statement that continues to roil high-ranking republicans. Clinton called the comment “horrifying.”
“We can only hope that we don’t head into a Time Warp, falling back to the post-election uncertainty of 2000,” Porter writes.