(The following article is a CNBC Pro free preview. Click here to subscribe).
While the ranks of Wall Street are thought to be majority Republican, many analysts expressed worry to clients Friday that the surprising Brexit vote may be the start of a "populist insurgency" to sweep the globe and elevate presumptive GOP nominee Donald Trump to the U.S. presidency.
The uncertainty about Trump's policies and the instability this nationalist movement brings to global capitalism as usual is what has even a conservative Wall Street worried.
Here are the highlights:
Nomura (multiple analysts):
"Moreover, one should not underestimate the psychological impact and how quickly markets could link the outcome to a rising risk of Donald Trump winning the U.S. presidential election ... the U.K. referendum is part of a global phenomenon — the rise of nationalist sentiment and populist revolts against established political parties. The demographic profile of Brexit supporters is found to be strikingly similar to that of American Trump supporters. ... In contrast, investors, judging from recent price action, did not anticipate a Brexit, and option pricing suggests markets are also discounting a Trump victory. The U.K. betting markets too have downplayed the results of opinion polls: the odds of Brexit were generally about 1-in-3, similar to what U.S. betting markets assign to a Trump victory. ... The upshot is that investors are likely to take the results of opinion polls more seriously now and, as such, financial markets could start pricing in a greater risk of a Trump victory in the 8 November election and, possibly, a greater chance of populist insurgencies in the rest of Europe."
Citi Research's Tobias Levkovich:
"Populism, especially as it manifests itself in the pushback against globalization, immigration and the political elites, can be found on both sides of the Atlantic. Indeed, many see the American version of it in the likes of Bernie Sanders and Donald Trump. In the past, such a depressed zeitgeist did not generate a new bear market but provided the basis for a recovery. "
The Bear Traps Report, Larry McDonald:
"The results out of the U.K. will have an impact on the U.S. elections come November. The U.S. anti-establishment momentum shares many of the same arguments as their friends across the Atlantic. Frustrations over issues such as immigration, job losses, depressed income levels and radical Islamic terrorism are NOT exclusive to the USA. Trump was keen to pounce on these issues this morning, we expect him to paint Hillary Clinton with the Obama administration brush in this regard."