What a Trump or Clinton presidency would mean for stocks

Detroit Free Press

What would a Hillary Clinton presidency mean for our jobs and 401(k) plans? What would a Donald Trump presidency mean for Wall Street and everyday investors?

Many economists, particularly in the banking industry, make it a policy to not comment on what’s become a heated presidential election race. After all, what’s the advantage of possibly losing clients by offending them with divisive commentary in a highly competitive banking environment?

But Greg Valliere, chief political strategist for Horizon Investments, which advises institutional investors, recently told the CFA Society of Detroit that while Democratic candidate Clinton is still expected to win, it would be unwise to underestimate GOP candidate Trump.

Valliere said he’d still put the odds of a Clinton victory at 55 percent. But he only sees a 5 percent chance of a landslide for Clinton – meaning the chances are better that the GOP would retain the U.S. House of Representatives, the Senate, or both. And that prospect of potential gridlock in Washington would be viewed as a major plus for Wall Street.

But Valliere stressed that yes, Trump has a chance to win. He noted that Clinton is challenged by the trustworthiness issue.

Right now, the financial markets seem to be betting on a Clinton win, but not a landslide.

But he cautioned that a Trump presidency is not priced into stocks now, much as Wall Street underestimated the chance that voters in the United Kingdom would favor exiting the European Union.

“They got it wrong on Brexit,” Valliere said.

Valliere – who once had the odds of a Trump presidency at one-in-three – said he raised Trump’s odds for winning to 40 percent.

For Trump supporters, he said, Clinton represents more of the same mediocre economic growth – and Clinton’s agenda does not seem to focus enough on growth.

Valliere said the impact on investors of a Trump presidency would likely be one of more uncertainty.

“I would argue on many issues that Trump would be the mother of all uncertainty,” Valliere said.

Two issues that could hurt stocks: Trump has virtually promised a trade war with China. And Trump lately has expressed growing criticism of Federal Reserve Chair Janet Yellen, Valliere said.

On the positive side, though, he said Trump likely would make progress when it comes to necessary tax reforms.

As for Clinton, Valliere said drug stocks would likely be vulnerable as she’d be tougher on drug pricing. Yet health care providers and renewable energy would do well. But he noted that the chances of a tax hike would likely be slim, especially if Clinton does not win by a landslide. He would expect Clinton to continue adding regulations via executive orders.

Susan Tompor is the personal finance columnist for the Detroit Free Press.