Trump v. Clinton: Wall Street makes its pick
Would the market fare better under a President Donald Trump or a President Hillary Clinton? That’s the question investors of all kinds are asking now that Trump and Clinton are the presumptive nominees. The answer, according to some of the nation’s top market experts: President Clinton. And, the reason can be summed up in two words: trade war. “Since she would take a less hostile position toward our trading partners, particularly China and Mexico, her administration could focus more on growth than protectionism,” says Sam Stovall, managing director of S&P Global Market Intelligence. Others share this view. “I believe the market would fare better under Clinton, in part, because we don’t know enough about a Trump administration and the potential adverse consequences of trade wars,” says Bob Doll, senior portfolio manager at Nuveen Asset Management. Meanwhile, another expert says Wall Street dislikes both candidates but ultimately prefers Clinton. “From the financial markets’ standpoint, the choice between Clinton and Trump is really a choice between the lesser of two evils,” says Bob Johnson, president and CEO of the American College of Financial Services. Still, Johnson says, there is little doubt that market participants would rather see a Clinton presidency. “Market participants believe they know more about her positions and that a Clinton presidency wouldn’t represent a radical departure from the current regime,” Johnson says. “There is a time-worn adage — ‘the markets dislike uncertainty,’
and Trump epitomizes uncertainty. There hasn’t been a more potentially disruptive candidate than Trump in recent memory.”
Johnson recited some of the uncertainty that comes with Trump: “Trump has advocated some outlandish positions, including suggesting that the U.S. might be able to ‘renegotiate’ terms of the debt — essentially paying creditors less than 100 cents on the dollar,” he says.
“He’s said he would repeal trade deals, deport Mexicans and punish corporations that move outside the U.S. All of these actions would destabilize the financial markets.”
WINNERS AND LOSERS UNDER CLINTON
A Clinton presidency would likely be good news for gun and ammo manufacturers, renewable energy companies and consumer staples, experts say.
“It may seem ironic that gun and ammo manufacturers would cheer a Clinton victory (and they would likely do so privately), but the fear of gun-control measures would be good for (them),” Johnson says.
Wind power and solar companies likely would do well under Clinton “as there would likely be even more tax incentives for renewable energy,” he says.
Income could rise for lower middle-class Americans with a President Clinton, and that would be good for consumer staples. “If Clinton would be able to champion an increase in the minimum wage, there would be more money in the pockets of lower-middle-class consumers,” Johnson says.
For his part, Stovall says managed care companies (HMOs) should benefit from the continued promotion of the Affordable Care Act (ACA). And Doll says health care services would fare better than health care products.
One sector likely to be hurt: “Restaurants could be adversely affected by the Democrats’ desire to push for a hike in the minimum wage to $15 per hour,” Stovall says.
WINNERS AND LOSERS UNDER TRUMP
According to Johnson, winners likely would be traditional energy companies, sectors such as fast-food res- taurants that rely on minimumwage labor and large pharmaceutical firms.
Johnson also says traditional energy companies such as coal, natural gas and oil companies likely would find a more favorable regulatory environment under a President Trump. Others share that opinion.
“Coal could do well, as there would be less emphasis placed on clean-air legislation,” Stovall says.
Meanwhile, Johnson says, “large pharmaceutical firms would breathe a big sigh of relief if Trump won, as Clinton has been very outspoken about price gouging by pharmaceutical firms.”
And, perhaps not surprisingly, “health care facilities, ... also known as hospital management companies, would most likely be hurt due to (Trump’s) promise to undo the ACA,” says Stovall.
“Trump epitomizes uncertainty. There hasn’t been a more potentially disruptive candidate ... in recent memory.” Bob Johnson, president and CEO, American College of Financial Services