Republican presidential nominee, Donald Trump winning is expected to influence the stock market “bigly”, if he wins the election. His policies are aiming for huge tax cuts and on cutting the government spending to reduce national debt and rather spending funds on infrastructure, e.g. building a wall with Mexico. A panel of strategists gave an analysis about which industries stand a chance to loose and gain if Donald Trump becomes the President of USA. Read USA needs Donald Trump.
Commodities, Banks and Volatility
- Large pharmaceutical firms would likely to benefit if Trump wins the election. Clinton win would put increasing pressure on the pharmaceutical industry.
- Technology firms may develop successfully as a result of increased unification and acquisition activity. There is currently a backlog of potential mergers due to the uncertainty of whether they would be allowed. Many technology firms have large cash positions and potentials, and would benefit from Trump’s promise to ease regulatory activity.
- The implied volatility index is likely behave in a same manner as the unexpected Brexit vote, that happened last June. Short-term speculators wanting to bet on a Trump victory would benefit from a long VIX position (VXX).
- Cement Industry is likely to thrive with coming of Trump as the President. It is evident from previous statements of Mr. Trump that main focus of his policies would be on infrastructure. And also if we take Mr. Trump at his word about building that wall on the southern border. It is going to take a lot of cement to construct that barrier.
- Money-center banks would certainly benefit from a Trump win. Whereas Clinton’s “I’ll make Wells Fargo (WFC) pay” statements could prove to be a bad environment for large financials, which can be somewhat eased with Trump triumph.
- Gold (GLD) would benefit as a Trump victory would bring some near-term market turmoil. Investors tend to flock to the precious metal in uncertain times. And a Trump victory would heighten uncertainty.
It is assumed that most profound market impact would be taking place on the Federal Reserve. Donald Trump has also attacked the independence of the Fed Board of Governors for acting in a manner to benefit Obama and Clinton. If a Trump victory leads to market disruptions, it may delay rate hikes by a Fed cautious not to forestall an economic recovery.
It is assumed that Presidential elections are full of sound and fury but have very less impact on the stock market. However, This election is different, given the divisiveness of the campaign and anger among a meaningful subset of the electorate. The results of the election are likely to have a very real impact on the stock market.
Trump is a vocal supporter of the coal industry (KOL) and traditional fossil fuels. Trump is likely to change the “drill, baby, drill” mantra that started in the 2008 presidential campaign to be “frack, baby, frack.” Read more on Donald Trump.