In a note on Monday, Fundstrat’s Tom Lee said that although there would be a stronger rally if Clinton wins, stocks would still rise if Donald Trump is victorious.
Here are his eight reasons why:
- Markets already discounted a Trump win with the recent 4% slide.
- A Trump win could put Republicans in charge of the presidency, the House and the Senate.
- More than 100 business leaders have endorsed Trump, including Carl Icahn and John Paulson.
- The market’s performance is driven more by economics than by who is president. “Many investors will identify strategies based on the specific platforms of the candidates and eventual winner — this is intuitive and logical,” Lee wrote. “We looked at 6 precedent contested elections, and interestingly, found that portfolio strategy tended to follow prevailing economic trends, rather than platforms.”
- Markets did well even under unpopular presidents like Lyndon B. Johnson.
- The “enormously unpopular” Affordable Care Act, or Obamacare, will likely be repealed.
- There are merits in Trump’s economic plans including corporate-tax cuts and higher infrastructure spending.
- Investors would focus on Trump’s potential to reform Washington, or “drain the swamp” as he says.
Lee sees the S&P 500 rising to 2325 by the year-end, which is an 11% jump from current levels and the most bullish forecast among top analysts. The median forecast according to Bloomberg is 2175, or +4% from here. That implies the consensus sees stocks moving higher regardless of who wins, provided many analysts don’t change their year-end forecasts after the election.