What a Trump or Clinton presidency would mean for stocks

• Market watchers eye RealClearPolitics aggregate of all polls to spot trends.
• Some forecast that GOP can retain ground in Congress if Clinton wins by small margin.
• A Trump win would be better for tax reform and plus for drug companies, expert says.
• A Clinton win would be better for alternative energy, health care providers, expert says.

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, told the CFA Society of Detroit Thursday that while Democratic candidate Clinton is still expected to win, it would be unwise to underestimate GOP candidate Trump.

Valliere, who has been a guest on CNN and CNBC, said he'd still put the odds of a Clinton victory at 55%. But he only sees a 5% 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.

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"Trump would have to win a state like Michigan and I think that's an uphill fight for him,," Valliere said. He noted that Clinton has a stronger ground game and a more polished campaign staff than Trump, which should work in her favor.

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 this week he raised Trump's odds for winning to 40%.

"I would take the polls with a grain of salt. I think they could be inaccurate this year," Valliere said, citing the difficulty of polling people by cell phone rather than land lines, and reluctance of some to tell a stranger their more controversial views.

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Valliere said he talked with one Trump supporter in St. Louis recently who said Trump is a jerk — but represents change.

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 — indicating the prospect of a "spitting match" between Trump and Yellen if he wins the election, 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.

Valliere says he is not rooting for one candidate over the other.

"I think they're two very flawed candidates," Valliere said.

But he found room to make a little joke at the expense of each candidate.

As for Clinton, he said, "she has a tax credit for every problem you have in your life."

As for Trump, he said, if he wins, Valliere said he would hope it would be a blustery Inauguration Day.

"I'd pay good money to see his hair in the wind," Valliere said.

Contact Susan Tompor: 313-222-8876 or stompor@freepress.com. Follow her on Twitter @Tompor.