Trading The 2016 Election: Part 1-Stocks In Focus

By: Wayne Duggan

Election day in the U.S. is now less than six months away, and the latest polls show that frontrunners Hillary Clinton and Donald Trump are neck-and-neck heading into the election home stretch. While many traders have strongly-held personal beliefs when it comes to political ideology, the best traders all speak one common language: dollars and cents.

Regardless of which candidate earns your vote in November, the outcome of the election could have a major impact on some big-name stocks.

The Trump Portfolio

Ironically, even though Trump called for a boycott of Apple Inc (NASDAQ: AAPL) over the unlocking of the San Bernardino shooter’s phone, Apple would be one of the biggest winners from Trump’s aggressive proposed changes to the corporate tax system.

Trump has said that corporate taxes will be capped at 15% and that companies with cash stored overseas would be allowed a one-time 10% repatriation tax to bring that money back to the U.S. Apple reportedly has nearly $200 billion in overseas accounts.

A Trump presidency would also be good news for gun makers like Smith & Wesson Holding Corp (NASDAQ: SWHC). Republican candidates traditionally earn the support of the NRA, and Trump is no exception.

Clinton specifically called out gun makers back in March, saying, “No other industry has absolute immunity… and they sell products all the time that cause harm.”

Finally, Trump may not be making many trips to Atlantic City once he’s in the White House. But Trump Entertainment Resorts owns the Trump Taj Mahal, and President Trump would likely be very kind to companies that run casinos in AC, including MGM Resorts International (NYSE: MGM).

The Hillary Clinton Portfolio

While Donald Trump wants to stimulate the economy via corporate tax cuts, Clinton instead wants to hold companies accountable for their bad behavior.

One of centerpieces of her platform is to eliminate drug price gouging. Clinton had an entire TV campaign ad targeting Valeant Pharmaceuticals Intl Inc (NYSE: VRX), but companies like Mallinckrodt PLC (NYSE: MNK) have also gotten negative publicity involving drug pricing.

Clinton has also called for the breakup of big banks like Bank of America Corp (NYSE: BAC), Wells Fargo & Co (NYSE: WFC), JPMorgan Chase & Co (NYSE: JPM) and Citigroup Inc. (NYSE: C). Despite the beginning of a new Federal Reserve interest rate tightening cycle that should help improve bank margins, the “big four” bank stocks are down an average of 8.9% so far this year on breakup fears.

Finally, it wouldn’t be surprising to see Clinton push for higher emission standards or other regulations on the energy sector in an effort to facilitate the transition to clean energy. That would certainly be good news for stocks that are focused on clean energy, such as Tesla Motors Inc (NASDAQ: TSLA), SolarCity Corp (NASDAQ: SCTY) and Pattern Energy Group Inc (NASDAQ: PEGI).

Disclosure: the author is long BAC.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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