Analyst recommends Trump v. Clinton stock picks as first debate nears
The first of three 90-minute presidential debates will kick off on Monday at 9 pm ET, with nominees Hillary Clinton and Donald Trump set to argue the event's formally designated topics of "America's Direction," "Achieving Prosperity." and "Securing America." Given the two candidates' divergent and market-moving commentary on publicly traded companies, the debates are likely to influence investor predictions on the November 8 vote for the White House, and research firm Deutsche Bank has offered up its take on the industries and stocks most likely to move on the election outcome. STOCK PICKS UNDER CLINTON, TRUMP: Explaining his firm's thesis on how U.S. elections may rattle markets in November, Deutsche Bank analyst David Bianco said on September 16 that a presidential and congressional sweep by either party would likely bring temporary "policy uncertainty and market volatility," though he reminds investors that any long-term stock swings will, of course, be the result of policy decisions taken by the winning candidate and their lawmakers. In terms of specific sectors and companies that could be sensitive to the elections, Bianco contends that a Republican sweep may benefit "some" U.S. oil producers by permitting more drilling, though the added supply would pressure prices and the broader energy sector; as well as result in "somewhat faster" Federal Reserve rate hikes, bringing a stronger dollar, lower inflation and likely allowing large banks to outperform their smaller peers. The analyst notes that while Trump's promised tax cuts and infrastructure and defense spending would theoretically steepen the yield curve, he views that unlikely under a GOP-controlled House. Importantly, Deutsche also offers a series of industry pair trades and related stock baskets for Democratic and Republican sweeps. Arguing that health services and facilities would win under Clinton while drugs and devices would win under Trump, Bianco recommends UnitedHealth (UNH), Humana (HUM) and McKesson (MCK) as "Clinton stocks" versus Johnson & Johnson (JNJ), Pfizer (PFE) and Medtronic (MDT) as "Trump stocks." Engineering and construction would win under Clinton while defense would win under Trump, he says, offering Aecom (ACM) and Quanta (PWR) in the Clinton column versus Northrop Grumman (NOC) and L-3 Communications (LLL) in the Trump column. Thirdly, Bianco sees small banks and life insurers winning over big banks and capital markets under a Democratic win, and he names Prudential (PRU) versus Charles Schwab (SCHW) and Wells Fargo (WFC). The analyst argues that energy majors such as Exxon (XOM) would be favored under Clinton while oil service companies such as Halliburton (HAL) and small U.S. producers would be favored under Trump. Bianco also models clean energy and social media winning under Clinton as compared to cheap energy and telco/cable winning under Trump, recommending NextEra Energy (NEE), Cree (CREE), First Solar (FSLR) and Facebook (FB) versus Duke Energy (DUK), Verizon (VZ) and Comcast (CMCSA). Finally, he offers the pair trade of metals and mining against chemicals and construction materials, naming Alcoa (AA) in Clinton's basket versus Dow Chemical (DOW) and Martin Marietta (MLM) in Trump's. Also in his Clinton camp are Netflix (NFLX), Citi (C) and Union Pacific (UNP), while Ford (F) and Delta (DAL) are placed in the Trump stock grouping.