“More taxes, more drug scrutiny, deficits likely growing, and just more of the same,” Joe Zicherman, a veteran Morgan Stanley trader who now trades his own money, said of what could happen if Clinton wins. “The first president in history to come in with a sub-50 percent approval rating. Shouldn’t you fade that?”
Still, the “fade the Clinton rally” argument is a minority view, at least for the moment. More typical is the view from Jim Paulsen of Wells Capital Management, who argued on CNBC this morning that a pickup in earnings momentum and stronger economic numbers would sustain stocks.
A recent ISI Evercore survey found that 83 percent of investors expect the market to rally in the week following the election if Clinton wins.
Even after six months, 70 percent expect the S&P to be higher.
Ari Wald, technical strategist for Oppenheimer,over the weekend urged clients to buy on weakness.
“We now have the right leadership,” he said to CNBC. “Investors are selling safety stocks, selling interest rates sensitive, and buying banks and tech.”
He conceded that markets could test Friday’s lows but that “if you do get another pullback, you want to buy it.”
What about the collateral damage? A Clinton victory would likely lead to higher yields and a stronger dollar, for example. That’s certainly a headwind for stocks.
Wald was not deterred: “This is similar to the 2013 taper tantrum. When rates move up, you want to buy.”