Wall Street's biggest bull outlines 8 reasons why markets will rip higher if Trump wins

Akin Oyedele

Stocks are rallying on Monday following news that the FBI found no reason to charge Hillary Clinton after its review of the new emails linked to her use of a private server.

This is seen as a "relief rally" that calms concerns about Donald Trump winning the election. Gary Shilling, like many other economists, said a Trump win would be unsettling to the stock market.

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  • The "enormously unpopular" Affordable Care Act, or Obamacare, will likely be repealed.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.

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