Here's what a Trump win would really mean for the stock market

Donald Trump has signaled that big banks could be a short bet if he wins office, but his presidency could help plenty of other companies — like Pfizer, Monsanto, TransCanada and Lockheed, and asset classes like gold.

The Republican platform clarified some of the positions that Trump has been discussing for months without a lot of detail. The platform, released Monday on the first day of the party's convention, pointed to some hardened Republican positions, as well as some areas where Trump and his Democratic rival Hillary Clinton may not be that far apart.

If the policies proposed by Trump and the Republicans were put in place, defense contractors, energy drillers, pipelines, food producers, gold miners, biotech, construction firms, regional banks and credit card companies could all be among the winners. Losers could be the big banks, hotels and leisure, and potentially the industrials and exporters that could be hurt if a Trump administration takes extreme action on trade agreements.

The bond market may also be on the losing side of the register.

"He does have a lot of programs that cost a lot of money," said Greg Valliere, chief strategist at Horizon Investments. "To me it's a reason why the long-term trend in bond yields is higher. I think if he were to win, the deficit would jump significantly. If Hillary were to win, I think the deficit would jump modestly. I think that is something the bond market is going to have to pay attention to."

While his policies could benefit specific companies and industries, what's less clear is how the stock market would react to Trump since it has been pricing in a Clinton victory and Trump is seen as more unpredictable.

Trump is also expected to have some difficulty getting many of his proposals passed, as could Clinton. "If the Republicans maintain their dominance then there's less gridlock, but if they don't have a 60-40 majority or an overwhelming majority a lot of things are not going to get put in place, plus the Republicans don't want to increase the debt. They want to reduce the debt," said Sam Stovall, chief equity strategist at S&P Global Market Intelligence.

"I can't help but think of how Donald Trump reminds me of a fifth-grader running for president of his class, promising to put Coca-Cola in the water fountains. It may get attention, but it's never going to materialize," Stovall said.

Stovall said the market may point to who is going to win, based on past performance in presidential election years, going back to World War II.

"If the market was down from July 31 through Oct. 31, then the incumbent person or party was replaced 86 percent of the time. However, if the market went up, the incumbent person or party was re-elected 82 percent of the time. An up market would mean Hillary wins, a down market would mean Donald wins," he said.

The big market surprise during this week's Republican convention was the GOP call to reinstate the Glass-Steagall Act, a Depression-era law that kept commercial banks from going into capital markets businesses. The end of that law in 1999 led to the mergers of Wall Street's investment banks and commercial banks, resulting in behemoths such as JPMorgan Chase and Citigroup.

That position is close to the populist views of Democratic Sens. Bernie Sanders and Elizabeth Warren, and Clinton could come out swinging with new proposals to toughen bank regulation as a result of the Republican effort. The Republicans would also like to rescind parts of Dodd Frank, bank regulations put in place after the financial crisis. At the top of their list is the elimination of the Consumer Financial Protection Bureau, a move that analysts say could benefit credit card companies.

"There's really this pervasive anti-Wall Street, anti-business view in both parties. I think there's a cloud over Wall Street that's not going to dissipate anytime soon. The problem with Trump is just the level of uncertainty. With Hillary, I think she's more practical. She's not going to try to put Glass-Steagall back together again. She's not going to try to dismantle Dodd Frank," said Valliere.

The makeup of Congress will determine each candidates' success in accomplishing policy goals, but if each candidate succeeded at their individual proposals, there are clear distinctions. For instance, the Republican platform proposes getting rid of genetically modified food labels, which could be positive for food companies and Monsanto. It also favors drilling on federal land, and the approval of the TransCanada's Keystone pipeline, rejected by the Obama administration, so drillers and pipeline companies could benefit.

The Republican platform also called for a commission, similar to one in the Reagan presidency to study the feasibility of a "metallic basis for the currency." Dan Clifton, head of policy research at Strategas, said the reference to a possible gold standard is in reaction to concern about the easing policies of the Federal Reserve, which the GOP platform proposed to audit.

Some analysts have said gold would do well if Trump were to win because it would be viewed as a hedge against the uncertainty he would bring to the White House, but Clifton said gold miners have historically done well under Republicans. "Freeport McMoRan is positively correlated to Republicans," Clifton said.

Clifton said he expects Trump to put corporate taxes at the top of his agenda.

"I'm trying to gauge what is a priority, and I think the repatriation is a big thing, and the emphasis on corporate tax reform," said Clifton. Tax reform has a big role in the Republican platform, and if given a tax break, corporations would willingly bring back the large cash hordes they have overseas.

"I think both Hillary and Trump need a deal in 2017. I think some kind of a deal that combines repatriation for earnings — the corporate profits that are stashed in Europe. It's a huge story for drug companies and technology companies," said Valliere.

"The other part of the story is the infrastructure stocks," he added. "I would say both Trump and Hillary could have a surprising degree of agreement on this."

Clifton said Trump, who has vowed to build up the military and update weapons systems and equipment, would be the big spender, benefiting defense contractors. Trump has also said he would be tough on immigration and build a wall on the southern U.S. border.

Mention of the wall is in the Republican platform, but Clifton said increased border security could likely mean beefed up spending on such things as drones and other surveillance technology. Public drone-related companies include names like GoPro and Ambarella, which makes high definition video chip sets for cameras mounted in drones.

"Defense spending is going up regardless of who is president. The market is making that bet now. If Hillary wins, it's already priced in. … If Donald wins it gets that next upside," said Clifton, noting there would also be an increase in cybersecurity expenditures.

Trump has been adamant on both trade and toughening immigration. He has spoken against trade deals that disadvantage U.S. producers. Trump has spoken against the North American Free Trade Agreement with Mexico and Canada and is against the proposed Trans Pacific Partnership, as is Clinton.

The Republican platform said: "We envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a "Reagan Economic Zone," in which free trade will truly be fair trade for all concerned. We need better negotiated trade agreements that put America first."

It went on to say "carefully negotiated" deals with "friendly democracies" result in millions of U.S. jobs but when agreements do not protect U.S. interests, they should be rejected.

"It's a genuine concern, but investors have to realize he could take action without congressional approval. I do think that's a serious threat, but I would also say that neither he nor Hillary is going to be very aggressive looking for new trade deals," Valliere said. "I think we hit a wall on things like the Trans Pacific Partnership. With him there's a serious risk there could be worsening relations with China."

If there were to be resulting trade conflicts, analysts say, the risk would be to big U.S. industrial companies and other exporters.

"I think with his talking so tough on trade, you could almost say that's going to be an additional incentive for people to focus on domestic stocks, such as utilities, telecom and maybe consumer discretionary, and maybe also mid caps and small caps which have less of an international nature," said Stovall.

Trump's tough position on immigration is also seen as something that could hurt the industries most reliant on foreign workers, such as agriculture and the leisure industry, including hotels and restaurants.

At the same time, those types of minimum wage industries could be impacted by Clinton, if she were to increase minimum wages. Clifton said a beneficiary of that could be dollar stores, with sales lifted by more spending power from that wage group.

Clinton could pursue the Obama administration's plan to legalize immigrants who have been in the U.S. "If they take complete control of Congress, which is the only way that change is going to be made, you're going to take 11 million people out of the shadows and legitimize them. That means they're all going to have a credit card and a bank account," said Clifton.

Health care is an area with big distinctions. Trump says he would get rid of the Affordable Care Act, whereas Clinton would keep it. So while she would be positive for hospital stocks, her vow to go after drug pricing has had clear impact on biotechs.

"Biotech stocks are clearly a negative if Hillary wins. We're putting them in the Republican column. A lot of this is priced in. … There's an 82 percent correlation between Hillary's probability (of getting elected) and biotech stocks. What's interesting to us is pharma stocks are not pricing in the same thing. …They're not trading on the election. They are 4 percent dividend yielding companies," said Clifton. Dividend stocks have been popular as investors seek yield.

While a Trump administration would be positive for energy drilling companies, Clinton is viewed as negative for oil, gas and coal, but positive for alternative energy, like solar and wind.

"(Democrats) believe you need high oil and gas prices to get renewables on line. This is what it's all about. If you're running a long, short election portfolio, you'd be short the oil companies. You'd be long oil and you'd be long the renewable energy companies," Clifton said.

The Obama administration's position on pipelines may be retained in a Clinton administration, and that could mean railroads — another purveyor of crude could benefit.