There could be other problems as well when Trump tries to implement some of the more controversial portions of his agenda.
"Congressional deficit hawks may constrain Mr. Trump's tax reform plans, and the (earnings) boost investors expect may not materialize," Kostin said. "Potential tariffs and uncertainty around other policy positions may raise the equity risk premium and lead to lower stock valuations in" the second half.
One thing that could mitigate the second-half pessimism is a shift in investor cash.
Goldman sees a possibility of investors losing money on bonds as inflation picks up, pushing them into stock funds. Actively managed mutual funds in particular have witnessed huge outflows despite the seven-year bull market, with U.S. outflows of more than $236 billion in the past year alone, according to Morningstar. If bond yields rise and prices go down, that could swing money from fixed income into equities.
"Policy uncertainty introduces a degree of instability to our 2017 forecast that has been absent in recent years," Kostin wrote. "Uncertainty always exists when forecasting, but our projections for next year have more elements of instability than usual."
As for how the trade plays out, Kostin believes that in the first half, "cyclical" stocks will beat out defensive shares, with companies having high domestic sales and high tax doing well on the expectation for lower tax rates. As both inflation and rates rise, the second half will be better for companies that have low labor costs and strong balance sheets.