Gardner said Trump's rise and staying power have been a surprise. He described him as having the same type of flamboyance and style as former Italian Prime Minister Silvio Berlusconi. "There are similiarities in a larger-than-life persona, huge egos. Both are media creatures, very populist demogogues. Short on substance, long on style."
Read MoreNew Hampshire's primal scream will have consequences
Gardner said uncertainty about the election seems to be hurting financial markets. For months, the market was comfortable with the view that Clinton would win even though she is not loved by Wall Street. But that changed when Clinton barely edged out Sanders in Iowa and was down by more than 20 percent in New Hampshire.
The Democrats do have an edge and Clinton could probably beat Trump, but that's no guarantee. Gardner said the Republicans have an advantage in voter enthusiasm with much-larger-than-normal turnouts in both Iowa and New Hampshire.
"This is an overwhelming victory by Bernie Sanders. If the market looks at this, he's got a better chance than it's been discounting," said Dan Clifton, head of policy research at Strategas. Clifton said Sanders' surge came from independent voters but when looking at just-registered Democrats in New Hampshire, the race was much closer with Sanders leading 52 to 48 percent. That could help Clinton in states with closed primaries.
"There's clearly something happening where voters are turned off by Hillary Clinton, and this race will go on for some time. South Carolina is critical," said Clifton. "Clearly her image is tarnished. Nobody thinks she's honest or trustworthy."
Clifton said that at times of economic uncertainty, the incumbents are typcially voted out.
For now, the question is how the results for New Hampshire and Iowa impact other primaries, if at all. The key for Clinton will be to show a dramatic lead in the Feb. 27 Democratic primary in South Carolina, which she is expected to win with the support of the African-American community.
Gardner said the same thing hurting Clinton is hurting Jeb Bush.
"Hillary and, I think, Jeb Bush face defects in their candidacies, which are predicated on experience, and I think they're both tone-deaf to what the electorate wants. They're paying lip service. Both are falling back on rhetoric and experience at a time when frustration is so high that people just don't care," said Gardner. "To some extent both of them are backward-looking at what they used to do, when voters are looking for new ideas and neither of them can connect to that."
Sanders plays into the thirst for new ideas with his promise of free tuition and breaking up banks. "You can make the argument his ideas are somewhat discredited. His prescription does not cure the patient. It probably makes it worse. But he taps into that level of anger," he said.
"He's not running on his experience in Washington. He's running on what he wants to do in the future. He taps into something in voters," said Gardner.
Gardner said many of the young Sanders voters don't remember the Soviet Union or Cold War. "They hear a Utopian call and don't have anything to compare it to. It sounds great," he said. Gardner said Sanders successfully gets his followers riled up about banks, just as Trump has done against immigration.
"It's tough to quantify, and there's obviously other factors going on in the market right now. It's tough to say this is driving the market, but certainly when you scratch the surface a little bit, there's this anxiety about where the U.S. is going, where the election is going, and what's policy going to look like a year from now," he said.