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HSBC on surprise Trump election victory: 'Look out below'

The first reactions from Wall Street research units about Donald Trump's upset election win rolled in early Wednesday morning and one of the first was decidedly bearish.

HSBC said in a note to clients that Trump's policies and lack thereof would hurt the economy, earnings and possibly spark stagflation.

"Look out below," wrote Ben Laidler, the firm's global equity strategist. "Trump's election victory will come as a shock to equity markets which had shown few signs of pre-election concerns, until very recently. We believe it is a clear risk-off event, as it is likely to result in a significant departure from current economic policy if Trump's campaign proposals are implemented."

"We expect volatility to rise, valuation multiples to contract and earnings to disappoint," he added.

To be sure, Laidler did say that U.S. markets could outperform the rest of global markets during the turmoil in Trump's wake. And some of Republican's known policies may boost some sectors of the market eventually.

"If Trump does follow through on the full extent of his proposals, our economics team believes there could be a short-term boost to GDP growth from tax cuts and increased defense spending, but stagflation could quickly set in if import prices rise and the immigrant labor force contracts," the report said.