Bank stocks are a good bet, but ‘don’t think that Dodd-Frank will be repealed,’ analyst says

Clifton on Trump trade: Financials good place to be

Investors shouldn't let their hopes run too high about President-elect Donald Trump peeling back bank regulations despite market highs, Strategas Research Partners' Dan Clifton said Tuesday.

"Financials is a good place to be, but don't think that Dodd-Frank will be repealed," Clifton told CNBC's "Squawk Box."

Clifton said some regulations would likely be rolled back, including parts of Dodd-Frank that affect small banks, and he could see regulators taking a more hands-off approach.

But when it comes to the 2,300 pages of the Dodd-Frank bank reforms, which were enacted in response to the 2008 financial crisis, Clifton said a repeal was not probable.

One massive piece of legislation Clifton said Congress will try to do away with before Trump even sets foot in office is the Affordable Care Act.

"They're going to try and pass two pieces of legislation before Trump is even president. First, the Keystone Pipeline gets approved. And two, to repeal Obamacare without replacing it so that Donald Trump can sign those bills immediately becoming president," said Clifton, head of policy research at Strategas' Washington office.

The second half of Trump's "Repeal and Replace" mantra for Obamacare will come later, Clifton said.

Congress will probably set a date for when the repeal becomes effective a year or two from now, and until then will work with the administration to fill in the details of Trump's replacement plan, he said.

But those are just some of the shifts to come following Trump's inauguration, Clifton said.

"As soon as Trump gets here, Cabinet gets settled, you're going to see all the discussion moving to tax reform, infrastructure, fiscal policy and defense spending," he said.

But like Dodd-Frank, some of Trump's goals may be tapered once he begins to govern, Clifton said.

The analyst predicted that instead of bringing corporate tax cuts down to 15 percent, Trump would settle for a 25 percent cut.

Clifton said some other realistic goals include measured repatriation of capital held by U.S. companies overseas, small income tax cuts and allowing businesses to deduct capital expenses all at once instead of spreading out their deductions over a longer period of time.

"Budget rules restrict what [Trump] can do," Clifton said.

The analyst added that political opposition and the question of whether Trump will be capable of working with Democrats remain major restrictions.

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