In Donald Trump and Hillary Clinton’s battle for the White House, investors have been trying to predict for months which potential president would be better for the stock market—and what the stock market itself is predicting to be the winner.
Billionaire businessman and NBA owner Mark Cuban, for one, thinks the stock market will crash if Trump is elected, while renowned bond investor Jeffrey Gundlach of DoubleLine thinks a potential Trump victory could threaten the global economy—even though he believes Trump will win.
Meanwhile, other investors have tried to pick the stocks that will soar depending on which candidate becomes president. A President Hillary Clinton, for example, is perceived to be good for stocks that benefit from Obamacare, environmentally friendly policies (say, solar power companies) and minimum wage increases. A Trump surge in the polls correlates with an uptick in the price of gold and a downturn in the Mexican peso (based on his pledge to build a wall between that country and the U.S.). The GOP nominee is also thought to be favorable to companies that take advantage of foreign tax havens to stash their cash, such as Microsoft (MSFT) and Apple (AAPL), while some investors think Clinton could be a tailwind to Netflix (NFLX) because of her support of net neutrality rules.
Still, those tech stocks have all been surging lately for reasons of their own, unrelated to the presidential election. And health insurers, once considered to be a beneficiary of the Affordable Care Act, aren’t really a solid Clinton proxy, as many have been withdrawing from the Obamacare marketplaces, casting shade on the law (not to mention that Clinton has spoken out against mergers between some of the largest players, including the proposed Aetna (AET)-Humana (HUM) and Anthem (ANTM)-Cigna (CI) deals). Likewise, defense and infrastructure stocks have been associated with both Trump and Clinton. Each candidate has pledged greater spending in those areas. So it’s hard to call either one of those industries an indicator of the election.
Fortune, however, found a handful of stocks and assets that most closely track the candidates’ polling odds, and therefore may be the best proxies for predicting the outcome of the presidential election. We scored Trump and Clinton based on the performance of these indicators, awarding more points for stronger correlations to the candidates’ actions. Here’s how they stack up:
Cemex
If Donald Trump is going to build a wall, Cemex is likely the best company to build it. One of the biggest concrete makers in the world, Cemex also happens to be based in Mexico, which makes it an obvious choice to build Trump’s promised border wall. With the estimated cost of the project as high as $12 billion, including as much as $10 billion for cement, the contract would likely be a huge win for a local building company.
That may help explain why Cemex stock has risen in line with Trump’s candidacy: U.S.-listed Cemex shares have soared 34% since Trump clinched the Republican nomination in July. Still, in the week since the final presidential debate, Cemex’s stock price has declined more than 2%, as Clinton has maintained her leading margin over Trump.
Score: Trump +2
Biotech
Hillary Clinton has been considered one of the biggest threats to biotech investors ever since September 2015, when she pushed biotech stocks into a bear market with a single tweet about cracking down on drug price hikes that cost the sector $40 billion in market value.
Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h
— Hillary Clinton (@HillaryClinton) September 21, 2015
Clinton struck again this August, with another tweet referring to price increases by Mylan (MYL) of its life-saving epinephrine injector. Biotech stocks promptly fell more than 3% that day.
EpiPens can be the difference between life and death. There's no justification for these price hikes. https://t.co/O6RbVR6Qim -H
— Hillary Clinton (@HillaryClinton) August 24, 2016
Given her market-tanking power, biotech stocks are now seen as a contrarian indicator of Clinton’s strength: When her chances of winning the White House rise, biotech stocks move in the opposite direction as investors expect price regulation is coming. So pro-Hillary investors might actually see it as a good sign then that the Nasdaq Biotechnology Index is down 5% since Clinton officially received the Democratic nomination for president, and that the sector has fallen nearly 11% since Sept. 22 alone, which was just before the first presidential debate.
Score: Clinton +1
Goldman Sachs
A certain friendliness with America’s quintessential bulge-bracket bank—and one that became a symbol of what’s wrong with Wall Street after the 2008 financial crisis—has not helped Clinton win over the Democratic base. Indeed, Clinton’s perceived coziness with Goldman Sachs (GS) became such a problem that even the bank’s CEO Lloyd Blankfein has recently had to play coy in public about his staunch support of the candidate. As if the six-figure fees she received for speaking at Goldman Sachs events weren’t enough, WikiLeaks created a stir earlier this month when it released the transcripts of those speeches, fueling criticism that Clinton is too close to Wall Street to properly regulate it.
Still, Clinton’s ties to the bank have managed to comfort some of its investors, who believe her policies will treat Goldman and its ilk with softer gloves. After a terrible start to 2016 when its shares were down nearly 30% by February, Goldman Sachs stock has since largely rebounded as Clinton’s campaign has gained strength: The bank’s shares have returned more than 10% since Clinton received her party’s nomination in July. Sure, some of that had to do with Goldman beating earnings expectations, passing its Fed stress test and unexpectedly making a killing trading bonds, but the election likely factored in too, and investors can thank Clinton for that.
Score: Clinton +0.5
Peso
If investors were skeptical that the U.S. elections could really sway foreign exchange markets, the first Trump-Clinton presidential debate quashed that doubt. As pundits and polls declared Clinton the clear winner of the first debate, the Mexican peso had its best day in about seven months, surging nearly 3%, and making the peso perhaps the best predictor of the 2016 election outcome. The day after the second debate, when Clinton again claimed victory in the polls, the peso rose another 2% against the dollar.
Again, the peso’s behavior is linked to Trump’s border wall. When investors think it likely that Trump will win, subsequently crippling Mexico’s immigration and trade relationship with the U.S., the peso falls; when it looks more likely that he’ll lose to Clinton, the peso rises. Only time will tell, of course, if the peso is truly an accurate indicator of the election—FX traders don’t necessarily vote in the U.S., after all. But they are certainly putting their money on Clinton: The peso has risen more than 6% against the dollar since the first debate a month ago.
Score: Clinton +2
Totals:
Trump: 2
Clinton: 3.5—WINNER
