President elect Donald Trump gives two thumbs up to the crowd. Photo / Getty
Oil drillers. Gas pipelines. Coal. Banks. Pharmaceuticals. Construction, industrial equipment. The defense industry.
Those are the likely winners of a Trump administration that could take the lid off coal and fracking regulations, begin a massive repair of the nation's roads and bridges, rebuild defense, repeal the Dodd-Frank financial reform act and kill Obamacare.
One big loser? Foreign trade could suffer if the president-elect follows through on his plan to renegotiate trade agreements.
"Without a doubt, the obvious beneficiaries are defense, transportation and energy," said Tim Loughran, a professor of finance at Notre Dame. "If there were more coal companies still on the market, they would be really hot right now. The transportation sector has been hit with excessive regulation. Trump should be able to fix that, too."
Independent oil companies such as EOG Resources, Devon Energy and Continental Energy Corporation could do well if they are allowed to drill on federal lands. The big integrated petroleum producers such as Exxon, Chevron and Shell may not perform as well financially because massive oil production will keep oil prices low.
John Engler, former Republican governor of Michigan and president of the Business Roundtable, an influential association of chief executives from major U.S. corporations, said Trump is likely to unleash a series of initiatives that include building projects such as the Keystone pipeline and another pipeline in North Dakota.
President Barack Obama delayed for years making a decision on Keystone, only to kill the controversial pipeline a year ago. The North Dakota pipeline being built by Energy Transfer Partners to transport oil 1,200 miles east, from North Dakota's Bakken field to a refinery in central Illinois, has been the subject of protests by Native Americans who say its construction would disturb sacred lands.
From the environment to finance to health, "the regulatory gusher that has been flowing out of Washington has been hitting every business in every sector," Engler said. "I expect there will be almost immediate regulatory relief for beleaguered American business both small and large."
Engler said a reform of business taxes could produce job growth by allowing U.S. corporations to repatriate and spend hundreds of billions of dollars that are now held overseas because of onerous U.S. rates.
"I felt and the CEOs feel that fixing our broken tax system is one of the things to really help job growth," Engler said. Everything from the Consumer Financial Protection Bureau to wellness restrictions in the Affordable Care Act will be ripe for amending or outright repeal.
"There's a whole host of things that can be done," he said.
He also predicted that a bipartisan effort on infrastructure will emphasize private sector participation in a Trump administration compared to a more publicly directed program under Hillary Clinton.
On the negative side, health information technology companies that had ramped up under Obamacare were likely to take a hit. Foreign manufacturing, especially in Mexico, could feel negative effects. Japanese automakers who build in Mexico and export into the United States saw their stock prices drop Wednesday. Ford Motor Company, which Trump singled out for criticism for taking jobs to Mexico, was down as well.
With Obamacare, for example, the share price for Virginia-based information technology contractor Maximus was down nearly 18 percent Wednesday. Maximus made a big bet on the market for federal health IT contracts when it bought a federal contractor for $300 million in cash last year. The firm mushroomed under the Affordable Care Act but could be scaled back under a Trump presidency.
Marvin McIntyre, managing director at Morgan Stanley's private wealth division, said "if campaign rhetoric is to be believed, it would reasonable to expect that defense, energy, and health care companies to rally."
Defense companies were already showing renewed life in trading Wednesday, thanks to Trump's pledge to rebuild the military. Engility Holdings, Northrop Grumman and Lockheed Martin saw gains in early Wednesday trading.
The stocks of the big pharmaceutical companies had been stifled in anticipation of Hillary Clinton's pledge to reduce drug prices. Pfizer was up 7 percent in early trading Wednesday, along with overseas companies AstraZeneca and GlaxoSmithKline, buoyed by the Trump victory.
"Health care, including insurance companies and pharmaceuticals, should do better as the fear of the extension of Obama recedes," said Christopher Poch, a financial adviser. "The uncertainty surrounding Trump's foreign policies and aggressive statements toward Russia could imply an increase in defense spending and cyber security."
The Wall Street Journal was reporting a letter that the National Association of Manufacturers had send to Trump. It wrote:
Loughran said if Trump is able to change the business tax rules, the implications could be huge for companies with large overseas cash holdings.
"He wants to encourage U.S. companies to bring the cash home," Loughran said. "Apple has about $200 billion in cash abroad. They pay that out in a dividend, and that would be colossal."
Robard Williams, a senior vice president at Moody's, issued a note to investors covering the implications of Trump's comments during the campaign, suggested a mixed outlook. They included renegotiating trade agreements to imposition of tariffs on imports to repeal of the Affordable Care Act. Williams wrote:
"Moody's believes that policies that result in a disruption to the flow of goods and services between the U.S. and its trading partners would be negative for industries including autos, oil, technology. However, it would be positive for industries facing severe import competition, such as steel and manufacturing.