In theory, that should bode well for President Trump since a bull market has historically benefited the incumbent. But Trump is trailing Democratic challenger Joe Biden in many head-to-head national polls. Although the market’s sharp rebound since March could be viewed as a sign that investors expect the coronavirus-induced recession to be brief, you need to dig deeper and look at how the recovery is unfolding. It turns out a basket of stocks that could fare well in a Biden presidency have been outperforming the overall market — as well as a portfolio of stocks that might benefit from a second Trump term.Blue stocks vs redRead MoreAccording to data from Strategas that was shared with CNN Business, a group of infrastructure, renewable energy, pro-globalization, health care and cannabis stocks are up more than 10% since early June. This so-called Biden or blue list includes companies like Granite Construction (GVA), Tesla (TSLA), First Solar (FSLR), chip giant Broadcom (AVGO) and the iShares MSCI Germany ETF (EWG), which owns several top German stocks. The bet is that these companies might thrive if Biden wins and pushes for the United States to rebuild highways and bridges, wean America off oil and restore fractured trade relations with China, Japan, Europe and other global economic leaders. Make America relaxed again: Democrats promise less stress if electedInvestors also seem to think that affordable health care and more relaxed laws regarding marijuana use could be in the cards if Biden is the next president. Along those lines, insurer Centene (CNC), hospital owner HCA (HCA) and Canadian cannabis firm Canopy Growth (CGC) are in the “blue” portfolio.Meanwhile, a group of oil and fossil fuel producers, big defense contractors and bank stocks tracked by Strategas that might do better under a second Trump term is down 9% in the past three months. Driller Transocean (RIG), coal miner Peabody (BTU), military suppliers Lockheed Martin (LMT) and Northrop Grumman (NOC), and Wall Street powerhouses Bank of America (BAC) and Morgan Stanley (MS) are part of this “red” basket.The Fed may matter more than the president This is no guarantee of a Biden win. The market (and many political pundits) notoriously underestimated and misjudged Trump’s chances against Hillary Clinton in 2016. And it’s only September — a lot can happen in the two months before the election. Trump could make a comeback in the polls after the debates. Positive news about possible Covid-19 vaccines could also benefit the incumbent.But other experts also think Wall Street is signaling that it expects Biden to win, and that this could be a good thing for the continued economic recovery.Wall Street's worst nightmare isn't Trump or Biden. It's no clear winner at all For one, there’s historical precedent for Biden to stick with current Federal Reserve chair Jerome Powell, who has been praised for tackling the Covid-19 economic crisis by slashing interest rates to zero and launching several new lending programs.Biden’s former boss, Barack Obama, stuck with George W. Bush’s appointed Fed chair Ben Bernanke so that Bernanke could continue to manage the Fed’s response to the 2008 global financial crisis. In other words, Obama chose continuity over partisanship.Trump could very well keep Powell for a second term. But the president has often lashed out at Powell on Twitter and in news conferences for not acting quickly enough to cut rates. He even bashed Powell for not slashing rates below zero, a risky move taken by Europe and Japan.That makes a reappointment of Powell under Trump less of a slam dunk.”There may be more risk of Powell being replaced under Trump than Biden. Trump was criticizing Powell even when the economy and market were both doing well,” said Nela Richardson, an investment strategist with Edward Jones in an interview with CNN Business.”That’s just one reason why the outcome of this election is not as cut and dry. Biden represents the precedent of Obama keeping Bernanke,” Richardson added.Another market expert noted that the usual knee-jerk market reaction to White House politics (i.e. a Democrat is bad because they would raise taxes while a Republican will cut them) may not hold water in 2020.”We lean against the conventional thinking that Biden = tax hikes = bad for the market,” said Katie Nixon, chief investment officer of Northern Trust Wealth Management, in a recent report.”There is more at play, and the calculus behind the totality of proposals is complicated, with the impact of tax increases potentially offset by a repairing of trade relationships around the world,” Nixon added.