According to President Donald Trump, everybody would be very poor if he were to be impeached.
The president told Fox News, “If I ever got impeached, I think the market would crash. I think everybody would be very poor.”
The comments came after his personal lawyer Michael Cohen had pleaded guilty to 8 counts that included illegal campaign contributions made “at the direction of a candidate for federal office.”
Predictit, a New Zealand-based prediction market that offers prediction exchanges on political and financial events, has revealed that the odds of a Trump impeachment hit a three-month high. 37% believe that the impeachment has a chance of happening by the end of next year while 45% believe it will happen during Trump’s first term.
JPMorgan’s John Normand wrote, “Fiscal stimulus, which has been the most-material driver of this year’s step up in US growth and corporate earnings, would not be reversed if the mid-term elections delivered a Democratic Congress, an impeachment process or eventually a guilty verdict.”
He continued, “Neither has the Trump Administration been proposing a deregulatory agenda comparable to Reagan and Clinton’s that requires legislation to deliver transformational change. The agenda is advancing more through personnel, priorities, rules and executive orders, which are important at the sectoral level (Financials, Energy) but not at the macroeconomic one. Thus, rethinking the direction of the economy or financial markets on the prospects for less deregulation under a preoccupied or a different President seems hasty.”
“Perhaps there is a tactical case for reducing overweights in Equities versus Bonds this Fall, on a view that a high P/E market is typically vulnerable to drawdown before an event risk,” Normand added. “But the case for strategically underweighting stocks or shifting to long duration is poor unless one believes that prospects for US growth, earnings and the Fed in 2019 rest on this aspect of domestic politics.”
“If, at some point, Trump’s Presidency ends prematurely like Nixon’s, the lingering question for EM – or at least the China complex – will be whether the new boss Vice President Pence will be the same as the old boss,” he said.
Strategas has said that if Democrats win the House in November, an impeachment effort is likely. CEO of Strategas, Jason Trennert, said in a note, “That clearly would present a risk to the market in the immediate aftermath of the midterms. In any case, in the event of impeachment or resignation, there is no evidence to suggest that a President Pence would have a dramatically different approach to economic affairs.”
Trennert also wrote, “We believe this would ultimately have little impact on monetary, fiscal, regulatory, or trade policies in the long-term but could have a meaningful, if short-term, impact on market returns.”