Figuring out the market implications of political events is one of the more challenging aspects of market analysis.
Everyone has their own views on the partisan issues involved. And it’s no secret that people don’t always have rational reactions to political situations.
Plus, governments are notoriously not likely to do what makes the most economic or financial sense.
Fortunately for analysts, so far, the markets appear to be ignoring most of what’s been going on in the US Capitol. This is, of course, in reference to President Trump’s either treasonous or perfect phone call with the President of Ukraine, depending on where you stand.
Despite the recurring headlines of explosive revelations, the markets have been reacting to other things. And, so far, they’ve been unaffected.
It’s a Good Show
That’s not to say that there couldn’t be important market implications. Should the Senate vote to convict Trump, it would be a first in the country’s history. And the market would likely be very unhappy!
Vice President Pence will be present for the vote. The Chief Justice is also already at hand. So, should Trump be convicted, the new President would likely be sworn in immediately.
We expect the vote to be happening today.
The markets, however, see this as such a remote possibility that it’s not worth bothering with.
For virtually all analysts, it was from the beginning a foregone conclusion that the House would vote to impeach, and the Senate would vote to acquit. This leaves things practically where they were at the start.
It’s All About November
The aim, according to the consensus, is to make a political point.
The Democratic Party has concluded that Trump will be easier to defeat in November if he’s been impeached. Even if it’s just along party lines.
They point to the polls showing a majority of Americans believing that Trump should be removed from office. And, by keeping the focus on Trump, they might find it easier to unify disparate groups towards a common goal.
How well will this work?
Well, just ask pollsters who thought Hillary Clinton would be President now about the reliability of political projections this far ahead of the election. Or the pollsters that showed Mitt Romney had a good chance of beating Obama.
The reality is that it’s usually really hard to unseat an incumbent President without a third party “spoiler” candidate. The last time that happened was in 1980, with the election of Ronald Reagan, in the middle of an economic and political crisis.
Donald Trump’s polls have remained largely consistent since he was elected. This suggests that how the election will go has more to do with who the Democratic candidate is.
Running as an impeached presidential candidate will be a first. But, given the vote to do so was and likely will be along partisan lines, the public might take it the same way markets have…
It’s political theater. And that doesn’t change the underlying issues. Trump’s standing in the polls seems to be much more closely correlated to the perceived state of the economy than any of the numerous Washington scandals.
Given the potential of the coronavirus outbreak to affect the economy, it just might be that Trump’s electoral prospects have more to do with China than anything happening in the Senate this week.