Impeachment and the Stock Market

We’ve got some smart people on this board, so what do you think would happen to the stock market should Trump be impeached and convicted by the Senate? I assume that Mike Pence will be almost as friendly to Corporate America as Trump is.

Will the stock market tank as Trump says, or will it likely take a hit and then remain roughly where it was before the impeachment? I think the latter.

The stock market responds negatively to uncertainty about the near-term future. I would suggest that impeachment would *reduce *the uncertainty that Trump’s continued occupation of the office creates.

It would take a hit but soon recover. Doesn’t like short term issues but nothing that’s affecting it long term would change.


Saw this in the news and thought, man, Trump is getting desperate. :stuck_out_tongue: Pretty much what Elvis said…it with almost certainly take a small short term hit, then recover. Depending on what (presumably) the new President Pence does, it might actually be an improvement over the uncertainty that that chaotic Trump administration has caused. I could see a new president deciding to do a 180 on trade tariffs, at a minimum with our close allies in Europe and our two neighbors close to home, and even seeking to negotiate (in good faith) with the Chinese about the actual issues we have with them causing a large uptick in the currently stagnant stock market in the medium term.

I am legendarily bad at predicting stock market movements but I’ll give it a shot. Uncertainty is generally bad for the market and surprising outcomes from uncertainty are worse.

My guess is that there would be some pressure on the stock market leading up to impeachment proceedings. If the vote was overwhelmingly likely to go one way or the other, there would be little volatility or further downward pressure. If the Senate vote on removal looks close, there would be greater uncertainty and thus greater volatility until the vote. Ironically, I don’t think the stock market would really be dramatically affected regardless of whether any vote was to remove him from office or to keep him. The key factor is that the vote fall in line with the market’s expectations, whatever they may be.

Thanks everyone. Well there’s this.

An early indicator would be the reaction of the market if the Dems take over one or both houses of Congress. That would change government policy far more than a Trump to Pence transition.

Are there signs that there’s a stock bubble? If so, anything could break a bubble.

I agree with this. The stock market reacted favorably to a Republican being elected President, not Trump, under the assumption that there would be lower taxes and less regulation, which many see as favorable to business. The Democrats have been tagged (unfairly in most cases) as creating more uncertainty for business thru more taxes and more regulation.

Trump likes to take credit for things other people put in place, and thinks he has far more control of the stock market than he really does. His threat connecting his impeachment with a stock market plunge is empty. If the market turns it will be for some other reason.

Without Donald Trump and his brain we would all be so poor.

I agree it would be difficult times for America’s joke writers and late night humorists. Think about it. Without our Punchline-in-Chief, they might have to actually work. Sad times indeed.

Not as much as you would think. The Republicans are very likely to retain control of the Senate, and of course will still hold the White House.

So that means you now have a Democratic House. But what is the change you’re expecting? The problem for Republicans is that they haven’t been able to pass much of anything except the massive tax cut for the rich. They’re in auto-gridlock. They have all this legislation they’d love to pass, in theory, the only problem is that it’s so unpopular they’re afraid to pass it. So we’ve had two years of a do-nothing Congress, and taking over the House means more of the same. Maybe we’ll see some dramatic bills passed in the House that go on to die in the Senate, which will mean nothing.

Those are the odds, sure, but “very likely” is very likely an overstatement.

Gridlock is very likely to continue, though.

The Dow and S&P have been on a smooth, almost linear, upward rise for nine years. The market may be a wave about to subside, but not a bubble about to burst.

From some of the things I’ve read people think we’re due for a market correction, with some even predicting a slide into recession. I take the most dire predictions with a grain of salt since people have been predicting a major market crash for a few years now.

Trump gauges the success of his administration mainly on how well the stock market is doing, which is exactly what you would expect from someone straight out of corporate America. Don’t get me wrong, I like a strong stock market as much as the next guy, but I worry about an oncoming recession that will throw a lot of people worse off than I am out of work. And so the cycle continues…

Past performance is no guarantee of future results, however, we do have some history here.

If you look at the historic S&P 500 results, you’ll see the market dropped sharply from the end of 1972 to mid-1974. That coincides neatly with Watergate, but it also coincides with the end of the Vietnam War, the final trip to the Moon. and the fact that the market hit a peak in November 1972, so who’s to know how much of the drop was Watergate, and how much was due to other forces. It’s also notable that after Nixon left office in August 1974, the market rose throughout Gerald Ford’s presidency.

When Bill Clinton was impeached in December 1998, the market was in the middle of the dot com bubble, which continued until near the end of 2000.

The assassination of John F. Kennedy and the death of Franklin Roosevelt didn’t affect the markets at all once the immediate shock passed.

Well the market might be hopeful that more good stuff for business would pass - which isn’t going to happen in this case. And we might see some interesting hearings - now blocked - of what the administration and business has been doing.
There might be something about ending the trade war. Republican senators from farm states, already facing a revolt, might be hard pressed to vote to depress agricultural exports.
But this is probably assigning way too much rationality to the markets, which might well go “oh shit, the tide is turning.”

Also the first Arab oil embargo and increase in the general inflation rate in the US from 3.4% over all of 1972 to 10.3% over all of 1974. It’s reasonable to believe that was the predominant factor besides the political uncertainty. I say reasonable to believe since there is never an absolutely objective basis to say which factors are most important in the market’s moves. There are always multiple things going on. The moon landings were almost surely a triviality to the stock market, and the more or less expected basic throwing in of the towel in Vietnam by the US was probably a minor factor, whereas the spike in oil prices flowing through to general inflation was a huge deal. But if you push back and say ‘prove it’, it’s never easy to do.

And that’s about debating past cause and effect. Predicting future cause and effect is even less tethered to provable facts. My surmise would be that the now richly valued US stock market* would fall pretty hard from serious political turmoil. Although depends the scenario and the question is always whether an event represents damage to future earnings capacity of companies. If the Democrats win the House, pursue impeachment and it goes nowhere in the Senate there will be no permanent damage. If under a barrage of yet to be revealed evidence the GOP turns on Trump and there follows a public groundswell in favor of a Democratic Party firmly shifted to ‘democratic socialism’, then the market will melt down.

I’m not saying that will happen. I’m not saying you can’t argue for a much further left Democratic Party to address the problems of US society. But the stock market would seriously dislike that, and it wouldn’t be a passing squall. A centrist/mild left Democratic Party? The market doesn’t care much as has often been shown, especially when there’s enough GOP power to further moderate or gridlock it. Also to disclaim, the market wouldn’t be happy with dominant and united Trumpist/populist (protectionism particularly) GOP, not that that’s likely soon anyway. And is not the case now. The GOP now is split between conservatives and populists, and has only a semi-functional working majority in the House and a non-filibuster proof majority in the Senate.

*also arguably a factor ca. 1972 also, anyway the market was generally more expensive on a price/earnings basis over the 60’s to early 70’s then it had been in the 50’s or than it got for the rest of the 70’s and till the late 80’s when it began the long march to today’s heights.

The Wall Street Journal just put out an analysis assuring investors they have little to fear from a Trump impeachment. Don’t allow Trump or his Jackass followers to frighten you into otherwise or that there will be any sort of civil war if he gets his ass bounced.
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