In a show of fear-mongering and overweening ego, President Trump has proclaimed that if he loses the 2020 Presidential Election, our economy will self-destruct, as embodied in this Mediaite headline:
Trump Threatens ‘Economy Will Go Down the Tubes’ if He Doesn’t Win Re-Election
So it seems to me that with the advent of the Impeachment Inquiry, we should be seeing a restive and unhappy market. Are we? Here are the monthly charts for the 3 most popular stock indexes, data supplied by MarketWatch/BigCharts:
Each is down slightly since the announcement of the inquiry, and in my experience is indistinguishable from many other periods of economic instability or even boredom. Their behavior can easily be attributed to many causes, including building concerns about the Trump tariff war with China and other countries, declining manufacturing activity, the bond yield curve inversion, and less immediate concerns, such as the failure of the last four Executives (Clinton, Bush II, Obama, and Trump – we could even include Bush I, but my informal memories of government activity begins to fade that far back) to curb monopolistic business practices by down-thumbing many mergers and, yes, even breaking up monopolies such as the too-big banks, or concerns about poor big bank business practices from the constant drive to improve profits….
>breath<
My point being, if the markets and the economy were so dependent on the presence of Trump in the Oval Office and the Republicans in control of Congress, then I’d expect the markets to be in a tail-spin and President Trump shouting hellfire and damnation down upon Pelosi and the Democrats.
Instead, the investment community, to the extent that one can speak of a heterogeneous collection of individuals and entities as if they are one individual with one mind, is quite sensibly keeping its focus on the economic situation, while keeping an eye on the House exercising its due diligence and obligations in overseeing President Trump’s activities. Given the gross incompetence exhibited by the Republicans in the previous Congress in which they passed the 2017 tax “reform” bill which resulted in little more than a sugar-rush spike of business activity, followed by a return to the mean, while government deficits jumped in a horrific manner, I think investors realize that Republicans are not God’s gift to the United States. Instead, the Republican vision of the economy appears to be based on ignorance, such as the role of regulation in business and the nation, and “miracles” such as the discredited Laffer Curve.
I think, as an investor, I do not expect the Impeachment Inquiry to cause an economic uproar, and while if an Impeachment does occur and a trial is permitted by the perfidious Senator McConnell (R-KY), even a conviction in that hypothetical trial will cause only a momentary uproar in the markets. Indeed, if a President Pence were to announce the retraction of tariffs, you might see a jump in the markets, albeit momentary and possibly of the aforementioned sugar-rush variety.
So much for President Trump being the economic savior of the nation. We’ve been pumping along on the same path that President Obama, to the extent that the President matters, left us on, and while that path hasn’t been optimal (see earlier remarks concerning monopolies), it’s been fairly darn good. Unless Trump wrecks us with ridiculous tariffs or finds some other way to crack the economy, I don’t expect the political uproar in Washington, appropriate or not, to do any long-term major damage to the economy.
But I do expect Trump to deploy that argument during this entire political process. Just shake your heads and discount it.
