The stock market’s most dangerous month begins today, and I’m going to tell you what is likely to happen that will make this October potentially the most dangerous of them all.
Another October stock market crash as in 1907, 1929, 1987 or the near-crash in 1989?
I can’t predict that. But I can predict that what’s about to happen in Washington will keep investors awake at night. And if your financial adviser doesn’t have a clue as to what I’m going to tell you, get a new adviser.
I predicted months ago that the Democrats would have to ramp up their attacks on President Trump as we got closer to the time when a report would be released by Justice Department Inspector General (IG) Michael Horowitz.
That report, years in the making, will probably contain a lot of devastating details about dirty tricks that the Democrats and their sympathizers in the FBI and the CIA pulled on then-candidate Trump.
It will also likely show a lot of the things that were done to the campaign of candidate Bernie Sanders by those who were trying to rig the Democratic nomination and the presidential election itself in favor of Hillary Clinton.
Bad things happened, some of which I picked up in this column when they were going on in the summer of 2016. For instance, I reported back then that the FBI investigations of Clinton’s missing emails were a joke and that then-FBI director James Comey didn’t have strong internal support for not indicting her, as he claimed.
It’s likely that people will be criminally charged shortly by a grand jury that is said to now be impaneled in Connecticut.
All of these developments could happen very soon. And I sense that the Democrats know this — and I’m told by a reliable source that the Dems have already seen some of the allegations. This is behind the sudden, intense push for the quick impeachment of Trump.
Just so you know, impeachment is a hollow threat.
The House, which is controlled by the Democrats, can vote to impeach Trump without any real justification. But the impeachment trial would take place in the Senate, where the Republicans have control.
And even if a show trial were to take place, the Democrats would put many of their own leaders in grave jeopardy of being questioned about past bad acts.
The impeachment effort that’s going on right now is a diversion — an attempt by the Democrats to get in front of the very bad things that are about to be released by Attorney General William Barr that are based on the findings of Horowitz.
The Democrats are going to say that Barr and Horowitz (who was appointed by former President Obama, by the way) are merely attacking the Democrats in retaliation for impeachment.
The first salvo in the Democrats’ next move came when House Speaker Nancy Pelosi last week offered her opinion that Barr had gone “rogue.”
The biggest problem for Wall Street is that the Democrats can’t let up on their attacks on Trump. If they do, they would essentially be conceding next year’s presidential election to Trump.
So how does this all affect the financial markets?
The chaos is already bothering Wall Street. When the Democrats yelled louder last week about impeachment because of a phone call Trump had made to the Ukrainian president, stock prices declined sharply.
When the contents of that phone call were released — and there didn’t seem to be anything impeachable — stock prices went back up.
Trump has already said impeachment would cause the stock market to collapse. Wishful thinking, maybe, so he can blame the Democrats.
But there are other economy problems all this political chaos could cause. It’s unlikely Trump will be able to make much progress on economic issues like trade with China if foreigners think he’s in jeopardy of getting kicked out.
Plus, federal budget deficits, tax issues and a whole lot of domestic financial matters aren’t likely to get resolved. All of this could push the US into a recession in 2020.
There’s one other thing.
Back when Bill Clinton was being impeached in 1998-1999, the Federal Reserve cut interest rates to help the economy.
The Fed might step in this time as well. But that’ll lead to more battles as the Democrats scream foul and the Republicans cheer the Fed on.
Buckle up.