Investors are currently faced with a new wrinkle: an “impeachment inquiry.”
Whatever that amounts to.
There were full-blown impeachment proceedings in the cases of President Clinton and President Nixon. In President Trump’s case, we have House Democrats dancing with an ongoing “inquiry.” If they had anything of substance, it seems they would have voted on it already.
With stocks at all-time highs, the market is already chuckling.
However, the possibility of a full-fledged, bipartisan impeachment is worth looking at with regard to the stock market. What could investors expect?
Historically, the market sells off in the short term and experiences downside volatility, creating a buying opportunity — much like it behaved during the Russia probe late last year.
In Clinton’s case, where there was hard evidence of lying under oath about a dalliance with a White House intern, the market sold off 20%. But once the Fed pumped money into the system, the S&P 500 rebounded 18.9% in one month, and 41.6% in the following six months. And Clinton was allowed to stay in office.
As for Nixon, there was a burglary at the Watergate complex, tapes discussing a cover-up, perjury taking place in the Oval Office and more. He was a goner from the words “break-in.” The market sold off some 30% for the 12 months from the break-in. After Nixon was forced to resign in 1974, the market rallied over 21% in a year, then continued rallying into the early 1980s.
The House’s “inquiry” time would be better spent working on the people’s business, in a bipartisan way. Things like infrastructure repair and job retraining for the 21st century are endeavors hard-working Americans would look upon kindly.
Besides, that’s what the politicians are actually paid to do.