A Donald Trump impeachment is going to be a lot different than getting fired on “The Apprentice,” but that doesn’t mean the stock market will collapse. It could go the other way.
President Trump is bracing for impeachment and told Fox News that he thinks the stock market will collapse if that happens.
“You’re fired” appears increasingly likely for Trump after his former campaign chairman was found guilty on Tuesday of eight charges including tax fraud, and his former lawyer admitted to violating campaign-finance law on Trump’s orders.
White House scandals and constitutional crises are never good for the stock market, Time, Inc. reported.
There’s historical precedent to back this up. When President Richard Nixon fired Watergate special prosecutor Archibald Cox in October 1973, and then-Attorney General Elliot Richardson resigned in protest, the S&P 500 fell 14 percent from Oct. 1 through November.
But that stock market slump wasn’t just about Watergate and the constitutional crisis. It lasted more than a year-and-a-half, during which war broke out in the Middle East, oil prices quadrupled, and inflation hit an annual rate of 12.2 percent, Jason Zweig wrote in Money in 1997.
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“Nixon’s so-called Saturday Night Massacre took place while Wall Street was already mired in one of the worst bear markets in history. From January 1973 through August 1974 — a period that includes the conviction of the Watergate burglars, Nixon’s resignation, global oil shock, Middle East turmoil, and a dramatic spike in inflation — stocks lost 42% of their value.”
Despite the legal challenges that could threaten Trump’s presidency, the market has been demonstrating remarkable resilience, according to Market Watch.
The Dow Jones Industrial Average has gained 4 percent so far in 2018, while the S&P 500 index has risen by about 7.5 percent over the past eight months, and the Nasdaq Composite Index has gained more than 15.1 percent so far this year, according to FactSet data.
“The current bull market, by some measures, is the longest on record, spanning 3,455 days, as of Thursday’s close.” — Mark DeCambre, Market Watch.
— Jamarlin Martin (@JamarlinMartin) August 21, 2018
In May 2017, Market Watch columnist Mark Hulbert warned against treating the prospect of impeachment with what he described as a “cavalier attitude.
Hulbert tracks the advice from more than 160 financial newsletters and monitors financial radio and TV. He said he had observed an attitude “as if we are dealing with nothing more serious than someone getting fired on ‘The Apprentice.'”
“Donald Trump is capable of anything,” Hulbert wrote. “If he senses that a long drawn-out impeachment saga has begun, he could very well decide to short-circuit the process by resigning. Jeremy Siegel, the Wharton finance professor and author of the investment classic “Stocks for the Long Run,” says the Dow Jones Industrial Average might rally a thousand points if Trump steps down. But if Trump instead circles the wagons and fights the process, as Nixon did, it’s harder to be sanguine about stocks’ prospects over the short- and intermediate terms.”