What impact can the 'impeachment' have on Trump on Wall Street?

[[Nike]]

impeachment: a political trial that already affects four presidents
USA. Congress launches the first step of the 'impeachment' against Trump
Is Donald Trump's possible impeachment good or bad for the economy and financial markets?

Answering that question is impossible. But the few historical precedents that exist indicate that Wall Street is not concerned about the political crisis, but the situation of the economy. And, judging from what happened on Wednesday, when the Democratic leader of Congress, Nancy Pelosi, announced the opening of investigations to decide whether to launch the impeachment, that is the case now too. Although the Stock Exchange moved with the decisions of Pelosi and Trump, the ups and downs were below 1%. And the market closed the day in positive.

In the six months of 1974 that passed since Congress launched the impeachment against Richard Nixon until he resigned, the S&P index of large US companies fell by 13%. But the crash was only part of a bear market that caused the index to lose a brutal 48% in 1973 and 1974 for reasons that had nothing to do with the US political situation, but because of the first oil shock and the consequent rise in inflation. In that scenario, the impeachment was only a footnote.

In the 12 months that the impeachment of Bill Clinton lasted - from February 1997 to February 1998 - the opposite happened: the S&P rose 23%. It is true that, in between, in August and September 1998, it fell 20%, just coinciding with the publication of the report of the special prosecutor of the 'Lewinsky case', Fred Starr.

But the drop was not due to the report or the decision of Congress to make it public, with its quasi-pornographic details about the sexual relationship between the president and Monica Lewinsky, but the suspension of payments from Russia in August 1998, and the consequent collapse of the hedge fund LTCM, which put the world near a crisis like the one that followed the fall of Lehman Brothers, exactly 20 years later. There is another impeachment, against Andrew Johnson, but it took place 151 years ago, when neither the political nor economic situation in the United States resembled the current one in almost nothing.

The macroeconomic situation in the United States is more reminiscent of that of 1998 than that of 1974: there is full employment, there is no inflation, interest rates are very low, the dollar is high, and the stock market has record highs. One of the biggest differences is that in 1998 the US had a fiscal surplus and now has a deficit triggered. But, in a world where there is plenty of liquidity, the first world economy has no problem financing its growing red numbers.

There is another bigger difference: politics. The US is engaged in a large-scale trade war with China, and it seems that Donald Trump wants a truce. In fact, on Friday, the White House leaked to the media that it does not rule out expelling Chinese companies listed on the US stock exchanges and prohibiting US funds from investing in the Asian giant.

Add to this that the United States is slowing down - the figures for private consumption and business investment published last week have been much worse than expected - and the picture is more confusing. Especially since Richard Nixon and Bill Clinton did not get into economic policy, and the second secretary of the Treasury during his impeachment was Robert Rubin, who had immense support on Wall Street.

Trump is the opposite. He has pressured and insulted the Federal Reserve to lower interest rates, and does not consider abandoning its trade wars. In fact, Washington will announce tomorrow the imposition of import tariffs for 7.2 billion euros ranging from aircraft components to olives.

This uncertainty in economic policy can add to the uncertainty in domestic policy and impact the market. But, as long as the opposite is not proven, it is the commercial war with China - and perhaps with the EU - and the progress of the economy that will affect the markets. The impeachment, at least for now, doesn't worry on Wall Street.