Common Cents for August 24. 2018? A Peach?

August 24, 2018, by John Norris

During an interview with Fox News’ Ainsley Earhardt this week, President Trump had this to say: “If I ever got impeached, I think the market would crash, I think everybody would be very poor, because without this thinking, you would see…you would see numbers that you wouldn’t believe in reverse.” This is an amazing thing for the President of the United States to say, for a lot of reasons.

However, is it true? Hmm. Do individual politicians get too much credit for the good times and too much blame for the bad?

First things first, to impeach the President would require a simple majority of yeas in the House AND a two-thirds vote in the Senate. To all but ensure an impeachment, the Democrats would have to win the House, as well as sweep ALL Senate elections in November PLUS sway an additional 2 GOP Senators to vote for it. While the former might be a possibility, the latter will be a pretty tough row to hoe…in my opinion.

Still, for grins, would impeaching Donald Trump send the economy and markets into a tailspin? The proverbial ditch?

The answer is those things could happen in any event, and very easily coincide with any impeachment proceedings. The reason is pretty simple: recessions and bear markets are part of the cycle, and we haven’t had either in quite a while. Oh, I will stop short of saying we are on borrowed time here, but the current decade ends in 2020 and this would be the first decade in over a century without a recession if the good times can last another 2.5 years. Seriously.

So, if you are looking at the calendar, what is the probability of impeaching President Trump prior to the end of 2019? Understanding how many seats the Democrats have to gain in the Senate in 2018 to make it a slam dunk, as it were? Probably not real, real high, which would take us into 2020…which is an election year. Impeach the man in 2020, and the odds are we were probably looking at a slower economy anyhow. 2021? You know, I would be willing to bet a plug nickel we will either be exiting or entering a modest recession by then…regardless of any political shenanigans or gamesmanship in Washington. While I am supposed to say something like ‘past performance is not indicative of future results,’ those are just the odds.

But that won’t stop ‘us’ or ‘them’ from assigning either blame or credit for the ultimate demise, or salvation, of the present Administration.

To be sure, Donald Trump is not the first unpopular President, nor will he be the last. Further, I will go out on a limb and say there will never be a mid-term Administration which enjoys anything over, say, a 75% approval rating during peacetime. That is just the way it is. To that end, according to Gallup, Barack Obama had -7 and a -8 approval rating at this point in both 2010 and 2014. Right now, according to realclearpolitics.com, as amazing as it might be for some, Trump is currently at a -9, which isn’t terribly different than the previous resident at 1600 Pennsylvania Avenue.

However, this particular President engenders some extreme emotions from both supporters and detractors…really extreme. I mean people get unhinged and/or unglued talking about the man. So much so, I would be far more concerned about the potential for significant societal discord during the impeachment process, if not the probability, than market volatility.

It isn’t even close.

So, here is where we are IF the Democrats win both houses of the Congress in November: 1) impeach Trump, get Pence, and probably get the blame for the economic slowdown in 2020 or 2021 (which was probably going to happen anyhow), or; 2) attempt to impeach Trump, fail, and all but ensure the next Democratic President gets the same treatment by the GOP (perhaps this is just deserts for the brouhaha with Bill Clinton back in the day), or; 3) abandon any effort to impeach Trump and run the risk of tearing the Democratic party apart.

Of the 3, the first sounds like the best possible scenario, and 2 is probably the next best for the DNC’s power makers. So, I fully suspect it will be full steam ahead with the impeachment process IF the Democrats sweep in November. Heck, it might be anyhow.

Still…

We all know the following: stock prices come down to corporate profits, which are a product of economic activity. Period. Ergo, there is a strong, positive correlation between stock prices and GDP. The popularity of the person in the Oval Office? The likeability? The boorishness? While that stuff might make for wonderful fodder for the 24-hour news outlets, it is all about the Benjamins baby. It is all about the Benjamins.

Does that sound base? Greedy? Why yes it does, and I won’t deny it. However, why do people invest their own money? I would argue it is to make even more money, right?

Impeach Trump? Impeach any President? You are stuck with their Vice President, and a likely veto of anything the ‘opposition,’ meaning you, tries to pass. You got the votes to override a Presidential veto on everything? Your economic policies?

Probably not.

At the end of the day, the Trump Administration and Republican dominated Congress have enacted some pretty business friendly policies. As a result, despite where ‘we’ are in the economy and Fed tightening cycles (relatively long in the tooth on both), profits and activity are pretty good…arguably better than they would be but for the tax law and regulatory changes. However, as beneficial as they have been short-term, no one has ever been able to devise a foolproof cure for the cyclical nature of economic activity and profits. With that said, no one has ever been able to find a better alternative for a strong stock market than robust corporate profitability and the potential for more of the same.

Is impeaching Donald Trump the cure? The alternative? Would impeaching the next President be the ticket, regardless of political affiliation? Probably not.

…but that doesn’t mean ‘we’ will ever learn. Now, what is that old saying about history? And about those who fail to learn from it?