“If I Ever Got Impeached, I Think The Market Would Crash”

For starters this is not a political post (despite the title). This is a factual post. For kortsessions followers this will not be new news, but I think a refresher may be in order. The reasons are two-fold: the media is beginning to chirp about the market being affected by the president’s deepening legal woes as a negative for stocks and his statement above that ties market success or failure to the president remaining in office “If I ever got impeached, I think the market would crash, … Everybody would be very poor.”

Facts (i.e. The Truth-Opinion in italics)

Fact #1 — The secular bull market that we are now enjoying began early March 2009 and started from a low of 666 on the S&P 500. This was about 1.5 months into the first term of the Obama administration. At that time the unemployment rate stood at 10%. On November 1, 2016 (before the election of President Trump) the S&P 500 stood at 2128, a triple off the lows. The unemployment rate stood at 5%. At current writing unemployment hit a low of 3.8% in May of this year and as of July stood at 3.9%. So, unemployment has improved since the election but it had already improved dramatically in the previous eight years.

Fact #2 — Since November of 2016 the S&P 500 has increased at its high (2868) another 740 points, up another 34%. There were two primary reasons for this: A total barrage of executive orders mandating the removal of costly, business-stifling regulations coupled with a huge, very-stimulative business and individual tax cut. The cost of these tax changes is estimated to be a 1 trillion dollar increase in the federal deficit.

Fact #3 — If president Trump were to leave office tomorrow, President Pence would continue to support all of the current administration’s policies. My sense, too, is that trade policy/ trade war issues would magically go away.

Fact #4 It has been two years since our last major market correction. A potential Trump departure could trigger one. This would not be the end of the world or the death of the current administration’s economic policy.