Strategists say it’s likely Democrats will gain control of the House, but the Senate is expected to remain in the hands of Republicans for now, and therefore Trump’s economic initiatives will stay in place. The market has gained on the earnings boom created by Trump’s corporate tax cut, and tax reductions for individuals are driving consumer spending, a big contributor to economic growth, at 4.1 percent last quarter.
“It’s always easy to be Teflon when the economy and market is doing well,” said Maley. “It’s a psychological thing. If the economy holds up, he’ll be able to deflect this.”
Maley said he disagrees with the view that Vice President Mike Pence would easily succeed Trump, if he were ousted as a result of special counsel Robert Mueller’s investigation. “That’s great, but you have to get from point A to point B. Trump is not going to go down easily. He’s going to drag it out. Would a Pence presidency be good? Maybe, but it would take a while to find out,” he said.
There is precedent for the market to ignore a president’s troubles, as it did during Bill Clinton’s presidency when Congress impeached him for lying about his relationship with intern Monica Lewinsky.
“The market didn’t seem to care. They were thrilled Long Term Capital Management didn’t drag down the entire system,” said Stovall. But when Richard Nixon was under fire for the Watergate scandal, the market and economy were in a far different place.
“We were already in a 48 percent bear market that started January 1973 and were were actually a few months away from bottoming. Nixon’s resignation probably was viewed positively because it got the negative news out of the headlines,” said Stovall.
But talk of impeachment may actually help Republicans like it helped Democrats in 1998 when Clinton was facing a similar situation, said Clifton. Democrats that year held on to Congress as Republicans called for impeachment, Clifton said. So far, Democrats are avoiding that talk.
“I’m not sure investors are going to care,” said Bruce McCain, chief investment strategist at Key Private Bank. “A lot of the conversation this morning is surrounding the fact that what they need to impeach is not there.”
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