Well, folks, I am sure this week, if you have younger children at home, you were busy sorting out costumes and making sure the candy was in ample supply for the crush of trick or treaters. Sounds all pretty normal and comforting! As my prep duties at home were completed early, I started to research the potential past correlation of impeachment and market performance. Fortunately, we don’t have an abundance of home-grown events to evaluate, however some of our close trading countries had some data to contribute.
Our first impeachment attempt was levied against President Johnson who had taken office after the assassination of President Lincoln. President Johnson, soon after he replaced President Lincoln, was charged with violating the Tenure of Officer Act for removing Secretary of War Edward Stanton. Johnson was acquitted three days after Stanton’s acquittal. Watching too much evening political coverage on President Trump’s current political standing certainly has interested me in the possibility of impeachment.
More in our time was the break-in event at the Democratic National Committee offices at the Watergate Office Complex in 1972. The spotlight was eventually focused on President Nixon and indeed it was quite the battle. Once the burglars were identified, a narrative surfaced that placed many of Nixon’s close ties at the organization and in the direction of the break-in. It was believed that the mission was to spy on the Democratic party and sabotage elements of their proposed political plans. As the story and facts started to be understood, the White House counsel was fired and the FBI director resigned for destroying evidence. It was becoming clear that more people were aware that possibly efforts to cover up any inquiry on the Watergate break-in were coming from the top. Washington was still pursuing at this time a full legislative agenda. The Bretton Woods Agreement, which was a fixed exchange rate system established after WWII, converted to a floating rate system in March of 1973 (Nixon Initiative).
The following events all produced meaningful market moves:
WATERGATE:
Spying events first reported in 1972
End of the fixed rate exchange system 1973
Televised hearings in 1973
Nixon resigns December 1974
THE CLINTON /LEWINSKI SCANDAL:
Major drop in world equities early 1999
News of scandal breaks 1998, Clinton confession 1998
Clinton acquittal, US Equities and Bonds recover January 1999
Click below to read an interesting article by Washington-based journalist Elizabeth Drew entitled, "Will Trump Be Removed from Office."
https://www.project-syndicate.org/commentary/trump-impeachment-removal-from-office-real-possibility-by-elizabeth-drew-2019-10