I have said this repeatedly in past kortsessions.com posts. What the strong market has been about is a growing economy (albeit not fast enough for some folks), low inflation, low interest rates, accelerating corporate earnings growth and a world-wide, synchronized economic recovery … oh, yes, for better or for worse, reduced regulation … something the president can take direct credit for. Except for the regulation piece these factors were in place long before last year’s election and they continue in place today despite the totally dysfunctional environment in Washington, DC, which, in part, I lay at the feet of President Trump. He is the chaos president, just as he was the chaos candidate. He cannot help himself and he will not change. That is the problem. His tweeting and other shenanigans have created an environment where, because of his self-created distractions, nothing gets done.
So, Why did the market reacted so negatively (DJII down an immediate 350 pts.) over Mike Flynn’s guilty plea?
I’m not sure. My belief is that Mr.Trump is, at best an impediment to getting things done and, at worst … well I won’t go there. If General Flynn’s revelations about the president implicate him in some sort of nefarious relationship with the Russians, there is no reason to believe that the Republicans in the House of Representatives would bring articles of impeachment. So far no matter what the president has done or said has had any consequence in weakening their support. But, let’s just say the House does act. What’s the worst thing that can happen? Mike Pence!
But you say, Mike Pence is no Donald Trump. You’re right. He somewhat understands the Constitution, has experience working in Congress and does not tweet. Oh yes, he appears to be somewhat rational. Though this may not be the most glowing recommendation for the Veep, Mr. Pence might be an answer to the dysfunction. He might be a better person to shepherd the ‘golden fleece’ of tax cuts and tax reform through the legislative process. BTW, tax reform and cuts are not life threatening/must items. They do not have to get done before year end.
So I submit for your careful inspection the proposition that the market moves higher on the news of a Donald Trump impeachment.
What’s your take?
P.S. In the odd chance VP Pence as part of his role in the transition team is caught up in this scandal are you ready for President Ryan?
P.P.S. BTW, the fact that a version of the tax bill has made it out of the Senate does not mean that it is a done deal (though the futures market, as we approach Monday’s opening appears to be ready deem it a fait accompli). That bill still has to be reconciled with the version that has come out of the House of Representatives. This could be a very sticky proposition despite the partisanship involved. Again, the market’s prosperity is not resting on the question whether we get tax cuts and tax reform or not. It is resting on a relatively strong economic foundation that has been building over time.
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