By Kevin Kelleher
August 23, 2018

President Trump’s warning that his impeachment would cause markets to crash caught Wall Street’s attention Thursday—and quickly elicited more than a little skepticism

“I think that if I ever got impeached, the market would crash,” Trump told Fox News in an interview. “Everybody would be very poor.”

Analysts and investors active in the market on a daily basis quickly dismissed Trump’s claim, mostly because his pro-market policies would continue without him. “Trump isn’t irreplaceable. I don’t think the market would crash,” Ed Yardeni, president of investment advisory Yardeni Research, told CNN.

“It’s a ridiculous remark — the kind of thing a Latin American dictator or a Middle Eastern strongman would say to keep supporters in line,” Josh Brown, CEO of Ritholtz Wealth Management, said to CNBC. “President Pence will be just as friendly to corporations and just as supportive of low taxes, as would any other Republican.”

In Trump’s defense, U.S. stock market indexes are trading near record highs. The S&P 500 Index has risen 22.5% since Trump was sworn into office in January 2017, buoyed in part by a big tax cut. Under Obama’s two terms in office, by contrast, the S&P 500 rose 210%.

And while many stock market investors are celebrating what by some measures is the longest bull market since World War II, the advanced age of that bull suggests the market could decline under Trump even without the threat of any impeachment proceedings.

Trump is also benefiting so far from the extension of an economic recovery that began early in the Obama administration. The U.S. GDP has risen an average of 2.9% during Trump’s time in office, in line with the average economic growth since World War II. While that growth rate is better than the 2.1% average for Obama, it’s below the average economic growth during the Reagan, Carter, Ford, Johnson, and Kennedy administrations, according to Bloomberg.

Impeachments, of course, have never been good for the stock market, where investors dread uncertain outcomes. President Nixon faced impeachment in the midst of a prolonged bear market. Between June 6, 1974, when a grand jury revealed Nixon as an unindicted co-conspirator in the Watergate investigation, and Aug. 9, 1974, when Nixon resigned, the S&P 500 declined 13%.

In the 1990s, when the stock market was in the middle of a bull run, the S&P 500 fell nearly 20% in the weeks leading up to Kenneth Starr’s report on President Clinton. However, the market more than made up those losses even before the Senate acquitted Clinton.

In short, while few investors with long positions in the stock market would welcome the turmoil that would likely result from impeachment proceedings against Trump, the notion that the turbulence would leave everyone poor is likely more than a little far-fetched.

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