The impeachment of Donald Trump is in its final stages. The House of Representatives impeached the President for “abuse of power” and “obstructing congress”. These charges are very series, but the US stock market is taking it in stride. The underlying reason that stocks have not sold off or become more volatile as the trial enters its final days, is that market participants do not believe there is any chance that the US senate will convict Donald Trump. If they did, share trading would be very volatile.
How did the Impeachment Start?
The Impeachment (an inditement) of President Donald Trump began in the US House of Representatives. The charge was for abuse of power and obstruction of congress. The House of Representatives accused Donald Trump of soliciting a foreign government for help in a US election. In addition, when the House of Representatives issued subpoenas for documents and witnesses, the President denied their requests. The House said that this was obstruction of congress. These moves were telegraphed to the market, but stock prices remained resilient. Throughout the process, investors remained convinced that despite the charges, the senate would not remove President Trump from office.
After the US House of Representatives
The impeachment subsequently moved to a trial in the US Senate. The Senate needs 66 votes to convict a president and remove him from office. Donald Trump is a republican and the Senate republican hold a majority. There are currently 53 republican Senators and 47 democratic senators, making a 66% removal number nearly impossible. In fact, it appears that the Senate does not even want to hear witnesses. If this were the case, this would be the first impeachment trial in the United States that did not require witnesses. One Senator, Lamar Alexander, a Republican from Tennessee, who was on the fence, said that he did not need to hear from witnesses. He said that the House Managers proved their case and the President did something improper. In his view, the improper actions of the President did not rise to the level of impeachment.
The Bolton Revelations
There was some volatility during the impeachment hearing as excerpts of a book by former national security advisor John Bolton was leaked. Bolton was blocked from testifying during the House Impeachment trial but would testify in the Senate trial if he were subpoenaed. The Bolton manuscript had verbiage that said that President Donald Trump told him that Ukrainian funds would be held up until the President of Ukraine announced that he was formally investigating a Trump political rival Joe Biden. This is firsthand testimony and would prove that Trump did what the House of Representative said he did.
The key take-away from the Impeachment of Donald Trump is that the market has shrugged it off and will only really care if there is a strong likelihood that the President will be removed from office. With a majority in the Senate, this is unlikely. What is also clear is that many senators now seem to feel that the President did something wrong. If you believe former National Security Advisor John Bolton, the President solicited help for the 2020 election by asking Ukraine to announce an investigation into the President’s rival.
What the republican senate is saying is that this activity does not rise to the level of impeachment. This appears to have created a new bar for presidential activity. If this mantra sticks, the stock markets should continue to ignore the impeachment of Donald Trump.