The following market analysis was prepared for LeapRate by Ramy Abouzaid, ATFX (AE) Head of Market Research.
Faced with a historical impeachment, Trump tweeted “I’m not worried!”
Democrats: “We did not choose this impeachment”, Republicans answer “oh come on”.
On Wednesday the 18th of December – a Democratic-led US House of Representatives impeached US President Donald Trump for abusing the power of his office and of obstructing the investigation of the Congress to cover up his Ukraine scandal.
Even though the other – 3 Ex-impeached presidents – would’ve reacted differently, Trump is not only defending himself by calling this whole impeachment a “Hoax!” and a “political witch hunt”, he’s actually betting on it to expand his popularity amongst fellow – future voters – Americans;
“Have you seen my polls in the last four week?” Trump answered a confused USA Today reporter when asked about the possibility of his impeachment.
The dear USA Today reporter, your confusion is totally understandable. Given the fact that most of the polls reveal that the majority of the Americans form October onwards support trump being impeached with a percentage reaching in December 47.4% supporting the impeachment vs 46,4% that don’t. Just so you get a better idea on how drastic this percentage is, you can simply compare it to the polls by mid-April – when Mueller report made public – when 53.3% didn’t support the impeachment vs 37.4% supporting it. The majority remained inclined to go against the impeachment even after Mueller testification before the congress, but it went downhill by the end of September – beginning of October after News about Ukraine scandal snowballed.
Source: fivethirtyeight.com
Trump’s office is trying its best to market the vote as a politically motivated move from the Democrats from the very beginning. Could the impeachment be metamorphosed into a political win for Mr. President and his party?
Again, most of the polls calculating the approval rate of the president reveal that this scenario is very improbable. From Data gathered by Ipsos, YouGov, NBC News/Wall Street Journal and Morning Consult, the approval rate of Mr. president since taking office was never really promising, with a disapproval rate always higher, reaching its peak on December 2017 with a rate of 57.4% of Americans disapproving their president vs 35.6% approving. As for today, his disapproval rate is at 52.5% vs 42.2% approval rate, maybe his popularity didn’t get smashed, that hard, after the impeachment after all!
Source: fivethirtyeight.com
Even if, miraculously, Trump succeeded in changing the numbers – through his deal with China or through a Tweet or something – It could help him in the upcoming elections – but would his popularity stop him from being convicted and removed from office altogether?
Not really sure if he should be betting on that. So, what now?
So far, the markets didn’t respond volatility to the news, and it doesn’t really seem that it’s worried about what would happen next – for President Trump to be removed from office the trial must convict him with a majority of two-thirds, and with Republicans holding the majority of 53-47, it really seems like an unlikely scenario.
The Dollar index that studies the movement of six major currencies in contrast to the dollar, closed at 97.40 not so far from its high at 97.475 on Wednesday. The greenback doesn’t seem really affected by the news.
Even stock-market indexes didn’t show a great reaction on Thursday, it even closed on near all-time highs. on Wednesday futures trading showed a small increase for stocks as for Equities, and by the end of Wednesday’s regular session, has weakened with the S&P 500 SPX closing at -0.04% and Dow Jones (DJIA) closing at -0.10%, a percentage that barely broke the five days high.
The NASDAQ Composite Index (NDX) also showed no concern; Even though it remained almost steady on the day of impeachment (moved a little higher from 8,823.36 on the 17th of December to 8,827.72 on the 18th of December), it went significantly up afterwards to reach 8,924.96 on the 20th of December.
Just as Trump, the Markets doesn’t “show” that it’s too worried about the impeachment, is it because the markets are as good as Mr. president in overlooking the facts?
The bomb was dropped by House Speaker Nancy Pelosi exposed the real conflict between the two parties. As she stated directly after the impeachment, that she won’t be sending the articles to the Senate, until she is able to confirm that it will get a fair hearing; A trial with testimonies, witnesses and open documents.
This move could lead to a delay in the trial, which was supposedly meant to take place after the New Year’s. Especially, since Senate Majority Leader Mitch McConnell rejected Democrats’ request to get witnesses to the trial. A delay that both Democrats and Republicans believe that would be to their benefit.
Who’s right? We are yet to see.