This article was written by Neil Crammond, Director of Risk Management at Avem Capital Limited.
Speculation about Donald Trump's resignation or impeachment heated up after the fallout from the firing of FBI Director James Comey and the hiring by the U.S. Department of Justice of a special counsel to lead the investigation into alleged ties between Russia and Trump’s campaign.
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While a full-page advertisement showing Donald Trump behind bars was published by the two leading British newspapers last week, other publications began to speculate whether Trump will in fact resign in 2017. According to the U.S. Constitution, a President can be impeached by Congress for either treason, bribery, or other high crimes and misdemeanors. As the Republicans control both the House and the Senate, impeaching Trump would mean turning against one of their own.
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Should Donald Trump resign, Vice-President Mike Pence would instantly become the 46th President of the United States. Donald Trump would become only the second President in US history, after Richard Nixon, to resign from office. The possibility that Donald Trump will either resign or be impeached is remote, but given the recent scandals surrounding his Presidency, neither should be discounted.
How would the stock market react?
Up until now, the stock market has taken all of this in its stride. As Trump stuttered through his first 100 days and beyond, the stock market continued to perform. Up, up and away the indexes went. But as the newsreels continue to publicize growing concerns with Trump and his contradictory administration, questions begin to be raised as to the performance of the markets.
One now begins to wonder if the indexes are going up because they think that Trump can achieve pro-growth policies, or if they’re going up because that’s the direction with all the momentum.
Given the latest purported Russian intelligence leaks and the uncomfortable links Team Trump appear to have with senior Russian diplomats, it was only a matter of time until the performance of the stock market was going to be called into question.
My view is that one could make the argument that a Trump resignation could propel the markets to even higher levels. It would remove the Cloud of political uncertainty that seems to have settled over the iconic Washington DC residence like a grey menace.
However, therein lies the problem. It is times like these when the real estate funds tend to make their money. Impeached or not, resigning or remaining in office, while the indexes are going up it’s worth considering all possibilities and preparing for all scenarios.
