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Stock Market would Rally if Trump Exits

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The Dow and S&P are trudging toward ending with losses for the week, as “Trump to Comey: You’re fired!” remains the news story that keeps on giving.

The sad-sack retail sector is still getting attention as well. Fresh sales data and J.C. Penney’s results are hitting in the wake of Macy’s Monty Python-esque “We’re not dead” remark.

President Donald Trump is showing no signs that he will resign as the FBI firing controversy rages on, even if Democrats are dreaming of impeachment. Nonetheless, stock pundits are talking about how the market might react to such a move.

“What would U.S. stocks do if President Trump suddenly resigned? Based on recent price action, the answer is clear: Rally 3-5%, at least, over a day or two,” says Convergex’s Nick Colas for our call of the day.

 

“U.S. equities see through the headlines (like the Comey firing) and essentially believe two things,” the chief market strategist writes. “First, corporate earnings are growing nicely. Second, the Republican-led Congress needs to pass tax reform by the 2018 midterm elections.”

The market will “favor anyone who can push item #2 to a speedy conclusion while not screwing up #1,” Colas says. Another driver for stocks is long-term interest rates are going nowhere, he adds.

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Closing date: 
Sunday, December 31, 2017 - 15:00
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Business & Science

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WeThePeople's picture

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This is not narrow enough to bet on. There must be specific time frame for this to be a bet. For example, right after the moment Trump resigns, stock market would go down because of uncertainty. And then.. anything could happen. 

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An old adage holds that fear and greed are the principal driving forces behind investor behavior, and thus the direction of the markets. Right now, as President Trump lurches from crisis to crisis, fears about "the ghost of impeachment" are gripping the markets, as John Stoltzfus, chief investment strategist at Oppenheimer & Co. Inc., told CNBC.

In the midst of controversies over the firing of FBI director James Comey and allegations that Trump shared classified information with Russia, last Wednesday the S&P 500 Index (SPX) and the Dow Jones Industrial Average (DJIA) suffered their biggest declines since September, while the Nasdaq Composite Index endured its largest one day selloff since Brexit last June, CNBC reports. However, all three indices quickly recovered. As of Monday's close, these indices are, respectively, 0.25%, 0.4% and 0.6% below their closing values last Tuesday.

The Clinton Impeachment

The only presidents impeached in U.S. history to date were Andrew Johnson in 1868 and Bill Clinton in 1998. While it may be tempting to draw parallels with the Clinton impeachment, Princeton University professor and CNN political analyst Julian Zelizer disagrees, according to TheStreet. Clinton was midway through his second term when impeached, and already had been embroiled in a variety of scandals since entering office. The market slid as independent counsel Kenneth Starr prepared the report that led to the impeachment, but the market regained its lost ground well in advance of Clinton's February 1999 acquittal by the Senate. "The Starr Report didn't have anything new that people weren't aware of already, so the market felt comfortable to move up again," attorney and financial lecturer Seth Kaplowitz told TheStreet.