President Trump might think the markets would crash if he were to be impeached, but that’s probably not the case, according to the vice chairman of Blackstone Advisory Partners.
“The president hasn’t been right on a number of things, and I don’t think he’s right about that,” Byron Wien said during an interview with FOX Business’ Liz Claman on Thursdays. “If he were impeached and Mike Pence took over, I think the market would probably do well.”
Trump made the comments during an interview with “Fox & Friends,” warning that if he was ousted from office, “everybody would be very poor.”
The president came under increased scrutiny this week after former campaign chairman Paul Manafort was found guilty on eight counts of financial crimes, including tax fraud. His former personal attorney Michael Cohen also pleaded guilty to making illegal campaign contributions, and said he’d been directed to do so by Trump.
But according to Wien, strong corporate earnings tend to drive the market more so than political or geopolitical events. Although policies implemented by the White House -- like the 2017 Tax Cuts and Jobs Act, which slashed the corporate earning rate to 21 percent from 35 percent -- can help the market, it’s because they boost corporate earnings.
“Look at all the political turmoil in Washington,” the financial guru said. “Earnings drive the market, and as long as these geopolitical events and political events domestically don’t affect earnings across the board, the market will work its way higher.”
In fact, despite trade worries and issues facing companies like Sears, the market just added another day to its record-long bull run on Thursday, on the heels of a strong second-quarter earnings season.
Since March 2009, the S&P 500’s compounded annual growth rate has been 16.5 percent -- that’s up 322 percent total over the nine-year period. And Wien doesn’t think the bull run is ending anytime soon, suggesting that it could last as long as two more years.
No signs that usually precede a recession are there: Unemployment is still decreasing; the yield curve hasn’t inverted; inventories haven’t accumulated, Wien said.
“Now I think we’re going to have a recession after the next presidential election, that’ll probably be 2021, and the market may anticipate it the year before,” he said. “I think we’ve got another couple of years of a bull market.”