Trump impeachment hearings leave Wall Street unfazed

'Outcome of the 2020 election is far more important'

Impeachment hearings kick off on Capitol Hill on Wednesday, and Wall Street couldn’t care less.

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Analysts and economists for the finance industry's largest banks have largely ignored the proceedings as the stock market sits near all-time highs.

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I:DJIDOW JONES AVERAGES
$28015.06
+337.27 (+1.22%)
SP500S&P 500
$3145.91
+28.48 (+0.91%)
I:COMPNASDAQ COMPOSITE INDEX
$8656.528802
+85.83 (+1.00%)

The Democratically controlled House of Representatives will probably vote to impeach President Trump, which will necessitate a trial in the Senate, according to the public policy office at Swiss lender UBS. But conviction of high crimes and misdemeanors in the upper chamber is unlikely, since Republicans are in control and removing the president would require a two-thirds super-majority.

“Although we expect U.S. political uncertainty to remain elevated, we don’t see this process as a source of market risk,” Mark Haefele, global chief investment officer at UBS Global Wealth Management, wrote on Oct. 29.

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The S&P 500 has rallied 4.2 percent since House Speaker Nancy Pelosi launched an impeachment inquiry into a whistleblower's claim that Trump pressured Ukraine's government to investigate 2020 presidential candidate Joe Biden's dealings in the country in order to benefit his own re-election campaign.

If history is any indication, the stock market could be headed even higher.

The S&P 500 rallied 31 percent from the time President Bill Clinton's affair with Monica Lewinsky made headlines to the date he was found not guilty of perjury and obstruction in a Senate trial, according to data from Dow Jones Market Data Group.

Wall Street sign with American flags and New York Stock Exchange in Manhattan, New York City, USA.

Wall Street strategists have not yet released their 2020 outlooks, though many investors have warned that liberal policies proposed by Democratic contenders such as Sens. Elizabeth Warren and Bernie Sanders would hurt markets if either won the White House.

Warren, D-Mass., Sanders, I-Vt., Biden and Mayor Pete Buttigieg have all called for rolling back Trump’s corporate tax cuts, something Goldman Sachs says would take a bite out of the stock market and the U.S. economy.

Hedge fund managers Leon Cooperman and Paul Tudor Jones say the stock market would drop by 25 percent in the event of a Warren presidency. The senator championed the creation of the Consumer Financial Protection Bureau, wildly unpopular with U.S. lenders, and has maintained a famously rocky relationship with Wall Street.

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In the meantime, impeachment poses at least one threat to financial markets: The possibility that hearings will prevent approval of the United States-Mexico-Canada Agreement, Trump's replacement for NAFTA, by year's end.

"The impeachment proceedings could put the USMCA passage in jeopardy as the calendar gets closer to the 2020 electoral year," Citi economist Dana Peterson wrote on Sept. 30. The trade deal has already been ratified by Mexico, and Canadian Prime Minister Justin Trudeau has said his government would act on the agreement after the U.S. House of Representatives signs off on it.

Trump, while speaking Tuesday at the Economic Club of New York, called the trade deal “a historic win for American farmers, energy producers and manufacturers.” The passage of USMCA is expected to add up to 500,000 jobs and 1.2 percentage points to GDP, the president said.

Aside from possibly delaying USMCA and similar side effects, impeachment “is more theatrics than anything else,” Jeffrey Gundlach, CEO of Los Angeles-based DoubleLine Capital, which has $140 billion in assets, told FOX Business when the inquiry was announced in September.

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“I don’t think it’s a real major market issue," he said. "When it comes to politics, the outcome of the 2020 election is far more important than what will be an unsuccessful and probably not even fully realized impeachment sort of action."