JPMorgan: “A Trump Impeachment Is Very, Very Unlikely”
While it’s not the product of JPM’s political analysts, but instead comes straight from the far more visceral and intuitive trading desk, moments ago JPMorgan, as part of its intraday summary, notes that contrary to some other speculation, most notably by Heights Securities, a “Trump impeachment is very, very unlikely” and adds that “the impeachment bar is very, very high. The daily scandals obviously don’t help Trump’s political capital but market expectations for legislative action are already very low.”
But first, here is JPM’s intraday market on what is shaping up as the worst day for stocks since before the new year.
Market update – there is red across the board in equities. The headline reason is the NYT article from Tues night (the first to reveal the “I hope you can let this go” comment from Trump to Comey) but weeks of benign volatility (which helped sow complacent sentiment) and crowded positioning in certain stocks/sectors is exacerbating the move lower. Trading is more active but not panicked or rushed. The biggest problem for stocks isn’t so much the Trump controversies but instead the big TSY rally – yields down across the board and the 2-10 spread is cracking below the closely-watched 100bp level (this is hitting the banks hard; the 2-10 spread has surrendered all of its post-11/8 widening but the BKX is still well above where it stood pre-election). Wall St expectations for realization of the pro-growth agenda are fading but they had already moderated substantially over the last several months; more important is the trajectory of domestic nominal growth (while there wasn’t any major data out Wed morning some recent numbers, including the CPI, have fallen underwhelmed expectations).
FInally, JPM on Trump’s impeachment chances:
Trump – impeachment very, very unlikely and regardless it wouldn’t be positive. There is a lot of talk about Trump impeachment and how a President Pence could be a positive. It is way, way too early to begin having the impeachment conversation. Impeachment is much more a political (instead of a legal) process and w/the GOP controlling both chambers and Trump’s popularity in the party being (relatively) healthy the political dynamics don’t signal impeachment. That could change in Jan ’19 assuming Republicans lose either the House or Senate in Nov ’18 but if that happens the whole pro-growth agenda would grind to a halt. The impeachment bar is very, very high (no president ever has been removed from office as a result of impeachment; two had articles of impeachment brought up in the House before being acquitted in the Senate; one resigned before going through the process). The daily scandals obviously don’t help Trump’s political capital but market expectations for legislative action are already very low.