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OK, Let's Talk About Impeachment

By David Scott | Monday 3 September 2018


 


Impeachment is freighted with anxious connotations for many Americans, who remember the tumultuous end of the Nixon administration in August 1974 and the national mood at the time. From a capital markets perspective, it was also a grim period. The S&P 500 fell 26% in 1974, tagging on to a 14% drop the prior year. 2018 is not 1974 as the US entered a deep recession in 1973 on the back of much higher oil prices (caused by a shooting war in the Middle East and Saudi embargo) and a weaker dollar (which ended a global system of fixed exchange rates). Now, we have 20% earnings growth in 2018, a good economy, low/stable interest rates and a rising dollar. From a macroeconomic standpoint, things are very different indeed. But I have little doubt that a political event on the scale of a presidential impeachment would roil markets until the issue was resolved.

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