Ain't No Party Like an Impeachment Party
by Zach Marsh on Dec 20, 2019
At times the stock market can be a pretty good barometer of American sentiment. And if Nancy Pelosi wanted her Democratic colleagues to present a solemn façade as they voted for impeachment this week, the message was received in the financial markets as well. With all of the surprises of a funeral, the House of Representatives voted Wednesday night to impeach President Donald Trump. The stock market reaction? A yawn.
The US stock market, with an election less than a year away and the sitting President facing impeachment, still has not priced in one iota of a cent of political risk. The S&P 500 now sits at record highs and remains unfazed by any threat to the status quo. In more normal periods of expansion, one of the greater fears for market participants is disruption of the status quo. However, current times being what they are, the market appears more like sharks at a feeding frenzy, overcome by sensory induced euphoria. Equity momentum remains at peak elevations, pushing the stock market higher and higher, with little fear of a pullback. Determining when, if at all, the post-party hangover will occur is an elusive answer.
As for the remainder of the year, the market now seems on autopilot and is content grinding higher with little economic news due out between now and December 31. However, the early part of next year may provide a healthy dose of volatility. The Federal Reserve’s latest version of Quantitative Easing, which they don’t call QE, designed to alleviate malfunctioning in the short-term lending markets is intended to be a temporary measure. The inception of this temporary measure, at the end of September, and the recent leg higher in the stock market, which began October 2nd, has many asking if this move is causal or just merely corollary. Should the Fed’s newest version of quantitative easing subside next quarter we may see a pullback in the stock market. But that is a question for next year.
On a final note, this will be our final letter for 2019. We would like to thank our clients from the bottom of our heart for your patronage, it is a pleasure to serve you all. We would also like to thank you for reading our weekly letters and we hope that you have enjoyed reading them as much as we love putting them out. David and I would like to wish you all Happy Holidays.
Zach and Dave
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