How The Stock Market Predicts Trump’s Impeachment
Yes, it’s the new year and all sorts of experts are forecasting this and that, usually spelling doom for President Trump. By the looks of their forecasts (or wishful thinking), Trump quits in 2019; is impeached; or does not run for office in 2020 because his approval numbers drop into the low 30s as Fox News ditches Trump for his decision to abandon the Washington War Machine.
True? Only time will tell.
This week, Alan Hall from the Socionomics Institute, a division of Elliott Wave International, put out a detailed report on how the declining stock market may be a harbinger of things to come for the president. Much of the Institute’s analysis is loosely based on behavioral economics. At the heart of their analysis of markets is that social mood is the primary driver of social action. And that includes buying stocks.
History shows that the stock market is a useful indicator of people’s attitudes toward the president. Socionomic theory proposes that society’s overall mood regulates both stock prices and the public’s perceptions of its leaders.
“These tendencies are evident in presidential reelection outcomes. Presidents Hoover and Carter lost bids for reelection during trends toward negative social mood as reflected by declining stock prices,” Hall says, adding that the stock market is a better reelection indicator than inflation, unemployment and GDP growth combined.
Bill Clinton beat George H. W. Bush because of a weak stock market and economy. He was also helped along by a chunk of the electorate choosing independent candidate Ross Perot.
Barack Obama would have beaten anyone from the Republican Party in 2008. George W. Bush oversaw the start of the Great Recession. The stock market crashed in October 2008, a month before Obama beat John McCain, a popular Republican loved by liberals, less than a month after.
See: 2019: The Year Trump Becomes Silvio Berlusconi — Forbes
If the U.S. stock market finally goes into bear territory, it won’t entirely be Trump’s fault. The Fed is raising interest rates and no one on Wall Street is happy about it. They like free money from the Treasury.
The trade war can be a drag on certain companies and industries dependent on Chinese imports. Trump can take the blame for that one, though it takes two to tango here. China is also to blame, only Xi Jinping cannot be voted out of office.
Trump’s low unemployment and red-hot economy have kept his approval rating high among Republicans and just under 50% in cross-party approval polls. It’s not great. Which is why everyone now suspects that if the S&P 500 slips into a bear market this year—something that has as much to do with the business cycle as it does the Fed and Trump’s trade war—then Trump is a one-term president. If his approval rating goes into the 30s, Republicans in the Senate could give up on him, thus opening the door to an impeachment proceeding in the House.
The Democrats won the midterms in a landslide. They promised improvements to healthcare the day after their victory. They have decisively switched to investigating Trump and Russia instead. Sorry, voters. Your $1,100-a-month family health insurance bill will just have to wait until the Democrats can give you Medicare for All (which is never).
Speaking of Democrats, Bill Clinton was impeached by a Republican Congress that hated him almost as much as the Democrats hate Trump. Yet despite a $70 million investigation into all things Clinton, the Senate acquitted him on perjury charges. He was helped by the fact that there was a positive social mood in the country that was lifting the stock market to new heights.
Trump’s stock market heights are behind him. And while the Democrats didn’t have the headcount in the House to impeach, they do now. The stock market is also working against Trump.
Since the October 3 stock market peak, disapproval of the president remains at around 53% based on Rasmussen polls.
Meanwhile, like Clinton’s Ken Starr investigation, the Special Counsel has implicated more Trump advisors on matters unrelated to the original probe.
On December 17, the Mueller investigation issued more than 100 criminal counts and charged 34 people, 10 of whom were found guilty. That same day, Wired magazine published its list of investigations against Trump and wrote that “Trump faces a legal assault unlike anything previously seen by any president.”
It will be doubly worse under a Democratic House.
By year’s end, the Trump Foundation agreed to dissolve and Secretary of Defense James Mattis and diplomat Brett McGurk resigned. Chief of Staff John Kelly also finally resigned after months of headlines predicting his ouster.
“Stalwart supporters of the president remain,” says Hall. “But the number of oppositional voices is rising,” he says.
A December 19 NBC News/Wall Street Journal poll found that 41% of Americans favor impeachment. That’s not a majority, but it sure is a sizable minority. It’s a number that could easily rise if unemployment pushes higher and the stock market falls lower.