Will the market crash if Trump is impeached?

How seriously should people take Donald Trump’s claim that stocks would crash if he were kicked out of office? As you mull over an answer, consider what someone in the other party would say.

Maybe there’s a less subjective way to judge — with earnings estimates, perhaps, which have changed a lot during his presidency. Or maybe valuation. Neither is perfect, but nor is any quest for science in the stock market.

Before digging in, acknowledge that stocks have enjoyed unusually strong gains since Election Day, with the S&P 500 rising at an annualized rate of 20 percent, crushing the historical return of 9.4 percent since 1927. At the same time, note the Trump return is only about 1 percentage point higher than the yearly gain since March 2009, an era mostly overseen by Barack Obama.

Craig Erlam, senior market analyst at Oanda Corp. in London:

“The market isn’t hinging on anything substantial that hasn’t already been carried through. The markets have largely rallied on tax reform and we’ve seen that reflected in company earnings. But if there’s political instability and the U.S. economic growth slowed significantly, that would have global implications.”

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam