Will the market crash if Trump is impeached, as he has predicted? Here's a look at some hard data. via MktwHulbert
Not surprisingly, opinions vary widely, often along partisan political lines. A year ago, you may recall, President Trump famously predicted that the stock market would crash if he were impeached. Other commentators dismissed that prediction as an idle threat.
I failed to find any significant correlation. Consider a statistic known as the “r-squared,” which reflects the degree to which one data series predicts or explains something else . I failed to find r-squareds above 1% — which is to say that increases or decreases in the probabilities of Trump being impeached couldn’t even explain 1% of stock market gyrations.
My second answer to this “why” question: There were plenty of other things besides impeachment in 1974 and 1998 that can more than account for the stock market’s poor performance on those occasions. As Robert Stovall, Chief Investment Strategist at CFRA, reminds us: Prior to Nixon’s impeachment, “the U.S. stock market was already in a bear market, triggered by the OPEC oil embargo.
Given these criteria, you’d certainly guess that they would have had a big impact on the markets. But that’s not what the researchers found. On the contrary, they found that the S&P 500’s absolute return on the days these events hit the market was quite small—just 1.46%, which is less than 1 percentage point more than the 0.56% that prevailed on all other days.
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