Will The Stock Market Crash If Donald Trump Is Impeached? | Podcast Episode #66

0:00
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market. crazy week going on here with everything that you’re seeing in the political world with Donald Trump, with the House Democrats, with a Ukrainian leader named Zelensky, I think, kind of think of Zelensky from Honey I Shrunk the Kids.

0:17
Remember, I think that was like the next door neighbor. That that nobody really liked. I don’t know, maybe I’m dating myself. It’s kind of like an 80s reference or early 90s reference, but if you see it, it’s actually a pretty good movie. It’s a kid friendly movie. Actually, it’s made for kids. So I saw it when I was a kid. But nonetheless, let’s not talk about Honey I Shrunk the Kids here or any other Disney movie because there’s a lot to talk about with.

0:38
What is being seen in the stock market this week and what we’re seeing with the House Democrats going forward with the impeachment of the President of the United States, followed by what’s gonna be the impact on the stock market. Now, I did a video of this.

0:55
That you can actually see on YouTube. It’s, it’s worth seeing too. I’m gonna reiterate a lot of the same things that I said there, maybe digging a little bit deeper, but the difference is on the YouTube video, I pull up some charts for you to actually see what I’m talking about, whereas you really can’t do that on a podcast. Nonetheless, I think you’ll get a lot out of this podcast and to understand exactly what it is that I am talking about, let’s go ahead and just dive right into it.

1:15
So for impeachment, that comes from the, the House of Representatives. You need 218 votes out of the 435 people that are in the In the House to impeach a president. The last time it happened was with Bill Clinton during the 1996 Bill, uh, Monica Lewinsky scandal, and we know the details of that, so I don’t really have to dig into the, the nitty gritty of that.

1:39
But it actually came during a time though where we were in a part of a massive bull bull rally and, uh, the market kept going higher. I mean, it didn’t peak until 1999, so. That’s worth looking at in context of what we’re seeing right now because the market, as we know, has been going on a bull rally for the longest one in history actually, and it’s in it’s like 10th year.

2:02
So, you gotta wonder, it’s like, when is this show gonna be up, you know, for the bulls and the market’s gonna actually have a Uh, a big selloff or enter into a recession. I don’t know, uh, trying to predict or short the market thinking that the top is in it’s like trying to stand in front of a freight train hoping that it’s gonna stop, just not gonna happen.

2:19
So you have to follow the trend until it ends and then you decide to either get out, get your money on the sidelines, or you start shorting the market. 2008, we saw a huge sell-off in the stock market. I actually really liked it because the shorting opportunities were amazing and, and I’ve really profited pretty well off of it. So I’m, I’m not a stranger to big market sell-offs, nor do I shun them.

2:39
I actually think At this current time, it would be probably good for the market to pull back 15 or 20 percent at least because it would provide a lot of really good trading setups, not only on the way down, because that would be great, but also on the way back up because when it finally bounces, it puts in a sizable rally.

2:55
Just look at what we saw back in, uh, December of last year when the market finally bottomed after pulling back like some 22 percent or something like that. It went on a a crazy tear thereafter. So sell-offs are not really that bad for most of America. Yeah, they don’t like them, that hits their 401k.

3:12
They tend to get out at the worst possible times and get back in at even far worse times, you know, you get, you get out at the bottom and get back in at the top. I mean. And, and believe me, that happens a lot because fear and greed oftentimes mark the tops of markets. You know, you start feeling safe when the market is at a top.

3:29
And so you get in and then all of a sudden the bottom falls out. I even, I even had a friend contact me the other day and, uh, he’s not gonna listen to this, so I I won’t give his name, but he, he doesn’t listen to my podcast. If he did, he, he, he’d be better off for it, but he doesn’t. So. The guy calls me, he says, hey, what’s going on with the stock market?

3:46
And this was when we had like a 40 or 500 point selloff back in August. And I said, I said, oh well, you know, XYZ happened and the market sold off, and he says, oh, figures. I said, what happened? He said, well, I got in the other day and it just so happens that the market just starts crashing as soon as I get in, you know, that’s the thing, like people just throw money at the stock market thinking it’s, it’s like a money tree and it’s just gonna make you money now, over a 30 year period, sure, it will make, make you some money, but.

4:12
Nonetheless, without trying to get too derailed here, I wanna, I wanna focus on this impeachment here because Like I said, you got to have 218 votes from the House. They already have that. They’re gonna impeach him. They’re not going to set up this whole impeachment thing and then not impeach him. They’ve already, they’re already moving forward with it.

4:28
It’s gonna be like 96 where they did that to Bill Clinton and, you know, the rest is history. You’re only going to, to make a martyr out of the president. He’s going to gain in popularity. The Senate’s not going to convict him. Look, a Republican Senate. Could not convict him in Bill Clinton in 96.

4:46
There was Republicans that actually voted against removal from office. I’m not saying that there’s going to be Democrats this time because it’s a much more polarized environment, but for that same exact reason that we’re super polarized, I don’t expect any Republicans, much less 19 of them, to cross over and remove him from office unless.

5:03
There’s something really egregious that that comes out beyond what we already know. And what we already know right now isn’t really enough to remove. I know, I know people are going to disagree with me on that. OK, fine. Look, I’m giving you an opinion here. I, I look at the stock market but not based off of my political beliefs because political police do not give you a profit in the stock market.

5:23
I look at it based off of what the market tells me, and the market’s not too worried about the impeachment right now. But now What Trump probably should do, and if I was Trump or if I was an adviser to Trump, I’d probably tell him to do this in terms of damage control and, and, uh, turning the tables on the Democrats who are trying to impeach him.

5:41
I would, I would say, hey, look, pin the economy on the impeachment. We’re in the, the 9th inning. Heck, we’re probably in extra innings right now with this market rally. We’re probably like in the 11th or 12th inning, right? There’s a good chance between now and the election, especially with the volatility that comes with having a, a president that does work for Wall Street and, and favors, you know, deregulation and cutting taxes versus somebody who does not like Wall Street in, in the form of like Elizabeth Warren or a Bernie Sanders.

6:13
If one of those two get the nomination, you’re gonna have a lot of volatility in the market if either of those two candidates start to pull favorably against Trump, which they already do, but the market’s not really quite pricing and The idea of them becoming president just yet. So, but if they, but if they do become the the the party’s nominee, then you have some some serious problems on your hands for the market because it will introduce some volatility.

6:35
But at that time though, Look, the impeachment’s not going away anytime soon, just like the Mueller report took years to get through. Yeah, they, they may impeach him here before the end of the year or early next year, but it’s, it’s going to be a theme all the way through the 2020 election, and Trump has an opportunity to actually pin it on the Democrats and blame them for any kind of market sell-off that may happen because you can say, hey, look, Wall Street doesn’t like what you’re doing.

7:00
It doesn’t like you removing a president that’s provided a 40 percent return since he took office or since he won the election. And the idea of you threatening to remove them from office is creating market volatility and therefore that’s why you’re getting the sell-offs. Now, the reason why that’s important is because people’s 401ks, IRAs, 403Bs, retirement accounts, college savings accounts, they’re all tied to the market, right, or a good chunk of them are.

7:24
So you start seeing the stock market selling off, people aren’t gonna like that because now all of a sudden the actions of the Democrats going through with this impeachment. It’s costing them money and. They’re gonna, people are always going to vote for their pocketbooks, so. If you’re Trump, President Trump, you should pin the economy going forward on the Democrats in the impeachment process that they’re, they’re going through.

7:48
If there isn’t a sell off, then you take credit for it. I mean, again, I’m not trying to get political here. I’m just trying to say from a stock market outlook from. From the effects of an impeachment on it, that’s, that’s what I would do. I would say the same thing to a Democrat if the roles were reversed.

8:03
I would say to the Democrat pin the economy on the, on the Republicans going through impeachment. But right now you’re not seeing a lot of hard reaction to the, to, to the impeachment process. You’re seeing a little bit. You saw when the, the director of national intelligence testified this morning, you saw the market starting to shift around some and getting, getting a little bit, you know, crazy.

8:24
However, It rebounded right away when there wasn’t really anything there to hurt Trump. And then yesterday the market sold off when the, the call transcript between the president and the Ukrainian leader came out. The market sold off and then popped back up and rally the rest of the day.

8:39
So the market’s kind of a little bit skittish and a little bit scared of, you know, the headlines that might be coming out about this whole Ukraine thing, but In the end, the market keeps reacting as long as there’s no, no major game changing news that would cause the president to possibly be removed from office.

8:57
So there’s two things going forward that you have to look out for. You have to look out for one, some wildcard, you know, or another shoe dropping that, that really hits home the need to remove the president from office, and it can’t just be, you know, hopeful things are like, hey, look what he did. I can’t believe he did that, or he called, you know, some.

9:14
Personal horse face, you know, it can’t be, it can’t be these kinds of things. It needs to be something major like Nixon major. Um, and, and if that happens, then yes, the market’s going to react because there’s a good chance then you could get some senators on board to enough senators on board from their GOP to remove him, uh, from office or to vote for him to be removed.

9:34
But you need 19 of them out of the 53 that they have, and that’s, that’s gonna be a tough sell. The second thing that you have to watch for is in the general election. If Elizabeth Warren gets the nomination, and the president is starting to really falter in the polls, let’s say Elizabeth Warren breaks out to like a 62, 38 edge in the in the polls, right?

9:56
Which would be like massive. We’re talking about Reagan versus Walter Mondale, kind of massive. If you get something like that, and they haven’t yet voted in the Senate as to whether or not to remove the president from office, then you might see more from a strategic play, the Republicans vote to remove Trump from office so that they can stick another candidate in there.

10:14
But that’s going to be way down the road. That’s gonna be probably 2020 because that’s when you would start seeing those kinds of poll numbers that can be more validated and, uh, create a situation where if the president’s not doing good against his candidate in the general election. Then they may try to vote him out and then put a new person in.

10:33
But even that would be super risky for the Republican Party because then you’re also looking at alienating a huge chunk of the base that are really supportive of Donald Trump and would vote for him no matter what in 2020. So I think that, number one, it’s possible, I don’t think number two is likely to happen at all.

10:53
In the end, I don’t think that the impeachment’s gonna create a huge ruckus in the stock market. I think if he starts pulling back against the candidates and for the general election that he’s going against, like an Elizabeth Warren or Bernie Sanders, that’s gonna create a market sell-off, probably back down to at least the June lows.

11:10
And if it gets really bad where he loses, I think that you could, you could take out the the December lows. I think you could go down to the, the 2,300s again, and that would be, that would be a big problem for the stock market. That would not be a good thing. But now if Biden gets the nomination, and whether he wins or loses or whatever, the market likes that matchup because the stock market had 8 years of Obama.

11:31
It did pretty well. It wasn’t ever feeling, it never felt threatened by the Obama presidency. So Biden would probably be more of the same of what you saw with Obama. He’d be more of a moderate president versus what you would get out of a Sanders or Warren. But in the end, just to sum this up, I don’t think the impeachment’s a huge game changer.

11:50
I don’t think any of the scenarios of, of the GOP voting him to be removed from office in the Senate is likely to happen. I also don’t think that you’re gonna see the, the Senate, uh, trial take place probably until sometime next year. I think depending on how it favors them.

12:06
They’re going to schedule it accordingly. If it favors them to delay it more into like the summer time and make it a big part of the 2020 election because it’s going to make the Democrats look look bad, then they’re going to drag this whole thing out. If it’s going to make the Democrats look good, they’re gonna probably want to get, get it, you know, done and over with.

12:24
But in the end, I, I think it’s gonna go the way that we saw for the Republicans in 1996 where They impeached impeached the president then and it just made the president more popular with his base and with with people who felt like he was being victimized, and I think you’re gonna see the same thing again here with Trump, if I had to guess.

12:41
It’s just my guess. So don’t expect much in terms of market volatility from impeachment and Trump will probably come out on top through this whole impeachment thing, even though he does get impeached. All right, if you have any questions.

12:56
You can leave them, leave them in whatever comment section that you’re listening to this. Through, or you can send me an email at ryan@shareplanner.com. I’ll discuss it with you. Look, I don’t have to agree with you. I don’t mind talking about it. I, I put the video on YouTube and already had some crazies getting mad at me on there and um you know, they, they can’t have a civil discussion about what the impact of the impeachment’s gonna be on the stock market.

13:19
So, you know, but hey, look, you can, you can send me whatever you got. I’m, I’m a big boy, I can handle it. So, thank you, take care and God bless.