Cornered criminals have been known to take hostages. In an interview that aired on Thursday morning on Fox & Friends, President Donald Trump appeared to take one worth more than $30 trillion. “If I ever got impeached, I think the market would crash,” Trump boasted in an interview that was supposed to distance himself from the convictions of his personal attorney Michael Cohen and former campaign chairman Paul Manafort. “I think everybody would be very poor. Because without this thinking,” here Trump paused to point at his brain, “you would see numbers you wouldn’t believe—in reverse.”
Trump inherited a strong and growing economy and a roaring bull market. And yet, he has boasted throughout his presidency that he alone is responsible for the market’s continued success, thanks to the trifecta he mentioned in the Fox & Friends interview: cuts in regulations, a $1.5 trillion corporate tax cut, and his own unparalleled smarts.
Trump’s exact contributions to the stock market (and the economy) will be debated for years, but his assertion that the markets would buckle if he was pushed out of office is intriguing. Wall Street has a very positive view of Trump, and tends to downplay his political woes. “When it comes to the Trump news, investors are saying, ‘Tell me something I don’t know, or at least I didn’t expect,’” CFRA chief investor Sam Stovall told Vox on Wednesday. Like congressional Republicans, they tune out Trump’s bluster and focus instead on the fundamentals: in this case, the administration’s extreme friendliness toward Wall Street.
Removing Trump from office would therefore deprive Wall Street of an ally in the Oval Office. Impeachment certainly wouldn’t lead to breadlines, but there would likely be more turbulence than many expect.
Tuesday was one of the worst days of Trump’s presidency, with the convictions of Cohen and Manafort suggesting that the legal noose around Trump is beginning to tighten. The former even implicated the president in a violation of campaign finance law when pleading guilty. Twenty-four hours later, however, Wall Street marked the longest-ever bull market with champagne, while the S&P 500 hit a record high. It’s not easy to ignore the chaos in the White House, particularly during one of its most tumultuous weeks, but investors did just that.
Trump’s relationship with Wall Street wasn’t always this rosy. Trump distanced himself from other Republican candidates in 2016 by saying investors were “getting away with murder.” He made a clear link between the “swamp” in Washington, D.C., and financial behemoths, which he pledged to break up. Financiers would pay higher taxes if he was elected, he said. On the eve of the election, many were warning that global markets would collapse if Trump won.
But the markets, fueled by low interest rates, didn’t collapse. And Trump has done a lot to soothe any lingering concerns Wall Street might have had. First, he stacked his cabinet with Goldman Sachs alums, who then set about rolling back financial regulations. Then, he oversaw the passage of a $1.5 trillion corporate tax cut that has contributed to record-shattering corporate profits.
The stock market didn’t need much help when Trump took the reins in January of 2017. But he has done nearly everything a president can to push the market to new heights, and investors have responded by shrugging off the rest as noise. “The market has known there’s a political circus in D.C. for the entire time of the Trump presidency,” Nicholas Colas, co-founder of DataTrek Research, told CNN. “Investors don’t really care who the president is. They care about earnings and interest rates.” Indeed, the Federal Reserve raising interest rates is of significantly greater concern than the possibility of impeachment, which most analysts currently discount.
Historically, there is not much correlation between impeachment and dips in the stock market, though the sample size is very small. The market fell significantly in 1974, the year that Richard Nixon resigned office, but regained those losses the following year. (Those losses, furthermore, were also caused by the 1971 collapse of the Bretton Woods system and the 1973 oil crisis.) Bill Clinton was impeached in December of 1998; the stock market the following year set records.
Still, there are key differences. Nixon left office before he could be impeached. Clinton, meanwhile, weathered the storm with a soaring approval rating. Trump is historically unpopular and, if presented with impeachment, would in all likelihood react by instigating a constitutional crisis. This would certainly have an adverse effect on domestic and global markets, which tend to react badly when the world’s largest economy is gripped in crisis.
But Trump is fooling himself if he thinks that his impeachment would make people “poor.” It’s his reaction to impeachment that would likely drive markets down, not the impeachment himself. Trump has made it abundantly clear that he will not be removed from office without a serious fight—and that should worry not only investors, but everyone else, too.