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Why Political Turmoil Will Shake the Market in 2020

Written by Jason Stutman
Posted September 28, 2019

You don’t have to be a fan of Donald Trump to understand that Democratic politicians decided to throw the American economy under the bus this week.

In the wake of a sudden impeachment inquiry on Tuesday, markets predictably took a nosedive as Wall Street grappled with the threat of Donald Trump being ousted before the 2020 presidential election. 

If you have any money in the stock market, either in a personal brokerage or retirement account (IRA, 401(k), etc.), this week’s political circus and push for impeachment should worry you.

After all, your account balances are lower today because of it, and this could be just the beginning of a broader scorched-earth election strategy coming from those wishing to kick Donald Trump to the curb...

Love him or hate him, Trump has been at the helm during one of the most prolific stock market rallies and economic booms of our time.

The first year after Trump took office, the S&P 500 climbed by roughly 35%. It was the single most rapid climb in the history of the index. The same can also be said about the last four decades of the Dow Jones.

Some will say Trump simply inherited Obama’s economy, and maybe that‘s true to an extent, but as I write this today unemployment is near record lows, the real estate market is thriving, and consumer confidence is at a record high.

After nearly three years of Trump in office, most Americans will attribute economic success to the sitting POTUS (even if they hate him). Despite an overall approval rating around just 44%, the majority of Americans at least approve of Trump’s handling of the economy (54%).

A lot of Democratic politicians, though, aren’t happy about the glowing state of the economy. They know that if the U.S. market continues to thrive, Trump’s chance of reelection is relatively strong. In response, they’re doing whatever they can to destroy confidence in it.

If you need any convincing that someone could actually think this way, consider this recent quote from Bill Maher:

And by the way, I’m hoping for it. I think one [way] you get rid of Trump is a crashing economy. So please, bring on the recession… Sorry if that hurts people, but it’s either root for a recession or you lose your democracy.

While no elected politician has been as blatant as Maher in their intention, the strategy is apparent enough.

In July, Elizabeth Warren posted an article on Medium entitled “The Coming Economic Crash — And How to Stop It.” 

In the same light, Jeff Weaver, senior adviser to the Bernie Sanders 2020 presidential campaign, has been openly telling media outlets that we’re entering a “Trump Recession.”

This strategy of eroding market confidence is almost as clever as it is appalling; imagine wanting to win the White House so badly that you were actively wishing economic hardship on the very nation you mean to lead.

I don’t know about you, but the idea of it makes me pretty angry.

It also makes me far less likely to take any push for impeachment coming from these people with any degree of seriousness. It seems to me that their primary motivation is not to protect democracy as they claim, but rather to stir the pot and ultimately manufacture market risk.

There are few basic facts to put this week’s politics into perspective:

First, the impeachment push we saw this week, which drove the Dow Jones down by roughly 500 points, was launched on false and exaggerated reports. The claims of Ukrainian election interference at first were very serious, but the goalposts were quickly shifted when the facts became clear.

The Wall Street Journal, for one, initially claimed that Trump had pressured Ukrainian leader Volodymyr Zelensky “eight times” to work with his lawyer, Rudy Giuliani. A released transcript of the call proved this allegation to be false; not only was Giuliani's name mentioned only twice by Trump, but it was Zelensky, not Trump, who initially brought his name up.

Even more damning to the original narrative, the Washington Post claimed that Trump made a “promise” to Zelensky in exchange for Ukraine investigating Biden. This sparked a flurry of “quid pro quo” accusations, which also ultimately turned out to not be true.

There is no doubt that Trump asked Ukraine if they could do the U.S. “a favor” by looking into alleged acts of corruption involving Biden, but there was no offer or “promise” to Ukraine for anything in exchange. This was the entire basis of the impeachment inquiry, until it wasn’t.

The focus has now shifted to a whistleblower complaint, which sites multiple secondhand sources, despite the public already having a transcript of the call.

Despite all this, Democratic politician Peter Schiff thought it was a good idea to lie in his opening statement to this week’s House Intelligence Committee, claiming that Trump asked Zelensky to “fabricate dirt” on Biden. 

Trump, as evidenced in the declassified transcript, never did such a thing, which is why #FullofSchiff quickly become one of the top trends on Twitter on Thursday. 

Schiff was ultimately forced to backtrack, saying it was just “parody,” but it seems far more accurate to classify that one as a purposeful lie.

Of course, however you want to interpret these events as a voter is entirely up to you…

Maybe you’re in the Bill Maher camp and you hate Trump enough that you think it’ll all be worth it. 

Or maybe you’re simply outraged at the audacity of it all...

As an investor, though, none of that really matters. All you need to know is as the 2020 election approaches, this is the game that many gunning for Trump are going to be playing, and chances are it's only going to get worse.

Over the next 400 days, there will be no shortage of fear, uncertainty, and doubt adding turmoil to the market.

This doesn't mean you should panic, but it does mean that now is the time to pay closer attention to the market than ever.

Until next time,

  JS Sig

Jason Stutman

follow basic @JasonStutman on Twitter

Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and Topline Trader. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.

Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.

Outside the office Jason is a lover of science fiction and the outdoors. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.

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