A Waste of Time, Starting Today
Author: Greg Valliere
November 13, 2019
TIME IS A PRECIOUS COMMODITY: We don’t have enough, you don’t have enough. That’s why we design this morning piece to be read in a minute or two.
THE PLOTS AND SUB-PLOTS in the impeachment probe can gobble up hours every day — Rudy Giuliani’s shady associates, the Democrats’ use of selective leaking, Ukraine’s role in the 2016 U.S. election, Hunter Biden’s business ties, etc. It’s too much to follow.
MOST IMPORTANTLY, the outcome of this probe looks pretty clear: there will be a mountain of testimony showing that Donald Trump did something improper, but not enough evidence to persuade Republicans that this constitutes high crimes or misdemeanors, requiring impeachment. Unless there are bombshells lurking, there are nowhere close to enough votes in the Senate to convict.
THIS WILL DRAG ON FOR MONTHS: After hearings lasting until mid-December, the House will vote to impeach, perhaps just before Christmas. A Senate trial could last for two months. The Democrats think this daily drumbeat of impeachment news will soften up Trump for defeat next November; the Republicans think the public will tire of this exercise.
SINCE OUR FOCUS IS ON THE FINANCIAL MARKETS, we think there’s little for investors to worry about; the markets ignored Robert Mueller and they will ignore impeachment. Thus our goal in the next few months will be to focus on other issues which may get lost in the fog. Just this morning there are three major stories for the markets:
THE FED IS HAVING SECOND THOUGHTS ABOUT EASING: We expect Fed Chairman Jerome Powell will make it clear in testimony before Congress today that the central bankers aren’t inclined to cut rates any time soon, surely not in December. Several Fed officials have indicated in recent days that the reduction in October probably wasn’t needed.
A CHINA DEAL STILL ISN’T READY: There’s a truce, sort of, but neither Washington nor Beijing has a final Phase One trade deal ready to sign. We still expect a modest face-saving pact, but Trump’s scathing comments yesterday about China’s “cheating” confirmed the deep antipathy between the two countries.
A NEW TAX BILL IS TAKING SHAPE: As we reported yesterday, Larry Kudlow and his team are working on a major tax cut for next year — perhaps a 15% rate for most of the middle class, the Washington Post reports this morning. Make no mistake, the administration will throw everything but the kitchen sink at the economy next year.
THESE STORIES AND MANY MORE will be important for the markets. But impeachment? Earnings are more important, GDP is more important, interest rates are more important.
OUR ADVICE: Try to filter out the noise, which will be deafening — but is there time to plunge into the mind-numbing Ukrainian narrative? Not unless you have a lot of free time to watch cable TV. Spoiler alert: the Senate will acquit. You want Trump out of office? Vote him out.
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