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When Mueller Finally Moves, Should the Markets Care?

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Insights and Market Perspectives

When Mueller Finally Moves, Should the Markets Care?

Author: Greg Valliere

February 21, 2019

WASHINGTON WAS BUZZING YESTERDAY with speculation that the long-awaited report from Robert Mueller will be released within the next week — a dramatic development that will shape the next two years in American politics.

MUELLER HAS STATED that he doesn’t believe he has the authority to indict a sitting president. But he can refer to Donald Trump as an unindicted co-conspirator, which seems likely; the evidence of obstruction of justice is simply too overwhelming to ignore.

AFTER A FEW FRENZIED DAYS of debate on CNN and Fox about releasing the entire report, the focus will fall on the House, which most definitely has the authority to indict a sitting president (see: Bill Clinton). This could set in motion impeachment proceedings which could culminate with a Senate trial this summer — and, most likely, Trump’s acquittal.

WE’VE STUCK TO THIS NARRATIVE for many months, but we’re unsure over wild cards: Has Michael Cohen provided a treasure trove of taped conversations with the President that the public eventually will hear? And could a furious president seek to fire Mueller or issue blanket pardons? Either of these developments could lead to a Constitutional crisis.

THE OTHER UNKNOWN IS WHETHER A MESSY TRIAL could affect the financial markets. It’s worth noting that amid all of the tweets and leaks and cacophony, the markets really haven’t been affected by this two-year Russia probe. There’s been virtually zero impact on Wall Street.

BASED ON THAT TREND, Mueller could indict and issue a damning report, and the markets could react modestly — or even yawn, especially if the Mueller report looks like a simple perjury trap (really, just about everyone in Washington could get indicted for perjury). The prevalent view in the markets is that there aren’t 67 votes in the Senate to convict Trump, and we agree.

A SCATHING MUELLER REPORT certainly will ignite the Democrats’ left, which is already ascendant (Bernie Sanders raised an astonishing $5.6 million in campaign contributions in two days this week). So even if Trump avoids Senate conviction, he could be greatly weakened heading into the 2020 campaign; his famously loyal base will stick with him, but that’s only about 35% of the country.

OUR BOTTOM LINE is as follows: the Mueller report will be scathing, but no one punches back and controls the agenda like Trump — and Senate Republicans will be too timid to convict. A trial this summer would be quite a spectacle, however, perhaps injecting some uncertainty into the markets.

BUT INVESTORS REACT to earnings, GDP, interest rates, etc. and we suspect that these variables will continue to dominate — as long as it seems likely that there aren’t 67 votes to convict in the Senate; the Democrats have only 47 seats. Richard Nixon was doomed in 1974 when Senate Republicans broke with him, but as of now — based on what we know — a GOP revolt against Trump doesn’t look likely.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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