On Tuesday, Nancy Pelosi, the speaker of the House of Representatives, formally ordered an investigation into President Trump’s impeachment. The inquiry came after a series of events involving his alleged doubtful conduct.
Investigation into President Trump’s impeachment
Reportedly, President Trump asked Ukraine’s president to look into presidential candidate Joe Biden and his son’s dealing in the country. Did President Trump seek help from a foreign leader to boost his re-election chances? There are also reports that President Trump decided to withhold millions in military aid to Ukraine before the call. Withholding funds would be a pressure tactic to get Ukraine to look into the matter.
Stock markets fell
On Tuesday, stock markets fell after the news about the impeachment inquiry. The S&P 500 (SPY), the Dow Jones Industrial Average Index (DIA), and the Nasdaq Composite (QQQ) fell 0.8%, 0.5%, and 1.3%, respectively. In addition to the impeachment inquiry, downbeat consumer confidence data also took a toll on the markets. The consumer confidence index for September came in at 125.1—a decline compared to 133.5 in August. Among major stocks, Tesla, Amazon, Alibaba, and Apple were the major losses. They fell 7.5%, 2.4%, 3.1%, and 0.5%, respectively.
The impeachment proceedings have haunted the markets. Notably, the markets are already battling increased uncertainties surrounding slowing growth, the trade war, and recession fears.
On Tuesday, the markets trimmed some of their losses. President Trump said he would release the transcript of his call with President Volodymyr Zelenskiy. The White House released the transcript today. As reported by NBC News, President Trump asked President Zelensiky to look into Joe and Hunter Biden’s dealings. According to the transcript, President Trump said, “There’s a lot of talk about Biden’s son, what Biden stopped the prosecution and a lot of people want to find out about that, so whatever you can do with the attorney general would be great.”
Jim Cramer on Trump’s impeachment
Several experts including Jim Cramer, CNBC’s Mad Money host, and other analysts weighed in on the impeachment proceedings. As reported by CNBC on Tuesday, Cramer said, “I need you to recognize that the Senate will most likely acquit.” He added, “How much will that matter to the stock market? You know what, we’ve seen this movie before.” He compared the stock market reaction with the reaction to President Clinton’s impeachment in 1998. Cramer said that “it was a sideshow.” Currently, he recommends that investors wait for stocks to get oversold before buying into them.
J.P. Morgan on Trump’s impeachment proceedings
As reported by MarketWatch, J.P. Morgan (JPM) also weighed in on President Trump’s impeachment proceedings and the impact on stock markets. John Norman, head of J.P. Morgan’s cross-asset fundamental strategy, wrote in a note that the proceeding shouldn’t be viewed as just “another ring to the circus.” According to MarketWatch, he said that taking a pessimistic view could mean that the president’s domestic challenges get more compounded. Norman stated that markets aren’t prepared for such negative scenarios.
Allianz and Wells Fargo shared their views
MarketWatch also discussed Allianz’s view on the impeachment. Allianz’s global strategist, Neil Dwane, told MarketWatch during an interview, “Impeachment is unlikely to work as it needs both Houses to align.” He said, “But this ruins any civility into the next election, so we should expect POTUS to fight ugly through 2020 as well.” In turn, Dwane said that impeachment could ruin investors’ confidence in the US economy.
According to Bloomberg, Wells Fargo said, “Though a short-term repricing is possible, the latest impeachment news does not change our view of a 3088 year-end.”
Should you look to gold in times of uncertainty?
During times of uncertainty, investors might want to add some gold to their holdings. So far in 2019, many analysts and hedge fund managers have been recommending gold. The SPDR Gold Shares (GLD), the largest gold-backed ETF, has risen 19.2% year-to-date. GLD gained 0.5% when most of the markets were trading in the red. The VanEck Vectors Gold Miners ETF (GDX) has amplified gold’s gains by rallying about 40% in 2019.
Ray Dalio, Bridgewater Associates’ CEO and a billionaire investor, is optimistic about gold prices. Paul Tudor Jones also sees huge upside potential for gold. Citigroup (C) thinks that gold prices could reach $2,000 per ounce. The estimate is based on Citigroup’s view of rising geopolitical risks and lower interest rates.
Read Trump, Trade War, Powell: More Upside for Gold Prices? to learn more.