In conversations regarding the markets this year, some have asked me: what do you think will happen to the stock market if the Trump Presidency runs into significant legal problems or even impeachment? My candid and apolitical response: all else being equal, stocks will rally after a period of distress, because markets hate uncertainty and while the current administration already has lots of it, the process of its downfall would create more.
If history tells us anything, it's this: an administration under fire can cause some pain in the markets, resolution will take a lot longer than most people expect, and the markets seem to like it when that resolution is found. Meanwhile, other things easily create more distress in the markets than the political scandal itself. For two useful points of reference, let's examine how the markets have previously responded to beleaguered modern presidents.