As the impeachment trial got underway in the Senate this week, the equity market continued to tick higher. The market’s ambivalence to the impeachment proceedings comes as little surprise – during Bill Clinton’s presidency, from the start of Congress’ impeachment inquiry to actual impeachment, the S&P 500 went up +23%. In the twelve months that followed the Senate’s acquittal of Clinton, the S&P 500 went up an additional +19%.1 A similar pattern has emerged during President Trump’s impeachment, with the market rallying through the House proceedings and now remaining largely stable as the Senate takes up the matter. The conclusion for investors, in our view, is not necessarily that impeachments are meaningless for markets – political outcomes do matter. But once the information is known and the equity market can “price-in” the outcome (in this case, near-certain acquittal for President Trump), then there is not much room for positive or negative surprises – which are ultimately what move markets in the short term, in our view.
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