Heading Down the Stretch

For only the 4th time in the history of the United States, the House of Representatives has initiated an impeachment inquiry against the President. This activity should fill the news cycle for the remainder of the year. Our interest in the matter lies in how it will affect the market. Looking at the past 2 impeachments (Nixon and Clinton), the impeachment process itself did not impact the market. In 1974, the market was dealing with two major economic factors. Nixon had previously suspended the convertibility of the dollar into gold and the economy was trying to exit a recession. The market largely ignored the impeachment in lieu of the economic forces in play. In October 1998, the market dropped 11% leading up to the articles of impeachment being presented to Congress, but the market recovered within the month. Beyond October, the market rallied finishing the year up 27%. Looking at our current situation, with the Republicans in firm control of the Senate, the odds are strongly in favor of President Trump remaining in office for the remainder of his term. During this period of government turmoil, we believe nothing of substance will get done. Business likes government gridlock because then they can plan for (and take advantage of) the status quo. Expect the impeachment inquiry to have limited effect on the markets.

If the government could get one thing done, we would like them to settle the U.S.-China trade war. The trade war continues to impact the global economy. This continued drag hurts both businesses and consumers. The constant change in negotiations and tactics adds to the uncertainty in the market. Any breakthrough in trade negotiations will be positive for the market.

We would like to add some clarification to Fidelity’s continued request for people to add trusted contacts to their accounts. The idea behind having a trusted contact on your account is so that we have someone to call when we notice suspicious activity in your account that may be the result of elder financial exploitation. The goal of a phone call to a trusted contact would be to ascertain the health and well-being of the account owner. The trusted contact would not have access to, or any detailed information about, your Fidelity accounts. Studies show that financial exploitation is normally carried out by people that you know and are close to (family members, caretakers, etc.), so picking a trusted contact or two outside of that circle is preferred. If you wish to add a trusted contact to your Fidelity profile, let us know so that we can send you the appropriate paperwork.

We are beginning the process of year-end tax planning. We are reviewing capital gains/losses in non-qualified accounts. Please call us if you have any outside investments with significant gains or losses so we can attempt to lower your tax burden.

Yours truly,

Michael F. Cantlon
Thomas E. Guyett
Robert T. Gephart