Market Overview

The 'Trump Dump' Might Already Be Priced Into The Market

The 'Trump Dump' Might Already Be Priced Into The Market

Concerns about President Donald Trump’s possible impeachment over the firing of FBI director James Comey sent the Dow Jones Industrial Average tumbling more than 373 points. But while some investors fear the uncertainty of possible impeachment proceedings, others seem to be realizing that the possibility of a Mike Pence presidency could be the best possible news for investors.

Political uncertainty at the highest level has always been bad news for stocks. But Trump’s unpredictability, inconsistency and unconventional approach to governing has been a source of constant uncertainty for investors since Election Day. For many investors and business leaders, impeachment proceedings would be just another day at the office in the Trump Era.

In fact, a Trump impeachment may already be priced into the market.

Trump Rally Paved Way For Trump Dump?

“Why such a muted reaction in all the markets against the news today? Perhaps it’s not because the market thinks there’s a constitutional crisis but it already assumes impeachment,” BK Asset Management analyst Boris Schlossberg said on Wednesday.

Related Link: Don't Call It A Comeback: Specter Of Trump Impeachment Resurfaces After Being Dismissed By Many

In fact, a market sell-off may be short-lived if Trump is, in fact, impeached.

CNBC analyst Jim Cramer says stocks would do just fine without Trump.

“Remember that if the Republicans break with Trump in some sort of impeachment process, the Mike Pence becomes president,” Cramer said. “He shares the same agenda as Trump, but at this point would likely be far more effective in getting these things done.”

Height Securities analyst Peter Cohn reached the same conclusion.

“Consider the fact that the drama-free Vice President Mike Pence would assume the position with strong working relationships on Capitol Hill and knowledge of the political process from his years in the House and as Indiana Governor,” Cohn said this week.

“Perhaps investors should consider whether the constant atmosphere of craziness emanating from the White House is worth taking a few extra months to get tax reform done (and potentially make rate cuts retroactive to the start of 2018 anyway).”

If Cramer and Cohn are right, some of the very same “Trump stocks” that were huge gainers after the election could get a major boost if he’s booted out of office. In addition, all American companies that could benefit from lower corporate tax rates, less government regulation and a potential repatriation tax holiday could gain some positive momentum as well.

Come Impeachment...

If a potential Trump impeachment appears to be progressing, traders should watch for potential buying opportunities in the following places:

  • U.S. companies with primarily domestic exposure and the SPDR S&P 500 ETF Trust (NYSE: SPY).
  • Bank stocks and the Financial Select Sector SPDR Fund (NYSE: XLF).
  • Prison stocks Corecivic Inc (NYSE: CXW) and The GEO Group Inc (NYSE: GEO).
  • Energy and coal stocks, including the Market Vectors Coal ETF (NYSE: KOL).


Image Credit: By U.S. Customs and Border Protection - 170515-H-NI589-0489, Public Domain, via Wikimedia Commons


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