(excerpt)

... Uncertainty is never good for the stock market — just ask anybody who lived through the Nixon presidency. So with the Trump administration in the deepening throes of political (and now legal turmoil — with the appointment of Robert Mueller as special counsel — will the uncertainty exact a lasting impact on Wall Street?...

...The stock market fell by 45% as Watergate ended Richard Nixon’s presidency. Compare that with the 1970s, during the Watergate era, when the stock market fell 45% from its peak, a bear market that didn’t end until December 1974. It was Richard Nixon’s worst-case scenario, as “a third-rate burglary” led to congressional hearings, a special prosecutor, accusations of high crimes and misdemeanors, and the eventual resignation of an American president. ...

...This time, the economic scenario is completely different. The new president took office with low inflation, low unemployment, and a post-election stock market fueled by optimism that Trump’s pro-business agenda with tax reform and cuts in regulation would finally add strength to a feeble gross domestic product (1.6% in 2016).

“Net-net we believe Trump’s agenda is still bullish for stocks,” says David Kudla, founder, CEO, and chief investment strategist of Mainstay Capital Management. “But his policies may be longer in coming than many might have thought in January.”...

 


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