Markets & Impeachment

David R. Kotok
Wed Feb 7, 2024

A few readers have asked if the latest impeachment activity in the House is having or will have any impact on financial markets. In my opinion, the answer is no. And I believe that will be true regardless of the outcomes of the two present House impeachment actions whether targeting President Biden and/or DHS Secretary Mayorkas. Since the process of impeachment has become a purely political one, it seems to be used by either political party controlling the House when the opposite party holds the White House. Furthermore, I believe that a conviction by the Senate is so unlikely as to render that probability near zero. Maybe it always was that way? A few misbehaving judges are the few exceptions in American history. 



Below is a quote from the US Senate’s webpage on impeachment ( At the end of the page we can find impeachment activity reported for all of American history. A full list of all impeachments and their results starts with Senator William Blount in 1799 and ends with President Donald Trump in 2020. Only one cabinet officer has been impeached. He was William Belknap, Secretary of War, in the Ulysses Grant administration. The Senate did not convict him.  
Here’s the quote:  

Since 1789, one principal question has persisted — how to define “high crimes and misdemeanors.” This question has been debated by members of Congress, defense attorneys, and legal scholars from the first impeachment trial to the most recent. Were misdemeanors lesser crimes, or merely misconducts? Did a high crime or misdemeanor have to be a violation of written law? In an unsuccessful attempt to impeach Supreme Court Justice William O. Douglas in 1970, Representative Gerald Ford declared: "An impeachable offense is whatever a majority of the House of Representatives considers it to be at a given moment in history." This constitutional phrase remains a subject of continuing debate, pitting those who view impeachment as a response to an official’s perceived violation of the public trust against those who regard impeachment as being limited to indictable offenses.

Financial markets seemed to respond to the Richard Nixon impeachment inquiry. But that response was not clear and only implied. Nixon was already in trouble following his re-election in 1972. There was turmoil due to the Vietnam War-related events and other global forces, including a war in the Middle East and an oil price shock. Nixon faced charges about the Watergate break-in and subsequent “dirty tricks” in his political campaign. And then along came the famous 18-minute gap on a White House tape recording. That was enough the put the issue into serous motion. Nixon resigned before the House held any vote to impeach him.  
Was the 1973–1974 bear market exacerbated by the Nixon impeachment hearings? We could speculate about that forever.  
I recall that time and the shock to the financial system. Remember that Cumberland was founded in 1973. In my opinion, and from distant memory, the activity of the Nixon impeachment theatrics made the bear market worse than it might otherwise have been. But there is no way to disaggregate the various forces at work and attribute some financial market turmoil to the impeachment process alone. The oil price shock and interest rate shock were coupled with an inflation surge in the early 1970s. They were certainly powerful forces, with or without any impeachment activity.  
So, will the House impeach anyone that the Senate will convict?  Not likely.  
In my opinion, financial market agents are ignoring this noise from the House of Representatives.  

David R. Kotok 
Co-Founder & Chief Investment Officer 



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