Sep 26, 2019

No telling what impeachment could do to the stock market

Reproduced from LPL Financial; Chart: Axios Visuals

It's still early days in a possible impeachment process, but "it would be complacent to think that the impeachment process just adds another ring to the circus," cross-asset strategists at JPMorgan warn in a note to clients.

What they're saying: They point out 4 important variables about the expected impeachment drama in Washington:

  1. "US constitutional conflicts like the impeachment process are rare events, with [prior] market outcomes too context-specific" to use as a rubric.
  2. "The unique context now involves four elements — global growth slowdown, classic late-cycle vulnerabilities, high market valuations but somewhat defensive investor positioning."
  3. The "international wildcards are the implications for US-China trade and US-Iran relations."
  4. "The domestic wildcard is the implication for 2020 Presidential and Senate elections."

Be smart: Analysts at BMO Capital Markets point out that the Fed was "in the midst of a 75 bp fine-tuning series of rate cuts" during former President Bill Clinton's impeachment scandal and "should probably get more credit for the positive growth sentiment than the risk of a presidential ousting."

Go deeper: The market just wants a U.S.-China trade deal

Go deeper

Fed's repo market troubles suggest something "very wrong" with the financial system

Illustration: Rebecca Zisser/Axios

Despite tens of billions of dollars of cash infusions every day for more than a week, things are getting worse, not better, in the systemically important repo market that banks use to access cash.

Driving the news: It's prompted the New York Fed to again increase the size of overnight cash loans offered to $100 billion a day, and to double the size of a 2-week offering to $60 billion.

Go deeperArrowSep 26, 2019

Investors signal they hate Trump's "Phase 1" China trade deal

Illustration: Sarah Grillo/Axios

Wall Street was bursting at the seams with excitement about a trade deal between the U.S. and China — until details of the deal were revealed.

The big picture: China agreed to more than double its annual purchases of U.S. agriculture, up to $50 billion and made yet-to-be-determined concessions on intellectual property rights while the U.S. agreed not to implement its planned Oct. 15 tariffs of 30% on Chinese imports.

Go deeperArrowOct 14, 2019

The bears are in control now

Illustration: Aïda Amer/Axios

For much of the year, equity bulls bought stocks on even the faintest hint of good news about companies or the economy, pushing U.S. indexes to new all-time highs despite a slowing economy and negligible earnings growth.

Why it matters: But with the S&P 500 approaching 20% gains for the year and no real signs of growth to be found, a spirit of pessimism and increased caution looks to be gripping the market.

Go deeperArrowOct 2, 2019