The Impeachment Process Begins in Congress

Posted in , By David M. Smith

Impeachment proceedings arrived in the House of Representatives.  It has been a stunning turn of events over the last week.  At the heart of the issue is if President Trump used his government position for personal political gain.  In short, did the U.S. President ask the President of Ukraine to investigate Joe Biden in return for U.S. aid?  President Trump fully admits to asking Ukraine to investigate Joe Biden and his son, who was on the board of a large Ukrainian company, but he does not admit to withholding aid unless they investigated.  It is not hard to connect the dots for a motive as he wants to badly damage a possible opponent like he did in 2016 with Hilary Clinton's email issue (AXIOS).  Or an investigation could knock Joe Biden out of the 2020 Presidential Democratic race.  President Trump would much rather face a Democratic progressive like Warren or Sanders than a political moderate such as Biden.  The motive is there but proving the allegations will be the task at hand for Democrats. 

The Democratic leadership deliberated over a year regarding impeachment proceedings resulting from the Russian allegations and investigation and never moved forward.  House Speaker Nancy Pelosi feared that even if they had the grounds to impeach from a legal standpoint, they would lose in the court of public opinion.  But it only took a week for impeachment proceedings to be launched after the revelations surrounding Ukraine.  With the President directly involved, they feel they have a stronger hand this time.  As more information works its way into the public realm, we'll have to see if public opinion supports this impeachment proceeding.   

How will the markets react to this?  The Russian inquiry had little impact on the markets and as of this week the market reaction to political news was relatively muted.  But with the Ukraine news swirling around President Trump on Wednesday, he announced a trade deal with China "could happen sooner than you think" and the markets moved modestly higher (WSJ).  So far, investors are focused on economic news and ignoring politics. 

What are the ripple effects from an impeachment process?  Will foreign adversaries feel the U.S. is distracted and try to take advantage?  It is not difficult to imagine Venezuela, or even Russia, making a move they wouldn't try on a slow news day.  Will the President feel the need to divert attention to positive news and ramp up efforts to complete trade negotiations with China and other partners (wasn't the timing interesting for the U.S. and Japan to reach a limited trade pact this Wednesday (CNBC)?  Will no legislation make it through Congress now that many committees will be involved in impeachment proceedings?  Who knows where we go from here, but so far this week, things are unfolding quickly.  

There are links and articles to everything happening in DC, and also articles on inverted mortgage yields, megacities and Brexit.  On the lighter side are articles on the perfect age, laughter as medicine (we need this!), and more Ken Burns!  

  • Trump-Ukraine Timeline:  Trying to keep track of all the events, players and details can be tricky.  Hopefully, a timeline can help.  Wash Post
  • Call Transcript:  At the heart of the impeachment debate is a phone call between President Trump and President Zelensky of Ukraine.  Read the analysis of the released transcript as of midweek.  BBC  NYT
  • Once Impeachment Starts…  No one knows where the Impeachment proceedings will lead.  Wash Post
  • Public Support?  The public was not behind impeachment from the allegations over Russian interference.  Is this time different?  FiveThirtyEight
  • What's the Perfect Age?  If you were to take a pill that stopped your aging, at what age would you take it?  It's an intriguing question researchers are trying to answer to understand longevity, satisfaction, stress and peak years for having fun.  The findings are surprising in that many in their 50s don't want to be 30, and seventy-year-olds are among the most satisfied.  Honestly, I'm unsure what age I would select.  But now wouldn't be so bad as I love where my kids and family are at in their life – though my guess is that my kids wouldn't want to be stuck in school forever!  WSJ
  • Graphic of the Week – Megaregions Driving the World Economy:  Megaregions are concentrated metropolitan areas driving high global economic growth.  This graphic maps out the top 29 megaregions in the world.  I am not surprised the Boston - DC megalopolis is ranked number one or Paris-Amsterdam-Munich was ranked second.  I was surprised that China didn't have a region show up until number eight and that Chicago along with a few Rust Belt cities was as high as third.  Visual Capitalist
  • Let's Lighten Up the Mood…  OK, I know this week's articles are on the more serious side, so let's lighten it up.  When I get too focused on the news (which for the most part only reports the bad stuff) I look for some levity.  Turns out laughter is good for our well being.  So amidst all the doom and gloom, take a moment to not take things so serious and have a few laughs!  Forbes  WebMD  YouTube Cat Videos
  • Inverted Mortgage Yields:  Many 20 and 30-year mortgage loan rates are now lower than 7 and 10-year adjustable-rate mortgages (ARMs).  Usually the shorter-term loans have lower rates.  But banks are struggling to make profits on low-yield loans.  With conventional 20 and 30-year loans, they can sell them in the open market after closing.  But with less conventional loans like ARMs, they can't sell them and have to keep and service the loans themselves.  They don't want to own loans that aren't profitable, so they are keeping shorter-term ARM rates high in order to drive customers to conventional loans they can sell.
  • Brexit Update – Boris Johnson on the Ropes:  Remember watching heavyweight fighter Mike Tyson in his prime totally and relentlessly dominating opponents?  Right now, Britain's Prime Minister Boris Johnson resembles one of those opponents.  He is losing major political and legal battles, and they are not even close.  Britain's Supreme Court UNANIMOUSLY ruled his move to suspend Parliament was unlawful.  It has been a string of major defeats and I can't recall a worse start for any major political leader.  Mr. Johnson is still defiant, but he appears only a haymaker or two from having the referee call the match and move on to another fighter. 
  • More Ken Burns:  Ken Burn's documentary on country music was mentioned in last week's Coffee Notes.  I am a big Ken Burns fan (who isn't) and have enjoyed many of his documentaries.  So I thoroughly enjoyed a podcast I found of Tim Ferriss interviewing Ken Burns.  What an American treasure!  Tim Ferriss
  • Quote:  "Life sometimes brings enormous difficulties and challenges that seem just too hard to bear.  But bear them you can, and bear them you will, and your life can have a purpose." - Barbara Walters who turned 90 this week.

Thank you for reading The Friday Buzz! 

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About the Author David M. Smith

David is a Senior Financial Advisor and the firm’s Co-Chief Investment Officer. He has more than 20 years’ experience in the financial services industry and holds the highly respected Certified Investment Management Analyst™ and Certified Financial Planner™ designations; he is a Co-Managing Member of the firm.
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