What impeachment could mean for U.S. markets

“We’re in for a very, very bumpy ride,” Myers told the audience of advisors. “I’m absolutely convinced that as we go through the fourth quarter, this impeachment process in the United States is going to become the single biggest focus for the U.S. market, and possibly other markets.”

Myers gave a rundown of the impeachment process and a preview of what may come, predicting it would be “the most extensive investigation of any American politician, his family and his company in the history of the country.”

Myers said he was certain the Democrat-controlled House of Representatives would impeach the president. “If they don’t move forward after all this effort and noise, it would be politically catastrophic for the Democrats,” he said.

There may not be a smoking gun, he added, but he believes the accumulation of evidence from the six House committees investigating alleged wrongdoing — ranging from financial crimes to insurance fraud to abuse of power to violating the emoluments clause — will, “in aggregate, rise either to or above the standard of impeachment.”

But while impeachment in the House could be swift, what follows would not be straightforward. Trump would stand trial in the Republican-controlled Senate, where he would be forced to either appear live or via a recorded deposition.

Myers is just as certain accusations would be dismissed in the Senate. However, he expects the process to be longer and “messier” than it was for Bill Clinton and Richard Nixon, two career politicians who respected political institutions.

“It is going to be a completely different impeachment process because, unlike the previous two in modern history, this president is going to do everything he can to fight back,” he predicted.

Myers also pointed out that the president’s children, and son-in-law Jared Kushner, don’t have executive immunity. “Privately, the chairs of these committees will tell you they’re absolutely going after the children,” he said.

While impeachment proceedings will occupy Washington’s attention for months, Myers said it could contribute to a positive outcome for trade talks with China. As Trump faces more political pressure, he will need good news from the economy and the stock markets more than ever.

With forward-looking data on the U.S. economy “alarmingly weak,” Myers predicted the president would resort to a “mini-deal” with China on trade to try to preserve the economic expansion — and his electoral prospects.

“The markets don’t care, in the end, if we get to a deeply structural deal with China,” which China won’t do anyway, Myers said. “What the markets want is a de-escalation, and I think we’re going to get that.”

President Elizabeth Warren: A buying opportunity?

Myers said his firm already liked Senator Elizabeth Warren’s chances of winning the Democratic nomination before the impeachment proceedings began; now that they’re underway, with Trump’s efforts to dig up dirt on Democratic candidate Joe Biden in Ukraine as the catalyst, he said Warren’s chances have improved to 70% or higher.

He also thinks she’ll be elected president in 13 months.

With the California Democratic primary moved up to “Super Tuesday” in March, rather than its historic position in June, Myers said there’s a good chance the Democratic nomination will be decided by April. If Warren is leading next spring and polling well against Trump, he expects U.S. equity markets to respond to her populist agenda of regulating banks, energy and tech by selling off 30%.

“It will be a gradual selloff. It’s not going to be overnight. There will be months where the market’s discounting a Warren presidency,” he said. “If the market does that, it will be the biggest buying opportunity in U.S. equities since 2009.”

The reason? Myers predicted Republicans will hold the Senate, forcing Warren to govern as a centrist. This would prevent many of the leftist policies, such as a wealth tax, the Green New Deal and certain financial regulations from getting through Congress.

However, Myers said investors in energy, technology and pharmaceuticals should be cautious.

President Trump used executive orders to roll back layers of environmental protections. Warren would “snap all that back on Day 1,” he said, with consequences for energy producers.

Technology companies —  Google and Facebook in particular — are also at risk, as Warren has made clear her agenda to break up big tech. But Myers said there’s a surprising amount of bipartisan agreement that certain companies are stifling innovation and failing on privacy, with potential national security implications.

“We’re not saying don’t own [big tech] stocks, but we’re saying own them with your eyes wide open because there is a huge move coming from Washington that will be even more punitive if a Democrat wins the White House, but will still happen even if Trump gets re-elected,” he said.

Myers also said investors should be prepared for action on drug prices. Warren may do this through executive order, but he also said it could happen under Trump before the 2020 election.