As if Washington wasn’t already screwed up enough, now we have a formal impeachment inquiry underway.
I’m not very worried about what this formal process means for the President’s current term or his reelection chances. What is of greater concern is the impact this process will have getting anything substantive done in Washington.
Sadly, the idea of bipartisan action on legislation that could help the US economy, like infrastructure and trade agreements, probably gets pushed out past the 2020 election. Congress is likely to do nothing but “must do” items like funding the government.
The entrenched trade war between Washington and China remains a major headwind for the economy and financial markets. Passage of the already agreed upon trade deal with Canada and Mexico is also now In doubt. These uncertainties cost the economy in terms of tariffs imposed on goods and loss of corporate investment because CEOs are unwilling, rightly so, to invest without clarity on trade.
The financial markets are likely to remain highly volatile, swinging wildly on each news story or tweet.
We remain generally constructive on the US economy and financial markets, despite the political craziness. We remain neutrally positioned with a focus on risk management.
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