Trump Crises Hurt DOW’s Growth

 

Has President Trump’s increasingly unconventional behavior finally put a brake on the American economy? Investors are watching with concern as the DOW sees its worst drop in six months. Security experts are debating the fallout stemming from the President’s possible information leak during his meeting this week with a Russian delegation. Although the new developments are troubling economists, the Dow is still is sitting comfortably above 20,000 points, the record breaking ceiling that the market reached shortly after Trump’s inauguration.

Dow falls by 300 points following allegations that Trump committed obstruction of justice.

What Is Behind the DOW’s Fall?

While Trump supporters call the fall a much expected “market correction”, some experts place the blame for the reversal on a country unclear of its leader’s next steps. Following the appointment of a new special investigator dedicated to exploring Trump’s ties to Russia and possible charges of obstruction of justice, Democrats in Congress have begun to call for an investigation into whether an impeachment is warranted, hoping that a change in leadership could put trading back on track.

Why Comey Was Dismissed

Trump’s problems with James Comey began when he fired the government official via email. This decision was based on advice from Deputy Attorney General Rod Rosenstein and newly confirmed Attorney General Jeff Sessions agreed that Comey’s behavior was unbecoming for the head of the FBI. However, the split between the Trump administration and Comey had been worsening for some time.

Comey Counters Administration’s Charges

Insiders say that the White House delayed the dismissal for political reasons, based on the advice of White House Chief of Staff Reince Priebus. The President saw an opportunity to proceed following Comey’s admission that he had been mistaken in his testimony the previous week regarding his investigation into Hillary Clinton. Meanwhile, in an attempt to regain his reputation, the ousted FBI Director released a memo in which he stated that President Trump had tried to steer a federal investigation away from his advisor, Michael Flynn.

Trump Tweets Security Breach

In contrast to the allegations regarding Comey, Trump was personally responsible for drawing attention to his release of sensitive information to Russian diplomats. In a Tweet on May 16th, Trump defended his right to share information regarding Islamic State threats with Russia. This generated a flood of criticism, as the media had been asked to hold back on releasing the information due to its sensitive nature. Since the potential leak was made public, recent polls have shown that public sentiment has become more favorable towards a possible impeachment.

Is Russia Worth the Risk?

While the Israeli leadership has downplayed any negative consequences resulting from the information being shared, political pundits are questioning why Trump would place his aspirations to come closer to Russia above the needs of one of America’s closest allies. Dan Shapiro, who served as an Ambassador to Israel, stated that Trump’s disclosure had endangered the life of a spy placed inside of Islamic State by the Israeli intelligence community. Still, given the amount of involvement that Russia is displaying in the Middle East, the sharing of information may have made sense.

How Likely Is Impeachment?

Even if more evidence comes out showing that Trump crossed the line in his requests to Comey or his release of state secrets, it’s unlikely that any investigation would lead to an impeachment hearing while the Republicans hold both the House and the Senate. The impeachment process is difficult to trigger by design, in order to ensure the separation of powers between the executive and legislative branches. First, the House must pass a vote to impeach the President by a simple majority. Next, two thirds of the Senate must find the President guilty of the charges before he can be removed. The first step has only been triggered twice. The second step has never been carried out.

How Does the Drop in the Dow Affect Trading?

The biggest winner following the DOW plummet is gold, which always benefits during times of economic uncertainty. The euro and pound should also climb as the world’s attention shifts from Brexit and the recent EU elections to the U.S. political quagmire. Look for media company stocks to see an upward bounce as news coverage escalates with each new scandal. Although the DOW’s drop of more than 1 percent is significant, the index will likely recover as summer consumption increases.