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Life without President Donald Trump? On Wall Street, that idea is been being bandied about increasingly of late, as the commander-in-chief has seen his credibility as leader of the free world assailed relentless over the past weeks, ultimately spurring Wall Street stocks into their worst tailspin in months.
On Wednesday, Jeremy Siegel — a prominent stock-market bull — said equity markets, specifically the Dow, would spike by 1,000 points if Trump announced his resignation from the U.S. presidency.
“If Donald Trump resigned tomorrow, I think the Dow would go up 1,000 points,” the University of Pennsylvania Wharton School of Business professor said in a CNBC interview, following a downdraft for U.S. stocks that resulted in the Dow Jones Industrial Average DJIA, -1.78% and the S&P 500 index’s SPX, -1.82% worst single-session selloff since Sept. 9, as the Nasdaq Composite Index COMP, -2.57% the market’s proxy for risk appetite on the Street, registered its ugliest one-session slump since June 24, the day after the U.K.’s vote to leave the European Union roiled global markets.
To be fair, it isn’t entirely clear if the prominent professor, whose optimism for equities compelled him to predict that the Dow would hit 20,000 way back in 2014, was being serious or hyperbolic.
Nevertheless, life without Trump, who had helped risk assets, like stocks, soar to record heights since his stunning election victory back in November on the back of a raft of pledges of tax cuts, infrastructure spending and deregulation, might not be so bad for Wall Street investors.
The president is wrestling with allegations that he interfered with a Federal Bureau of Investigation probe into members of his presidential campaign’s ties to Russia. The markets, after withstanding a number of smaller blows, finally succumbed to an unrelenting stream of negative news Wednesday, following a New York Times report that Trump asked then-FBI Director James Comey to end his investigation into Trump’s former national security adviser, Michael Flynn, a day after he resigned in February. Last week, Trump fired Comey, who had been leading the probe, stunning those both inside and outside of Washington.
Siegel makes a simple case and it isn’t an outlandish notion: No Trump = less drama = tax cuts, infrastructure spending and deregulation.
Trump’s absence would still leave the market-friendly Grand Old Party dominant in D.C., at least for another two years — until midterm elections — and under that regime Trump’s pro-business agenda, under the guidance of Mike Pence or another Republican, could come to full bloom.
“One has to remember that the rally since Trump’s election has been based not on Trump’s agenda [but] on the Republican agenda. I would say that 90% of the people, investors on Wall Street, and most of the CEOs, would prefer a President Michael Pence, rather than Donald Trump,” Siegel said.
“So, in a way you know what kind a trouble he’d be, might he have to resign, might he be impeached… all that does not derail the Republican agenda, upon which this rally was based,” he said.
Check out the CNBC video below:
Siegel isn’t alone in that thinking.
Former CNBC host and ex-hedge-fund manager Ron Insana — aligning with Josh Brown, chief executive officer of Ritholtz Wealth Management, and another CNBC contributor — had this to say:
“I would agree with Josh that Mike Pence, if he were to become president — and I said this yesterday — would be a more effective champion of those stimulus measures that would, in fact, help the economy grow further and support the stock market,” Insana said.
To be sure, Trump is far from being ousted from the Oval Office, but the market appears to be envisioning an existence without the quondam real estate mogul in the White House, and to some at least, it doesn’t look terrible.