It was a terrible week for President Donald Trump, who mistakenly characterized the Mueller report as “total exoneration.” But it was a fine week for financial markets, which determined there’s nothing in the maelstrom of presidential scandal to concern businesses or investors.
After nearly two years of work, Special Counsel Robert Mueller essentially issued a split decision in his probe of Russian election interference and possible criminal activity by Trump. Mueller found no evidence that Trump or others on his 2016 campaign deliberately conspired with Russia in a criminal act. There were numerous contacts between Trump campaign officials and Russians they probably shouldn’t have been talking to, but nothing overtly criminal. Whew.
But Trump tried many times, in many ways, to disrupt the probe that began when the Justice Department appointed Mueller special counsel in May 2017. Trump asked his White House lawyer to have Mueller fired, then told the lawyer to deny he had done that when the press picked up the story. When the lawyer wouldn’t do it, Trump asked others to have Mueller fired. They also declined. Trump crafted lies for the press to hide the real reason for contacts with Russians, and condoned the perjury committed by his personal lawyer, Michael Cohen, who lied to Congress about plans for a Trump project in Russia. The perfidies Mueller uncovered go on and on and will consume Washington for months.
The good news for investors: None of this affects you! Markets didn’t move at all on the revelations in the Mueller report, but instead closed out a shortened trading week with modest gains buoyed by a couple of hot IPOs and encouraging economic news. Markets concluded that the Mueller findings don’t appreciably raise the odds of a Trump impeachment, which seems about right. And uncertainty about what Mueller might find is no longer an issue.
Like Mueller, the Trump-o-meter is rendering a split decision this week. It’s great news markets don’t have to worry about a Russian asset in the White House. But Mueller has documented widespread abuse of power that delegitimizes Trump’s presidency—and seems likely to continue. For these reasons, the Trump-o-meter reads WEAK, the third-lowest reading.
Democrats will feed off Mueller report
The Mueller matter is far from over. The report gives Democrats who control the House material for months’ or years’ worth of hearings on the nature of contacts between Trump officials and their Russian contacts, the many public lies Trump and his minions have told, and the “10 episodes” of possible obstruction Mueller investigated. It’s going to be politics at its absolute ugliest, with Democrats heaving one accusation after another and Trump doing his best to deflect and dissemble. On top of this, the House is also looking into Trump’s business dealings with at least nine major banks.
In declining to prosecute Trump, however, Mueller gives some top-cover to Senate Republicans who would vote on convicting Trump, and removing him from office, if the House voted to impeach. That’s why it remains unlikely Congress will force Trump from office. No matter how unseemly Trump’s behavior, Senate Republicans can say they’re following Mueller’s lead by choosing to drop the matter. That’s a good outcome for markets. President Pence, if it came to that, might be friendlier to markets than Trump. But the turmoil that would surround the removal of Trump would inflame the nation and possibly distract from other critical matters.
The Mueller findings will, however, dog Trump indefinitely and further damage an already weak presidency. That will impede Trump’s negotiating ability in the trade dispute with China, the immigration standoff with Mexico and domestic priorities such as lowering prescription drug prices. Trump desperately needs a win, and might be more inclined to ink a trade deal with China, even if he gets less than he wants. Markets would cheer almost any deal with China, a kind of consolation prize for Trump. It might be the best he can hope for.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman