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- Impeachment hearings began in Washington D.C. Wednesday and continue throughout November.
- Amid the hearings, the stock market closed at a record high on both Wednesday and Thursday fueled by strong earnings.
- Money managers are split on what impact the hearings have had on the market, and what impact they might have going forward.
- Read more on Business Insider.
Public impeachment hearings against President Donald Trump began Wednesday in Washington D.C. with testimony from two top foreign-service officers.
On Friday, Marie Yovanovitch, the former US ambassador to Ukraine, will be the third official to testify, followed by more key players who will testify later in November. The hearings center on whether or not the president strong-armed Ukraine to look into political rival Joe Biden.
So far, the stock market has all but ignored the impeachment proceedings. The S&P 500 closed at a record high both Wednesday and Thursday, boosted by a better-than-expected earnings season that’s sent stocks higher.
Money managers interviewed by Markets Insider have mixed opinions on the impact the impeachment hearings have on the stock market. Some say that because it doesn’t look like the hearings will lead to meaningful change, markets are largely looking past them.
Still, one said that even though markets look good right now, they’d be soaring higher if the uncertainty of the impeachment proceedings was removed.
Going forward, there are other factors that are weighing on markets, the managers said, even with fresh highs. The US-China trade war continues to drag on, and even though a phase-one deal looks close, it’s far from certain.
And there could be volatility in the markets leading up to the November 2020 presidential election, the managers said. A clear Democratic leader has yet to emerge, which adds uncertainty for investors. In addition, Wall Street has made it clear that it is not happy with progressive policies proposed by Democratic presidential hopeful Elizabeth Warren.
Here’s what three money managers said about the impeachment hearings and what they could mean for the stock market going forward:
1. Greg Zappin, managing director and portfolio manager, Penn Mutual Asset Management: No “major impact on the market”
“I don’t particularly think that the impeachment hearings and proceedings are going to have a major impact on the market,” Greg Zappin of Penn Mutual Asset Management told Markets Insider in an interview.
At the end of the day, the market is focused on earnings, earnings growth, recession fears, China trade issues, and the Federal Reserve, he said.
Going forward, he said that the election in 2020 will be a bigger market mover than the impeachment hearings.
“I think the focus on who the democratic nominee is and what the policy prescriptions are, are going to really move the market. I think that’s still the big thing,” he said. This is because the level of policy change that could be coming will depend on the Democratic nominee and the election in 2020.
2. Charles Lemonides, chief investment officer of ValueWorks: “A very real and serious headwind”
“What’s happening in Washington right now is a very real and serious headwind for the markets. And it’s a challenge for investors and it is suppressing valuations. It is keeping markets lower than they would otherwise be,” Charles Lemonides of ValueWorks told Markets Insider in an interview.
Once the challenge of the impeachment is removed, the market could go much higher, Lemonides said.
“The combined headwind of impeachment proceedings with the uncertainty of a presidential election and how that paralyzes people leaves one sort of impressed by the fact that the S&P is, you know, touching record highs,” he said.
“The takeaway for me is that yeah, if these negatives weren’t there, these markets would be really, really robust.”
3. Thyra Zerhusen, chief investment officer of Fairpointe Capital: “It’s not going to make huge changes right now”
“I think the impeachment is very important, but the population is very split and it’s not going to make huge changes right now,” Thyra Zerhusen of Fairpointe Capital told Markets Insider in an interview.
“The uncertainty has been very damaging to the US manufacturing industry,” she said. “So this is just one more uncertainty and at the end, maybe nothing will happen.”
As for the market, Zerhusen thinks it’s “going to plug along until the elections,” she said. Then, “the next big critical thing will be more who will be elected.”
She continued: “And if we had somebody more steady that companies could make longer term decisions, that would definitely be a positive.”