Week in Review 9.27.2019

Stocks fell during a week that was largely dominated by political headlines. On Tuesday, the House of Representatives announced it was launching a formal impeachment inquiry of President Trump. The immediate knee-jerk reaction on the part of markets was to pull back. However, an examination of the last two impeachment investigations suggests that markets are ultimately more focused on economics than politics.In the year after the Richard Nixon impeachment investigation began, the S&P 500 fell 33% as the economy was already poised to enter a recession. In the year after the Bill Clinton impeachment investigation began, the S&P 500 rose 39% supported by strong economic growth. Thus, while the recent historical sample size is relatively small, it would seem to suggest that where markets go from here will ultimately be decided more by how trade talks and other fundamental issues unfold than the proceedings in Washington.

Economic data out of Europe continued to point to slowing conditions. German composite PMI data experienced its first contractionary reading since 2013, led by a steep drop in manufacturing, which fell to its lowest level since mid-2009.