Stocks were only modestly lower last week amid reports that President Donald Trump allegedly asked former FBI Director James Comey to drop the investigation concerning former National Security Advisor Michael Flynn's connection with Russia.
Many people are worried that President Trump could be impeached for this, but impeachment and a conviction would be difficult considering the makeup of Congress. To impeach President Trump, 24 Republicans would need to vote with Democrats in the House of Representatives. To find him guilty, 19 Republicans would need to vote with Democrats in the Senate. This fear certainly caused some rapid movement in the stock market last week, but it's likely overblown at the moment. The bigger concern for investors like you should be the impact the Comey distraction has on the ability of the Trump administration to pass tax reform, roll back regulations, and pass a government-spending plan to fix bridges and highways. Simply Money Advisors believes the positive impacts from these economic policies likely won't occur until 2018. In the meantime, the economy should grow with little risk of a recession for the remainder of 2017.
With the economy growing, companies will likely report higher profits. We are seeing many companies raise their expectations for growth in 2017. This is great news especially as it comes on the heels of a very strong first quarter for corporate profits. Large companies reported growth of about 15% in earnings and 8% in sales, on average. With the economy and profits growing, the Federal Reserve, our nation’s central bank, will likely raise interest rates at its next meeting on June 14th.
The Simply Money Point
Yes, the political friction in Washington, D.C., may cause some short-term uncertainty in the stock market. To help protect your money, stay focused on the long term and have a well-diversified investment mix that’s appropriate for your needs and goals.