What invoking 25th Amendment on Trump means for investors
A growing chorus of lawmakers and business leaders are calling on President Trump’s cabinet to invoke the 25th Amendment and immediately remove Trump from office. Presumptive Senate Majority Leader Chuck Schumer is the latest to charge the president with inciting the violence that led to protesters storming the Capitol on Wednesday.
“If the vice president and the cabinet refuse to stand up, Congress should reconvene to impeach the president,” Schumer said in a statement.
Most Democratic members of the House Judiciary Committee signed a letter asking Vice President Mike Pence to invoke the 25th Amendment, accusing Trump of inciting violence. “The world watched aghast as insurrectionists, who had been egged on by the President, threatened the safety of elected officials and staff and destroyed public property as they stormed and occupied both the House and Senate chambers bringing our democracy to a halt," they wrote on Wednesday. And Rep. Alexandria Ocasio-Cortez (D., N.Y.) tweeted Thursday that articles of impeachment are “ready for introduction.”
Articles of impeachment have already been drafted and are ready for introduction. They were prepared and finalized by @IlhanMN while she was extracted in a secure location, and members are signing on. pic.twitter.com/FJCpmp64OV
— Alexandria Ocasio-Cortez (@AOC) January 7, 2021
Despite the severity of these actions, markets are unlikely to be affected, according to UBS Global Wealth Management chief economist Paul Donovan. In an investor note, Donovan said he doesn’t expect calls for or even the invocation of the 25th Amendment to impact financial markets because neither scenario would change U.S. economic policy.
“This would probably not impact policy in any meaningful way given that the inauguration of U.S. President-elect Biden is so close,” said Donovan.
Pence and other members of Trump’s cabinet haven’t responded to these calls yet. Trump said through a spokesman on Thursday that there will be a peaceful transition of power on Jan. 20.
Donovan cautioned that international investors may take a different view of markets from domestic investors on the issue of transition of power. “Many international investors come from countries with very different experiences of democracy, regime change, and the stability of the nation state from those of the United States,” he said. “Peaceful transitions of power are less common in some parts of the world. It is perhaps inevitable that such investors will look at what has happened in the United States through the prism of their own experiences. As a result, they may increase the risk that they see in US assets.”
The proximity of Biden’s inauguration would prevent the 25th Amendment from impacting markets in “any meaningful way,” but an impeachment conviction of President Trump could, said Donovan. “Markets might care about impeachment if that were a serious threat as conviction could bar U.S. President Trump from holding office in the future,” he said.
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