U.S. stock index futures opened higher in Monday’s pre-market session in reaction to the news that special counsel Robert Mueller’s long-waited investigation did not find enough evidence that Present Donald Trump’s 2016 campaign colluded with Russia, according to Attorney General William Barr. The move was short-lived, however, and prices regain to retreat on renewed concerns over a global recession.
Nonetheless, what should’ve been a bullish event for investors has fizzled.
Shortly before the futures market opening, in a letter to top lawmakers, Barr wrote:
“The Special Counsel’s investigation did not find that the Trump campaign or anyone associated with it conspired or coordinated with Russia in its efforts to influence the 2016 U.S. presidential election.”
The White House responded to the report by stating the results are a “total and complete exoneration of the President of the United States.”
Mueller Investigation a Burden on Trump Policy
For investors, Mueller’s investigation had been lingering concern for investors as it may have hindered Trump’s efforts to further his policy by implementing additional tax cuts and further easing regulations on corporations. Who knows how it may have distracted Trump as he tried to protect U.S. business interests against unfair business practices by China.
As Art Hogan, chief market strategist at National Securities put it, “It’s been like an aching joint. It’s always been that one market catalyst that has always been right around the corner.”
Stephen Weiss, founder of Short Hills Capital Partners, presented a similar reaction saying, “I think the market was going to bounce back anyway and this gives it a little extra oomph. “But overall the investigation rarely was a big concern for investors. If there is a big pop on this, you can likely fade it.”
Nathan Sheets, chief economist at PGIM Fixed income said, “My instincts are that, at least at first pass, it seems to be relatively favorable. Where all of this really connects to markets and markets outlook is implications for tax policy going forward. The sense has been if Trump is damaged, the tax cuts that were put in place could be reversed or – given the rhetoric we’re hearing – taxes could even be increased.”
“There was “more downside risk than upside” from the report’s release, Stephen Pavlick, Washington policy analyst at Renaissance Macro Research, told MarketWatch in an interview last week.
That is because “most people have priced in that there isn’t a lot of ‘there’ there,” he added. Arguing that if there really were damning information, such as proof that Donald Trump coordinated with the Russian government’s effort to boost his election chances, that it likely would have come out already, given the media’s intense focus on the issue.
In my opinion, we already saw the market’s reaction to the news on the pre-market opening. And that will be it. The market’s rose on the news and I don’t expect to see any new developments related to the event when the cash market opens on Monday.
Instead investors are going to revert back to the major concerns including the U.S.-China trade war, the weakening global economy and inverted Treasury yields which may be signaling a recession down the road.
This article was originally posted on FX Empire
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