In our latest post, Beware Shorting Impeachments, we noted:
Bad things tend to happen in the world when the U.S. administration is distracted and looks weakened by political scandal. And, believe us, there is a legion of bad things out there just waiting to happen, all of which are stock market negative. – Global Macro Monitor
We just found this tidbit of history from Politico of how during the Watergate scandal the Nixon administration was melting down and the President retreated to self-medication,
The Nixon administration began disintegrating—the president unable to play his role as the leader of the nation and the free world—at 7:55 p.m. on October 11, 1973.
The newly appointed secretary of state, Henry Kissinger, picked up his telephone. His trusted aide at the National Security Council, Brent Scowcroft, was on the line from the White House. The Arab-Israeli war of 1973 was in its fifth day, escalating toward a global crisis and a potential nuclear conflict.
SCOWCROFT: The switchboard just got a call from 10 Downing Street to inquire whether the president would be available for a call within 30 minutes from the prime minister. The subject would be the Middle East.
KISSINGER: Can we tell them no? When I talked to the president he was loaded.
President Richard Nixon—ravaged by more than four years of war in Vietnam, 15 months of Watergate investigations and countless nights of intense insomnia—was incapacitated. – Politico
Wow! POTUS was hammered as the world spiraled toward nuclear conflict and incapable of taking “the call.”
This further confirms our suspicions that domestic political scandals, such as Watergate, distorts and weakens the global perception — and maybe not just perception — of U.S. leadership in the world. And contributed, at least, partially, to the 1973 Yom Kippur War and subsequent economic crisis caused by the related OPEC embargo.
It was only nine days later after the above account by Politico the Saturday Night Massacre took place.
If past is prologue, as Trumpgate thickens we suspect the world may become more unstable. As an example, the behavior of, say, North Korea may become more nefarious as they perceive the U.S. administration weakened and distracted. This already seems to be the case, no?
This only adds to the “wall of worry” and checks over bullishness and probably why the market refuses to correct.
Thank goodness President Trump doesn’t drink, but he does seem to find release — i.e., self-medicate — through his Twitter account. And recent history shows that one “bad” tweet can do more damage and be more self-destructive to a Presidency than, say, five martinis. Gulp!