Would stocks crash with a Trump impeachment?

President Donald Trump warned in a tweet last month amid the Ukraine whistleblower inquiry that his impeachment would cause “the markets crash.”

Trump’s tweet came a day after the release of a rough summary of a July 25 phone call with Ukrainian President Volodymyr Zelensky. The summary showed Trump asked Zelensky to investigate former Vice President Joe Biden and his son Hunter Biden. It was preceded by a whistleblower complaint that alleges Trump used the powers of the president’s office to solicit interference from a foreign country ahead of next year’s election. The complaint, along with the call, prompted an impeachment inquiry by the House of Representatives.

This is not the first time Trump has warned of a market shock if Congress impeaches him. Last year amid the investigation into Russia meddling in the 2016 election, he told Fox News, “If I ever got impeached, I think the market would crash. I think everybody would be very poor.”

Is Trump right?

Probably not. First, the risk to markets and the economy is not really that Trump might actually get forced out of office. Barring a truly devastating revelation, the Republican-controlled Senate will not vote to remove Trump, a president with nearly unanimous support in the party, if he is impeached by the Democratic-controlled House of Representatives.

The risk instead is primarily uncertainty, which markets hate.

History shows us that the impeachment of a president doesn’t necessarily mean disaster for the stock market. Strategists have pointed to the impeachment of President Bill Clinton as being most similar to current events, if the House does impeach Trump.

Clinton was impeached by the House of Representatives but immediately acquitted by the Senate in February 1999. The S&P 500 rallied 28% from January 1998, as the first reports of Clinton’s affair with a White House intern, through the Senate acquittal.

Note: The decline of 20% in the interim periods was due to a default on domestic Russian bonds and the collapse of hedge fund Long-Term Capital Management.

That contrasts with a weak market when President Richard Nixon was being investigated for Watergate (he resigned before Congress could impeach him). According to LPL Financial, the S&P was 39.2% higher a year after the impeachment process began against Clinton, and was down 33.4% a year after proceedings were started again Nixon.

What’s the difference between the two attempted impeachments? Well, one important distinction was that the economy was in far worse shape when Nixon was in the White House during the early 1970s.

And even though our economy appears to be slowing, we’re probably in a place more similar to the Clinton impeachment era than the Nixonian one.

But the impeachment issue adds to the uncertainties already overhanging markets, including tensions with Iran, a Halloween deadline for Brexit, and ongoing trade frictions with China.

Strategas says that the new NAFTA 2.0 trade deal with Mexico and Canada will probably now be at even more risk, since Democrats are unlikely to agree to it. But there could be a swifter movement on China, and Trump now is more likely to accept a smaller deal, putting aside some of the thornier issues. That would be good for industrial stocks, semiconductors and those assets impacted by a positive trade outcome, like energy and other commodities.

The political reality for Trump is that he needs to show some accomplishments on the trade front. His approval rating over the past 18 months has been tied to better news on trade with China, but it’s equally likely that he could lash out at China as the impeachment process drags on. When it comes to Trump, one should expect the unexpected.

So, what should investors do in these circumstances? Very little, most probably.

JPMorgan put it best when they said that the drama brought by an impeachment proceeding brings “little justification” for investors to change their portfolios. This means making sure you’ve got a financial plan and are sticking to it.

Doing nothing can sometimes be the hardest thing to do. But in this case, it might just save you from inflicting unnecessary harm on your portfolio.