US Open – Impeachment Proceedings, Trade, Oil falls, Gold steady, Bitcoin trying to stabilize

US equities continue to drift further away from record high territory as the nation becomes consumed with the impeachment inquiry of President Trump and as no major breakthroughs are expected in the Sino-US trade war until the October high-level talks.

It seems stock traders will have to wait for the march into uncharted record territory as deepening political gridlock in the US and political posturing ahead of next month’s critical trade talks will likely overwhelm the prospects of global stimulus. Global equities and yields are lower and the risk-off tone could gain traction as we enter a period of uncertainty with geopolitical risks.

Wall Street does not expect Trump to get impeached as Democrats will need two-thirds of Senators to convict Trump, a tall task since Republicans have the majority. The worst case scenario for US equities would be an Elizabeth Warren Presidency and this week’s developments have helped her gain momentum against Biden.

Impeachment

House Speaker Nancy Pelosi has officially launched a formal impeachment inquiry on a growing controversy about President Trump’s request to have the Ukrainian government investigate democratic frontrunner, Joe Biden and his son. Trump will be the fourth President to have the House launch impeachment proceedings. Trump seems confident that he will be vindicated and is poised to release the transcript of the phone call to the Ukrainian President.

Biden commented on the campaign trail that “this appears to be an overwhelming abuse of power.” The President’s advisors are making calls for an investigation on Biden’s request to have the Ukrainian prosecutor fired or the US would not release $1 billion in aid. The concern is that Hunter Biden’s employment with Ukraine’s largest private gas company could have been the result of a conflict of interest. Biden at the time was the man in charge of trying to clean up corruption in the Ukraine for President Obama. The Bidens were scrutinized at the time when this happened, and we will likely see this do little to derail Democratic frontrunner. The democrats supporting impeachment in politically vulnerable districts could now be at risk at losing their seats.

Oil

Oil prices are falling after Saudi Arabia seems to be ahead of schedule of restoring capacity and after the API report showed a second consecutive small build in stockpiles. The Saudis seem to have got the job done a full week in advance, but more importantly well ahead of what many skeptics were targeting.

Stability with oil prices is unlikely to happen as the situation in Iran remains fluid and the UN General Assembly has not yielded anything that will bring down the risks of military conflict.

Gold

Gold is likely to see strong demand as US political risks rise and consumer confidence plummets. American’s are not immune to the global slowdown and we will likely see the coming months show a further deterioration in household spending and the labor market, warranting the Fed to commit to an easing cycle.

Bitcoin

Bitcoin attempting to stabilize following its biggest drop since January 2018. Bitcoin’s tumble from the launching of the Bakkt crypto platform is a key moment for the crypto space, that should eventually see the physical settling of Bitcoin’s attract a new batch of investors. The whole cryptocurrency market tumbled as the new federally regulated market for trading cryptos saw a very lackluster debut. Long-term Bitcoin investors appear committed to holding onto positions ahead of the halvening event on May 27th 20202. The supply shock expectations should see Bitcoin well supported going into the end of the year.

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