In March, special counsel Robert Mueller subpoenaed the Trump Organization to turn over documents related to Trump’s business interests in Russia. Getting into Trump’s family finances could run afoul of a red line previously drawn by the President, who subsequently assailed Mueller on Twitter and raised speculation that he would fire the special counsel. The FBI’s more recent raid of Trump’s longtime lawyer, Michael Cohen, only increases the intrigue.
These developments make a 40-year old series of events suddenly very interesting.
In mid-1973, Watergate independent special prosecutor Archibald Cox issued a subpoena to President Richard Nixon asking for copies of taped conversations recorded in the Oval Office. The President refused to comply and later ordered Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus to fire Cox. Both refused and resigned. Solicitor General Robert Bork considered resigning but carried out the order. This series of events, known as the Saturday Night Massacre, sped up Nixon’s political demise.
For Trump, firing Mueller is equally inconvenient. Republicans hold both the Senate and the House, making impeachment proceedings seemingly unlikely, so it is notable that Republican Senator Lindsey Graham, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell all warned the President to leave Mueller alone, with Graham ominously stating “it would be the end of President Trump’s presidency.”
While the tweets attacking Mueller stopped in March, the Michael Cohen raid is once again raising speculation that Trump may fire Mueller.
For investors, the question is what impact Washington’s high drama could have on the stock market. A cursory glance at history raises red flags: in the 10-month period from the start of Nixon impeachment proceedings to his resignation, the S&P 500 dropped a stunning 43.5%.