While there was plenty of news to chew on from former FBI Director James Comey’s testimony before the Senate Intelligence Committee on Thursday, it’s clear the investigation into Russia’s influence on the 2016 election, and whether there was collusion with President Donald Trump’s campaign, is far from over.
That means nothing good for Wall Street.
Isaac Boltansky of the political-research firm Compass Point told Business Insider that Comey’s testimony proved nothing would be resolved anytime soon, delaying hope for Wall Street-friendly reforms like bank deregulation or sizeable tax cuts.
“The hearing was in line with expectations, and the market appears to have shrugged it off for the time being,” Boltansky said in an email after the testimony. “From a markets perspective, my concern remains that this issue is beginning to dominate the congressional bandwidth, which is a headwind for advancing the GOP’s pro-growth agenda.”
Chris Krueger of Cowen Washington Research Group agreed with the assessment that while the hearing did not reveal a lot of new information or change the investigation in any large way, it put the legislative agenda on hold.
“Slows everything down,” Krueger told Business Insider. “The only thing moving on the Hill with any velocity, momentum, or bipartisanship is investigations.”
Krueger also said that while tax reform, Wall Street’s favourite policy proposal on Trump’s agenda, was on a “separate track” from the investigation, Comey’s testimony and similar events “delays that engine.”
Investors have been anxiously awaiting an overhaul of the tax code because tax cuts would drive down costs for corporations and most likely lead to higher profits, and thus higher stock prices.
“Can still get done, but Congress must clear healthcare and the [fiscal 2018] budget sequentially and avoid a shutdown and a default due to the debt ceiling … just to get to tax on the table,” Krueger said in an email.