Former FBI Director James Comey’s testimony was far from what the mainstream media was clamoring for - i.e. Watergate 2.0- but we will wait to see what emerges from Comey’s private testimony taking place three doors down from the public hearing room in the Senate Hart building. We suspect Comey is armed with more intel relevant to the ongoing Russian investigation but is leaving special prosecutor Robert Mueller to determine whether or not obstruction of justice comes into play.
Today’s testimony calls into question President Donald Trump’s integrity and while his personal attorney pushes back hard, there is scant support for his version within the Republican ranks. In our view, Comey’s testimony will invite some deterioration of Trump’s credibility within his party, but not enough to derail his agenda. We think House and Senate Republicans will power through this current sideshow and focus on the Herculean tasks ahead of them: the FY18 budget and appropriations, health care reform, tax reform - and everyone’s favorite - the debt ceiling.
With the shock factor diminished, investors are not batting an eye from Comey’s testimony. Markets finished up today, as there were no startling revelations, but investors should continue to monitor the investigations as leaks (and related tweets) are likely to cause some market volatility in the months ahead before any conclusion is reached.