The risks of a White House impeachment crisis and months of Washington paralysis are rising exponentially. You do not fire the head of the Federal Bureau of Investigations lightly.

Donald Trump's sacking of James Comey in the midst of an expanding counter-espionage investigation  - on seemingly bogus grounds - is a political assassination. It is comparable to the Saturday Night Massacre in the Watergate saga, and arguably worse.

For all his faults, Richard Nixon was at least a foreign policy statesman. Few ever suggested that his inner circle had joined forces with a hostile power to subvert a US election.

The presumption has to be that the Oval Office is trying to obstruct a probe of Mr Trump's campaign team for suspected collusion with Kremlin. As the New York Times states today in a front page editorial: "Mr Comey was fired because he was leading an active investigation that could bring down a president." It certainly appears as simple as that.

Whether the escalating constitutional crisis poses a risk to inflated global equity and credit markets is far from clear. There is no historical template for this. It is certainly the sort of catalyst that could shatter complacency, even if VIX volatility index for now remains eerily becalmed at a 24-year low.

As a Washington correspondent in the 1980s and 1990s, I covered both the Iran-Contra affair and the scandals leading to the impeachment of Bill Clinton by the House of Representatives, and had own my brushes with the FBI along the way.

In both episodes, markets shrugged off events. Nothing perturbed Wall Street. We journalists at the coal face of the Clinton saga were often asked to give talks in Washington to financial institutions eager to learn whether events might spin out of control.

There was a cottage industry of investor newsletters and talk-radio hosts convinced that political Armageddon was coming, and with it a cathartic stockmarket crash. Those who "shorted" Wall Street on such advice lost a lot of money.

David Fuller's view

I think every investor and pundit interested in the US Presidential Election cycle has wondered, often out loud as I have, if President Trump would face impeachment proceedings at some point.  

The possibilities of this happening are the stuff of dreams for media types.  Conspiracy theories, illegal actions, presidential lies and especially sex scandals will always have an element of prurient appeal for the public, especially among those who don’t have a good book to read.

Nevertheless, while investors may enjoy the political intrigue, impeachment proceedings are of limited economic significance for the US. Investors would rather look at their traditional tools, commencing with price charts and earnings estimates for shares of interest.  Thereafter, the Fed’s actions and statements will be of far greater influence than any other factor. 

Meanwhile, would Democrats like to impeach Trump? Undoubtedly but Trump’s firing of James Comey does not give them a strong hand.  After all, Democrats wanted him sacked for his late intervention over Clinton’s emails, days before last year’s Presidential Election. 

My guess is that we will hear about possible reasons for impeaching Trump throughout his presidency.  Trump knows this and he should be sufficiently shrewd to avoid being removed from office.    

Here is a PDF of AEP’s column.