Testing the Teflon Trump stock rally

The stock market gyrations of last week have been blamed on anxiety caused by the House effort to repeal and replace Obamacare. Traders are worried the arm-twisting and deal-making we witnessed may signal trouble for key parts of the president’s economic plan—namely infrastructure spending and tax reform.

But what has investors truly anxious is the potential for a major political scandal.

The stock rally we’ve seen since November has been attributed largely to the anticipation of President Donald Trump enacting a big-spending, tax-lowering, regulation-cutting agenda. With this health care battle, though, the president’s deal-closing ability has been tested.

And so has the confidence of investors now that we know the FBI is investigating allegations of Trump campaign ties to Russia.

While there were plenty of legislative fights for the markets to absorb during President Barack Obama’s eight years, there wasn’t a daily drip of scandalous accusations feeding a chaotic presidential environment. (Wild presidential tweets don’t help calm emotions either.)

Shareholders may have political beliefs, but the stock market doesn’t. It responds in real time to financial and economic hopes and fears.

Any president who must spend political capital defending himself, his campaign and his administration against accusations as serious as President Trump faces this early in his tenure will be weakened for the legislative debates to come.

On Tuesday, the House Permanent Select Committee on Intelligence, the committee that heard the FBI Director last week confirm an investigation into Russian activity in the 2016 presidential election, has scheduled another hearing. The Senate Intelligence Committee holds its own public hearing into Russian intelligence activities on Thursday.

Traders look for excuses. Investors search for reasons. In this stock market, there are both.