Global sharemarkets were spooked overnight by Donald Trump’s latest political scandal in Washington – finally.
It was a rare wobble bringing them back sharply from record highs they hit just two days ago.
United States political scandal, nuclear stand-off with North Korea, far-right politicians in Europe; it can all get very grave indeed.
But investors have been largely unfazed. The great post-Global Financial Crisis bull run charges on.
It turned eight years old in March.
This begs the question: Have investors learned to cope better with political uncertainty? Or have we perhaps always over-played political risk?
The answer is probably a bit of both. Uncertainty can affect sentiment, particularly in the short term.
Markets with the quickest trigger, such as currencies, clearly move sharply on political news.
You’ve only got to watch an intraday currency chart on an election day.
But equity markets are less reactive.
As we have seen illustrated through the big political shocks of the past year, Brexit and US elections, they seldom stay down for long.
This latest furore for the embattled president has escalated quickly, with some commentators starting to talk about impeachment.
Who knows? This is unprecedented stuff and it will take a few days for markets to digest.
But history shows they slump and recover quickly around political events. And the big crashes of history – 1929, 1987 and 2008 – were sparked by more seemingly random events.
Billionaire Warren Buffett, a Democrat and a big Hillary Clinton supporter, made the point a year ago.
When asked at the Berkshire Hathaway annual meeting about the risks of a Donald Trump presidency, he shocked some of his politically like-minded supporters by saying he thought his investments would do just fine under either candidate.
He made the point again this month after his latest annual meeting when asked about the Trump influence.
“It’s the most important job in the world but it’s still over-emphasised in its relevance to stock market fluctuation or even business prosperity.”
So, perhaps smart investors have always seen this.
Around the recent French elections we saw the market pull back cautiously in advance.
Institutional investors braced themselves and hedged.
When Macron won, markets surged.
There’s no doubt a Marine Le Pen victory would have had enormous ramifications for Europe.
A Frexit would have cast a shadow over what is actually a slow, but steady economic recovery story. But still business and consumers would have carried on with daily life.
This perhaps is the big lesson for investors in the shadow of Trump and Brexit.
Headlines may be shocking, people may be unsettled and upset, but the world does not stop.
Strong businesses will retain a core optimism and seek new opportunity in a changing environment, even as they seek to minimise risk.
So what next? Well, in New Zealand we face our own madcap year of political posturing and potential instability.
The NZX has followed Wall Street on a golden run since 2009.
We got ahead of ourselves last year and the market has taken longer than United States to climb back from the Trump slump. But growth has been solid so far this year.
Could a wild card election result end the run? History suggests that the answer is most likely no.
The ruling National Party still holds the box seat, although some polls now suggest it could be close run if opposition parties can stitch together a workable coalition.
Regardless, the prospect of a change in government after three terms is hardly unprecedented.
The Kiwi system does throw a bit more chaos into the mix.
MMP means a candidate with a relatively small base of 10 per cent can hold the balance of power.
Parties in that space tend to offer up some pretty loopy and economically worrying policies.
But history also suggests that when they do go into coalition the price exacted is typically specific social policies with either National or Labour retaining control of the broader economic direction.
Politics all over the world will continue to be at its most influential when it drives monetary policy.
In the United States, the Federal Reserve has looked through fears that Trump might derail the economy, and the prospect he might super-charge it with tax cuts and spending, to hold a remarkably steady course.
But even with two more hikes scheduled this year, the shift back to more normal interest rate levels remains too slow and too distant to attract investors back to cash deposits in a hurry. Equities have stayed strong.
In New Zealand the official cash rate (OCR) looks set to remain on hold for at least a year. Rates are creeping up as banks fight for retail deposits but again there seems to be little pressure bearing down on capital markets.
Bad politics could derail the economy but would put downward pressure on rates.
Traditionally the arrival of a Labour Government might herald greater spending and a higher rate track. But this year, in partnership with Greens, Labour has committed to a fiscal responsible set of Budget Responsibility Rules.
So budget surpluses and paying down debt will remain base policies regardless of the outcome in September.
Of course, the next crash could always be just around the corner.
After eight years of equity market growth, it seems like common sense to assume we are nearer the end than the beginning of the bull run.
But fears that it would be political turmoil and voter unrest that killed the bull run seem to have been unfounded.