CITI: 'The risk of impeachment proceedings is now higher than before'

It is highly unlikely that President Donald Trump would be impeached, but according to Citi analysts, the likelihood has gone up.

The new assessment came after Donald Trump Jr. tweeted emails detailing how he apparently welcomed damaging information on then-Democratic presidential candidate Hillary Clinton from an intermediary said to be speaking on behalf of the Russian government.

The stock market sold off sharply following the news. The Dow Jones Industrial Average (^DJI) was down by as much as 129 points before recovering all of its losses.

Impeachment is unlikely given “the vagueness of the process and indeed the absence of evidence of ‘high crimes and misdemeanors,’ as the US Constitution underscores,” Citi analysts said. “Congressional Republicans hold a majority … it would be highly unusual and indeed likely politically costly to the party’s electoral prospects to pursue impeachment proceedings against a president of their own party, particularly with Midterm elections a little over a year away.”

On the other hand, and despite the numerous unknowns in the Trump-Russia situation, the analysts “believe the risk of impeachment proceedings is now higher than before, even if still not our base case for the reasons cited above.”

Donald Trump (C) is flanked by his son in law Jared Kushner (L) and his son Donald Trump Jr. (R) as Trump leaves the stage after his debate against Democratic nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S. September 26, 2016. REUTERS/Joe Raedle

Recent reports revealed that the president’s son, along with then-campaign chief Paul Manafort and Trump son-in-law Jared Kushner, met with Russian lawyer Natalia Veselnitskaya at Trump Tower in New York on June 9, 2016, after a series of emails between Trump Jr. and a publicist close to a Russian billionaire friendly with both Trump and Russian President Vladimir Putin.

In the emails, publicist Rob Goldstone said that a senior Russian government official wanted to provide the Trump campaign with information that would “would incriminate Hillary and her dealings with Russia and would be very useful to your father.” Goldstone added: “This is obviously very high level and sensitive information but is part of Russia and its government’s support for Mr. Trump.”

Trump Jr. responds that “if it’s what you say I love it especially later in the summer.” The two subsequently set up the early June meeting in New York, and Trump Jr. forwarded the thread to Kushner and Manafort. It’s unclear if any agreement was reached or any information was shared during the meeting. Trump Jr. insists that the meeting did not provide any useful dirt on Clinton.

“In our view these developments bear several implications for investors,” Citi states. “Firstly, they will further undermine the Administration’s ability to get key elements of its legislative agenda passed this year. While this is what we had expected, the nature of the allegations will also significantly increase the pressure on the Administration, particularly over the question of access of its key advisers to classified and top secret information.

Donald Trump Jr. (L) gives a thumbs up beside his father Donald Trump (R) in Hempstead, New York, U.S. September 26, 2016. REUTERS/Mike Segar

“The developments are also likely to increase doubts and concerns about the Trump Administration for those senior officials and Congressional Republicans who had previously been concerned, prompting the risk of resignations.”

No U.S. president has ever been removed from office after an impeachment and conviction. A president becomes impeached if the House of Representatives votes on one or more articles of impeachment and one of those article receives a majority vote. The Senate then holds a trial, overseen by the chief justice of the Supreme Court, in which lawmakers from the House serve as prosecutors, the president has defense lawyers, and the Senate is the jury.

If at least two-thirds of the Senate finds the president guilty, the president is removed, and the vice president assumes the office.

The involvement of the Russian government “will increase the risks of allegations of treason, espionage and conspiracy,” the Citi research analysts argue. “Impeachment proceedings may never be brought, but the risk of reputational damage to the Republican party and those members of Congress up for re-election in November 28 Midterms will be a further risk factor to consider.”