President Trump faces removal from office. Markets: 'Ho, hum'

President Donald Trump faces removal from office, yet markets have shrugged off impeachment and continued to march higher over the past several months. The S&P 500 is up nearly 11% since House Speaker Nancy Pelosi announced a formal impeachment inquiry on September 24.

Much of that is almost certainly because Trump's acquittal has been telegraphed since the beginning of the impeachment inquiry. More than a dozen Republican senators would have to defect to have any chance at removing Trump from office, an outcome that has the slimmest of chances of taking place.

Even if Trump were impeached, he would be replaced by a member of the same party: Vice President Mike Pence. Still, markets hate uncertainty. Although Trump is the odds-on favorite to win reelection in November, investors could be concerned about Pence's chances against a Democratic field that includes progressive candidates like Elizabeth Warren and Bernie Sanders.

"If the trial in the Senate unveils any material information that threatens policy continuity, financial markets may react negatively to the added uncertainty," said Jameel Ahmad, global head of market research at Forextime, in a note to investors.

Climate change's economic threat

The big topic at the World Economic Forum in Davos this year is climate change, which many business leaders view as the biggest existential threat to the global economy.

The trouble with addressing sustainability is multifaceted: Not everyone agrees something needs to change. And among those who desire change, many think the problem is global, and different stakeholders have varying opinions on what should be done to fix it.

That has led to a "lively debate" at Davos, according to Jim Reid, research strategist at Deutsche Bank.

Most notably, Trump on Tuesday railed against climate activists, calling them "perennial prophets of doom." By contrast, climate activist Greta Thunberg admonished world leaders for doing "basically nothing" to reduce carbon emissions.

The encouraging news, proponents of climate change action say, is that business leaders are engaging more in the topic.

"The number of these conversations [at Davos] are rising exponentially," said Reid.

What's happening: The reason businesses and many global leaders are paying more attention to the climate crisis is that the effects of rising global temperatures could be devastating for the world's economies.

In a recent sustainability and risk report, McKinsey Global Institute found that climate change could "put millions of lives, trillions of dollars of economic activity, physical capital and the world's stock of natural capital at risk."

For example, 25 of the world's 100 busiest airports are less than 10 meters above sea level, putting them at risk of coastal flooding and storms. Extreme heat is already disrupting air travel, and the number of people living in areas with periodically lethal heatwaves could rise to as many as 360 million by 2030. And the value of homes exposed to flooding in Florida could be devalued by as much as $80 billion by 2050.

"We were surprised by the magnitude and timing of these physical risks, and their potential impact on human lives, natural systems, the economy and the financial system," said Dickon Pinner, leader of McKinsey's sustainability practice, in a statement.

How to trade on trade

"Phase one" of a trade deal between the United States and China has been completed. The USMCA has been passed by Congress. Trump expects a new trade deal with the European Union by the end of the year. But the hard work isn't over yet.

Recent tariffs on hundreds of billions of dollars of goods remain in place, and Trump continues to threaten new tariffs on European automakers — a frequent target of his ire. Trump said Wednesday dealing with the EU is more difficult than other regions. And France, the United Kingdom and the United States have an on-again-off-again spat over a digital tax on Big Tech.

"This entente is far from stable," noted Elwin de Groot, head of macro strategy at Rabobank, in a note to investors. "Perhaps US consumers can continue to drink champagne for now, but may have to cut back their thirst for British lagers."

Why it matters: The future of trade deals isn't only important for American investors hoping for improved economic conditions at home. Brits will be watching closely to see if Trump and Prime Minister Boris Johnson can resolve their digital tax dispute in a manner that paves the way for a quick post-Brexit trade deal between the United States and the United Kingdom.

Chinese investors also remain hopeful that a "phase two" deal with the United States will bring tariff relief. Although China's economy is growing significantly faster than that of most other countries, its growth has slowed in part because of the trade war with the United States.

Up Next

American Airlines, Comcast, Kimberly-Clark, Procter & Gamble and Southwest Airlines report earnings before US markets open. E*Trade and Intel follow after the close.

Also today, the European Central Bank's latest monetary policy decision arrives at 7:45 am ET, followed by a press conference.

Coming tomorrow: American Express closes out a busy week for corporate earnings.