CNBC price updates: Historic bull market and Cohen fallout — (8/22/2018)

For us, when you look at the full range of data points, when there's only one that's similar and the other kind of thing, like you mentioned, really the only similarity to 2007, the most notable one is that the chart is hitting fundamental highs of all the times. and completely different valuations, completely different when you look at small and mid cap companies and how they perform, that's completely different, you know, we're really just talking more when we say the

market

, we're really just talking about the Dow and the The S&P 500, those large caps that have been the winners, to us, when we look at the full range of data points, when there's only one that's similar and the other ten are different, to me that doesn't indicate that this is going to be So. a top knot in 2007, well, 1999, obviously, Aaron was, you know, these fake Internet companies as we know them now that drive all the taxi drivers who buy these stocks. 2007 was all housing, it was all leverage, it was all we know now was another false economy.

This, if this economy feels real, yes, it is. I would say the only concern for us is that it has definitely been driven by growth rather than value. You don't see as much breath as we love, so we might see these ups and downs. sort of sideways patterns for a while as long as the growth is very favored because right now when you look at the sp500 growth versus the value growth, it's outperforming, but almost 12% so far this year. year, we're only seven months into the year, so that's actually the biggest spread we've seen since we've been following the style indices, so it's a little worrying that it's clearly growth-led.

The value is so out of favor and we would like to see a little more of it. more breadth and some more of this value, the stock is actually holding up and performing a little better to keep this

market

going, but is that a reason to be skeptical about the

bull

run? No, I think it goes back to what Mike said earlier. I mean, it's very JIRA, yeah, you're an example in terms of the way these markets have gone, it's been such slow growth. I think it's the slowest growth we've had

historic

ally and, you know, we forgot to go back to the short guy, Mike, who's not in the market.

There's like nine trillion dollars in cash right now like nobody's been in this market for almost ten years. I mean, most investors have missed the boat, so I have to think that once we get through these trade wars or whatever trading sessions we have, I think we're going to really be able to have a big capitulation to the upside here. I mean, I think that's the biggest risk we have in the market today. I don't think that's inconsistent with this kind of late move. This is the Paul. The Tudor Jones type scenario that he created is a late '90s feel, like you have this wall of water, we have to get over it again and then this total explosive movement if that wasn't what we got in January and again. that's a tactical thing, if the 2019 earnings estimates hold true as they are now on paper and we don't get that typical erosion of the forecast they're in, there won't be much to discuss, yes we haven't had any erosion from this.

In fact, next year it will continue to go up for

2018

, we are up to 23% and we will get another 9% next year. Another thing is that the revenue estimates look really strong. We are looking at revenue growth of around five and a half percent next. year we understand that it is not going to be a

bull

market, but what is the typical pattern? So if in August of any given year, which is typically used, you lose a few percentage points of anticipated growth for the next calendar year. If next year it's 5%, you generally use it only to lose it in the first quarter or second and then it goes back up, so except in some of the really bad years, you lose it in the first half of the year .

I've been guilty of overestimating or underestimating I guess the risks of certain things in 99 and 2000, right, it's all good. Subprime mortgages are contained. Internet is going to be fine. Everything's fine. Well, we may also be underestimating the ability of things to remain good for a while. because we are so good now yes there is this I think we have been so marked for the last 15 years that we just can't believe things continue there must be something wrong that's what blows me away with this whole bull market and dealing with everyday retail investor is that they just don't believe it, I mean no matter how good the idea is, it was even defeated twice massively in the last 15 years, oh it's definitely scar tissue, I mean they couldn't put better numbers up front. of people and it's still there, but wait a second, what about the trade wars?

Oh wait a second, what's with the inverted yield curve? everyone was happy all the time no one saw the 9, it wasn't the case that it was 97-98, you thought the world was going to end this like a global margin call twice and all the people said this internet thing is crazy , TRUE? What I mean is that people didn't feel comfortable, even though it was a lot of easy money during the last few years of that race, it wasn't like the whole night, by the way, was seen as Greenspan blowing a bubble. All decade long, how could short-term rates stay at 3%?

It's too low. That's what you heard in the mid '90s and now we hear that 0 P has the anxiety that, yeah, yeah, you always do the right thing and that's the thing. When we look back, we'll say it was very easy to invest in the last decade, but it was really very difficult, it's really the trajectory of Fed rates and the Fed liquidity crunch that's been running over the course of the last years. years, I mean, bull markets don't usually die, as we've often said about old age, they often die because rates rise at a rapid pace and economic activity contracts.

We don't know, Alesi, that on the horizon the Federal Reserve has been very careful, but it is certainly one of the things that we are watching very closely in terms of what concerns them, that is, they have outlined quite clearly what they intend to do. Is that path their concern or is it that path that continues despite what is happening around the world, like a tumult in emerging markets or a sharp rise in the dollar, etc., we sure hope the Fed is data-driven to slow down if appropriate, if the economic indications are such, but one of the things that I think needs to be addressed is the amount of liquidity that has been injected into the system over the last few years, if we look at what that the Federal Reserve and the balance sheets of the central banks have done: go from four or five trillion to 15 trillion.

The process is slowly reversing and I think it's something we haven't seen before, so it's a degree of uncharted territory and liquidity has certainly driven many asset

price

s, particularly fixed income. JJ, what is your concern, if you have any? I'm sure you get it right, yeah, of course, you know, I think the Fed is a little bit worrying, actually more inflation, it's a bit worrying than anything else because we know that when it happens, it happens exponentially, as they really say, although you already know everything. The boxer will tell you that the blow that knocks you out is the one that you don't see coming and that worries me, you know, we saw a small sample of this maybe with Turkey if two weeks ago the European situation in terms of the bench, you know, we have boasts of that on the horizon, etc.

In fact, I'm a little bit more worried that if we see a global GDP slowdown in China, it doesn't slow down a little bit yet to a level where we have to worry too much, but those are the things that I think worry me more than maybe inflation because, even though you know we have a lot of money in the system, etc., the

price

pressure is just starting a little bit, as we saw maybe with Kimberly-Clark last week, but I don't think it's widespread yet, so we've Concerns aside, Joe, what is your general feeling about where we are in this market and how do you invest given what your concern is?

I think the earnings outlook is quite strong, so we certainly experienced 20 to 22 percent earnings here and in the first half of the year there are expectations for the full year around that level of earnings growth, so the earnings outlook is quite strong and economic activity, although perhaps peaking in the second quarter of this year. This year, from the point of view of the US economy, it is still moving at a good pace, so there are certainly a lot of positives that could drive this and will probably drive this market higher in the short term. The concerns we have are some of the things we talked about earlier. in terms of where the path of rates is and you know there are other exotic events that we're worried about, I think there was no mention of China, which is one of the things with Cohen, hey, JJ, I'm going to do it. to you because you're not here to throw something at me Cohen and the man allowed it I mean, did he do this?

I know you're surprised the market doesn't react more to this. You have people who you know are going to start talking about impeachment. They are going to start talking about the violation of the campaign finance law by the then candidate and now current president. Are you surprised that futures don't react more negatively to this news? I don't know, I'm not really Brian and you know he sees what the market really thinks. Last night at one point SPS was down over 15 right after the news broke, they came back just a couple dollars earlier, now they're down about six, and with that, what I think comes into play, people have been calling. for impeachment since the president was elected, I think one of the traps that retail investors especially fall into is that they let their political views outweigh what the market is telling them.

I see a VIX rising 20 cents. Gold rallied a little, but that could be a lot more. The dollar, like anything else, comes together a bit. The real warning signs that, gosh, you know, run for cover, are there right now, so I would say there has been a constant swirl of gains driving the markets. Their earnings season has been fantastic. It's not that other things can't change them, but right now the markets don't tell you that there is a big warning sign, of course these situations tend to remain fluid, but I think people really have to separate their political ideology from what what the markets really say.

And you have to remember that if you think back to 1998 and 1999, we went through a Pietschmann procedure with President Clinton, the market was up 20 to 30 percent in those periods, obviously a very different time, but I think a lot of policy issues are important for the economy, a significant tax cut for corporations and significantly less deregulation or less regulation has been really important, so those things have been achieved and I think that's what the markets focused on, on the extent to which this impacts the midterm elections in November. I mean, how does that alter or shape your view of the market?

I mean, Trump's agenda is to maintain the majority in the House and Senate. Are those things important to his vision of his market. I think the midterm elections and the continued disarray in Washington would be an issue that the markets are going to try to understand what the implications of

historic

al stagnation have not necessarily been a bad thing because it avoids doing crazy things on the right and crazy things on the left. , but we will know "That is certainly something that the market consensus today is that the Democrats are going to take over the house, so I think the expectation is much calmer, since while the market was trading we received stories that the Manta Ford jury asked if we can.

We didn't reach a consensus, etc., so we didn't know too much, but when they said the cone was moving toward a plea deal, the traders in the room said, "Well, let's take a look at what that has to mean." if they" We'll let them testify and maybe go down, then they must think that he has some value against the president and that's why that built in that nervousness and then secondly, as you say, yes, we had about two billion dollars for sale in the belt, so The reaction so far today is surprisingly benign, but I think that's because the president's Twitter has been surprisingly benign, given his past history, like joking a little bit about art.

There was a good research note this morning from Matt Meili at Miller Tabak. He said it's kind of a boy who cried wolf phenomenon for the markets where this is not the first time that political or geopolitical surprises occur every time the market sells off, goes back up and makes new highs, so there is a sort of a numerical effect, so these types of headlinesright now, well, until now, I mean, we know we're creating these headlines. The question is: will they affect the elections? Will the president stop being as benign as he has been this morning?

Will that start? To move things forward, there are people like Senator Blumenthal and others who are already starting to call for impeachment. If any of that starts moving forward, I don't think I'll ever get a full impeachment trial, but just impeachment could tie the impeachment trial. keeping the government for a year or two would be bad for the market, although I mean no one is a better student of history than you, so take me back to Nixon and then let's fast forward to the late '90s, when Clinton the market he did pretty well because The economy was doing pretty well, yes, but not in the late '90s, you have to mix it up, continue with Clinton, in the late '90s, you have to be very careful because there was more to it than just the impeachment trial, the year 2000 was approaching and all eyes were on. we were on it and that's what really gave us a tech boomLater on because everyone was told they had to replace all their equipment and there was a massive buying boom, one had the Russian ruble and the Thai baht, two pretty exciting years at the end of this venture, but I think the market would be a little worried if they thought that the progress we're making on deregulation and things like that would suddenly dry up because the government is paralyzed with introspections, for now it's a watchful waiting, it's like you said so far.

I've seen this movie before. and no one dies, so why would I be upset? and the movie starts to change, then the market will change. There's a nice Watergate chart I tweeted from investor intelligence that shows the S&P fell 23% during that time period. During the oil embargo it was actually officially the longest bull run since World War II Obama Trump's bull market is now longer than Eisenhower's bulls Reagan and Clinton Here's a look at the drivers and obstacles this bowl has bull markets always emerged from a scary time and that scary period was the financial crisis of 2008.

Subprime mortgage lending in the mid-2000s helped create a housing bubble when the bubble burst on leveraged financial institutions, At this point, it's easy for Charlie to imagine the worst-case scenario for Bear Stearns: In March 2008, JPMorgan bought the investment bank Bear Stearns for just $2 a share in the deal backed by the Federal Reserve and in September 2008, the collapse of the titans on Wall Street in panic. this morning Lehman Brothers filed for bankruptcy after failing to find a private buyer or a government bailout we are in the middle of a serious financial crisis with the stock market in free fall extraordinary government measures were taken in the coming months, including tarps for The The FDIC's $700 billion asset purchase program to bail out financial institutions has stabilized our financial system through quantitative easing, where the Federal Reserve purchased an additional $600 billion in mortgage-backed securities and a stimulus bill in early 2009 another eight hundred and thirty billion dollars. in government spending and tax cuts, but even with all that, the stock market didn't bottom out until March 6, 2009, when it hit a hellish 666 that was down a terrifying 57 percent from just 17 months earlier, the worst decline since the Great Depression. rebounded as this historic bull run began within three months the market was back up another 30 to 40 percent in 2010 the economy began adding jobs consistently, it has been so regular, in fact, that there has not been a single month of job losses since October 2010, the longest streak on record.

In November 2010, the Federal Reserve began a second round of quantitative easing. The idea was that buying Treasuries would help keep already super-low interest rates even lower, which should stimulate the economy, but it had an effect on stocks. The market also if investors couldn't get a good rate of return on bonds, stocks looked much more attractive and money poured in driving stocks higher for years, there were some serious bumps in the road when it looked like the bull might fade away, especially at first. In the May 6, 2010 flash crash, the Dow Jones Industrial Average suddenly lost more than 1,000 points before recovering most of the losses, but fears about high-speed trading kept investors on edge for months and months. then it looked like things might fall apart in the summer of 2011.

Concerns in Europe and political unrest in Greece caused a serious correction in the markets and after SP downgraded the credit rating of the US debt in August, the index leader fell more than 6% in one day, but the strength of the rally prevailed. the highest market Facebook Amazon and Google combined just those four companies have added more than two trillion dollars in market capitalization since the beginning of the bull run and let's not forget about Apple 2 riding the success of the iPhone the company's stock has Priced nearly 18 times what it was worth in March 2009, of course, it was the first company to reach $1 trillion in market value earlier this month.

After talking about it, people thought that the bullish trend might end in 2015, when China's stock market crashed and caused US stocks to fall. Then, oil prices crashed, causing stocks to fall. energy stocks and spooked the markets, and Briggs put the brakes on any bullish momentum in 2016, but since then stocks have been soaring for a while, it seemed like nothing could stop it, not even the Federal Reserve raising interest rates. Rising geopolitical risk from North Korea, not even the uncertainty inherent in a Donald Trump presidency after a brief bump on election night, markets have been applauding Trump's policies of deregulation and massive corporate tax cuts, until early

2018

when inflation fears combined with Trump's tariffs put a damper on the party, but with stocks back at record highs, this bull market has been a beast that has lasted over 3,452 days, the S&P 500 has quadrupled in value since bottoming out, just look at the Wilshire 5000, it has created over $27 trillion in wealth for investors.

That's a lot of nonsense and now it's a record. Michael Cohen's lawyer was on NBC's Today Show this morning talking about all of this. Savannah Guthrie asked him about the prospects for a presidential pardon. This is what she had to say. Do you expect a pardon? President Trump not only does not expect not to accept a pardon, but he considers that a pardon for someone who has acted so corruptly as president is something he would never accept, which is why Lanny Davis says that Michael Cohen is not asking for a pardon . The pardon would never accept a pardon from President Trump that changes the dynamic a bit in terms of the influence the president could have over Michael Cohen, which is why Michael Cohen pleaded guilty yesterday to eight charges, including a campaign finance violation involving payments to women related to her allegations of sexual relations with the president to keep those allegations secret before the election Also yesterday in Alexandria, Virginia, Paul Manafort, the president's former campaign manager, found guilty on eight counts for a jury in that state, so the legal cases here threaten the president, but Rudy Giuliani, the president's lawyer, issued a statement yesterday on the Cohen matter, suggesting that it doesn't really have any impact on the president, saying that it doesn't There are no accusations of wrongdoing against the president and the government charges against mr.

cohen

it is clear that rudy giuliani says that, as the prosecutor pointed out, mr.

Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that former lawyer Michael Cohen engaged in a pattern of lying and dishonesty over a period of time significant. He talked about much of this briefly in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night, guys. You know, even what we hope to be the next step in this, obviously, there's a lot more to unpack from this great story.

Here we are looking at Michael Kohn now, once President Trump is one of his closest friends and allies, obviously now turning against the president, but from a legal perspective, do we have any insight on either front? ? What are the next steps? I mean, this is a Shakespearean drama. At this point, we have Michael Cohen, who once said that he would take a bullet for the President of the United States. the most threatening figures for the president's entire presidency Lanny Davis suggested on television last night that Michael Cohen has more information, particularly about criminal hacking and whether or not the president knew about that hacking beforehand and even applauded it, Lanny Davis says then The question is what Michael Cohen knows about the president's involvement in the Russian hacking and whether he is willing to talk to prosecutors about it.

You're talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said, "Hey, are you?" Listen, go after it, right? That's what we're talking about. Well, the president's aides have suggested that that comment during the election campaign when the president said, Hey Russia, if you're listening, I want you to find Hillary's emails, they suggest that that comment was just. He jokingly didn't mean that he wasn't actually tasking Russian intelligence with hacking into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking.

Remember there were emails related to the Clinton campaign. that were stolen using computers by Russian intelligence according to an indictment of those Russian GRU members earlier this year by the special counsel's office, the question is whether the president knew about that hacking before it happened and whether he encouraged it , as Lanny Davis suggests. Michael Cohen knows that's the case, so what Michael Cohen now says to the spell council is of great interest and then how the president responds to all of this. There are a number of actions the president could take and we will wait and see if he takes any of them that could make this dangerous situation even more politically precarious for the nation.

We have talked about a bull market in stocks. Savin I'm guessing there's a bull market right now in anyone who's a campaign finance expert. law in Washington DC because that's where everything will be taken seriously again, so going back to campaign finance law and the Washington Post, I think they did a great analysis this morning, which is that you can hate the president and you can knowing that there may have been Laws broken in campaign finance, but for a sitting president to be impeached or impeached is almost impossible. Well, look, there are Department of Justice guidelines that suggest that Justice Department lawyers believe that it is not possible under the Constitution to impeach a sitting president, so it is likely that Robert Muller would not impeach although it is not guaranteed that he would not. would accuse the other.

The other possibility for Muller is to write a report on all this and present it to the Attorney General in this case to arrest Rosenstein because the Attorney General is recused through his own fault. get involved with the Russians and then Rod Rosen Stein would be in a position to decide whether to refer that to Capitol Hill for impeachment, so there are some fascinating questions here about where we're going, but these are the biggest risks in the world. I do not believe in any specific agreement at all. It will be reached, but it is important that the two sides really talk, something we haven't been doing for a while, so it is a necessary step in this process, but we are a long way from being able to resolve this, but it is good.

I hope that delegations in DC will lead to further progress, but we will have to wait and see, given the imbalance and trade, do you think China has any leverage in these negotiations? I mean, we don't sell them that many things and a lot of what we sell them tends to be more animal protein foods, you know, things like junk. Do you have a leg of the aisle to lean on to begin these negotiations? Well, China has a lot of strength. I mean, they are the second largest economy in the world. clearly the impact of the US Tariffs on Chinese products are hurting China, byAt the same time they still have a strong economy, they have principles that they are trying to present.

I think his real challenge to America. is that we are trying to achieve some fundamental changes in China, as the second largest economy in the world, it is a non-market economy and much of what we have cited as the source of the distortions are the result of its closed market, its non-state of market economy and their desire to keep it closed so that China has strength in this. I think the United States has more strength, but the path we are on of imposing tariffs by the United States or conservative logging terrorists by China is not, ultimately, a path that is To be successful, we have to find ways to break down the barriers and make sure that, in the long run, American companies get a better deal and operate in China for anyone who has been waiting for the President to weigh in on Michael Cohen, who he didn't mention in his comments yesterday, he just did in Twitter, a little restrained than you might expect, but says that if anyone is looking for a good lawyer, I strongly suggest they do not retain the services of Michael Cohen and Buster Hollen and I realize that this is not what you are into. we brought to talk, but you have enough political experience to weigh in and tell us what you think based on yesterday's news.

Well, look, I think that issue is one that more or less clouds the overall picture, but I also know that in areas like the negotiations with China we continue to see work being done. I don't think that's a significant distraction from trying to reach these agreements with China, but what it does say is that for many in France, the country faces many challenges, both internal political challenges and the type of changes that we are trying to bring about. push internationally, I'll add largely in the commercial sphere without the support of our allies and friends, and I think that's one.

One of the biggest challenges ahead in this process, although the administration may be making some progress, there is a report in Politico today that suggests that we are on the verge of potentially having a handshake agreement with Mexico and we are about to think that we have really made progress in the NAFTA talks only with Mexico, if that is the case then Canada could come back and maybe we will get a little closer to a deal there, we should definitely move closer there, they are our neighbors, they have been engaged for several years with the NAFTA renegotiation, but what we have to do is stop just renegotiating old agreements and reaching new agreements and getting new agreements with countries like China that is really critical and that is where the stakes are high and I continue to believe, Like most of the business community, tariffs and retaliatory tariffs are costing us businesses, our consumers, and our workers, so we better find a solution. solution to this in the short term, otherwise the United States will pay double what we are losing in terms of access to the Chinese market and what we are losing by increasing costs here domestically and another round will go into effect on Thursday of tariffs. about $16 billion in goods, so I mean this will all escalate, Ambassador, in your opinion, you said your measure of success for any deal would improve dramatically, dramatically improved market access for American companies seeking do business in the China market.

However, a path to success is seen through trade negotiations through tariffs. I mean, for example, if tariffs go into effect on $200 billion worth of goods, you know, that will work. Should China be forced to do this? I don't think that's the trick I mean, I don't think that using tariffs, which is the path that the administration has taken, is the best way to get us to where we're trying to get to in China, what will be the concern, like if tariffs take effect tomorrow a potential additional 200 billion China retaliates with tariffs on more than 5,000 United States. products that come into China and if they stay, then we will have fundamentally changed the nature of the equation, but then the question is what are you trying to do after that, because we import a lot more from them than they import from us, so that they will look for other things that are kind of non-tariff means to hurt us businesses, they will encourage consumers to go elsewhere, leverage themselves, go for China, well, China is average on this, so I guess it's what I'm asking.

No, I wouldn't say, I wouldn't say they have more influence than the United States. I mean we are clearly the strong player and this, but many of us, because the longest Bull Run since World War II, the Obama Trump bull market is now longer than the Eisenhower Reagan and Clinton Bulls. Here's a look at the drivers and obstacles to this Bull markets always emerge from a scary time and that scary period was the financial crisis of 2008. Subprime mortgage lending in the mid-2000s helped create a bubble real estate when the bubble burst in leveraged financial institutions.

The titans of Wall Street have come by now, Charlie finds it very easy to imagine the worst-case scenario for Bear Stearns: In March 2008, JPMorgan bought investment bank Bear Stearns for just $2 per share in the Fed-backed deal Federal and in September 2008, the collapse of the Titans Wall Street in panic mode this morning Lehman Brothers filed for bankruptcy after failing to find a private buyer or a government bailout we are in the middle of a serious financial crisis with the stock market In free fall extraordinary government actions were taken over the next few months, including a $700 billion asset purchase program to bail out financial institutions, Treasury and FDIC actions have stabilized our financial system, quantitative easing in which the Federal Reserve purchased an additional six hundred billion dollars in mortgage-backed securities and stimulus In early 2009 it enacted another eight hundred and thirty billion dollars in government spending and tax cuts, but even with all that, The stock market didn't bottom until March 6, 2009, when it hit a hellish 666 that was down a terrifying 57 percent from just 17 months earlier, the worst drop since the Great Depression, then things picked up, starting this run. historic bullish, in three months the market rose another 30 to 40 percent in 2010 the economy began to create jobs steadily;

In fact, it has been so regular that there has not been a single month of job losses since October 2010. The longest streak on record was in November 2010. The Federal Reserve began a second round of quantitative easing. The idea was that buying Treasuries would help keep already super-low interest rates even lower than that. It should stimulate the economy but it also had an effect on the stock market, if investors couldn't get a good rate of return on bonds stocks looked much more attractive and money poured in driving stocks up for years , there were some serious obstacles along the way.

In this way, when it seemed that the bull might fade, especially at the beginning of the May 6, 2010, flash crash, the Dow Jones Industrial Average suddenly lost more than 1,000 points before recovering most of the losses, but fears on high-speed trading kept investors on edge for months and then things looked like they were going to fall apart in the summer of 2011. Debt concerns in Europe and political unrest in Greece caused a serious correction in the markets and then After SP downgraded US debt in August, the leading index fell more than 6% in one day, but the strength of the rally prevailed;

Tech stocks drove the market higher. Google combined just those four companies have added more than two trillion dollars in market capitalization since the beginning of the bull run and let's not forget about Apple who took advantage of the success of the iPhone, the company's shares are priced almost 18 times what they were worth in March 2009, of course, it was the first company to hit $1 trillion in market value earlier this month and saw this happen after talking about how amazing people thought it was. The bull could end in 2015, when China's stock market crashed and wiped out U.S. stocks, then oil prices crashed, sending energy stocks tumbling and spooking markets and Briggs put the brakes on any bullish momentum in 2016, but since then stocks have been rising for a while it seemed like nothing, Costello, not the Fed raising interest rates, not increasing the geopolitical risk of North Korea, not even the uncertainty inherent in a presidency of Donald Trump after a brief slump on election night, markets have been applauding Trump's policies of deregulation and massive corporate tax cuts until early 2018, when inflation fears combined with Trump's tariffs slowed the party, but with stocks back at record highs, this bull market has been a beast that lasted over three thousand four hundred and fifty-two days.

The value of the sp500 has quadrupled from the bottom, just look at the Wilshire 5000, it has created over $27 trillion in wealth for investors, that's a big bowl and now it's a record davus. Michael Cohen's lawyer was on NBC's Today Show this morning talking about all this Savannah Guthrie asked him about. the prospects for a presidential pardon this is what he said: he expects a pardon from president trump, not only does he not expect that he will not accept a pardon, but he considers that a pardon from someone who has acted so corruptly as president is something he would never accept then Lanny Davis are saying that Michael Cohen is not asking for a pardon he would never accept a pardon from President Trump that changes the dynamic a little bit in terms of the influence the president could have over Michael Cohen so Michael Cohen pleaded guilty yesterday to eight counts, including a rape campaign involving payments to women related to their accusations of sexual relations with the president in order to keep those accusations secret before the election.

Also yesterday in Alexandria, Virginia, Paul Manafort, the president's former campaign manager, was found guilty on eight counts by a jury in that state, so there are dueling legal cases here that threaten the president, but Rudy Giuliani, the attorney for the president, issued a statement yesterday on the Kohen matter suggesting that it really has no impact on the president saying that there is no indictment. of any irregularities against the president and of the government's charges against mr. Cohen, it's clear that Rudy Giuliani is saying that, as the prosecutor pointed out, Mr. Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that the president's former lawyer, Michael Cohen, engaged in a pattern of lying and dishonesty over a significant period of time.

He talked about much of this briefly in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night, guys. You know, even what we hope to be the next step in this, obviously, there's a lot more to unravel from this great story. Here we are looking at Michael Kohn now, once President Trump is one of his closest friends and allies, obviously now turning against the president from a From a legal perspective, do we have any idea on either front what they are? the next steps?

I mean, this is a Shakespearean drama, at this point we have Michael Cohen, who once said he would take a bullet for the President of the United States and is now among the most threatening figures in existence for the entire presidency of the United States. President Lanny Davis suggested on television last night that Michael Cohen has more information, particularly about criminal hacking, and whether or not the president knew about that hacking beforehand and even applauded it, says Lanny Davis. The question is what Michael Cohen knows about the president's involvement in Russian hacking and whether he is willing to talk to prosecutors about it.

You're talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said, are you listening? go after it, right? That's what we're talking about. Well, the president's aides have suggested that that comment during the election campaign when the president said, "Hey, Russia, if you're listening, I want you to find Hillary's emails," they suggest that that comment was justHe jokingly didn't mean that he wasn't actually tasking Russian intelligence with hacking into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking.

She recalls that there were emails related to the Clinton campaign that were stolen using computers by Russian intelligence according to an indictment of those Russian GRU members earlier this year by the special counsel's office. The question is whether the president knew about that hack before it happened and whether he encouraged it, as Lanny Davis suggests Michael Cohen knows. So what Michael Cohen now tells the special counsel is of great interest and then how the president responds to all of this, there are a number of actions that the president could take and we'll wait and see if he takes any. of them that could make this dangerous situation even more politically precarious for the nation, we have talked about a bull market in stocks, but I suppose there is right now, at this very moment, a bull market in anyone who is a legal expert campaign finance law in Washington DC because that's where it's going to get serious again, so going back to campaign finance law and the Washington Post, I think they did a great analysis this morning, which is that you can hate the president and You may know that laws may have been broken during the campaign.

Finance, but for a sitting president to be impeached or impeached is almost impossible. Well, look, there are Department of Justice guidelines that suggest that Department of Justice lawyers believe that under the Constitution it is not possible to impeach a sitting president, so Robert Muller probably won't do it. although it is not guaranteed that he will not accuse the other, the other possibility for Muller is to write a report on all this and present it to the Attorney General in this case to Rod Rosenstein because the Attorney General is recused because of his own relationship with the Russians and then Rod Rosen Stein would be in a position to decide whether to refer this to Capitol Hill for impeachment, so there are some fascinating questions here about where we're going, but these are the highest stakes in the world.

I don't think at all that any concrete agreement will be reached, but it is important that the two sides really talk, something we haven't been doing for a long time, so it is a necessary step in this process, but we are very far from being able resolve this, but it's good that the delegations in DC I hope that leads to further progress, but we will have to wait and see, given the imbalance and trade, do you think China has any leverage in these negotiations? I mean, we don't sell them that many things or much of what we do. selling them tends to be more animal protein foods, you know, things like scrap metal, do you have a leg of the aisle to lean on to start these negotiations?

Well, China has a lot of strength, I mean, they are the second largest economy in the world, clearly the impact of that on us. Tariffs on Chinese products are hurting China, at the same time they still have a strong economy, they have principles that they are trying to put forward. I think his real challenge to America. is that we are trying to achieve some fundamental changes in China, as the second largest economy in the world, it is a non-market economy and much of what we have cited as the source of the distortions are the result of its closed market, its non-state of market economy and their desire to keep it closed so that China has strength in this.

I think the United States has more strength, but the path they were following of imposing tariffs by the United States or conservative logging terrorism by China is not, ultimately, a path that will To be successful we have to find ways to break down the barriers and make sure that American companies get a better long-term deal and operating in China for anyone who has been waiting for the President to weigh in on Michael Cohen, who he didn't mention in his comments yesterday, just did on Twitter a little restrained than you might expect, but says that if anyone is looking for a good lawyer.

I strongly suggest that he does not retain the services of Michael Cohen's ambassador, Holloman. I realize this is not what we brought him to talk about, but he has enough political experience to weigh in and tell us. What you think based on yesterday's news, look, I think that issue clouds the overall picture, but I also know that in areas like the negotiations with China we continue to see work being done. I don't think it's a significant distraction from trying to reach these agreements with China, but what it does say is that for many French people there are many challenges facing the country;

It is not so much the internal political challenges but the type of changes we are trying to promote. Internationally, I will largely add the trade sphere without the support of our allies and friends and I think that is one of the biggest challenges going forward in this process, although the administration may be making some progress, today there is a report in Politico suggesting that we are at the point of potentially having a handshake agreement with Mexico, at the point of thinking we have actually made some progress with the NAFTA talks with just Mexico, if that is the case then Canada could return and maybe we get a little closer to an agreement there we should definitely get closer there they are our neighbors they have been committed for several years to renegotiating NAFTA, but what we need to do is move away from simply renegotiating old agreements and reaching new agreements and new agreements with countries like China, that's really critical and that's where the stakes are high and I still believe, as most of the business community believes, that tariffs and retaliatory tariffs are costing us businesses, our consumers and our workers, so we better find a solution to this in Otherwise, in the short term, the United States will pay twice for what we are losing in terms of access to the Chinese market and what we are losing by increasing the costs here domestically and another round of tariffs on $16 billion will go into effect on Thursday. of goods, so I mean this is all going to escalate, Ambassador, in your opinion, you said your measure of success for any deal would dramatically improve market access for American companies looking to do business in the China market, do you? you can see a path to success through trade negotiations through tariffs, I mean, for example, if tariffs go into effect on $200 billion worth of goods, you know, that will work.

Should China be forced to do this? Well, I don't think that's the trick, I mean. I don't think that using tariffs, which is the path the administration has taken, is the best way to get us to where we're trying to get to in China. What will be the concern if the tariffs go into effect? that come into effect tomorrow, a potential additional 200 billion of China will retaliate with tariffs on over 5,000 American products entering China and if they remain in place, then we will have fundamentally changed the nature of the equation, but then the question is what? is trying to do after that because they import a lot more from them than they import from us, so they'll look for other things that are sort of non-tariff means to hurt American businesses, or they'll encourage consumers to go somewhere else. part, leverage, go in favor of China, well, China has There's a lot of influence in this, you know, I guess that's what I'm asking.

Well, no, I wouldn't say, I wouldn't say they have more influence than the United States. I mean, clearly we are the strong player and this, but many. American companies do business and do so quite successfully in the Chinese market, particularly consumer-facing companies. China would have the ability, through regulatory burdens and by discouraging consumers to buy American products, to really hurt us, so the path we are on is high risk. game, but what we have to do is find a way to conclude it successfully and that will require some difficult negotiations and some willingness on China's part to really open up its market in ways that we haven't seen to date.

I don't think there will be any short-term consequences. The market doesn't seem to be having a negative reaction to this news, it's like it's already built in because of course this won't happen for some time. I think the challenge becomes for the Trump administration, particularly possibly for the markets, if you see a very direct connection to the president, you know Michael Cohen has alleged that he said he acted on instructions from the president and admitted to committing funding violations. the bell. Trump is saying something very different and previously Michael Cohen said something different, so this person I think one question and his character made people wonder what the real story here really is, although it's important to note that yesterday he did. under oath and said that the president directed it, so I would like to come here.

I want to get the first reading from it. Any possible legal or political implications for President Trump, well, you have to know about the markets first. I think if you go back, if the Watergate classification was contrary to Clinton's impeachment, it's difficult, I think, to disentangle a lot of impact on the market, maybe a little bit. with peter clinton, iran-contra at the helm, but you don't really see if the economy is good, the markets tend to drive through it. I think what Brian Cornell said today about consumer targeting is probably a lot more important to the markets and what Michael Cohen said, what I'd like to know is how the Republicans will respond.

Listen, this is not much of a boost to his base heading into what will be a difficult midterm elections and what, if anything, Republicans can do in the fall to ramp up enthusiasm I don't think they're going to pass any cuts to taxes a good friend put on a sieve talked about a government shutdown over immigration to cheer people up I don't think there's much Republicans can do yeah well Lord what do I mean Republicans coming back to that? Michael Cohen said under oath that the president ordered him to pay a porn star and a Playboy model weeks before the election to keep it secret and not reveal affairs with the president during the Republicans care if they do something right, I think yeah, in the events of the last election, the 2016 presidential election, I think the whole kind of sex drugs and rock and roll story is now kind of on the back burner for Republicans, it's not something that's the main issue. who are voting on what Republicans should do is talk about the economy.

I mean, the economic news in this country every day has been strong. Consumer confidence is stronger under President Donald Trump than it has been under the Reagan and Clinton economies, etc. From a general perspective, the party in power should do very well in these economic times, unfortunately for Republicans, we are talking about Michael Cohen and other unsavory characters in Trump's world. That's the biggest problem is we're distracted as a country focused on things that don't matter about the livelihood of Americans, well, yeah, you know, people also know you know the doubt that Trump didn't hit a home run here in this economy.

Soros started at third base. I mean, 90% of those market days happen under Obama. people are aware of that and that's why I think they're not giving the Republicans as much credit as one would normally think James, what do you think about the midterm elections? Does this improve the position of Democrats running for House seats? Yes, listen every time. I talk to Republicans as if no one thinks they are doing things that are going to occupy the chamber. They're worried about the Senate again. This is, you know, this is demoralizing for the Republican base. It's very energizing for the Democratic base.

It's hard to think about what Republicans can do. do between now and Election Day that kind of changed the situation, especially if it's just more legal proceedings from Muller Cohen instead of trying to focus on market milestones or record low unemployment or that kind of things are certainly taking place and that's probably appropriate, certainly Trump Land of Trump will not condemn the president, but there are some new wild cards now and it was a great day, as you say, in which the market knows that it is crowning a new reigning bull at the same time as reaching new intraday highs at the same time you know that the president's fixer and former campaign manager are pleading guilty to eight charges, so I think Cohen is the most interesting question for Wall Street because he found guilty and we did not have a full court trial. so we don't know exactly what evidence he has and the risk that there would be that he could fully cooperate with Mullerand you have, you know, a former Hillary Clinton fixer, Lanny Davis, essentially saying he wants to cooperate and I have some interesting information.

So, you know, the left, left-wing bloggers and social media are enthralled because they are absolutely convinced that this guarantees that we will have a serious impeachment campaign. Certainly, liberals and progressives are more energized coming out of this. and except for the street, you know it's just doing something that we warned about a week or so ago and you know the markets have been very bullish on a number of things, you know, Muller's judgment on all the evidence that he's gathering. . but also on the trade issue, I think they became very isolated, if not entirely in agreement, with the tactics of the president willing to give him a lot of room for maneuver and then the concerns about a government shutdown on a wall financing issue. border, all that was settling in quite well. and now I think they have to worry about the tail risk in September and that's just when the markets and voters start to focus on the elections after Labor Day.

Well, Chuck, that said, I think it's going to be a loud September and I guess even looking beyond that. So what could all of this mean if we look ahead to the midterm elections, like you said, come September, voters will start to pay attention, markets will start to pay attention to what voters think, how do you think this will play out in November? well, I think September is going to be very important, Michelle, because again the markets have already assumed that the house will probably go dark or kradic and this will probably help because I certainly think the left will be more energized coming out of this, it's interesting.

This buried the news of a Republican congressman who should have been saved Duncan Hunter in San Diego from pleading guilty to fraud putting another Republican seat at risk the biggest risk is that if we have a really bad September and the president has to worry about the counter response of the President, you know? Could he forgive one of these two individuals? Could you actually bet on the Bank again for trade or border wall financing just to divert attention, since you know it likes to dominate the news cycles and as September progresses, you know it could become the question of whether this actually reaches some of those hard to get places like North Dakota Missouri Indiana Florida Tennessee where the Senate will be decided and if the Senate is considered to be at risk after Labor Day, the markets will have a lot more to do discount because Trump's agenda is much more at risk, granting all those political implications if you follow the chain.

I'm struggling to figure out what the market would be trying to price and discount even if you follow that line. of a serious impeachment proceeding under a Democratic House, mainly because what is the economic agenda of the Trump administration, right, it is a hard line on trade, the tax cuts are on the books, it has this new regulatory approach, so which I wonder if he knows that a year ago people were I'm worried that this big demise of the president is in jeopardy because that bill hasn't been passed yet, so what are we trying to put a price on it now?

You know it's interesting and it just adds an extra element of risk, you know, and again, if it is. serious evidence that the president and Michael Cohen, you know, intentionally violated federal campaign finance laws, then it becomes a much more serious issue, but other than that, you know we're just moving more consciously toward a likely camera democracy and an effort towards impeachment. However, the Senate will likely remain narrowly Republican, the president's agenda will remain intact, and markets will become increasingly comfortable with the idea of ​​the president actually focusing more on China and moving toward bilateral deals with, you know, Canada. , Mexico and the EU nation, so I agree with you that the markets should not overreact, investors should not overreact right now, but again, this is some kind of risk of extra tail that wasn't really on the screen and, potentially, the notion that Republicans possibly lose the Senate.

If we have a really bad September, we think that's the deciding factor that could help cause a small correction. Now we're getting our first reaction from a senior White House official to what we saw yesterday. In terms of Michael Cohen's guilty plea in Paul Manafort's guilty verdict, Larry Kudlow, the director of the National Economic Council, offered some comments a moment ago to

cnbc

.com, put it all through an economic lens and explained why he thinks we are not. Seeing as dramatic a market move as some might have expected, given the drama inherent in the news, I interject by saying that economics is everything when it comes to markets and confidence and I think the markets, frankly, look through everyone These various political issues, there's no policy change coming and that's what really matters, stay tuned and I think the markets have done a good job, so Larry Kudlow are offering some insight here on what the markets are looking for, which It's not any change. in the economic policy of the Trump administration and therefore with a strong economy, we are not seeing a dramatic reaction in the markets to this dramatic political news Michelle no, yes, it seems like it went down yesterday, but not by much of a shrug , I guess things I actually mentioned that the only similarity to 2007, the most notable is that the chart hits all-time highs.

The fundamentals are completely different. Valuations are completely different when you look at small and mid-cap companies and how they perform, that's completely different. We're really just talking more when we say market, we're really just talking about the Dow and the S&P 500, those large caps that have been the winners, so for us when you look at the full range of data points when there's only one that's similar and the other ten are different to me, that doesn't indicate that this is going to be in the top ten than in 2007, well, 1999, obviously, Aaron was, you know these fake Internet companies, as we know them now, that lead to all the taxi drivers who buy. these 2007 stocks were all housing it was all leverage it was all we know now it was another fake economy this if this economy feels real yes it is I would say the only concern for us is that it has definitely been driven by growth more than value, you're not seeing as much encouragement as we love so we could see these sideways up and down patterns for a while as long as growth is heavily favored because right now when you look at sp500 growth versus value growth It's up almost 12% so far this year plus in just seven months of the year, so it's actually the biggest spread we've seen since we've been following the style indices, so it's a little worrying that it's clearly growth-led, the value is on the wane and we would like to see a little more breadth and some more stocks of this value actually hold up and perform a little better to really keep this market going, but is that a reason to be skeptical about the bull market, no, I think it goes back to what Mike said earlier.

I mean, it's very JIRA. Yes, you are a follow-up in terms of the way these markets have developed. It's been such a slow growth. I think it's the slowest growth we've ever had. historically and you know, we forget: back to the small bike that's not on the market, there's like 9 trillion dollars in cash right now like nobody's been in this market for almost 10 years. I mean, most investors have missed the boat, so I have to think that once we get through these trade wars or whatever trade concessions we get, which I think we're going to get, we could really have a big capitulation to the upside.

I mean I think that's the biggest risk we have in the market today I don't think it's inconsistent with this kind of late move, this is the Paul Tudor Jones type scenario that he created, it's a late 90s sentiment, well , you have this wall of water that we have to get back over that and then this total explosive move, if that's not what we got in January and again, that's a tactical thing, if the 2019 earnings estimates hold true as they are now on paper we don't get that typical erosion from the forecast Aaron, there's not going to be much to discuss, yes we haven't had any erosion this year, in fact it will continue to go up for 2018, we're up to 23%, we'll get another 9% Next year, another thing is also the income estimates.

Looking really strong, we're looking at about five and a half percent revenue growth for next year. We understand it won't be a bull market, but what is the typical pattern? So if in August of a given year, what? you typically lose a few percentage points of anticipated growth for the next calendar year, so if next year it's five percent, it's usually used only to lose it in the first quarter or second and then go back up, except for some of the really bad years you missed it in the first half of the year the market unrest was guilty of overestimating or underestimating I guess the risks of certain things in 99 and 2000, right, everything is fine, subprime mortgages are contained, the Internet It's going to be Well, everything's fine, well, we may also be underestimating the ability of things to stay fine for a while just because we're so good now.

Yes, there is this. I think we've been so scarred for the last 15 years that we just can't. I think things will continue, there must be something wrong, that's what blows me away in this whole bull market and I deal with the retail investor every day. They just don't believe it. I mean, no matter how good the accumulated davidon is, hit twice massively. in the last 15 oh it's definitely scar tissue, I mean if you couldn't put better numbers in front of people and still, but wait a second, what about the trade wars? Oh wait a second, what's with the inverted yield curve?

By the way, the numbers, just a quick note. I think in retrospect there's a sense that in the '90s everyone was happy all the time. Nobody saw the nine. It was not the case. He was 97 98. You thought the world was going to end like this. a global margin call twice and the whole time people said this internet thing is crazy right and it was if it was so my point is people didn't feel comfortable even though it was a lot of money easy during the last years of that career. It wasn't like all night, by the way, that Greenspan was seen as blowing the bubble all decade long.

How could short-term rates stay at 3%? It's too low. That's what you heard in the mid-90s. and now we hear a zero that quite hides the anxiety that: yes, yes, you always do the right thing and that's what when we look back we will say that it was very easy to invest in the last decade, but it was really very difficult, it's really Phèdre's path and the Federal Reserve's liquidity squeeze have been running over the last few years. I mean, bull markets don't usually die, as we've often said of old age, but they often die because rates are rising at a rapid pace. and contracts economic activity, initially we don't see that on the horizon, the Federal Reserve has been very careful, but it is certainly one of the things that we are watching very closely in terms of what they are concerned about, I mean, they have mapped it out with quite clear.

What do you plan to do? Is that path worrying you or is that path continuing despite what's happening around the world, like a tumult in emerging markets or a strong rise in the dollar, etc.? We sure hope that the Fed will rely on data to slow down if appropriate if the economic indications are such, but one of the things that I think we all struggle with is the amount of liquidity that has been injected into the system over the course of In recent years, if you see what the balance sheets of the Fed and the central banks have done, it went from four or five trillion to 15 trillion, that process is slowly reversing and I think it is something that we have not seen before, so which is a degree of uncharted territory and liquidity has certainly increased a lot. of asset prices, particularly fixed income, JJ, what is your concern?

If you have any, I'm sure you're fine, yes, of course you know that. I think the Fed is a little worrisome, actually, more inflation, it's a little worrisome than anything else. more because we know that when it happens it happens exponentially as they really say, although you know that every boxer will tell you that theblow that knocks you out is the one that you don't see coming and with that I worry, you know we saw a small sample of this, maybe with Turkey there two weeks ago, the European situation in terms of banking, you know, we have something on the horizon , etc.

I'm actually a little more worried that we'll see global GDP slow down. China is slowing down a little bit, not yet to a level where we have to worry too much, but I think those are the things that worry me more than maybe inflation because, although you know we have a lot of money in the system, etc. , the pressure Prices are just starting a little bit, as we saw maybe with a Kimberly-Clark last week, but I don't think it's widespread yet, so we've put the concerns to rest, Joe, what's your general opinion on where are we meeting at this moment? market and how to invest in light of what your concern is.

I think the earnings outlook is pretty strong, so we certainly experienced 20 to 22 percent gains here and the first half of the year the expectation for the full year is about that level of earnings growth, so the outlook earnings is pretty solid, economic activity, while perhaps peaking in the second quarter of this year from the standpoint of the U.S. economy, is still moving along apace, so there are certainly a lot of positives that could push this and they will probably drive this market higher. In the short term, the concerns we have are some of the things we talked about earlier in terms of where the path of rates is and there are other exhaustion events that we are concerned about.

I think it means China was mentioned, which is one of the things about Cohen, hey JJ, I'll do it to you because you're not here to throw something at me. Cohen and the man can afford it. I mean, did he do this? No, are you surprised that the market doesn't react more to this? You have people who you know are going to start talking about impeachment, they are going to start talking about the violation of the campaign finance law by the then candidate, now the current president. Are you surprised that the future ones don't react more negatively to this news?

Actually, it's not Brian, and you know, last night you saw what the market really thinks about it. At one point SPS, we were down over 15 right after the news broke, they came back just a couple dollars before, now they're down about six and so on. I think one of the traps that retail investors especially fall into is that they let their political opinions override what the market is telling them. I see a rising VIX. 20 cents Gold is up a little bit, but that could mean the dollar goes up a little bit, like anything else, the real warning signs that, oh my gosh, you know, you should go for shelter are not there right now, so with that I would say There has been a constant swirl of earnings driving the markets, their earnings season has been fantastic, not that other things can't change them, but right now the markets aren't telling you there is a big warning sign Of course, these situations tend to remain fluid, but I think people really have to separate their political ideology from what the markets are actually telling them and you have to remember that if you think back to 1998 1999, we went through a Pietschmann procedure with the President Clinton, the market is up 20 to 30 percent in those that appear.

Obviously, these are very different times, but a lot of the policy issues that I think are important for the economy, a significant tax cut for corporations with significantly less deregulation or regulation, have been really important, so those things have been achieved and I think that's what the markets To the extent that this impacts the midterm elections in November, I mean, how does that alter or shape your view of the market? I mean, Trump's agenda maintains the majority in the House and Senate, are those things important to your view of the market? I think the midterm elections and the continued disarray in Washington would be an issue that the market is going to deal with. to understand what the implications of historical stagnation are, has not necessarily been a bad thing because it avoids doing crazy things. on the right and crazy things on the left, but come on, that's certainly something that the market consensus today is that the Democrats are going to take over the chamber, so I think the expectation is much more certain than when the market was In trading we got stories that the metaphor jury was asking if we couldn't reach a consensus, etc., so we didn't know too much, but when they said the cone was moving towards a plea bargain agreement, the Traders in the room said: well, take a look at that, what does that have to mean?

If they're going to let them testify and maybe go down, then they have to think that he has some value against the president and that's why that created that nervousness and then secondly, as you say. Yes, we had about two billion dollars worth of sales under our belt, so the reaction so far is surprisingly benign, but I think that's because the president's tweets have been surprisingly benign given his past history of joking with a little art. It was a good research note this morning from Matt Meili at Miller Tabak. He said it's a bit of a boy who cried wolf phenomenon for the markets, where this is not the first time political or geopolitical surprises emerge every time the market sells. then it goes back up and regains new highs, so there is a kind of number effect, so these types of headlines right now, well, so far, I mean, we know that we are building these headlines, the question is whether they will affect the elections.

Will the president stop being as benign as he has been this morning? Will that start to move things forward? There are people like Senator Blumenthal and others who are already starting to call for impeachment if any of that starts moving forward, I don't think. that he will ever be fully impeached, but simple impeachment, impeachment, could immobilize the government for a year or two. Would it be bad for the market? Although I mean, no one is a better student of history than you. So let's take me back to Nixon and then fast forward to the late '90s when the Clinton market did pretty well because the economy was doing pretty well, yeah, but not like in the 90s, you have to be Nixon, not with Clinton, in the late 90s, you have to be very careful because there was something more than impeachment going on, the year 2000 was approaching and all eyes were on that and that's what actually gave us a tech boom later because everyone was told they had to replace all their equipment and there It was a buying boom disaster that had the Russian ruble and the Thai baht, two years quite exciting at the end of this introduction, but I think the market would be a little worried if they thought about the progress we are making. deregulation and things like that suddenly petered out because the government was paralyzed by introspection, for now it's watchful waiting, it's like you said so far.

I've seen this movie before and no one dies so why would I be upset and if the movie starts to change then the market will change, there's a nice Watergate chart I tweeted from investor intelligence that shows the S&P fell by 23 % during that time period and it was also during the oil embargo where it was very hot the only As you mentioned, really the only similarity to 2007, the most notable being that the chart is hitting all-time highs, the fundamentals are completely different, the valuations They are completely different when you look at small and mid-cap companies and how they behave, that's completely different.

You know, we're really just talking more when we say the market, we're really just talking about the Dow and the S&P 500, those large caps that have been the winners, so for us when you look at the full range of data. The points where there's only one that's similar and the other ten are different to me, that doesn't indicate that this is going to be a big deal in 2007, okay, 1999, obviously, Aaron, do you know these fake Internet companies, as we now know them, what drives everyone? taxi drivers who bought these stocks 2007 it was all housing it was all leverage it was all we know now that was another fake economy this does this economy feel real yes it is I would say the only concern for us is that it has definitely been driven by growth more than value, you don't see as much encouragement as we love, so we could see these up and down sideways patterns for a Wow, as long as growth is favored a lot because right now, when you look at the growth of the sp500 versus the value growth is outperforming by almost 12% so far this year, we're only seven months into the year, so it's actually the biggest spread we've seen since we've been following the style indices, so it's a little bit.

The worrying thing is that it is clearly led by growth. Value was so out of favor and we would like to see a little more breadth and some of these value stocks hold on and perform a little better to really keep this market going. But is that a reason to be skeptical about the bull market? No, I think it goes back to what Mike said earlier. I mean, it's very JIRA, yeah, you're a journey in terms of the way these markets have developed, it's been such slow growth. I think it's the slowest growth we've ever had historically and you know what we forget is going back to little Mike not being in the market there's like nine trillion dollars in cash right now like no one's been in this market for almost ten years, I mean, most of them.

Investors have missed the boat, so I have to think that once we get through these trade wars or whatever trade concessions we get, which I think we're going to get, we could really have a big capitulation to the upside. I mean, I think that's the biggest risk we have in the market today. I don't think it's inconsistent with this kind of late move, this is the Paul Tudor Jones type scenario that he created, it's a late '90s feel, well. , you have this wall of water that we have. get over it again and then this total explosive move, if that's not what we got in January and again, that's a tactical thing, if 2019 or nonexistence comes through, as they are now on paper, we don't get that typical.

Erosion Forecasts Aaron, there won't be much to discuss, yes we haven't had any erosion this year, in fact it will continue to go up for 2018, we are up to 23%, so we will get another 9% next year, something else. Revenue estimates also look very strong. We're looking at revenue growth of about five and a half percent for next year. We understand that it will not be a bull market, but what is the correct typical pattern? If in August of any time year what you normally use loses a few percentage points of the anticipated growth for the next calendar year, so if next year it is 5%, you generally use it only to lose it in the first quarter or the second and then goes up again. except in some of the really bad years, you missed it in the first half of the year, the market Ryan was guilty of overestimating or underestimating.

I guess the risks of certain things in 99 and 2000, right, everything was fine, subprime mortgages are contained. The internet is going to be fine, everything is fine, oh we may also be underestimating the ability of things to remain fine for a while just because we are so good now, yes there is this. I think we've been so scarred over the last 15 years that I just can't believe things are continuing, there must be something wrong, that's what blows me away in this whole bull market and I deal with the retail investor every day, I just don't they believe it.

I mean, it doesn't matter how good the dividend is. has increased massively twice in the last 15 years, oh it's definitely scar tissue. I mean, you couldn't put better numbers in front of people and still, but wait a second, what's with the trade wars? Oh wait a second, what's with the inverted yield curve? By the way, look at the numbers. Just a quick note. I think in retrospect there's a sense that in the '90s everyone was happy all the time. Nobody saw the nine. It was not the case. He was 97 98. You thought the world was going to change. it ended up like a global margin call twice and the whole way people said this internet thing is crazy right and it was if it was so my point is people didn't feel comfortable even though was a lot of easy money during the last few years of that career it wasn't as if the entire nine, by the way, Greenspan was considered to be blowing a bubble throughout the decade, how could short-term rates stay at Number 3%?

It's too low, that's what you heard in the middle of the The '90s and now we're here at zero quite hide the anxiety that: yeah, yeah, you always do the right thing and that's what when we look back we'll say it was very easy to invest in this in the last decade,but it was really very difficult. Actually, the path of Fed rates and the tightening of Fed liquidity have been running over the last few years. I mean, bull markets don't usually die, as we've often said of old age, they often die because rates rise at a rapid rate and contraction of economic activity.

Initially we don't see that on the horizon the Federal Reserve has been very careful, but it is certainly one of the things that we are watching very closely in terms of what they are concerned about, that is, what they have outlined. It's pretty clear what they intend to do: is that path your concern, or is it that path that continues despite what's happening around the world, like tumult in emerging markets or a sharp rise in the dollar, etc.? We sure hope that the Fed will rely on data to slow down if appropriate if the economic indicators are such, but one of the things that I think we all struggle with is the amount of liquidity that has been injected into the system in the Over the course of the last few years, yes, you see, the balance sheets of the Fed and the central banks have gone from four or five trillion to 15 trillion, that process is slowly reversing and I think it's something we haven't seen before, so it's a degree of uncharted territory and liquidity has certainly increased. many asset prices, particularly fixed income, JJ, what is your concern?

If you have any, I'm sure it suits you, yes, of course, you know that. I think the Fed is a little worrisome, actually, more inflation, it's a little worrisome. than anything else because we know that when it happens it happens exponentially as they really say, although you know that every boxer will tell you that the blow that knocks you out is the one that you don't see coming and that worries me, you know? We saw a small taste of this, maybe with Turkey there two weeks ago, the European situation in terms of banking, you know, we have brigantines on the horizon, etc.

I'm actually a little more worried that we'll see a slowdown. Global GDP in China is slowing a little bit, not yet to a level that we should be too worried about, but those are the things that I think worry me more than maybe inflation, because even though you know we have a lot of money in the system, etc. The price pressure is just starting a little bit, as we saw maybe with Kimberly-Clark last week, but I don't think it's widespread yet, so we've eliminated the concerns, Joe, what's your general feeling on where? We are in this market and how do you invest in light of what your concern is?

I think the earnings outlook is pretty strong, so we certainly experienced 20 22 percent earnings in the first half of the year. Herthum has full-year expectations around that level of earnings growth, so the earnings outlook is pretty strong; economic activity, while perhaps peaking in the second quarter of this year from the standpoint of the US economy, is still moving along at a good clip, so there are certainly a lot of positives that could and probably will drive this. . This market goes up in the short term, the concerns we have are some of the things we talked about earlier in terms of where the path of rates is and there are other exhaustion events that we have concerns about, I think he was referring to China.

It was mentioned that it's one of the things that happens with Cohen, hey JJ, I'll do it to you because you're not here to throw something at me. Cohen and the man can afford it. I mean, you know? Are you surprised that the market is not? As you react more to this, you have people who you know are going to start talking about impeachment, are going to start talking about the violation of campaign finance law by the then candidate and now current president. Are you surprised that futures don't react more negatively to this news? I know I'm not really Brian and you know last night you saw what the market really thinks about this.

At one point SPS went down over 15 right after the news broke, they went back down just a couple dollars before, now they're down approx. six and with that, what I think it implies is people have been calling for impeachment since the president was elected and you know, I think one of the traps that retail investors especially fall into is that they let their political opinions override what the markets tell them. I see a VIX going up twenty cents. Gold rallied a bit, but that could be so much that the dollar like anything else goes up a bit.

The real warning signs that, oh my goodness, you know to seek shelter, are not there right now. With that, I would say there has been a constant swirl of earnings driving the markets, their earnings season has been fantastic, not that other things can't change them, but right now the markets are not telling you that there is a big sign of Warning, of course, these situations. they tend to remain fluid, but I think people really have to separate their political ideology from what the markets are actually telling them and you have to remember that if you think about 1998 1999, we went through a Pietschmann procedure with President Clinton, the market was up 20-30 percent on those in those periods, obviously a very different time, but a lot of the policy issues that I think are important for the economy, a significant tax cut for corporations and significantly less or less deregulation regulation, have been really important, so those things have been accomplished and I think that's what the markets were focused on, to the extent that this impacts the midterm elections in November.

I mean, how does that alter or shape your view of the market? I mean, Trump's agenda maintains the majority in the House and Senate. important to his vision of his market. I think the midterm elections and the continued disarray in Washington would be an issue that the market is going to try to understand what the implications are that our historical stagnation has not necessarily been a bad thing because it avoids doing crazy things on the right and crazy things on the right. the left, but we will know that that is certainly something that the market consensus today is that the Democrats are going to take over the house, so I think the expectation is much more certain.

While the market was trading, we were getting stories that the metaphor jury was asking if we couldn't reach a consensus on cetera, so we didn't know too much, but when they said the cone was moving toward a plea deal, the traders The room He said: Well, let's look at what that means. If they're going to let them testify and maybe go down, then they have to think that he has some value against the president and that's why that created that nervousness and then second of all, as you say, yeah, we had about two billion of dollars for sale in the belt, so the reaction so far is surprisingly benign, but I think that's because the president's tweets have been surprisingly benign, given his past history, kind of jokingly.

Outside of some art, there was a nice research note this morning from Miller Tabak's Matt Maoli. He said it's kind of a boy who cried wolf phenomenon for markets where this is not the first time that political or geopolitical surprises have come. Every time the market sells off, it goes back up and recovers new highs, so there is kind of a number effect, so these kinds of headlines right now, well, so far, I mean, we know we're building these headlines. The question is. Will they affect the elections? Will the president stop being as benign as he has been this morning?

Will that start to move things forward? There are people like Senator Blumenthal and others who are already starting to call for impeachment if any of that starts to take action. I don't think he can ever be fully impeached, but the mere indictment of the impeachment could tie up the government for a year or two. Would it be bad for the market? Although I want to say that no one is a better student of history than you, so take I went back to Nixon and then fast forward to the late '90s, with Clinton pretty well marketed because the economy was doing pretty well, yes, but not like the 90s, yes, not Nixon, at the end of the 90s, you have to be very careful because he had more than simply, the impeachment that took place in the year 2000 was approaching and all eyes were on that and that's what really gave us a tech boom later because everyone was told they had to replace all their equipment and there was a massive buying boom that one The Russian ruble and the Thai baht were pretty exciting two years ago at the end of this introduction, but I think The market would be a little worried if they thought that the progress we're making on deregulation and things like that would suddenly dry up. because the government is paralyzed with introspections for now it's watchful waiting it's like you said until now I've seen this movie before and no one dies so why would I get angry and the movie starts to change then the market will change there's a nice Watergate chart I tweeted from investor intelligence showing the S&P fell twenty-three percent during that time period.

It was also during the oil embargo. It was actually Davis, Michael Cohen's lawyer, he was on NBC's Today Show this morning talking about all of this. Savannah Guthrie asked him about the prospects of a presidential pardon, here's what he had to say: Expect a pardon from President Trump. , not only does he not expect me not to accept a pardon, but he considers it a pardon from someone who has acted. so corruptly as president to be something that he would never accept so Lanny Davis they are saying that Michael Cohen is not asking for a pardon he would never accept a pardon from President Trump that changes the dynamic a little bit in terms of the influence that the president could have on Michael Cohen , so Michael Cohen pleaded guilty yesterday to eight charges, including a campaign through a financial breach involving payments to women related to her accusations of sexual relations with the president, to keep those accusations secret before the election as well yesterday in Alexandria, Virginia.

Manafort, the president's former campaign manager, was found guilty of eight counts by a jury in that state, so there are legal cases here that threaten the president, but Rudy Giuliani, the president's lawyer, issued a statement yesterday about the Cohen's issue suggesting that it actually has no impact. on the president saying that there are no accusations of any crime against the president and the government charges against mr.

cohen

it is clear that rudy giuliani says that, as the prosecutor noted, mr. Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that the president's former lawyer, Michael Cohen, engaged in a pattern of lying and dishonesty over a significant period of time.

He talked about much of this briefly in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night, guys. You know, even what we hope to be the next step in this, obviously, there's a lot more to unpack from this great story. Here we are looking at Michael Cone now, once President Trump is one of his closest friends and allies, obviously now turning against the president, but from a legal perspective, do we have any insight on either front? ?

What are the next steps? I mean, this is a Shakespearean drama. At this point, we have Michael Cohen, who once said that he would take a bullet for the President of the United States. the most threatening figures for the president's entire presidency Lanny Davis suggested on television last night that Michael Cohen has more information, particularly about criminal hacking and whether or not the president knew about that hacking beforehand and even applauded it, Lanny Davis says then The question is what Michael Cohen knows about the president's involvement in the Russian hacking and whether he is willing to talk to prosecutors about it.

You're talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said, "Hey, are you?" Listen, go after it, right? That's what we're talking about. Well, the president's aides have suggested that that comment during the election campaign when the president said, Hello, Russia, if you're listening, I want you to find his emails, they suggest that that comment was just. He jokingly didn't mean that he wasn't actually tasking Russian intelligence with hacking into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking.

Remember there were emails related to the Clinton campaign. that were stolen using computers by Russian intelligence according to an indictment of those Russian GRU members earlier this year by the special counsel's office, the question is whether the president knew about that hack before it occurredand whether it encouraged him, as Lanny Davis suggests. Michael Cohen knows what the case is, so what Michael Cohen says now to the special counsel is of great interest and then how the president responds to all of this there are a number of actions that the president could take and we will wait and see if anyone takes them of them could make this dangerous situation even more politically precarious for the nation.

We've talked about a bull market in stocks, but I'm guessing there's a bull market right now for anyone who's a campaign finance expert. law in Washington DC because that's where it's going to be serious again, so going back to campaign finance law and the Washington Post, I think they did a great analysis this morning, which is that you can hate the president and you can know that there may have been laws. campaign finance is broken, but for a sitting president to be impeached or impeached is nearly impossible. Well, look, there are Department of Justice guidelines that suggest that Justice Department lawyers believe that it is not possible under the Constitution to impeach a sitting president, so it is likely that Robert Muller would not impeach although it is not guaranteed that he would not. would accuse the other the other possibility for Muller is to write a report on all this present it to the Attorney General in this case to Giraud Rosenstein because the Attorney General is recused due to his own involvement with The Russians and then Rod Rosen's time would be in a position to decide whether to refer that to Capitol Hill for impeachment, so there are some fascinating questions here about where we're going, but these are the biggest risks in the world.

I do not believe at all that a concrete agreement will be reached. reached, but it's important for the two sides to actually talk, something we haven't been doing in a while, so it's a necessary step in this process, but we're one law away from being able to resolve this, but it's good that delegations in DC I hope that leads to further progress, but we will have to wait and see, given the imbalance and trade, do you think China has any leverage in these negotiations? I mean, we don't sell them that many things and a lot of what we sell them tends to be more animal protein foods, you know, things like junk, do they have a leg of the aisle to lean on to start these negotiations?

Well, China has a lot of strength, I mean, they are the second largest economy in the world, clearly the impact of the US. The tariffs on Chinese products are hurting China, at the same time they still have a strong economy, they have principles that they are trying to present. I think his real challenge to America. is that we are trying to achieve some fundamental changes in China, as the second largest economy in the world, it is a non-market economy and much of what we have cited as the source of the distortions are the result of its closed market, its non-state of market economy and their desire to keep it closed so that China has strength in this.

I think the United States has more strength, but the path we are on of imposing tariffs by the United States or conservative logging terrorists by China is not, ultimately, a path that is To be successful we have to find ways to break down the barriers and make sure that, in the long run, American companies get better conditions for operating in China for anyone who has been waiting for the President to weigh in on Michael Cohen, who he didn't mention in his comments yesterday, he just did on Twitter, a little restrained than you might expect, but he says that if anyone is looking for a good lawyer, I strongly suggest that they do not retain the services of Ambassador Michael Cohen.

Holloman, I realize this is not what we brought you to talk about, but you have enough political experience to weigh in and tell us what you think based on yesterday's news. Well, look, I think that issue is one that kind of clouds the bigger picture, but I also know that in areas like the negotiations with China we continue to see work being done. I don't think that's a significant distraction from trying to reach agreements with China, but what it does say is that for many France there are many challenges facing the country, both are internal political challenges, but the type of changes we are trying to push internationally I will add them largely in the commercial sphere without the support of our allies and friends, and I think that's one.

One of the biggest challenges ahead in this process, although the administration may be making some progress, there is a report in the political newspaper today that suggests that we are at the point of potentially having a handshake agreement with Mexico, and we are to the point of thinking that we've actually made some progress in the NAFTA talks with just Mexico, if that's the case then Canada could come back and maybe we'll get a little bit closer to a deal there, we absolutely should get closer there, it's our neighbors with whom they have been committed for several years. renegotiate NAFTA, but what we have to do is stop just renegotiating old agreements and reach new agreements and new agreements with countries like China, that is really critical and that is where the stakes are high and I still believe that most of the The international community believes that tariffs and retaliatory tariffs are costing us businesses, our consumers, and our workers, so we better find a solution to this in the short term, otherwise the United States will pay. double what we're losing in terms of access to the Chinese market and what we're losing by raising costs here domestically and another round of tariffs on $16 billion worth of goods will go into effect on Thursday, so I want to say that all this will increase, ambassador, in your opinion, you said that your measure was successful. because any agreement would dramatically improve market access for American companies seeking to do business in the China market.

Can you see a path to success through trade negotiations over tariffs? I mean, for example, if tariffs go into effect on $200 billion of goods, you know, that will work. Should China be forced to do this? Well, I don't think that's the trick. I mean, I don't think that using tariffs, which is the path that the administration has taken, is the best one. way to get us to where we are trying to get to in China what will be the concern if the tariffs go into effect those that go into effect tomorrow a potential additional 200 billion China retaliates with tariffs on more than 5,000 American products entering China and If they stay, then we will have fundamentally changed the nature of the equation, but then the question is what do you try to do after that, because we matter a lot more about them than they matter about us, so they will look for other things that are similar . of non-tariff means to hurt American companies, or Kurtz, consumers will go elsewhere, leverage, go for China, well, China has a lot of influence in this, well, no, I wouldn't say, I wouldn't say they We have more influence than the U.S.

I mean we are clearly the strong player and this, but a lot of American companies do business and do it quite successfully in the Chinese market, particularly consumer-facing companies. China would have the ability through regulatory burdens by discouraging consumers from purchasing American products. really hurt us and therefore the path we are on is a high risk game, but what we have to do is find a way to conclude it successfully and that will require some difficult negotiations and some willingness on the part of China to really open up its market in ways we haven't seen to date I don't think there are any short-term consequences the market doesn't seem to be having a negative reaction to this news it's like it's already built in because this, of course, has been This is going on for a long time some time.

I think the challenge becomes for the Trump administration, particularly possibly for the markets, if you see a very direct connection to the president. Michael Cohen has alleged that he acted on instructions from the president and has admitted that he financed the campaign. rapes Trump is saying something very different and Previously, Michael Cohen said something different, so this person is a question and I think his character made people really wonder what the real story is here, although it's important to note that he did under oath yesterday and said he directed them, so I would like to come.

Here I want to get your first read on the possible legal or political implications for President Trump. Well, first, you know, I know about the markets. I think if you go back, if the range of Watergate was contrary to Clinton's impeachment, it's difficult, I think it's difficult to unravel a whole. There's a lot of impact on the market, maybe a little bit with Clinton PR, Iran and the Contras leading that, but you don't really see if the economy is good, the markets tend to rally through it. I think what Brian Cornell said today about targeting and a consumer probably much more important to the markets and what Michael Cohen said what I would like to know is how the Republicans will respond listen this is not a great stimulus for his base going forward that it will be a difficult midterm election and what Can Republicans do anything in the fall to increase enthusiasm?

I don't think they're going to pass any tax cuts. I am good friend. Stan Colander talked about a government shutdown over immigration to cheer people up. Don't know. I think there are a lot of things that Republicans can do, yeah, well, Sarah, what do Republicans do? I want to get back to that. Michael Cohen, under oath, said the president ordered him to pay a porn star and a Playboy model weeks before the election to keep him. calm about revealing their affairs with the president because Republicans care if they do something right. I think so, in the events of the last election, the 2016 presidential election.

I think the whole kind of story about sex drugs and rock and roll is now on the back burner to Republicans are not the main issues that they are on voting, what Republicans need to do is talk about the economy. I mean, the economic news in this country every day has been strong. Consumer confidence is stronger under President Donald Trump than under you. We know at points from the Reagan and Clinton economies and so from a general perspective the party in power should do very well in these economic times, unfortunately for Republicans we are talking about Michael Cohen and other unsavory characters In Trump's world, that's the biggest problem we face.

We're distracted as a country focused on things that don't matter for the livelihood of an arrogance, well, yeah, you know, people also know you know the doubt that Trump didn't hit a home run here in this economy, stores started third. . base, I mean, 90% of those market days happen under Obama, people are aware of that and that's why I think they're not giving the Republicans as much credit as one would normally think James, what do you think of the midterms? ? Does this improve the position of Democrats running for House seats, yes, listen to all the Republicans I talk to like no one thinks they are doing the things that are going to keep the chamber, they are worried about the Senate again , this is, you know, this is demoralizing for the Republican base.

It's very energizing for the Democratic base, it's hard to think what Republicans can do between now and Election Day to change that, especially if it's simply more legal proceedings from Muller Cohen rather than trying to focus on the milestones of Market Market or in your history. low unemployment or that kind of thing is certainly taking it slow and that's probably appropriate, certainly Trump Trump planned not to convict a president, but there are some new wild cards now and it was a great day, as you say, when the market that you know is crowning a new reigning bull at the same time that it hits new intraday highs and at the same time that the president's fixer and former campaign manager are known to plead guilty to eight counts, so I think Cohen is the biggest question interesting for Wall Street because he pleaded guilty, we didn't have a full trial, so we don't know exactly what evidence he has and the risk that there would be that he could absolutely cooperate with Muller and, in essence, you have a former Hillary Clinton fixer, Lanny Davis. she says she wants to cooperate and I have interesting information, so you know, the left, the left-wing bloggers and social media are captivated because they are absolutely convinced that this guarantees that we will have a serious impeachment campaign.

Certainly, liberals and progressives are more energized coming out of this and, except for the street, they know that it just does something that we warned about a week or so ago and they know that the markets have been very optimistic about a number of things. You know, the Muller trial for all theevidence that he's gathering, but also because of the trade issue, I think they become very isolated, if not entirely in agreement, with the tactics of the president willing to give him a lot of leeway and then the concerns about a government shutdown. on a border wall funding issue, that was all coming together pretty well and now I think they have to worry about the tail risk in September and that's just when the markets and voters start to focus on the elections after Memorial Day.

Work, well, Chuck said that, I think. It's going to be a noisy September and I guess even if we look beyond that, what could all of this mean if we look ahead to the midterm elections? As you said, in September voters will start to pay attention, the markets will start to pay attention to What are voters thinking? How do you think this will play out in November? Well, I think September is going to be very important, Michelle, because again the markets have already assumed that the House will probably go Democratic and this will probably help that cause, although I think the left will be more energized coming out of this, it's interesting that this has buried the news of a Republican congressman who should have saved Duncan Hunter in San Diego from pleading guilty to fraud putting another Republican seat at risk, the biggest risk is that if he has a really bad September and the president has to worry about the counter response of the president.

Knows? Could you forgive one of these two individuals? Could the Bank's heart really be betting on trade again or funding the border wall just to deflect attention like you know it likes? to dominate the news cycles and, as September progresses, it could become a question of whether this actually reaches some of those hard-to-get places like North Dakota, Missouri, Indiana, Florida, Tennessee, where the Senate will be decided and whether the Senate will be at risk afterwards. On Labor Day, markets will have much more to discount because Trump's agenda is much more at risk. Chuck accepts all those political implications if you follow the chain.

I'm struggling to figure out what the market would be trying. price and discount even if you follow the line of a serious impeachment procedure under a Democratic House mainly because what is the economic agenda of the Trump administration going forward, is it a hard line on trade, you have the tax cuts in the books, you have this new regulatory approach, so I'm wondering, you know, a year ago people were worried that the president's demise was in jeopardy because the tax bill hadn't been passed yet, so what are we trying to do? put a price on it now?

You know, it's interesting, as I heard. you said before that it looks like we might be closer to a peak and it just adds an extra element of risk, you know, and again, if there's serious evidence that the president and Michael Cohen, you know, intentionally violated federal funding laws of campaigns, then you know. becomes a much more serious problem, but other than that, you know we're just moving more consciously toward a likely Democratic House and an impeachment effort, but even then the Senate will probably remain narrowly Republican, the President's agenda remains intact, the markets are becoming better known.

I'm comfortable with the president really focusing more on China and moving toward bilateral deals with Canada, Mexico and the EU nation, so I agree with you that the markets should not overreact, Investors shouldn't overreact right now, but again, this is some kind of additional tail risk that wasn't really on the screen and potentially the notion that Republicans possibly lose the Senate if we have a really bad September, we think that's the one that's a small deal. switch that could help cause a small correction we're getting our first reaction now from a senior White House official to what we saw yesterday in terms of Michael Cohen's guilty plea in Paul Manafort's guilty verdict Larry Kudlow the Council National Economic Director offered some comments a moment ago to

cnbc

.com, putting all of this through an economic lens and explaining why he thinks we're not seeing as dramatic a market move as some might have expected, given the drama inherent in the news. said economics is everything when it comes to markets and trust and I think the markets look frankly at all these various policy issues, there are no policy changes coming and that's what really matters, keep your eye on the ball and I think The markets have done a good job, so Larry Kudlow is offering an idea here about what the markets are looking for, which is that there is no change in the economic policy of the Trump administration and, therefore, with a strong economy there is no We are seeing a dramatic reaction in the markets to this dramatic political news, Michelle, no, yes, it seemed to go down yesterday, but not for much of a shrug.

I guess there was Lanny Davis, Michael Cohen's lawyer, as you mentioned, really the only similarity to 2007, the most notable being that the graph is reaching. the fundamentals of the all-time highs are completely different, the valuation is completely different when you look at small and mid-cap companies and how they perform, that's completely different, you know, we're actually just talking more when we say the market in the that we are. I'm really just talking about the Dow and the S&P 500, those large caps that have been the winners, so for us, when you look at the full range of data points, when there's only one that's similar and the other ten are different Not that for me.

It doesn't indicate that this is going to be a big deal in 2007. Well, 1999, obviously, Aaron was, you know these fake Internet companies, as we know them now? Now that was another fake economy, if this economy feels real, yes it is, I would say the only concern for us is that it has definitely been driven by growth rather than value, you don't see as much encouragement as we love and So we could see these sideways up and down patterns for Wow as long as growth is heavily favored because right now when you look at the growth versus the sp500 value, the growth is outperforming by almost 12% so far this year, plus only seven. months into the year, so it's actually the biggest spread we've seen since we've been following the style indices, so it's a little worrying that it's clearly growth-led.

Value was so out of favor and for us we would. I would like to see a little more breadth and more stocks of this stock actually hold up and perform a little better to really keep this market going, but is that a reason to be skeptical of the bull run? No, I think it goes back to what Mike said. before, I mean, it's very JIRA, yeah, you're a journey in terms of the way these markets have gone, it's been such slow growth. I think it's the slowest growth we've had historically and you know we forgot, going back to little Mike.

Not being in the market, there is like $9 trillion in cash right now as if no one has been in this market for almost 10 years. I mean, most investors have missed the boat, so I have to think that once we get over these trade wars or whatever. The trade concessions that we get, that I think we're going to get, could really take a big capitulation to the upside. I mean, I think that's the biggest risk we have in the market today. I don't think it's inconsistent with this kind of late move. Well, this is the Paul Tudor Jones type scenario that he created, it's a late '90s feel, like you have this wall of water, we have to get over it again and then this all-inclusive explosive move if that wasn't what we wanted. got in January over and over again, that's a tactical thing, if the 2019 earnings estimates hold true as they are now on paper and we don't have that typical forecast erosion, Aaron, there won't be much to discuss, yeah, we haven't had no erosion.

For this year, in fact, it will continue to increase for 2018, we are up to 23%, so we will get another 9% next year. Another thing is that the revenue instruments also look very strong, we are looking at around five and a half percent revenue. growth for next year if we understand that it will not be in a bull market, but what is the correct typical pattern? If in August of a given year what you normally use loses a few percentage points of anticipated growth for the next calendar year. true, if next year it's 5%, you usually use it only to lose it in the first quarter or second and then it goes back up, so except in some of the really bad years, you lost it in the first half, the market disturbances.

I've been guilty of overestimating or underestimating I guess the risks of certain things in 99 and 2000, right, everything is fine, subprime mortgages are contained, the Internet is going to be fine, everything is fine, well, we may also be underestimating the ability of things to stay good for a while just because We are so good now, yes, there is this. I think we've been so scarred over the last 15 years that we just can't believe things continue. There must be something wrong. That's what happens. I'm amazed at this whole bull market and I deal with the retail investor every day, they just don't believe it.

I mean, no matter how good the angulation is, it was even hit massively twice in the last 15 years. Oh, it's definitely scar tissue. I mean, if you couldn't put better numbers in front of people and still, but wait a second, what about trade wars? Oh wait a second, what's with the inverted yield curve? It's like, come on, look at the numbers, by the way, just a quick note, I think there's a great feeling in retrospect that in the '90s everyone was happy all the time no one saw the nine, it wasn't the case that he I was 97 98 you thought the world was going to end up as a global margin call twice and all the way People said this Internet thing is crazy, right, and it did, so what I'm saying is people don't was comfortable, even though it was a lot of easy money during the last few years of that career, it wasn't like the entire nine, by the way, Greenspan was considered to be blowing the bubble throughout the decade, how is that possible ?

How could short-term rates remain at 3%? - Yes, yes, you always do the right thing and that is what when we look back we will say that it was very easy to invest in the last decade, but it was really very difficult, it is really Phedre's way and the liquidity crunch that the Federal Reserve. have been running over the course of the last few years, I mean, normally bull markets don't die, as we've often said of old age, they often die because rates rise at a rapid pace and contract economic activity, that doesn't We see it instantly on the horizon, the Fed has been very careful, but it's certainly one of the things that we're watching very closely in terms of what they're concerned about, which is to say, they've laid out pretty clearly what they intend to do.

Does that path worry you or is it that path that continues despite what is happening around the world, like a tumult in emerging markets or a sharp rise in the dollar, etc. We sure hope that the Fed will rely on data to slow down if appropriate if the economic indications are such, but one of the things that I think we all struggle with is the amount of liquidity that has been injected into the system in the During the last few years if we see what the balance sheets of the Fed and the central banks have done, which have gone from four or five trillion to 15 trillion, that process is slowly reversing and I think it is something that we have not seen before, so it's a degree of uncharted territory and the liquidity has certainly driven up the prices of many assets particularly fixed income JJ what's your concern if I have any I'm sure you're doing well yeah of course you know , I think the Federal Reserve is a little bit worrying, actually more inflation, it's a bit worrying than anything else because we know that when it happens, it happens exponentially as they actually say, although you know every boxer will tell you that the blow that you knockout is the one you don't see coming, and that worries me, you know, we saw a small sample of this, maybe with Turkey if Two weeks ago, the European situation in terms of banking, you know, we have it on the horizon, etc. .

I'm actually a little bit more worried that if we see a global GDP slowdown in China, the slowdown is a little bit, but it's not yet to a level that we have to worry too much about, but I think those are the things that worry me the most. that maybe inflation, because even though we know we have a lot of money in the system, etc., the price pressure is just starting a little bit, as we saw with maybe akimberly-clark last week, but I don't think it's widespread yet, so we've put concerns to rest. Joe, your general opinion on where we are in this market and how to invest based on your expectations.

The concern is that I think the earnings outlook is pretty strong, so we certainly experienced 20 to 22 percent earnings growth and in the first half of the year your expectations for the full year are about that level of earnings growth. earnings, so the earnings outlook is pretty solid, economic activity, while perhaps peaking in the second quarter of this year from the standpoint of the U.S. economy, is still moving along nicely pace, so there are certainly a lot of positives that could and will likely drive this market higher in the near term. The concerns that we have are Some of the things that we talked about earlier in terms of where the right path is and you know there are other exotic events that we are concerned about, I think it means that China was mentioned, which is one of the things that happens with Cohen, hey, JJ.

I'll do it to you because you're not here to throw something at me. Cohen and the man can afford it. I mean, did you do this? I know you're surprised the market doesn't react more to this. You have people who you know are going to start talking about impeachment, they are going to start talking about the violation of campaign finance law by the then candidate and now current president. Are you surprised that futures don't react more negatively to this news? No, now I'm not really Brian and you know he saw it. What the market really thinks about this last night at one point SPS we went down over 15 right after the news broke, they came back just a couple dollars before, now they're down about six and with that, what I think people have been calling for impeachment since the president was elected and I think one of the traps that retail investors especially fall into is that they let their political opinions outweigh what the market tells them.

I see a VIX rising 20 cents. Gold recovered a bit. a little bit, but that could be so much that the dollar like anything else binds together just a little bit. The real warning signs that, oh my gosh, you know, seek shelter, aren't there right now, so with that I would say there's been a constant swirl. Earnings Drive Markets Their earnings season has been fantastic, not that other things can't change them, but right now the markets aren't telling you there is a huge warning sign, of course these situations tend to remain fluid, but I think people really have to do it.

Separate your political ideology from what the markets are actually telling you and you have to remember that if you think back to 1998 1999, we went through a Pietschmann procedure with President Clinton, the market was up 20 to 30 percent on those that appear, It's obviously a very different time, but a lot of the policy issues that I think are important for the economy, a significant tax cut for corporations and significantly less deregulation or less regulation have been really important, so those things are they have achieved and I think that is what the markets focused on as much as possible.

As this affects the midterm elections in November, I mean, how does that alter or shape your view of the market? I mean, Trump's agenda maintains the majority in the House and the Senate, are those things important to the market's view of him. The midterm elections and the continued disarray in Washington would be an issue that the market is going to try to understand what the implications are of our historical stagnation not having necessarily been a bad thing because it avoids doing crazy things on the right and crazy things . to the left, but come on, you know, that's certainly something that the market consensus today is that the Democrats are going to take over the chamber, so I think the expectation is much more cone, because while the market was trading We got stories that the Manta Ford jury was asking if we couldn't reach a consensus, etc., so we didn't know much, but when they said the cone was moving toward a plea deal, the dealers in the room said : "Well, let's take a look at that." What does that have to mean?

If they're going to let him testify and maybe go down, then they have to think he has some value against the president and that's why that was because of that nervousness that Michael Cohen's lawyer was on NBC's Today Show earlier. This morning, talking about all this, Savannah Guthrie asked him about the prospects of a presidential pardon, this is what he had to say: he expects a pardon from President Trump, not only does he not expect him not to accept a pardon that he considers a pardon from someone that he has acted so corruptly as president that it is something that he would never accept, then Lanny Davis, they are saying that Michael Cohen is not asking for a pardon, he would never accept a pardon from President Trump which changes the dynamic a little bit in terms of the influence that the president could have on Michael Cohen, which is why Michael Cohen pleaded guilty yesterday to eight charges, including a campaign through financial rape involving payments to women related to her accusations of sexual relations with the president, in order to maintain those accusations secretly before the elections too.

Yesterday in Alexandria, Virginia, Paul Manafort, the president's former campaign manager, was found guilty of eight charges by a jury in that state, so legal cases are being faced here that threaten the president, but Rudy Giuliani, the lawyer for the president, issued a statement yesterday on the Cohen matter suggesting that it doesn't really have any impact on the president saying that there are no allegations of any crime against the president and the government's charges against mr. cohen it is clear that rudy giuliani says that, as the prosecutor noted, mr. Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that the president's former lawyer, Michael Cohen, engaged in a pattern of lying and dishonesty over a significant period of time.

He talked about much of this briefly in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night, guys. You know, even what we hope to be the next step in this, obviously, there's a lot more to unpack from this great story. Here we are looking at Michael Cone now, once President Trump is one of his closest friends and allies, obviously now turning against the president, but from a legal perspective, do we have any insight on either front? ?

What are the next steps? I mean, this is a Shakespearean drama. At this point, we have Michael Cohen, who once said that he would take a bullet for the President of the United States. the most threatening figures for the president's entire presidency Lanny Davis suggested on television last night that Michael Cohen has more information, particularly about criminal hacking and whether or not the president knew about that hacking beforehand and even applauded it, Lanny Davis says then the question is what does Michael Cohen know about the president's involvement in Russian hacking and is he willing to talk to prosecutors about that talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said, "Hey, are you listening?" The truth is that what we're talking about, well, the president's aides have suggested that that comment during the election campaign when the president said, "Hey, Russia, if you're listening, I want you to find Hillary's emails," they suggest.

That comment was just a joke. He didn't actually mean that he wasn't tasking Russian intelligence with hacking into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking. He remembers that there were emails related to the Clinton campaign that were stolen. using computers by Russian intelligence according to an indictment of Russian GRU members earlier this year by the special counsels office, the question is whether the president knew about that hack before it happened and whether he applauded it, as Lanny Davis suggests, Michael Cohen knows that is the case, so what Michael Cohen now tells the special counsel is of great interest and then how the president responds to all of this, there are a number of actions the president could take and we'll wait and see if he takes any of them.

That could make this dangerous situation even more politically precarious for the nation. We have talked about a bull market in the stock market. My guess is that right now there is a bull market for anyone who is an expert on campaign finance law in Washington DC. because that's where it's going to get serious again, so in campaign finance law and the Washington Post I think they did a great analysis this morning, which is that you can hate the president and you can know that laws may have been broken in campaign financing. but for a sitting president to be impeached or impeached is almost impossible.

Well, look, there are Department of Justice guidelines that suggest that Justice Department lawyers believe that it is not possible under the Constitution to impeach a sitting president, so Robert Muller probably won't do it, although he doesn't It is guaranteed that he will not accuse the other. The other possibility for Muller is to write a report on all this, present it to the attorney general, in this case, Giraud Rosenstein, because the attorney general is recused due to his own relationship with the Russians, and then Rod Rosen Stein would be in position. to decide whether to refer this to Capitol Hill for impeachment, so some fascinating questions here about where we are, but these are the highest stakes in the world, I don't think at all that any concrete agreement will be reached, but it's important that The two sides are actually talking, something we haven't been doing for a while, so it's a necessary step in this process, but we're a long way from being able to resolve this, but it's good that the delegations in DC I hope that leads to further progress but we will have to wait and see, given the imbalance and trade, do you think China has any power in these negotiations, I mean we don't sell them that many things and a lot of what we sell them tends to be more food with animal proteins, you know, things like scrap metal, do you have a foundation to stand on as you begin these negotiations?

Well, China has a lot. By strength I mean they are the second largest economy in the world clearly the impact of the US. The tariffs on Chinese products are hurting China and at the same time they still have a strong economy, they have principles that they are trying to introduce. I think the real challenge for America. is that we are trying to achieve some fundamental changes in China, as the second largest economy in the world, it is a non-market economy and much of what we have cited as the source of the distortions are the result of its closed market, its non-state of market economy and their desire to keep it closed so that China has strength in this.

I think the United States has more strength, but the path we are on of imposing tariffs by the United States and retaliatory tariffs by China is not, ultimately, a path that will To be successful, we have to find ways to break down the barriers and make sure that American companies get better conditions for operating in China in the long term for anyone who has been waiting for the President to intervene on Michael Cohen, who did not. He mentioned in his comments yesterday that he just did it on Twitter with a little more restraint than you might expect, but he says that if anyone is looking for a good lawyer, I would strongly suggest that they do not retain the services of Michael Cohen's ambassador, Holloman.

I realize this isn't what we brought you here to talk about, but you have enough political experience to weigh in, tell us what you think based on yesterday's news. Well, look, I think that problem is one that kind of clouds the bigger picture, but I also know that in areas like the negotiations with China we continue to see the work being done. I don't think that's a significant distraction from trying to reach agreements with China, but what it does say is that for many French people there are many challenges facing the country that are both internal political challenges and the kind of changes we're trying to push through.

Internationally, to a large extent I will add in the commercial sphere without the support of our allies and friends and I think that is one of the biggest challenges. As we move forward in this process, although the administration may be making some progress, there is a report in the political newspaper today that suggests that we are on the verge of potentially having a handshake agreement with Mexico and we are on the verge of thinking that actually we have made some progress with the NAFTA Speaksjust with Mexico, if that's the case, then Canada could come back and maybe we get a little closer to a deal there, we absolutely should get closer there, they are our neighbors, they have been committed for several years to renegotiating NAFTA, but what? that?

What we need to do is move from just renegotiating old deals to getting new deals and getting new deals with countries like China, that's really critical and that's where the stakes are high and I continue to believe, as most of the business community believes The tariffs and retaliatory tariffs are costing us businesses, our consumers, and our workers, so we better find a solution to this in the short term, otherwise the United States will pay twice as much. what we are losing in terms of access to the Chinese market and what we are losing by raising costs here at the meeting and another round of tariffs on $16 billion of goods will go into effect on Thursday, so I mean all of this will increase Ambassador, in your opinion, you said that your measure is successful for any agreement.

Market access would be dramatically improved for U.S. companies seeking to do business in the China market. Can you see a path to success through trade negotiations over tariffs? I mean, for example, if tariffs go into effect on $200 billion worth of goods, you know, should China be forced to do this? I don't think that's the trick. I mean, I don't think that using tariffs, which is the path the administration has taken, is the best way to get us. Where are we trying to get to in China? What will be the concern? If the tariffs go into effect which will go into effect tomorrow, an additional potential of 200 billion.

China will retaliate with tariffs on more than 5,000 Americans. products that come into China and if they stay, then we will have fundamentally changed the nature of the equation, but then the question is what do you try to do after that, because we import a lot more from them than they import from us, so They will look for other things that are kind of non-tariff means to hurt American companies, or kurtz consumers to go elsewhere, leverage, go in favor of China, well, China has a lot of influence in this, you know. , I, well, no, I wouldn't. I wouldn't say they have more leverage in the U.S.

I mean we're clearly the strong player and this, but a lot of American companies do business and do it quite successfully in the Chinese market, particularly consumer-facing companies. China would have the capacity through regulatory burdens. discouraging consumers from buying American products really hurts us, so the path we're on is a high-stakes game, but what we have to do is find a way to conclude it successfully and that will require some difficult negotiations and some China's willingness to really open up its market in ways we haven't seen to date. I don't think there will be any short-term consequences.

The market does not seem to be having a negative reaction to this news. It's like it's integrated. Because this, of course, has been going on for some time, I think the challenge for the Trump administration becomes particularly possibly for the markets if you see a very direct connection to the president, you know, Michael Cohen has alleged that he said that he acted on instructions from The president admitted to campaign finance violations, Trump is saying something very different and previously Michael Cohen said something different, so this person is a question and I think his character made people wonder which one is really the real story here, although it's important to note that he did it under oath yesterday, he said the president directed it, so I'd like to come here.

I want to get your first read on possible legal or political implications for President Trump. Well, first, you know about the markets, I think if it comes back, if it's The Watergate classification went against Clinton's impeachment, it's difficult, I think unraveling a lot of impact on the market, maybe a little bit with Clinton's public relations, the Iran-contra that led to that, but you don't really see if the economy has good markets. They tend to push it. I think what Brian Cornell said today about targeting and the consumer is probably much more important for the markets and what Michael Cohen said, what I'd like to know is how the Republicans will respond.

Listen, this isn't a big deal. a boost of enthusiasm for his base heading into what will be a difficult midterm elections and what, if anything, Republicans in Nepal can do to boost enthusiasm. I don't think they're going to pass any tax cuts. A good strainer friend talked about a government. immigration shutdown to cheer people up I don't think there's much Republicans can do, yeah, well Sarah, what do Republicans mean? I want to get back to that. Michael Cohen, under oath, said the president ordered him to pay for a porn movie. star and a Playboy model weeks before the election to prevent them from revealing her affairs with the president because Republicans care if they do something right, I think so, in the events of the last election, the 2016 presidential election, I think that the whole history of sex drugs and rock and roll sort of thing is now on the back burner for Republicans, it's not something that's the main issue they're voting on, what Republicans need to do is talk about the economy.

I mean, the economic news in this country every day has been strong. Consumer confidence is stronger under President Donald Trump than it has been during the Reagan and Clinton economies, and therefore, from an overall perspective, the party in power should do very well in These economic times, unfortunately for Republicans, we're talking about Michael and other nasties. characters in the Trump world, that's the biggest problem: we're distracted as a country focused on things that don't matter for the livelihood of Americans, well, yeah, you know, people also know that you know the doubt that Trump didn't hit the target. home run here in this economy Soros started at third base.

I mean, 90% of those market days happen under Obama, people are aware of that and that's why I think they're not giving the Republicans as much credit as one would normally think, James, what do you think? Think about the midterm elections. Does this improve the situation for Democrats running for seats in the House of Representatives? Yeah, listen to all the Republicans I talked to like no one thinks they're doing things that are going to occupy the chamber. They're worried about the Senate again. This is you. I know this is demoralizing for the Republican base, it's very energizing for the Democratic base, it's hard to think what Republicans can do between now and Election Day to change the situation, especially if it's simply more Muller legal proceedings Cohen instead of trying to focus on you know the market milestones or you know record low unemployment or those kinds of things are certainly being taken in stride and that's probably appropriate, certainly Trump's plan won't doom the president, but now There are some new wildcards and it was a great day. as you say, when the market knows it's capping a new reigning bull at the same time it's hitting new intraday highs at the same time it knows the president's fixer and former campaign manager are pleading guilty to eight charges, so I think Cohen is the most interesting question for Wall Street because he pleaded guilty, we didn't have a full trial, so we don't know exactly what evidence he has and what risk there would be that he could absolutely cooperate with Muller and he has you.

I know a former Hillary Clinton fixer, Lanny Davis, who essentially says she wants to cooperate and I have some interesting information, so you know, the left, the left-wing bloggers and social media are enthralled because they are absolutely convinced of this. guarantees that we will have a serious impeachment campaign, certainly the liberals and progressives are more energetic coming out of there, but, in the case of the street, you know he just does something that we warned about about a week ago and that you know that the markets have been They are very optimistic about a number of things, you know the Muller trial, about all the evidence that he is gathering, but also about the trade issue.

I think they feel very isolated, if not entirely on board, with the president's tactic of being willing to give him a lot of leeway, and then concerns about a government shutdown, a border wall funding issue, all of that was going down. settling quite well and now I think they have to worry about the tail risk in September and that's just when the markets and voters start to focus on the post-Labour elections. Well, Chuck, that said, I think it's going to be a noisy September and I guess even looking beyond that, what could all of this mean if you look ahead to the midterm elections, like you said, when September comes, voters will start to pay Pay attention to Markets will start to pay attention to what voters think.

How do you think this will play out in November? Well, I think September will be very important, Michelle, because again the markets have already assumed that the House will probably go Democratic and this probably helps that cause certainly I think the left will be more energized coming out of this it's interesting this buried the news of a Republican congressman who should have been saved Duncan Hunter in San Diego from pleading guilty to fraud putting another bigger Republican seat at risk The risk is that if we have a really bad September and the president has to worry about the president's response, you know Could you forgive one of these two individuals? attention as you know it likes to dominate the news cycles and as September progresses it could become a question of whether this actually reaches some of those hard to get places like North Dakota, Missouri, Indiana, Florida , Tennessee, where the Senate will be decided and if the Senate is considered at risk after Labor Day, the markets are going to have a lot more to discount because Trump's agenda is much more at risk, granting all those political implications if you follow the chain.

I'm struggling to figure out what the market would be trying to price and discount even if it goes down the line of a serious impeachment proceeding under a Democratic chamber, mainly because what is the Trump administration's economic agenda, right? It's a hard line on trade, where the tax cuts were won. the books have this new regulatory focus, so I'm wondering if you know that a year ago people were worried that the president's demise was in jeopardy because the tax bill hadn't been passed yet, so what are we trying to do? put a price on it now?

I know it's interesting, as I heard you say before, that it looks like we might be closer to a cap and it just adds an extra element of risk, and again, if it's serious evidence that the president and Michael Cohen intentionally breached the federal campaign. financial laws, you know, then it becomes a much more serious problem, but other than that, you know we're just moving more consciously toward a likely Democratic chamber and an effort toward impeachment, but even then the Senate will probably still be closely Republican and the president's agenda will remain intact. The markets are becoming more comfortable with the idea of ​​the president actually focusing more on China and moving towards bilateral agreements with Canada, Mexico and the EU nation, so I agree with you that the markets should not react Overreacting, investors shouldn't overreact at this point, but again, this is an added bonus. kind of tail risk that wasn't really on the screen and potentially the notion that Republicans possibly lose the Senate if we have a really bad September, we think that's the deciding factor that could help To make a small correction, we're now receiving our first reaction from a senior White House official to what we saw yesterday in terms of Michael Cohen's guilty plea in the Paul Manafort guilty verdict.

Larry Kudlow, the director of the National Economic Council, offers some comments. He told cnbc.com a moment ago and put it all through an economic lens and explained why he believes we're not seeing as dramatic a market move as some might have expected, given the drama inherent in the news there. Economics is everything when it comes to markets and confidence and I think the markets look frankly at all of these various policy issues, there are no policy changes coming and that's what really matters, stay tuned and I think the markets have made a good job. So, Larry.Kudlow, you are offering an idea here about what the markets are looking for, which is that there is no change in the economic policy of the Trump administration and therefore, with a strong economy we are not seeing a dramatic reaction in the markets to this Dramatic political news.

Michelle, no, yes, yesterday it seemed to go down, but not because of much of a shrug. I guess I was thinking about the early days of this administration, my colleagues and I in the heyday when we invested, sorry, advised investors every day, they called us every day. day asking about tweets asking about comments from the president at this point the president says something and many investors don't want to pay attention I think we're seeing in the market today a kind of inability to ignore the president or news about the president, so the real question It's what would be the tipping point, what wouldn't need to change for people who have become immune to start paying attention again, Brian, what about you?

Today's mantra for most of our guests has been focused on fundamentals, the economy, corporate earnings growth, and they look pretty good, without paying attention to the politics, what you're telling your clients, what I say just to be contrarian, I'd like to take the other side of that, but can't I say I have to agree with that, checking with our trade to ask KBW, but that's the response I think we're getting from many of our clients? It's not that they are immune to this. Ignoring it, I think there is a subtle but important difference: they won't, institutional investors won't pay attention to this until they get the sense that the president is in realistic political danger and that only happens when it's a question of La collusion with a foreign power comes into play and so far there have been accusations, accusations, conspiracy theories, but there is no hard evidence of collusion, if there was any, if there was public evidence that he somehow cooperated with a foreign power, then I think that you see. members of his own party are starting to turn against him in the absence of that, he is fine, I mean his political position and his political position is fine for now, as they watch all these developments very carefully .

Brian, the president, responded, tweeted about it twice, two different tweets. two, obviously, two different feelings about Mana Ford and Cohen, we just heard from Sarah Huckabee Sanders and the press from her. Three things: How does the administration's response and stance move us forward? What will the way they've approached this ultimately mean for the president and for the markets? Well, again, I think you have to take into account his audience, his audience, his group of political supporters, and I think this is a calculated strategy on the part of the president. Part of it is a knee-jerk reaction to the flow of news that he believes is unfair to him, but I also think there is a calculated move that, as we get closer to the midterm elections, he is trying to increase his base and increase participation, he knows he can't attract those who don't support him and he's stopped trying, he's not going to try, so I think. a lot of the tweets, a lot of the press interviews that he gives and the demonstrations that we saw last night in Charleston have a target audience which is to get out the Republican voters and I think the markets just shrug their shoulders, the investors just shrug their shoulders .

I understand who he's talking to, so he's not talking to them and they just don't care. Lanny Davis, Michael Cohen's lawyer, was on NBC's Today Show this morning talking about all of this. Savannah Guthrie asked him about the prospects for a presidential pardon. What she had to say is that she expects a pardon from President Trump, not only does she not expect him not to accept a pardon, but she considers a pardon from someone who has acted so corruptly as president to be something he would never accept. Lanny Davis are saying that michael cohen is not asking for forgiveness he would never accept a pardon from president trump that changes the dynamic a little bit in terms of the influence the president could have over Michael Cohen which is why Michael Cohen pleaded guilty yesterday to eight charges including a campaign through financial breach involving payments to women related to their accusations of sexual relations with the president in order to keep those accusations secret before the election also yesterday in Alexandria Virginia Paul Manafort, the president's former campaign manager , found guilty on eight counts by a jury in that state, there are dueling legal cases here that threaten the president, but Rudy Giuliani, the president's lawyer, issued a statement yesterday on the Cohen matter, suggesting that it really has no impact on the president, saying that there is no allegation of any crime against the president in the government's charges against mr.

Cohen, it's clear that Rudy Giuliani is saying that, as the prosecutor pointed out, Mr. Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that the president's former lawyer, Michael Cohen, engaged in a pattern of lying and dishonesty over a significant period of time. There is no news from the president. On much of this, he spoke briefly about it in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night. .

Guys, you know, even what we hope to be the next step in this, obviously, there's a lot more to unpack from this great story. Here we are looking at Michael Cone now, once President Trump is one of his closest friends and allies, obviously now turning against the president, but from a legal perspective, do we have any idea on either front what they are? the next steps? I mean, this is a Shakespearean drama at this point, we have Michael Cohen, who once said he would take a bullet for the President of the United States who is now Lanny Davis, one of the most threatening figures for the entire presidency of the United States. president, suggested on television last night that Michael Cohen has more information, particularly about criminal hacking, and whether or not the president knew about that hacking beforehand and even applauded him, Lanny says.

Davis, then the question is what does Michael Cohen know about the president's involvement in Russian hacking and whether he is willing to talk to prosecutors about it. You're talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said yes. You're listening, go after it, right? That's what we're talking about. Well, the president's aides have suggested that that comment during the election campaign when the president said, Hey, Russia, if you're listening, I want you to find Hillary's emails, they suggest that that comment was. just a joke, he didn't really mean that he wasn't actually commissioning Russian intelligence to hack into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking.

Remember there were issues related to the Clinton campaign. emails that were stolen using computers by Russian intelligence according to an indictment of those Russian GRU members earlier this year by the special counsels office, the question is whether the president knew about that hack before it happened and if it encouraged him, as Lanny Davis suggests. Cohen knows what the case is, so what Michael Cohen now tells the special counsel is of great interest and then how the president responds to all of this. There are a number of actions the president could take and we will wait and see if if he takes any of them, he could make this dangerous situation even more politically precarious for the nation.

We have talked about a bull market in stocks. I guess there is a bull market right now in anyone who is a campaign expert. the finance law in Washington DC because that is where everything will seriously come back, it will come back to the campaign finance law and the Washington Post I think did a great analysis this morning, which is that you can hate the president, you can know that you can There have been laws broken in campaign finance, but it is almost impossible to charge or indict a sitting president. Well, look, there are Department of Justice guidelines that suggest that Justice Department lawyers believe that under the Constitution, it is not possible to impeach sitting presidents, so it is likely that Robert Muller would not indict although it is not guaranteed that would not accuse the other, the other possibility for Muller is to write a report on all this and present it to the Attorney General in this case - Jerrod Rosenstein because the Attorney General is recused due to his own involvement in The Russians and then Rod Rosen Stein would be in position to decide whether to refer this to Capitol Hill for impeachment, so there are some fascinating questions here about where we're going, but these are the highest stakes in the world.

I do not believe at all that any concrete agreement will be reached. but it's important that the two sides actually talk, something we haven't been doing for a while, so it's a necessary step in this process, but we're a long way from being able to resolve this, but it's good that the delegations in DC I hope that that will lead to further progress, but we will have to wait and see, given the imbalance and trade, do you think China has any leverage in these negotiations? I mean, we don't sell you that many things and a lot of what we do sell tends to be more animal protein foods, you know, things like junk, do you have a foundation to stand on to start these negotiations?

Well, China has a lot of strength, I mean, they are the second largest economy in the world, clearly the impact. US Tariffs on Chinese products are hurting China and at the same time they still have a strong economy. They have principles that they are trying to present. I think the real challenge for the United States is that we are trying to make some fundamental changes in China. the second largest economy in the world, they are a non-market economy and much of what we have cited as the source of the distortions are the result of their closed market, their status as a non-market economy and their desire to keep it closed so that China has I think the United States has more strength in this, but the path in which we are imposing tariffs by the United States and retaliatory tariffs by China is not, ultimately, a path that is going to be successful.

We have to find ways to break down barriers and make sure that American companies get a better deal for operating in China in the long run for anyone who has been waiting for the president to weigh in on Michael Cohen, whom he didn't mention in yesterday's remarks. he; he just did it on Twitter. less restrained than you might expect, but he says that if anyone is looking for a good lawyer, I strongly suggest they do not retain the services of Michael Cohen's ambassador, Holloman. I realize this is not what we invite you to talk about, but you have enough political experience to weigh in and tell us what you think based on yesterday's news.

Well, look, I think that issue kind of clouds the bigger picture, but I also know that in areas like the negotiations with China we continue to see the work that's being done I don't think it's a significant distraction from trying to reach these agreements with China, but what it does say is that for many French people there are many challenges facing the country, both of which are domestic politics. challenges, but the type of changes that we are trying to push internationally I will largely add in the commercial sphere without the support of our allies and friends and I think that is one of the biggest challenges going forward in this process, although the administration may be making There is some progress, there are political reports today that suggest that we are at the point of potentially having a handshake agreement with Mexico, and we are at the point of thinking that we have actually made some progress with the NAFTA talks just with Mexico, if that's the case, then Canada could come back and maybe we get a little closer to an agreement there, we absolutely should get closer there, they are our neighbors, they have been committed for several years to the renegotiation of NAFTA, but they What we need to do is move away from simply renegotiating. old deals to getting new deals and new deals with countries like China, that's really critical and that's where the stakes are high and I still believe as most of the business community believes that tariffs and retaliatory tariffs are costing us businesses. , our consumers and our workers, so we better find a solution to this in the short term, otherwise the US will pay double what we are losing in terms of access to the Chinese market and what What we're losing by raising costs here is that another round of terrorist attacks on 16 will go into effect on Thursday.billion dollars worth of goods, so I want to say that all of this will escalate, ambassador, in your opinion, you said that your measure was successful. because any agreement would dramatically improve market access for American companies seeking to do business in the China market.

Can you see a path to success through trade negotiations over tariffs? I mean, for example, if tariffs go into effect on $200 billion worth of goods. Do you know that will work? Should China be forced to do this? Well, I don't think that's the trick. I mean, I don't think that using tariffs, which is the path that the administration has taken, is the best one. to get us to where we're trying to go in China what the concern will be if the tariffs go into effect which go into effect tomorrow a potential additional 200 million people China will retaliate with tariffs on over 5,000 Americans. products that come into China and if they stay, then we will have fundamentally changed the nature of the equation, but then the question is what do you try to do after that, because we import a lot more from them than they import from us, so They'll look for other things that are kind of non-tariff means to hurt American companies.

They know how to encourage consumers to go elsewhere. I'm asking, well, I don't know. I wouldn't say they have more influence than the US. I mean we are clearly the strong player and this, but a lot of American companies do business and do it quite successfully in the Chinese market, particularly consumer-facing companies that China would have had. The ability through regulatory burdens by discouraging consumers to buy American products really hurts us and therefore the path we are on is a high risk game, but what we have to do is find a way to conclude it successfully and that's going to take some tough negotiations and some willingness on China's part to really open up its market in ways we haven't seen to date.

I don't think there will be any short-term consequences. The market does not seem to be having a negative reaction to this news. It's like it's already built in because this, of course, won't happen for some time. I think the challenge becomes for the Trump administration, particularly possibly for the markets, if you see a very direct connection to the president that Michael Cohen has alleged. He said he acted on the president's instructions and admitted to campaign finance violations. Trump is saying something very different and previously Michael Cohen said something different, so this person is a question and I think the character of him made people really wonder what the real story is here. although it is important to note that yesterday he did so under oath and said that the president gave him instructions, so I would like to come here.

I want to get your first read on any potential legal or political implications for President Trump. Well, first, I know about the markets. I think if we go back, if the classification of Watergate was contrary to the impeachment of Clinton, it is difficult. I think it's hard to tease out a lot of market impact, maybe a little bit with Clinton's Iran-contra PR leading that, but it's not really like that. see if the economy is good, the markets tend to drive it. I think what Brian Cornell said today about consumer targeting is probably much more important for the markets and what Michael Cohen said, what I'd like to know is, how are the Republicans going to do it? reply listen this isn't a big boost to your base's enthusiasm heading into what will be a tough midterm election and what can Republicans do in the fall to boost enthusiasm?

I don't think they're going to pass any tax cuts. good friend stand strainer talked about a government shutdown over immigration to cheer people up I don't think there's much the Republicans can do yeah well sir what do the Republicans mean? Getting back to that, Michael Cohen under oath said he was directed by the president to pay a porn star and a Playboy model weeks before the election to prevent her from revealing his affairs with the president to Republicans. Do they care if they do something right? I think so, in the events of the last 2016 presidential election I think the whole kind of story about sex drugs and rock and roll is now on the back burner for Republicans, it's not something that's the main issue on the who are voting, what Republicans need to do is talk about the economy, I mean economic news.

In this country every day has been strong, consumer confidence is stronger under the presidency of Donald Trump than it has been in times of the Reagan and Clinton economies and therefore, from a general perspective, the party in power should do very well in these economic times, unfortunately for the Republicans. We're talking about Michael Cohen and other unsavory characters in Trump's world, that's the biggest problem: we're distracted as a country focused on things that don't matter for the livelihood of Americans. Well, yeah, you know, people also know you know the I doubt Trump hasn't hit a home run here in this economy, stores started at third base.

I mean, 90% of those market days happen under Obama, people are aware of that and that's why I think they're taking away as much credit from the Republicans as you would normally think James, what do you think about the midterms? Does this improve the situation for Democrats running for House seats? Yeah, listen to all the Republicans I talked to like no one thinks they're doing the things they're going to keep in the House. I'm worried about the Senate again. You know this is demoralizing for the Republican base. It's very energizing for the Democratic base. It's hard to see what Republicans can do between now and Election Day.

This changed the situation, especially if it is simply more Muller. Cohen's legal proceedings instead of trying to focus on market milestones or record unemployment or that kind of thing, Mark is certainly taking it slow and that's probably better, certainly, the Trump plan Trump won't condemn the president , but there are some new features. wild cards now and it was a great day, as you say, when the market, you know, is crowning a new reigning bull at the same time hitting new intraday highs at the same time meeting the president's fixer and former campaign chairman. They both plead guilty to eight counts, so I think Cohen is the most interesting question for Wall Street because he pleaded guilty, we didn't have a full trial, so we don't know exactly what evidence he has and what risk there would be that he could absolutely cooperate with Muller and you have, you know, a former Hillary Clinton fixer, Lanny Davis, essentially saying he wants to cooperate and I have some interesting information for you to know, the leftist social media bloggers there.

They are just enthralled because they are absolutely convinced that this guarantees that we will have a serious impeachment campaign. Certainly, liberals and progressives are more energetic coming out of this and, but for the street, you know, it just does something that we warned about. about a week ago and the markets have been very optimistic about a number of things, like the Muller trial, about all the evidence that he is gathering, but also about the trade issue. I think they isolated themselves a lot, if not all that well. with the president's tactics willing to give him a lot of leeway and then concerns about a government shutdown on a border wall funding issue, that was all coming together pretty well and now I think they have to worry about tail risk in September and that's Just when the markets and voters start to focus on the elections after Labor Day, well, Chuck, that said, I think it's going to be a noisy September and I guess even if we look past that, What could all this mean as we look ahead to the midterm elections?

You said that come September voters will start to pay attention the markets will start to pay attention to what voters think how do you think this will play out in November? Well, I think September will be very important, Michelle, because again, the markets already assumed that the House will probably go Democratic and this will probably help that call. I certainly think the left will be more energized coming out of this. Interestingly, this buried news of a Republican congressman who should have been saved by Duncan Hunter in San Diego. of pleading guilty to fraud putting another Republican seat at risk, the biggest risk is that if we have a really bad September and the president has to worry about the president's response, you know, could he pardon one of these two individuals?

In reality, Bank being tough again on trade or border wall funding is just to divert attention since you know he likes to dominate the news cycles and as September progresses, it could become the question of whether this really hits some of those hard to get places like North Dakota, Missouri. Indiana, Florida, Tennessee, where the Senate will be decided and if the Senate is at risk after Labor Day, the markets will have much more to discount because Trump's agenda is much more at risk, granting all those political implications if indeed way you follow the chain. I'm struggling to figure out what the market would be trying to price and discount, even if you go down the line of a serious impeachment proceeding under a Democratic House, mainly because what the future Trump administration is. economic agenda, right, it's a hard line on trade, you've got the tax cuts on the books, you've got this new regulatory approach, so I'm wondering if you know that a year ago people were worried about the big demise of the president who was in jeopardy due to tax bill.

It hasn't been approved yet, so what are we trying to price it now? You know, it's if she rode a bike. I heard you say before, that sounds like we might be closer to a peak and it just adds an extra element of risk, you know, and again if it's serious evidence that the president and Michael Cohen, you know, intentionally violated federal laws. of campaign finance, then it becomes a much more serious issue, but other than that, you know we're just moving more consciously toward a likely Democratic House and an effort. toward impeachment but even so, the Senate is likely to remain narrowly Republican, the president's agenda remains intact, markets become increasingly comfortable with the idea of ​​the president actually focusing more on China and moving toward a deal bilateral with, you know, Canada, Mexico and the EU nation. so I agree with you that markets shouldn't overreact, investors shouldn't overreact right now, but again, this is some kind of additional tail risk that wasn't really on the screen and, potentially, the notion that Republicans are likely to lose.

In the Senate, if we have a really bad September, we think that's the deciding factor that could help cause a small correction. Our first reaction now is from a senior White House official to what we saw yesterday in terms of that guilty plea by Michael Cohen in the Paul Manafort guilty verdict. Larry Kudlow, the director of the National Economic Council, offered some comments ago. a moment to cnbc.com, put it all through an economic lens and explained why he thinks we're not seeing as dramatic a market move as some might have expected, given the drama inherent in the news, I interrupted by saying that the economy It's everything when it comes to markets and trust and I think markets, frankly, look at all these various political issues, there's no change. in the politics that are coming and that's what really matters, stay tuned and I think the markets have done a good job, so Larry Kudlow are offering some insight here about what the markets are looking for, which is that there is no change in economic policy from the beginning.

Trump administration and therefore with a strong economy, we are not seeing a dramatic reaction in the markets to this dramatic political news. Michelle no, yes, it seems like she went down yesterday, but not with much of a shrug, I guess she was thinking at first. days of this administration my colleagues and I at the height when we invested sorry we notified investors every day they called us every day asking about the tweets asking about the president's comments at this moment the president says something and many investors do not want to lend attention I think that today we are seeing in the market a kind of inability to ignore the president or the news about thePresident, so the real question is what would be the tipping point, what would have to change for people who have something like that I become immune to start paying attention again, Brian, what about you?

Today's mantra for most of our guests has been focused on fundamentals, the economy, corporate earnings growth and they look pretty good, tune out the politics, is that what you're telling your clients. I mean, just to be a contrarian, I'd like to take the other side of that, but I can't, I mean, I have to agree with that, checking with our trade to ask KBW, that's the answer I think we have. What we're getting from a lot of our clients, it's not that they're immune to it, they're ignoring it and I think there's a subtle but important difference, they won't, institutional investors won't pay attention to it. this until they get the sense that the president is in realistic political danger and that only happens when a question of collusion with a foreign power comes into play and so far there have been accusations, accusations, conspiracy theories, but there is no hard evidence of collusion, if there was, if there was public evidence that he somehow cooperated with a foreign power, then I think you see members of his own party start to turn against him in the absence of that, he's fine, I mean his position politics and your political position is fine for now, as you watch all these developments very carefully.

Brian, the president, responded, tweeted about it. twice two different tweets two obviously two different feelings about mana Ford and Cohen We just heard from Sarah Huckabee Sanders and her press conference how the administration's response and stance move us forward what it will ultimately mean for the president and for the markets the way I have addressed this well again. I think you have to take into account his audience, his audience, his group of political supporters, and I think this is a calculated strategy on the president's part. Part of it is an impulsive reaction to the flow of news that he considers unfair. him, but I also think there is a calculated move that as we get closer to the midterm elections he is trying to grow his base and increase turnout, he knows he can't attract those who don't support him and he has left If he tries, he's not going to try and So I think a lot of the tweets, a lot of the press interviews he gives and the rallies that we saw last night in Charleston have a specific audience that is looking to appeal to Republican voters and I think the markets they just shrug their shoulders, investors just shrug their shoulders.

On his shoulders they understand who he is talking to, so he doesn't talk to them and they just don't care. Lanny Davis, Michael Cohen's lawyer, was on NBC's Today Show this morning talking about all of this. Savannah Guthrie asked him about the prospects of a presidential pardon. This is what he had to say is that he expects a pardon from President Trump. Not only does he not expect him not to accept a pardon, but he believes that a pardon from someone who has acted so corruptly as president it's something he would never accept So, Lanny Davis says Michael Cohen is not asking for a pardon, he would never accept a pardon from President Trump that changes the dynamic a little bit in terms of the influence the president could have over Michael Cohen, so Michael Cohen pleaded guilty yesterday at eight.

The charges include a campaign finance breach involving payments to women related to their allegations of sexual relations with the president to keep those allegations secret before the election. Also yesterday in Alexandria, Virginia, Paul Manafort, the president's former campaign manager, was found guilty of eight counts by a The jury in that state is in duel with legal cases here threatening the president, but Rudy Giuliani, the president's lawyer , issued a statement yesterday on the Kohen matter, suggesting that it really has no impact on the president, saying that there is no allegation of any crime against the president. in the government's charges against mr.

Cohen, it's clear that Rudy Giuliani is saying that, as the prosecutor pointed out, Mr. Cohen's actions reflect a pattern of lying and dishonesty over a significant period of time, so Rudy Giuliani, the president's current lawyer, suggests that the president's former lawyer, Michael Cohen, engaged in a pattern of lying and dishonesty over a significant period of time. He talked about much of this briefly in West Virginia last night, but he's been quiet on Twitter this morning and the normally talkative President of the United States on Twitter in the mornings hasn't posted anything since his return from West Virginia on Twitter last night, guys.

You know, Eamonn, what do we hope to be the next step in this? Obviously, there is much more to unravel from this great story. Here we are looking at Michael Cone now, once President Trump is one of his closest friends and allies, obviously now turning against the president, but from a legal perspective, do we have any idea on either front which are the next steps? I mean, this is a Shakespearean drama, at this point we have Michael Cohen, who once said he would take a bullet for the President of the United States and is now among the most threatening figures in existence for the entire presidency of the United States.

President Lanny Davis suggested on television last night that Michael Cohen has more information, particularly about criminal hacking, and whether or not the president knew about that hacking beforehand and even applauded it, says Lanny Davis. The question is what Michael Cohen knows about the president's involvement in Russian hacking and whether he is willing to talk to prosecutors about it. You're talking about whether he knew about WikiLeaks beforehand and even the president had very publicly said, are you listening? go after it, right? That's what we're talking about. Well, the president's aides have suggested that that comment during the election campaign when the president said, "Hey, Russia, if you're listening, I want you to find Hillary's emails," they suggest that that comment was just a joke, no.

He meant that he wasn't actually tasking Russian intelligence with hacking into Hillary Clinton's emails, but what Lanny Davis was suggesting is that it could be the case that Michael Cohen knows about criminal hacking. She recalls that there were emails related to the Clinton campaign that were stolen using computers by Russian intelligence according to an indictment of those Russian GRU members earlier this year by the special counsel's office. The question is whether the president knew about that hack before it happened and whether he encouraged it, as Lanny Davis suggests Michael Cohen knows. So what Michael Cohen now says to the special counsel is of great interest and then how the president responds to all of this.

There are a number of actions the president could take and we will wait and see if he takes them. Any of them could make this dangerous situation even more politically precarious for the nation. We have talked about a bull market in stocks. I guess there's a bull market right now in anyone who's an expert in campaign finance law. in Washington DC because that's where it's going to get serious again, so going back to campaign finance law and the Washington Post, I think they did a great analysis this morning, which is that you can hate the president and you can know that laws may have been broken. campaign financing, but for a sitting president to be impeached or impeached is almost impossible.

Well, look, there are Department of Justice guidelines that suggest that Justice Department lawyers believe that it is not possible under the Constitution to impeach a sitting president, so Robert Miller probably won't do it. although it is not guaranteed that he will not accuse the other, the other possibility for Muller is to write a report on all this and present it to the Attorney General in this case - Jerrod Rosenstein because the Attorney General is recused due to his own relationship with the Russians and then Rod Rosen Stein would be in a position to decide whether to refer that to Capitol Hill for impeachment, so there are some fascinating questions here about where we're going, but these are the highest stakes in the world.

I don't think at all that any concrete agreement will be reached, but it is important that the two sides really talk, something we haven't been doing for a long time, so it is a necessary step in this process, but we are very far from being able resolve this, but it's good that the delegations in DC I hope that leads to further progress, but we will have to wait and see, given the imbalance and trade, do you think China has any leverage in these negotiations? I mean, we don't sell them that many things or much of what we do. selling them tends to be more animal protein foods, you know, things like scrap metal, do you have a leg of the aisle to lean on to start these negotiations?

Well, China has a lot of strength, I mean, they are the second largest economy in the world, clearly the impact of that on us. The tariffs on Chinese products are hurting China and at the same time, they still have a strong economy, they have principles that they are trying to put forward. I think the real challenge for America. is that we are trying to achieve some fundamental changes in China, as the second largest economy in the world, it is a non-market economy and much of what we have cited as the source of the distortions are the result of its closed market, its non-state of market economy and their desire to keep it closed so that China has strength in this.

I think the United States has more strength, but the path they were following of imposing tariffs by the United States or conservative logging terrorism by China is not, ultimately, a path that will To be successful, we have to find ways to break down the barriers and make sure that American companies get better conditions for operating in China in the long run for anyone who has been waiting for the president to intervene on Michael Cohen, who did not. He mentioned in his comments yesterday that he just did it on Twitter with a little more restraint than you might expect, but he says that if anyone is looking for a good lawyer, I would strongly suggest that they do not retain the services of Michael Cohen's ambassador, Holloman.

Realize that this is not what we brought you to talk about, but you have enough political experience to weigh in and tell us what you think based on yesterday's news. Well, look, I think that problem is one that kind of clouds the bigger picture. but I also know that in areas like the negotiations with China we continue to see the work being done. I don't think that's a major distraction from trying to reach agreements with China, but what it does say is that for many in France there is a Many of the challenges facing the country are as much internal political challenges as the type of changes we are dealing with. to push internationally, to a large extent I will add in the commercial sphere without the support of our allies and friends and I think that is one of the biggest challenges in the future in this process, although the administration may be making some progress, today there are a report in the political arena that suggests that we are at the point of potentially having a handshake agreement with Mexico and we are at the point of thinking that we have actually made some progress. with the NAFTA talks only with Mexico, if that is the case then Canada could come back and maybe we get a little closer to a deal there, we absolutely should get closer there, they are our neighbors and they have been committed for several years to renegotiate the NAFTA. but what we have to do is move from just renegotiating old agreements to getting new agreements and new agreements with countries like China, that's really critical and that's where the stakes are high and I still believe as the majority of the business community believes. that tariffs and retaliatory tariffs are costing us businesses, our consumers, and our workers, so we better find a solution to this in the short term, otherwise the United States will pay double what it we are losing in terms of access to the Chinese market. and what we are losing by raising costs domestically and another round of tariffs on $16 billion worth of goods will go into effect on Thursday, so I mean this will all go up, ambassador, in your opinion, you said that their move will be successful for any The deal would dramatically improve market access for U.S. companies seeking to do business in the China market.

Can you see a path to success through trade negotiations over tariffs? I mean, for example, if tariffs go into effect on $200 billion worth of goods. Will that work? Should China be forced to do this? Well, I don't think that's the trick. I mean, I don't think that using tariffs, which is the path that the administration has taken, is the best way to do that.how far are we trying to go in China what will be the concern if tariffs go into effect which will go into effect tomorrow a potential additional 200 billion China retaliates with tariffs on more than 5000 US products entering China and if those then We have fundamentally changed the nature of the equation, but the question is what do you try to do after that, because we import a lot more from them than they import from us, so they will look for other things that are not Tariffs mean hurting the American companies, or Kurtz, consumers will go elsewhere, leverage themselves, go for China, well, China has a lot of influence in this, well, no, I wouldn't say, I wouldn't say they have more leverage. in the U.S.

I mean we're clearly the strong player and this, but a lot of American companies do business and do it quite successfully in the Chinese market, particularly consumer-facing companies. China would have the ability, through regulatory burdens by discouraging consumers to buy American products, to really hurt us and so on. The path we are on is a high-stakes game, but what we have to do is find a way to conclude successfully and that will require some difficult negotiations and some willingness on China's part to really open up its market in ways that we haven't done. Seen to date I don't think there are any short term consequences, the market doesn't seem to be having a negative reaction to this news, it's like it's already built in because of course this won't happen for some time.

I think the challenge becomes for the Trump administration, particularly possibly for the markets if he sees a very direct connection to the president he knows. Michael Cohen has alleged that he acted on the president's instructions and has admitted to campaign finance violations. Trump is saying something very different and previously Michael Cohen said something different, so this person is a question and I think his character made people really wonder what the real story is here, although it's important to note that he did it under sworn in yesterday, said the president led it, so I like coming here.

I want to get your first read on possible legal or political implications for President Trump. Well, first, you know, I know about the markets. I think if you go back, if the Watergate range was going against Clinton's impeachment, it's difficult. I think to unravel a lot of impact on the market, maybe a little bit with Clinton. Pete is the Iran-contra leading that, but you don't really see if the economy is good, the markets tend to drive it, I think when I think what Brian Cornell said today about targeting the consumer is probably much more important to the markets and what Michael Cohen said, what I would like to know is how the Republicans will respond.

Listen, this is not a huge boost to your base's enthusiasm in addressing what's happening. It's going to be a tough midterm election, and what, if anything, can Republicans do in the fall to drum up enthusiasm? I don't think they're going to pass any tax cuts. A good friend's colander talked about a government shutdown over immigration to cheer people up. top I don't think there's much the Republicans can do, yeah, well sir, what do the Republicans mean? Returning to the topic, Michael Cohen, under oath, said the president ordered him to pay a porn star and a Playboy model weeks before. elections to prevent him from revealing his affairs with the president because Republicans care if they do