Even as stocks bounced around and volatility spiked on news that a former member of President Donald Trump’s inner circle pleaded guilty to lying to the FBI, analysts were betting that optimism over tax cuts on top of a Santa rally will juice the market higher.
Any selloff “is a short-term knee-jerk reaction. At the end of the day, the drama in Washington is unlikely to derail the robust economy and corporate earnings growth,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management.
Former National Security Adviser Michael Flynn reached a plea deal with Special Counsel Robert Mueller who is investigating Russia’s alleged interference in the U.S. election. Flynn played a prominent role in Trump’s campaign and the activities that Flynn lied about were during the postelection transition period.
Richard Hastings, macro strategist at Seaport Global Securities LLC, expects the latest political development may act as a brief speed bump for the market.
“We’ve seen some dips on Trump legal risks before,” said Hastings, “and the Flynn situation could trigger a new outbreak of Trump allegations. But going from minor stuff to bigger steps seems like a big chasm, and we doubt Trump is doing things that totally goes into the disaster bucket.”
Source
