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S&P 500 Bounces Back As Market Digests Case Against Flynn

The S&P 500 has staged a sharp recovery after this morning’s announcement that Michael Flynn has plead guilty to lying to the FBI on January 24th about his contact with the Russian ambassador.

To summarize the plea agreement from the FBI Special Counsel’s “Statement of the Offense

  • On December 29, 2016, Flynn called a senior official of the Presidential Transition Team to discuss whether or not to talk to the Russians about recent U.S. sanctions imposed by Obama.
  • Flynn got the go-ahead from someone (does not name Trump) and called the Russian Ambassador, requesting that Russia not escalate the situation – asking that they only respond to the U.S. sanctions in a reciprocal manner.
  • On or about December 30 – the next day, Russian President Vladimir Putin released a statement indicating that Russia would not take retaliatory measures in response to U.S. sanctions.
  • Flynn lied about this on January 24 in a voluntary interview with the FBI
  • Flynn also lied to the FBI about calls he made to the Russian Ambassador and other countries to try and influence a UN resolution submitted by Egypt regarding Israeli settlements, stating he only asked the countries’ positions on the vote

ABC news takes it a step further, reporting from an anonymous source that “Donald Trump directed him to make contact with the Russians, initially as a way to work together to fight ISIS in Syria.”

Observation and takeaways

  • The fact that Flynn spoke with the Russians in December, well after the election, has been known since February.
  • Mueller’s “Statement of Offense” establishes is that there wasn’t an existing backchannel between the Trump campaign and Russia – at least through Flynn, as it pertains to pre-election collusion. 
  • It’s perfectly reasonable to expect an incoming President to instruct his incoming National Security Advisor to establish a dialogue with a country like Russia over recent and contentious sanctions, as well as fighting ISIS in Syria.
  • If Flynn’s contact with Russia was related to “collusion” in regards to election meddling, he would be pleading guilty to an espionage conspiracy, not the “process crime” of lying to the FBI.

As Andrew McCarthy of the National Review points out;

when a prosecutor has a cooperator who was an accomplice in a major criminal scheme, the cooperator is made to plead guilty to the scheme. This is critical because it proves the existence of the scheme. In his guilty-plea allocution (the part of a plea proceeding in which the defendant admits what he did that makes him guilty), the accomplice explains the scheme and the actions taken by himself and his co-conspirators to carry it out. This goes a long way toward proving the case against all of the subjects of the investigation. That is not happening in Flynn’s situation. Instead, like Papadopoulos, he is being permitted to plead guilty to a mere process crime.

So why lie?

Why would Flynn lie about his contact with the Russians in late January, five days after the Inauguration? Was it because the nation had been whipped into an anti-Russia frenzy? Or, as some have suggested, does the rabbit hole go much deeper and there are aspects of the Trump-Russia story that haven’t been made public yet? Again, if that were known, Flynn would be pleading guilty to a much more serious crime.

That said, Flynn is facing a whopping six months in prison and a fine of up to $9,500 for lying to the Special Counsel.

Who’s next?

President Trump’s son-in-law and senior advisor, Jared Kushner, told the Senate Intelligence Committee that he asked Russia’s Ambassador whether the Trump transition team could use Russia’s embassy to communicate with Moscow about Syria.

The meeting with the ambassador, Sergey Kislyak, “occurred in Trump Tower, where we had our transition office, and lasted twenty [to] thirty minutes,” Kushner wrote in an 11-page statement detailing his contacts with Russian nationals during the election and transition period.

“Lt. General Michael Flynn (Ret.), who became the President’s National Security Advisor, also attended … I stated our desire for a fresh start in relations.”

Kushner said Kislyak, whose tenure in the US ended this past weekend, asked whether there was “a secure line in the transition office to conduct a conversation” about the US’s Syria policy.

“General Flynn or I explained that there were no such lines,” Kushner wrote. But he said he went on to ask whether the Russian Embassy “had an existing communications channel … we could use where they would be comfortable transmitting the information they wanted to relay to General Flynn.” –Business Insider

And now it emerges that Kushner allegedly asked Flynn to contact the Russian Ambassador…

So – unless there’s more than meets the eye, it appears that the coverup is far greater than the crime in regards to Flynn’s decision to lie to the FBI. And whatever the outcome, the hard bounce in the S&P 500 would seem to suggest this is perhaps another nothingburger and not quite the end of Drumpf.

Where were you when it happened?

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16 comments

  1. Rodney F.

    The buy this morning was the biggest NO BRAINER in all of mankind!! Thank you for being yet another fantastic contrary signal, Fly!!! :—)

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  2. Rodney F.

    Got “lucky” and loaded the boat with Dec.163c in SPY…up 70% so far. A very very good day. Next week we rip higher. JMHO

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  3. Cricket

    It does not matter what circumstances were behind this plea nor how insignificant it may or may not be. The nationally coordinated propaganda service that call themselves journalists will turn this into the crime of the century now. One news outlet recently compared Trump and his supporters to Charles Manson. What do you think they will do with Flynn?

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  4. paradox

    That shirt image is the pic of the day, maybe pic of the year. Pretty much sums up trading in 2017.

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  5. zeropointnow

    Damn Rodney – well done!

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  6. zeropointnow

    Update: END OF DRUMPF iS NEAR

    https://ibankcoin.com/zeropointnow/files/2017/12/rallyinperil.png

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  7. ironbird

    So. It is still okay to be white.

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  8. mooby

    All of this “collusion” talk. Collusion is when two gas stations on opposite corners of a busy intersection enter into an agreement whereby they both charge the same amount for a gallon of gas.

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  9. txchick57

    Hey, Rodney, that was a truly moronic thing to say (and do). Unless you were able to read the plea bargain quickly and assess all while the market was panicking, if you **really** did what you say, you were just stupid and lucky. Fly is not a contrary indicator. He’s been doing this as long as I have in the same kinds of different markets. If you think this is all over, you’re an idiot. This same sort of crazy stuff happened in December of 2007 and you may want to look at what happened after that. I’d suggest you pull whatever “profit” you made off that trade and go partying with it this weekend, before you give it all back.

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  10. joyous__ending

    I don’t remember the intraday activity of the market in 1986 during Iran-Contra or 1998 Clinton-Lewinsky, I do recall there being days in 1986 with selloffs when folks got skittish that Iran/Contra would take out Reagan, those dips were full buys. 1998 was just full out buy anything not nailed down. Either way during both political scandals anyone who bet against the market during these two high powered bull runs got smoked.
    The only systemic risk out there is NorthK and their missiles and of course the always possible meteor strike.

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  11. Rodney

    txchick
    I could care less what the trigger was that caused the quick dip. I had no clue it was political until later. I was focused on the 50ema daily and was confident the fall below would be temporary and recaptured as this had been a strong theme in recent months. Dips to big support levels get bought. This time was no different. Next week poised to gap up on heels of today’s wick. 2007 is meaningless. What do I know..only been at this game for 27 years.

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  12. sarcrilege

    Makes one wonder if Flynn never heard of game theory, as in prisoner’s dilemma; or if the pressure was such that he simply broke and is prepared to throw everybody else under the bus to protect his own.

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  13. it is showtime

    Rodney & others so many of you are so deluded

    Without a legitimate productive capacity or direct control of index movement, stock markets don’t act like this. Just magically, for the first time spy crosses 2200 then 2300 for the first time then 2400 for the first time then 2500 for the first time then 2600 for the first time, in 12 mos.

    (all following the election of the guy in direct contradiction to the power structure who had the favor of wall st at the time, btw)

    When it just becomes No Brainer that Guess-what-the-indexes-recovered-again-surprise. “A good day” you stupid fuck. At the sacrifice of systemic stability, sure. You greedy entitled fuck.

    You really think you’re entitled to pavlovian autopilot stock market gains? Lol. You greedy fucking american.

    So many of you are such a joke.
    My revenge on collapse has only
    Grown

    We’re
    NOT
    Ripping higher next week.
    [Mocking laugh] [Mocking retarded person]
    The indexes are under programming and they’ve been made parabolic since the piggyback hurricane irma headline gains. You’re not just going up 200 300 X-triple digit dow much more now. You’re not getting it. Just keep falling in line moron, You’re entitled hubris gets to rip higher every week. Not.

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  14. Rodney

    Showtime
    We have all bared witness your stance for the past five years. You have whined the entire ride up. Missing it all. Moron indeed. You from Canada?

    Hands down “Ass Hat” of the decade on IBC. Congrats, champ.

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  15. it is showtime

    Rodney the lemming decides to retaliate from accurately being called a delusional trader whore, by pinning an Asshat decade award.

    In what is clearly endgame
    In proceeding thru the 9th inning

    And suggests truthtelling is whining. Talk about asshat. We were correct you loser! We said 2x 3x lehman would be your destiny without a reset!

    How fucking stupid do you look!
    With a mountainous equity timebomb in your face!

    Ass hat of the century will ironically go to the fools and tools which clearly includes You

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