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…

BREAKING: Jared Kushner is the “very senior member of the Presidential Transition Team” mentioned in the statement of offense against Michael Flynn, two people familiar with the matter tell @NBCNews https://t.co/4ZLASVAX9b

— NBC News (@NBCNews) December 1, 2017

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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