stocks we will see how all this news impacts your money over the next 30 days, whether it is this tax vote, maybe the tax vote comes today, passage looks more likely than ever according to the senators we have been speaking with there is that stunning mike flynn news as well "power lunch" picks up that story right now. have a great weekend see you on the other side. over to my friends on "power lunch. welcome to "power lunch" on a very busy friday, where your investments are caught in a tug-of-war between taxes and trump. about 90 minutes ago, stocks dropped sharply on one abc report that michael flynn is prepared to testify, donald trump directed him to make contact with the russians initially as a way to work together to fight isis in syria. then stocks began marching back after the senate majority leader said the tax bill is going to get done mitch mcconnell coming on the floor and saying quote, we have got the votes. two beltway battles controlling the fate of your money right now. >> we will take a look at where the market is at this hour based

on that beltway battle the dow slapping its losses at this hour. it was much lower. now it's up 106 points it was down as much as 350 points earlier the russell 2000 small cap index is down 1.5% it is a flight to safety check out the bond market where we see bonds rallying and hence, yields are falling treasury yields falling on the flynn news the u.s. 30-year bond yield hitting a low of 2.72% that's the lowest level since mid-september. look at wall street's so-called fear index, spiked when the flynn news broke you can see it right there, hitting its highest level since mid-august tyler? >> we have live team coverage. eamon javers at the white house. bob pisani on the floor of the new york stock exchange. eamon? >> reporter: we saw the national security adviser appearing in federal court in washington, d.c. this morning to plead guilty to a single count of lying to the fbi in the course

of the russia investigation. take a look at what we know now about where we stand in this michael flynn investigation. flynn pled guilty to lying to the fbi about his conversations with then russian ambassador sergey kislyak before president trump took offer flynn pledged full cooperation with the special counsel in its probe. prosecutors say flynn discussed russia with senior members of trump's transition team and spoke with a senior official of the team at mar-a-lago in december 2016. the white house for its part says that no one other than flynn is implicated in the documents that have been released today one of the questions is in court documents, they are talking about flynn having a conversation with a very senior trump transition official during the transition between the election and inauguration in december of last year. who was that very senior official could it have been the president himself or was it somebody lower down in the ranks in the trump transition we don't know the answer to that

but president trump was asked directly back in february whether or not he directed mike flynn. here's how trump answered that question earlier this year take a listen. >> did you direct mike flynn to discuss sanctions with the russian ambassador >> no, i didn't. >> prior to your inauguration? >> no, i didn't. >> might you have fired him if the explanation hadn't leaked out? >> no, i fired him because of what he said to mike pence very simple. mike was doing his job he was calling countries and his counterparts so it certainly would have been okay with me if he did it. i would have directed him to do it if i thought he wasn't doing it i didn't direct him but i would have directed him because that's his job. >> so the president last year saying there was nothing wrong with the contacts between mike flynn and the russians, that was his job. the president insisting he did not direct mike flynn to engage in those conversations but he would have because there was nothing wrong with it. ultimately, the special counsel is going to be looking at whether or not there was a quid pro quo between the trump

campaign and the russians. did the trump campaign get some benefit and in exchange, extend some reward to the russian government all of that entirely unproven as of right now, but the significance of this mike flynn news is that he's cooperating with the special counsel's office and the indication is that he would be cooperating in order to provide information on someone more senior to him in the trump orbit. we don't know at this point exactly who that is. >> one would think at some point, wouldn't one, that a line of response to mr. flynn's plea today is he is twice a liar. he lied to the fbi and he lied to mr. pence >> reporter: that's a classic problem for prosecutors when they get someone to agree to cooperate with them, they charge them with something, often it's lying. 1001 flynn is charged with today, the defense attorneys for whoever is ultimately charged can say you can't rely on the testimony of mr. flynn, he's admitted that he's a liar and

lied to the fbi. that can be a damaging line of argument however, his testimony is so valuable to the prosecution that they decided they are willing to risk that in exchange for whatever else he can say, whatever documents, recollections, evidence of any other kind he can provide. you would assume the mueller team sifted that out and decided it's worth it to go for it here. >> let's turn to tax reform. big news there senate majority leader mitch mcconnell says he's got the votes to pass that big bill. we are live on the hill. >> reporter: republicans appear to have those votes, tyler senator jeff flake of arizona became the 50th senator to confirm that he does support the tax reform bill and what won him over, he said, was the elimination of an $85 billion budget gimmick as well as assurances from leadership that they would work with him on permanent protections for the so-called dreamers again, he's from arizona that immigration issue is extremely important to limb. republicans do only need 50

votes to pass this bill under the special rules they are using to consider the legislation. two senators' votes are still unclear. susan collins is one of them she said that her official announcement should come in a few hours but she did tweet that one key provision she was looking for, the $10,000 limit on property tax deductions, that that would be included in the senate version of the bill the other holdout remains bob corker of tennessee. he told reporters that he will make his views known soon but i'm also hearing that there is no fiscal trigger or any alternative to that inside this tax bill so if it does pass the senate today which looks likely, this would be a major achievement for republicans, not just on the tax reform front but also remember that this tax bill would repeal the penalty for the individual mandate which brings republicans a major step closer to repealing and replacing the affordable care act which is a goal that's

long eluded them the next step in this process if it passes the senate today would be to go to conference committee. the house has already scheduled a vote for monday to pick members of that committee. so guys, that just gives you a little sense of how confident republicans are right now. >> and how quickly they are moving thank you. so the market's fluctuating today with every twist and turn out of washington. bob pisani is looking at today's wild ride. hey, bob >> reporter: and as you heard, we have a real tug-of-war going on in the market let me show you a timeline of major events and how it's impacted the markets it was about 11:08 when we got the initial abc report, that came out, they said mr. flynn was prepared to testify that president trump directed him to contact the russians originally as a way to work together to fight isis in syria. that was 11:08 you see the big drop in the market, about 350 points then we had the european close and that's when things stopped and started turning around i think selling from europe was

a major factor in the selling. volume accelerated going into the close, it lightened up after that that's an indication europe was a big factor then you see about noon, we saw senator jeff flake announcing that he was supporting the tax bill and the markets again started to move to the upside. so what we have got here is a market battle, a tug-of-war between the premium for tax cuts that we have been discussing for months versus now this newer issue that is president trump's legal troubles it's important to remember the rally this year has not just been based on tax cuts and global economic expansion although i believe those are the two most important factors there's an additional less tangible thing here. optimism that's partly due to the belief that we are in a more business-friendly environment and that we have republican control. we saw larry kudlow in the last hour exemplify the issues that if trump is in trouble, that

will damage the republican party in certain parts of the country. so to the extent the trump legal issues are hurting the markets, or may be an issue, you can see it reacting in the markets i want to point out that this has been an issue before does everybody remember may 17th, that's what happened when the dow, that day the dow dropped also about 300 points. there you see, that's the month of may right there that's when the memo from former fbi director comey surfaced saying trump asked him to stop the investigation of flynn so guys, we have dealt with this issue before it has moved the markets before and it's now back to the forefront. back to you. >> it certainly is busy week. thank you very much. see you soon now let's break down what this flynn news might mean from a legal standpoint joining us now is andrew boutrose we have to make it doubly clear that this is one report from abc news that says flynn may potentially be willing to testify against president trump with regard to a conversation

that began with isis in russia again, one report. that said, if the report is indeed accurate, what would be the next steps legally for both michael flynn and potentially the president? >> well, we certainly know that michael flynn is cooperating and we know that by virtue of the fact that he's only being charged in a one count, two-page indictment which is a very sort of short and simple indictment, that he has to be cooperating or is willing to cooperate against someone. typically you have to cooperate up as opposed to down. i think it leaves only a handful of people against whom he can be cooperating. i also take into account the statement that's been issued by ty cobb, the lawyer for president trump in the white house. the statement was very clear that the cooperation if any by flynn does not implicate anyone in the white house i think through process of

elimination, it then leaves the question if not anyone in the white house, then who. and i think -- i think we need to look to see who that might be it -- >> legally, if andrew, we can read that flynn says okay, i'm prepared to testify against somebody, should we assume then if he's making that kind of a deal, we assume a deal would be made, i suppose, that he would not take the fifth or could not? >> yeah, no, michael flynn would not be able to take the fifth. he's already sort of cracked that egg so that would not be an option for him at this point in time. and he's also admitting to his guilt as it relates to lying to the fbi. so he would not be taking the fifth. >> so what one could say if it's no one in the white house, that does not rule out people who were formerly in the white house, like the former chief of staff, reince priebus, mr. bannon, and several others

potentially, the former press secretary. cut to the chase here. i'm a little unclear, beyond the fact that he concedes he lied to the fbi which is a crime, what is the crime that they are going at here? what is the crime in talking, quote, talking to the russians apparently initially to tryand get cooperation in the battle against isis what's the crime >> you asked a spectacular question because you hit the nail right on the head it's not the conduct, it's the cover-up that's what people often overlook oftentimes when the fbi or department of justice goes after a person, it's not for the underlying conduct but it's for the coverup. case in point, martha stewart. martha stewart did not engage in insider trading or other types of conduct she was never charged with that. she was charged and convicted with lying to the fbi. it is often the coverup and not

the conduct that results in people being taken down. i don't think the underlying conduct here is problematic or at least as far as i'm aware instead, it is the lying to the fbi and you see that also in the papadopolous indictment that came out a few weeks ago again, even though it was incredibly detailed, it was not the conduct. it was the lie to the fbi. it's always the coverup. >> so when you read this very very short indictment, you're right, it is very short, and they say that he lied when he said that he did not talk to the russians about refraining from escalating the situation, et cetera, none of those things that you read there could potentially be something akin to the logan act which is when a private citizen works on behalf of an issue with another country when they're not allowed to, or nothing related to not being a registered foreign agent, for

example, nothing that you see there would trigger any of those issues >> you know, i don't think so. i will tell you, the proof of the pudding is in the eating if when they wanted to go after, when the mueller and his team wanted to go after paul m manafort, they threw the kitchen sink at him and indicted him with everything they kochcould. >> couldn't you argue they have a stronger case against flynn and that's why he pled and they didn't have a stronger case against manafort >> no, i think they threw everything at flynn because he wasn't cooperating or manafort. in the case of general flynn, they hit him with a very targeted indictment, two pages in length, incredibly short, and very isolated. i think if they could potentially have charged him with more, they may very well have but i suspect that they did not have the evidence to do so or that the underlying conduct in their view was not necessarily criminal and again, we see this

both in the papadopolous indictment and we now see it in the general flynn indictment, where once again, they don't charge the underlying conduct in either case. >> got it. you made that point. the coverup. want to ask about the ty cobb statement. you thought it maybe exonerated people in the white house. i want to read the one sentence that's relevant to this. nothing about the guilty plea or the charge implicates anyone other than mr. flynn i don't draw much from that or i don't draw from that that that doesn't mean somebody in the white house or not in the white house currently. >> you know, i think there was an additional statement and i don't have it in front of me but i believe there was an additional statement that made a reference to individuals currently in the white house that's why i was making the point that if you take that statement at face value, the only people left are people outside of the white house which then leads to your observation which i think is correct,

including potentially former individuals who were at the white house who are not there today. but all this is breaking my recollection is there's more to the statement >> it's possible he made another statement beyond the one we have, the official statement from him thanks, andrew >> thank you weekly recounts just out jackie >> you can see oil prices are actually paring their gains on the day. u.s. oil rigs rose by two for the week bringing the total count up to 749, an increase of 272 versus a year ago. this is according to baker hughes recounts have been rising modestly the past few weeks perhaps signaling producers are taking advantage of these oil prices close to $60 a barrel back to you. >> thank you, jackie the market's deep in the red before recovering on those tax talks on capitol hill, as progress seems to be made there. the gop saying they have the votes to pass this sprawling tax cut.

will the michael flynn plea deal be the piece of news that ends the massive rally? much more on this news and how it's affecting your money coming up on "power lunch."

markets have been on a wild ride, dropping sharply on one abc news report that michael flynn is prepared to testify that donald trump directed him to make contact with the

russians initially as a way to work together to fight isis in syria. but the stock market then cut its losses significantly when senate majority leader mitch mcconnell said we've got the votes on a tax bill. let's bring in katie nixon, chief investment officer for northern trust wealth management and ed yardeni good to have you here. which is more important today, the flynn news or the tax news for the market >> me first? >> looking at you. ladies first >> ladies first. i think actually, the flynn news is probably contributing to the volatility that we see today i think pretty much investors have come to peace with the fact that the tax bill at least the one out of the senate will be voted on successful day today. they appear to have the votes today. we see political risk being injected into the market >> the risk being this could be a long, drawn-out politically

crippling investigation for the trump administration >> potentially i think it injects a little uncertainty. >> ed, let me turn to you. last night, the joint committee on taxation comes out with its report that indicates this tax law far from paying for itself, will add -- >> what a surprise >> it will add $1 trillion to the deficit and raise, what, $407 billion in new revenues attributable to glorowth. how do you look at this tax law, have you, and what do you think it will do for growth? >> well, it's hard to get a handle on it because -- >> who knows what it is. >> who knows what it is. kind of reminds me of obamacare. we didn't know what was in it until it was finally passed. then it was so long, it took a long time to figure out. this has so many different bells and whistles going on, not quite clear how it will add up >> you think big tax cuts ever fully pay for themselves >> i kind of doubt it. i think at the end of the day if you don't have some discipline on the spending side, it's hard to see how you actually get it

all worked out >> you think the market came back a bit not only because of taxes but also -- i know you are not a political analyst but this is the news of the day, that the first part of the story was trump directed flynn to call the russians, period now it's trump directed flynn to call the russians about fighting isis in syria. it's like trump called his defense attorney, period to ask him to pick up his son at school they are very different things in some ways you think that's part of the reason the market came back, that second -- i think they call it a participle? >> it was dangling >> yes, it was yes, i do think it's less of a problem now that the sentence has been completed but i do think this reinjects short-term political risk into a market that's selling at very high valuations we are nearing the end of the year when investors want to lock in some gains. we have sectors that have way outperformed the market. it's normal to see this. it's really funny because we

have been so comfortably numb with the market in the last year or so -- >> nice pink floyd reference there. that was good. >> even a little volatility feels very volatile. this is normal >> do i recall correctly, right after the election, you said back up the truck on stocks. you were very very bullish we have come so far since then put aside everything today, if they hadn't brought flynn to court, where would you be? >> same position we don't have tax reform bills earnings estimates for next year look at the fundamentals they are so strong >> i guess that's what i'm trying to get at first question, what's more important to the market today, the market's selling off because of flynn but does that make you negative long term like would you still be piling the stocks right here? >> we are very over weight global equities. we continue to see a very strong fundamental foundation aside from potential improvements in the picture that would come from

tax reform which to your point, it's hard to determine, there are head winds and tail winds and cross currents associated with some of the things in the bill as i see it but one thing you can see from a reduction in the corporate tax rate is probably going to be very good for stockholders >> i want to turn to my economist i have known and respected for years and years. as you look into 2018, what kind of economy do you see, what kind of corporate profit growth do you see and implicit in that, what kind of stock market do you see? >> i see the market going higher as a matter of fact, i see 3100 on the s&p 500 by the end of next year. by the end of next year we will be discounting -- >> another 20% >> another 20% i think we are in the early phases look, we have had 58 panic attacks in this bull market and every one of these panic attacks has been followed by a relief rally. this could very well be a one day panic attack followed by a relief rally

>> why >> the reason earnings are doing so well is because on a global basis, the global economy has never really looked better it's a synchronized global boom. we are seeing more and more of -- >> what does that tell you about the fact, you say panic attack and as the numbers get bigger, the percentages get smaller and the fact we have headlines about the former national security adviser potentially willing to testify against the president and the dow is down .4%. >> it's really nothing it's p.e. times e and the e looks pretty good. today we had a p.e. panic attack that could come right back up. we are at 18 on the forward p.e. it's not exactly cheap, i agree with that. with the market's discounting, the expansion could last a lot longer, as long as inflation stays down >> thanks very much, folks good to see you. it has been a wild two days for the markets and your money, from the tax bill to the flynn plea deal. stock reaction on that news, we are watching wall street and washington we will drill down on key sectors to watch from here

[lance] monica, it is absolute chaos out here! gale force winds, accumulations up to 8 inches... ...don't know if you can hear me, but [monica] what's he doing? [lance] can we get a shot of this cold front, right here. winter has arrived. whooo! hahaha [vo] progress is an unstoppable force. brace yourself for the season of audi sales event. audi will cover your first month's lease payment on select models during the season of audi sales event.

your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.

the big breaking news today, an abc news report that says michael flynn is prepared to testify that donald trump directed him to make contact with the russians initially as a way to work together to fight isis in syria.

let's get more context on what this all means for mr. flynn and the president. joining us is john carlin, former assistant attorney general at the department of justice national security division john, always good to have you with us. you certainly know mr. mueller very very well the indictment of mr. flynn is a short one. it talks about not so much discussions initially about isis but discussions about sanctions that had gone into place a day or so before that mr. flynn may have had with the russian ambassador, then did not tell the truth about that how much trouble is mr. flynn in and how much trouble can we infer others in the trump administration or formerly in the trump administration may be in >> look, these are -- mr. flynn

has pled guilty to serious felony charges based on the criminal information that was filed today, and as part of that plea, guilty plea, he's clearly agreed to cooperate further. so you have someone who was perhaps during the campaign, the most influential and highest ranking person on the campaign on national security issues and who actually, that's when the criminal conduct here occurred, was serving as the national security adviser, the top position in our national security apparatus, in pleading guilty to committing a felony while in that job. so this is very serious. it's historic. he's the third person now, the second person to plead guilty, the other was also named by then candidate trump as a key national security adviser, and

you have this former campaign manager who is charged and awaiting trial i'm not sure if you can point to an historical precedent quite like this before so the question i assume that's ringing out throughout the white house and with others who are concerned about this right now is what's general flynn saying what's he cooperating on what's the next shoe to fall >> i can tell you are talking quietly because you are on the acela. i heard that chime you're on the train. i can bust a former fbi agent. how about that john, so i understand the idea that lying about your recollections, your conversations to an fbi -- to the fbi is a serious felony offense. but is there something wrong with the idea that mr. flynn was

directed to speak to the russians or spoke to the russians or spoke to other government officials either while he was working in the campaign or while he was part of the transition apparatus >> yeah. couple of thoughts there one is when someone pleads guilty, they agree to the charges that are in the information but i don't think we can assume now that we know the full scope of the conduct that led to this guilty plea. in other words, there may be a lot more that's occurred and that he's talking about that's not in the public documents. on that, we just need to stay tuned. >> can we be specific about what is in this in the two-page indictment, plea, et cetera, it says that what he lied about isn't about talking about isis, et cetera, that he said that he did not ask them to refrain from escalating a situation related to sanctions and that he doesn't recall the russian ambassador subsequently

telling him that russia had chosen to moderate its response to the sanctions as a result of his request. i don't know, if you go back to that time period it was wow, the russians are behaving, wow, this is pretty dramatic what about those facts, could those, not that he talked to them but what he talked about, does it matter >> yes it does. when you look at what happens, the date, december 29th, it's the date the obama administration announces new sanctions against russia and expelled 35 russian officials, one of the most serious actions that's been taken against spies inside the united states that's the day that he talks to a key russian official, ambassador kislyak, and asks him not to escalate the situation in a way that's contrary to the current sitting president's goals. so yeah, that's serious.

i know there's this report that you are referring to from abc and we will see whether that's true or not, but it would be significant i think when you're trying to figure out obstruction if the president secretly directed michael flynn or others to have communications to the russians, subsequently lied about it, said they didn't do it -- >> right now they are getting him on the coverup we established that from the first lawyer we had on the show. right now he's being prosecuted for the coverup. >> lying >> exactly for lying. if you assume that these are lesser charges than he would have otherwise faced, right, that's where you start moving up the chain about who else you might get in the white house am i understanding that progress correctly? >> if flynn has credibility. >> exactly >> yeah. i think that's one thing to think about. another thing to think about now is the obstruction of justice because you have a couple of different factors here

so one is if you remember the rather stunning testimony of director comey about the conversation that he had after the attorney general was ordered out of the room, the oval office, where the president asked him essentially to drop the flynn investigation, and subsequently director comey does not drop the investigation and gets fired so the question is when you're looking at obstruction, okay, it might be legal to fire him, but was there a corrupt intent was he fired in order to impede an investigation so if it turns out to be true, that flynn's prepared to say that trump knew about the conversations with russia and therefore knew that he had lied about them or may have directed them, then that would be significant in trying to figure out this corrupt intent. if you could prosecute a sitting

president, and that's a question i think debated by legal scholars, that could be a criminal charge in criminal court system otherwise it could be a basis to refer articles of impeachment. that's something to watch in the days ahead >> we will leave it there. thanks very much for your time today. john carlin, former assistant attorney general it was a november to remember for your money. but that's history now where are the opportunities in the weeks and months ahead in december we speak with one four star money manager who is absolutely crushing this market right now one of his funds has been ranked number one in the entire fund universe i mean wish i had time to take care of my portfolio, but..

well, what are you doing tomorrow -10am? staff meeting. noon? eating. 3:45? uh, compliance training. 6:30? sam's baseball practice. 8:30? tai chi. yeah, so sounds relaxing. alright, 9:53? i usually make their lunches then, and i have a little vegan so wow, you are busy. wouldn't it be great if you had investments

that worked as hard as you do? yeah. introducing essential portfolios. the automated investing solution that lets you focus on your life. why did you take credit card debt on? second kid. private school. medical bills. moving costs. solid ground. a personal loan from sofi is a smart way to consolidate credit card debt. certain borrowers cut their credit card interest rates 42% and increased credit scores 17 points on average. borrow up to $100,000 with

low rates and no hidden fees. find your rate in just two minutes, and take on your debt at sofi.com. here's what's happening right now. russian law makers who visited pyongyang say north korea is not prepared to disarm the russian news agency says the country, north korea, does not want nuclear war but it is morally ready for it macy's says it had a strong start to the holiday shopping season and would hire 7,000 more

temporary workers through christmas. the retailer had said in september it would hire 80,000 workers for the holidays that's 3,000 fewer than a year ago. sales of new vehicles in the united states should decline in 2018 as high prices and competition from nearly new off-lease vehicles weigh on consumers, according to the national automobile dealers association which says it sees vehicle sales at 16.7 million units next year compared to 17.1 million in 2017. an experimental treatment for opioid addiction is a step closer to fda approval late thursday, advisers to the agency voted to recommend approval for the experimental therapy which consists of a monthly injection. that's our cnbc news update for this hour. back to you. breaking news out of the senate tax plan. let's head back to capitol hill. >> we are hearing conflicting reports about whether the alternative minimum tax is back in the senate version of the tax bill it had been taken out of both

the senate and the house version but i spoke to senator bill cassidy of louisiana and he said there is talk of adding it back to the senate version of the plan he did not say whether it was on the individual or on the corporate side however, senator bob corker telling cnbc that he did not hear this discussed so this just gives you a sense of how things are in flux here on the capitol and as well, how they are looking for ways to pay for some of these concessions they have given to senators to bring them on board we are waiting for the managers amendment to come out. that will come from majority leader mitch mcconnell it will detail all the changes of the bill. we are not expecting that until later this afternoon or even early this evening back to you. >> i will pick it up thank you very much. guys, let's chat about this for a second a lot of our audience lives in new york, new jersey, massachusetts, california. we talked about this state and local tax, the s.a.l.t. deduction elimination, how it will really hurt the blue state upper income higher tax people

this is a big deal because the repeal of the alternative minimum tax was one of the carrots that the senate was trying to give to blue state republicans to effectively say we are going to cancel your state and local tax deduction but don't have a heart attack, because we are going to repeal the amt. yes, you will lose your deductions but the repeal of the amt may mitigate that pain this could be, if they don't add to the state and local tax deduction, bring it back that's another punch in the face for the blue states. >> reflective of this as one senator who absolutely wants better rates for pass-throughs, better rates here, there and everywhere but you have to pay for it >> this is a big revenue loser if you take it out >> exactly >> it sounds, though, didn't it, earlier that susan collins was leaning toward the bill in part because it sounds like they have agreed to put back in a $10,000

deduction for property tax >> exactly exactly. then you have to pay for that. >> you have to pay for it. >> here's one thing i will say it's not political commentary at all. but if anybody says you will be able to do your taxes on a postcard, in many parts of america, that is true. however, if you live where one-third of gdp is created, new york, new jersey, massachusetts, california, and probably even texas, because they have a high property tax, all these changes, it's going to be a very good time for accountants and dare i say, h & r block >> i agree i do not see a lot of simplification here. i don't. i don't. >> adding a lot. all right. big swings for the markets the past two days. yesterday the best day of the year today we crashed and have come back as an investor, how do you handle, how do you deal with wild moves xanax not an oioptn.

♪ ♪ ♪ ♪ what we do every night is like something out of a strange dream. except that the next morning... it all makes sense. fedex powers global commerce with vast, far-reaching networks... deep knowledge of industries... and, yes... maybe a little magic. ♪

yeah, look at that intra-day chart. the dow taking a wild ride it tanked 350 points on the michael flynn news when it broke out of abc news, but recovered much of its losses on buzz about the senate tax bill, maybe, finally getting through. the dow up more than 20% this year if you think that's impressive, check out the four-star rated federated kaufmann fund, up 24% this year and the number one fund over the past 30 years. joining us is stephen dinicello, portfolio manager. good to have you here. >> thanks for having me. >> tell me what you think of today's crazy action and how much do you think a situation like general michael flynn is a risk to the markets versus maybe we are finally going to get a tax bill >> sure. look, i'm probably admittedly in the minority here but instead of watching a highlight reel of michael flynn walking in and out of a washington, d.c. building, i actually was on some investor

calls this morning illinois tool works had their investor days today. just to give you a little anecdote of what i think is an undercover narrative in this market is it's really a self-help market illinois tool works is an industrial juggernaut that makes things as mundane as plastic fasteners for automobiles. they are able to generate 15% profit growth on low single digit organic growth, no matter who is president or what their tax rate is. kimor's chemical is a commodity chemical company making titanium dioxide, a raw material that goes into paint. they just said this morning that they see in excess of 15% earnings growth over the next five years >> so i get the point. i think the point you are making is that maybe we are making too much of what's going on in washington >> i was going to say -- >> are we allowed to talk about stocks again >> this is why we love you, why your investors must love you while we are all here talking about michael flynn or matt

lauer or louis c.k. or whoever it is, you are talking about illinois tool works. >> right all time implies a very long time when you are 50 basis points from an all-time high it's not that bad i'm not belittling what's going on but you really have to look under the hood take a company like caterpillar. this company has fundamentally clain changed their cost profile and are able to earn more with less. this is a self-help market nobody is talking about. incremental margins on very small increases on revenue is very powerful. the markets are at all-time highs because corporate profits are. >> go ahead. >> wouldn't tax cuts help juice those profits even more? >> absolutely. now, there's obviously a question of what is priced in and what is not. but i can tell you on both those investor days, i saw nothing but assuming tax rates are what they were in 2017 >> they are what we thought they were dennis green market.

fair enough. we love you. to tyler's point, i hear what you're saying -- >> love you, too >> lovefest. however, however, i'm not comparing this to watergate but you have people investigating around the president the dow fell 50% i'm sure in the '70s under that. there's got to be some sort of you or your firm that says okay, we have to factor in some political risk, no got to be some >> sure. the '70s were clearly a different time than now. interest rates were at a different point. inflation was at a different point. and technology was at a different point. a company's ability today to be more nimble than ever, to utilize big data, supply chain logistics, is a very powerful tool that nobody is talking about. again, go through the illinois tool works 10k and you will probably fall asleep but the underlying profit engine of that company is -- >> boring is beautiful >> should i buy block chain?

>> not in my purview >> i'm just playing with you >> we don't like talking purvs there you go >> thank you >> absolutely. it's been a wild trading day on wall street and wild week overall. what do traders think about this market right now? think of this market right now what is an investor like you to do you t goto stick around to hear this there are the numbers right now. ♪ [alarm beeps] let our your inner child at the lexus december to remember

sales event. lease the 2017 rx 350 for $399/month for 36 months. experience amazing at your lexus dealer.

author of eight ways of the peak performance of your life. >> doug, we are just talking now. lets talk about this psychology of these markets here. yesterday, there is euphoria and you got the market fall and distinct use here which is everything is great and trump is in trouble you got the watergate theorists, how do you manage to stay focus? >> zen >> it is not by happy thoughts it is by looking at the math of things and taking emotional experience that's affecting your

process. as an example, the market is down 200 points and you think it is a lot if you look at the percentage, it is very small you got to think about it. it is 200 points on 24,000 points that's like saying one penny on a dollar a lot 200 points sound like a lot but keep it to a percentage move and that'll help you >> i want to throw out bitcoin i heard market participants saying look at the bitcoin the path ji that's -- the pathology that's occurring >> what's unique about bitcoin is no one knows how high it can go people are talking and smart people are giving both sides of those coins. we form a bias a psychological bias called anchoring.

we look at bitcoin and it is a thousand word and now 11,010,000 and nothing is moving that high and fast and so we try to associate with things like gold or other things we are familiar with it is a different kind of animal and that's why you want to think of a longer term most people don't understand what it is but don't use it as a signal >> how do you take emotions out of investment. >> this is what you have to do at a moment like this. >> it starts with the cork >> yeah, that's right and mix it with jack daniels and a straw. >> it is of having a process that you can put into place. we are human beings, we'll have emotions and that's going to affect our decisions if you have a process to go to, that helps you make decisions based on smart risks or based on your personal emotions or

biases >> you can be so wrong i was so wrong heading into this year i thought that it was going to be a very bumpy year because the market have been rising a lot. and i talk to some of my financial advisers, people that i have 401 -ks with and the result is i caused myself a lot of money it was not i was being emotional, i was afraid of the uncertainties out there. i was trying to be rational. >> lets look at wayne gretzky. he had a fantastic view where if traders can think of this way, it is a hall-of-fame of mentality. he made the career of where the puck is going to be and not where it is. investors should be thinking about where is the market going to be. in the future, down the road, fundamentally, where do i think

things can develop into and they make investments based on that >> by the way, tyler, in the market is down 10%, you would feel really small, right >> yeah -- oh we got to go the bomb shell news dropped on mooi michael flynn, the fallout ahead. senator republicans scramming to win on the hold out of the tax plan we'll be live on capitol hill. we right laare watching this trn wall street, showing you the big move straight ahead. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they wanted out of life, and maybe even more. ♪ the market.redict

but through good times and bad... ...at t. rowe price... ...we've helped our investors stay confident for over 75 years. call us or your advisor. t. rowe price. invest with confidence.

your bbut as you get older,ing. it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

what a day this is breaking news as we kickoff the second hour of "power lunch. a turbulent day for your money michael flynn pleaded guilty to lying to the fbi start to look now. they have recovered more than half of their losses in part because senate majority mitch mcconnell says senate has enough votes now to pass its tax cut bill michelle >> thank you very much, tyler, i am michelle caruso-cabrera lets get you caught up where we are in the market. the dow has been trading in a

400 range today. all negatives but as tyler says, not nearly as negative as we saw today. industrials and technology and materials, they are among the biggest laggers and energy is leading right now. lets take a look at treasuries. a lot of buying and abc news reporting whether or not he w l testify. we saw yields fall the ten-year yield is at 2.46. lets get to eamon javer and ylan mui and bob pisani. is it fair to say more is coming out of the isis part of what he said may have tampered it down

just a little bit? >> we'll wait to find out of the implications of this we saw top intelligence committee coming out and saying they'll want jared kushner, the president's son-in-law to come out back before the panel and testify again what specifically warner wants to see from jared kushner. they're saying they want him to come back before the panel and no time given here for the testimony. we saw michael flynn appearing at federal court here in washington where he pled guilty to one count of lying to the fbi during a january 24th interview earlier this year with fbi officials. what he lied about was his contacts with the russian ambassadors and what he knew about administration or transition official attempts to send a message to the russians during the course of the transition particularly of u.n. sanctions and we have seen this

afternoon, the president of the united states only briefly coming out at the west wing toing greet the prime minister of libya but cancelling an event in which he may have the opportunity to talk to reportsereporter reporters, the president giving a quick thumbs up but we have not heard from him on camera at all and we may not hear from him at all and there is no briefing from sarah huckabee sanders today. ultimately, the national security adviser, michael flynn, was only at work for only 30 days at the white house and there is nothing in the settlement today that implicates anybody other than michael flynn. the white house is playing it tight lift today, the president's lawyer suggesting that michael flynn is an isolate case, brian. >> thank you very much i will take it up from there

turning now to tax reform. the senate majority leader announcing they have the votes to get the gop tax plan through the senate well, apparently mcconnell does and ylan mui is on the case. >> reporter: we are waiting for mcconnell to lead his amendment. that'll detail all the changes and deals that they made to bring weiaivering senators on board. we heard from two republican senators who say they are expecting to see some sort of alternative minimum tax to be reinstated in the senate version of the bell. one senator telling us it will be individual for corporations as well. they are looking for ways to pay some of the concession they made to bring those undecided senators on board.

susan colli susan collins of maine tweeted out of her proposal and that'll be in the senate of the bill they agreed to increase the deduction for past through businesses to 23% and jeff flake at arizona is telling us there will be some sort of step down or phase out of full expensing the original part of the bill is scheduled to be expired after five years now, he's saying there is a discussion of a step down of 80, 60 or 20% over a period of some years. one thing we still do not know when the final vote will be held democrats can extend this process as long as they want they want to make this as painful as possible, republicans will be watching and keeping you posted >> yeah, getting rid of the immediate expensing. >> larry kudlow is spinning. >> reporter: still be in there for the first five years they are talking about extending the period for which it will

occur instead of ending it after five years it will be fazed out over additional time period tell me if i am wrong here, ylan there is a lot of portion in the bill on both sides, especially on the senate side where certain provisions fazed out later down in the out years as they used to say so that the cost of the tax cut in the early years is mitigated, correct >> that's right, they are in a lock box here. this bill cannot cost more than $1.5 trillion or they won't be able to pass it with only republican votes they got to gain these numbers to mistake sure they stay within that frame >> they cannot get one democratic vote, ylan. >> not one >> it is looking increasingly unlikely because of the inclusion of the repeal of the individual andate, democrats are going to stay really far away from this one >> so that's it. >> of course, you can make an argument

it should be a lot to pass the law with nobody in the party voting >> that's a different issue, i guess. >> thank you, ylan >> we got all the stuff going on >> the market is taking a rough ride in response to today's news bob pisani is looking at the big ups and downs of the major indexes today. >> we have not seen this kind of volatility awhile. lets look at the time line and you can see the reaction of the mark it is 11.05 and 11.08. that was when the initial nbc report came out that michael flynn is prepared to testify we dropped 360 points on that and we stopped at the european close. approximately of that closing is a big factor of the intensity of the rally. around noon, jeff flake announced he was supporting the tax bill and around the time

mcdonnel says enough votes to get the tax through and we were off. we got this battle now between the premiums for the tax cuts and this potential return for president trump's legal issues here it is never about tax cuts and global economic. and there is the idea of optism where we are in a business friendly environment larry kudlow addressing this issue earlier if trump is in trouble, that may damage the republican party larry said that with us earlier at 12:00 on our air here >> the important thing right now is this is been an issue before and it is back again remember may 17th? the dow dropped 300 points of the exact same thing there is the month of may. this was on the surfacing of reports of the comey memo. the investigation of michael flynn.

looking at the market right now. you have to conclude that whatever new issues we have to deal with around trump's legal issues there is still plenty of juice left in the whole tax cut issues this one keeps moving the market and keeps helping them out week after week >> guys, back to you >> robert, stay on your post it is going to be an interesting afternoon. lets get more from dc to michael flynn and to moore, hugh hewitt and senior white house colu columnists for the hill. folks, welcome hugh, let me start by asking you of the flynn agreement here. how damaging do you think this could be to the trump's white house and administration >> it is important to draw the distinction between the two. i don't think it is going to slow down administration on regular reform and other issues.

i taken an interview earlier on msnbc.net neutrality is dead in two weeks. regul regulatory roll back, that goes forward, white house is going to be frozen. one of the things i think a lot of us are speculating from the department of justice experiencing in our background is, who else is working with special counsel mueller and his team is there another person helping them you do have to begin to wonder which he did not fully review. the white house is going to get very, very clogged up but the rest of the regulatory roll back

of his tax bill. >> nick, what do you think, what the hugh administration could do and i would like you to filter in our answer of what seems to be a calm and measure response from mr. trump's lawyer. >> i think hugh analysis is dead on congress will keep working ahead. i think it is important to say that the investigation is inside the white house. sort of the previous popping up list and manafort/gates. flynn was on the campaign but he was a mesh mber of the administration >> is it jared kushner, that's what we are still waiting for? >> this is a day where i bet you are going to be right of the big

victory of taxes and not so much anymore, right >> a political sense that's obliterated by this. both republicans of congress are hoping that tax reform victory would put to bed some of these criticisms that they get and have not been able to manage the legislation process but in the brawl political word, the flynn issue is dominating everything i was hitting the phones like everyone this morning like on two people i am close to in the white house were describing this as terrible, and one person said to me very dangerous >> someone else to hugh's point says one of the issues in the white house says they don't know where this investigation is going and who could be in its kr cross hairs. >> some folks who have said, they think we'll be better if pence was president or calmer

and better for the markets >> well, i don't think that so far is off i don't think it is going to get off to the president you are going to find some advisers the two rules are, don't talk to the fbi, and if you do talk to them make sure you tell the truth. its gotten more people over the years than any other statue and it got michael flynn today >> a false statement act could trip the president he would not be the first president to have caught up with making a false statement to a grand jury as we well remember in the clinton years >> he should not be interviewed by it and not agree to interview by the bureau. >> i am reading a book calls everybody lies people lie seven times a day on average, every man and woman and child. whatever it takes to get this

bill done, whatever it takes, they have to get the done. every republican we talked to emphasizes the importance of having something to show for this year. it is been a full year of complete republican control and if they end the year without some kind of legislation win, they are worried of what the midterms will look like. as ylan was saying earlier, we have not seen the final bill yet. as soon as it comes out, i am going to start comparing here is the thing, i spend a lot of time in the um trump's state. nobody i talk to, if we don't get tax cuts done, i am screwing the republican party in 2018 is it because the republicans ado don't want to look like --if w don't get this done, then the gop has failed at their agenda >> there is the core that'll always sport truupport trump nor

what bannon will continue to fight all over next year i think there is a clear and legitimate worry that they come out of the year with nothing to show for it and people voting for republicans and candidates, well, they didn't get anything done and i don't care. >> remember the house is in play right now and it get backseat to sort of hugh's point of what that'll throw all of those tings in things into a mess >> we have been talking here on the desk and if you are following what's going on. we don't know where this thing is going to end up or where the senate's version is and how they're going to merge a house/senate version do you send any simplications of this tax bill? >> it is difficult to tell because we don't know whether senators are going to go back to

pass it in legislation the senate may try to jam its version of the legislation through. i think nick is exactly right of the point that he made at a political level. this is going before the voters and saying we got something done, right? politics is about getting something done for the people that vote for you. the problem that republicans have had this year is that with the unified government, they have not gotten any landmark so it is not what the people are worrying necessarily and passing through deduction rates. it is about proving what you can make >> we got to conclude it there i go back to what hughes said at the agabeginning. there is been administrative achievements such as neutrality or the one that hugh mentions. thank you very much for a

thoughtful conversation. >> there is a lot of regulatory roll back. much more ahead. a fallout of the michael flynn plea deal and the wild market reonspse and the gop plans stay with "power lunch." with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ traders -- they're always looking for advantages. the smart ones look to fidelity to find them. we give you research and data-visualization tools to help identify potential opportunities. so, you can do it this way... or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity

for just $4.95 per online u.s. equity trade. fidelity. open an account today. ♪

kind of a wild day for the market if you are just joining

us the dow is down 77 points now, after the report that michael flynn maybe willing to testify against the president in certain forms regarding his dealings with russia and isis lets bring in our guest, michael farr and david sowerby >> hi, brian >> hey you guys, i failed already. i promise to try the whole interview without mentioning trump taxes and dc i have failed. >> what is there to talk about >> the economy the redskins are awful >> the weather in naples are no bad. why did you think the market reacted the way that it did in. >> well, this is one of those situations where brian markets don't want to be surprised here are some news that they did not anticipated. it was a plea deal andnot only a plea deal but it was clear

that he came forward and said that he lied he lied about the russian investigation and of course, when you come out and do that, you are waiting for the other shoe to drop and how many people in the administration will that particular shoe fall on. they're still chasing shiny objects of the latest news story and rallying back on the news. i hear what you are saying i totally adprgree what you are saying >> i can he be tonnect the dot pricing. and so i am trying to piece it together of the trump stuff and stocks fallen, is it because they think that it is going cost nationwide distraction where people won't go out to shop because they are so into the headlines? >> well, i think more that some of the markets have been

dependent and what comes out of it and what gets involved on capitol hill or the executive branch but, yeah, i think that this change just spooked the market look at the point gain we had. that's a small percentage move it looks big but it is -- >> david sowerby, what did you do today as you see this volatility >> buy on weakness >> you are bullish >> free cash flow and basis are still quite high and the economy is still growing the sensible investors will look and say in past periods of presidential uncertainty whether

it is watergate or iran gate and moni monica lewinsky. the economy was growing and practice were expanding and that's still the story today and that's why i think you still want to be positioned in stocks and maybelessen the big caps and expensive gross stocks and on the tech side, small cap area, they're going to be the beneficiary of corporate tax reform and that's where you want to be. >> sorry, i am going to be the adversary today. >> why not >> which is this, during watergate and i am not saying it is watergate the dow falls 50%, nothing more may come of this, i totally get it we got an investigation around the president, right is it fair to talk about earnings and everything else

when we are looking at a situation that we may not have seen there is got to be a measure of political risk in equity i wonder if that measure and whatever it is should reduce evaluations by at least some >> i don't believe so. you cannot predict politics number one and usually expect washington to do the least amount to fix the problem and number two, i do think we'll get some type of extra form and we are getting better sensibility on regulations and that's already good what kind of cash flow and this is company generating and am i buying it at the right place and will i be rewarded two or three years later. i think many times, trump what's going on in washington and trying to predict politics >>. >> brian, this is still an expensive market we see it go up 30% in the past

year since trump was elected earnings have had a great year still a lot of area in this market and this political pin could burst some of that balloon and send prices lower. >> i don't know how you do it every time, michael, of those clouds are in the same spot of your shoulders but it is magic >> i have it drawn in. we don't have clouds in naples >> thank you very much >> my pleasure >> they're priced to go up >> we'll tell you what's driving that move. honk, honk, get it, next the trend tracker live data board is brought to you by the cme group. zar: one of our investors was in his late 50s

right in the heart of the financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.

i am contessa brewer

here is your update at this hour >> tillerson was asked whether he was asked to resign by the trump administration >> it is laughable >> well, that's the same >> a special force bomb squad defusing a package containing explosives that was delivered to a pharmacy near a busy krchrista market the truck was hijacked last year fdapanel recommends testin for zika in 2016, the fda advised u.s. blood center to screen all blood donations for zika that's your cnbc update at this hour tyler, send it back to you thank you very much. the oil market is closing for the day, lets go to jackie

deangelis at the cnbc commodity desk this is on the pack of yesterday's opec deal. sessions high $58.88 the move today to the higher end closer to 60 but not quite that far. the russians, of course, they are on board, though behind the scenes they may not be fully committed to this. the next meeting on record is next june when opec meets indiana again. they're up by 7% for the last month. back to you. jackie, thank you very much. transport is up 12% and over 12% since it started the year. which stock is driving this sector forward here is morgan brennan, we brought her back from the road to do it hi morgan.

>> here is what's led. rail stocks. kansas city and north southern, a growing global economy traffic this year and that has helped rail traffic and air freight and trucking and containers the losers this year, alaska airlines and united continental and jet blue heading to 2018, these are companies that pay high rates, economic growth, rising oil price and the holiday season of ups and fedex both expects record deliveries. the transports are low today the best fperformer for the week they did hit their own record

highs for this week as well. >> morgan, thank you the push for lower corporate taxes is not happening for the united states. it is a global phenomena places like italy, their candidates for next year's election are campaigning on cutting corporate taxes, luigi demaio, he told me the first thing he would do is cutting business taxes >> it has to go 50% effective rate we want to benefit companies that works ininnovation. >> he would go further, think goose egg. >> you would like to reduce it to what? >> to zero percent zero taxation. and after five years, how much

>> lets discuss. >> he can sweeten the deal the point is for the u.s. to stay competitive, that's why it is so urgent when you hear larry talk about it. the fox stars in italy, they hate business and yet they're talking abiliout cutting the corporate tax rate >> i was talking with some people in ireland business development agencies there is a real worry that if brexit happens, it is going to slash their corporate tax rate to make it more competitive. we should worry about england. i will tell you what, how many u.s. companies, 10% tax rates in london is pretty attractive. >> same language and rule of law. we speak english and they speak royal. >> but, businesses will move absolutely >> absolutely. >> london's is far more and a pretty nice place to live. i am told. >> former national security

michael flynn pleading guilty for lying to the fbi. what this may mean, stay with us no matter how the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence.

we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

all right, lets get a check on the market. we were down at one point folks at 350 points. the dow is down 71 points. the market has come back you got names like apache and range resources. financials, they are taking a little bit of a hit about half of a percent the dow transport is taking a hit today. every member of the index is in the glereen, guys yesterday's move the big drop on the flynn headline >> absolutely. the big story of the day is apart from the tax bill. michael flynn cutting a deal with the fbi how have these sources played out in the past.

with us, larry, it is good as always to see you. you know practically every president goes to a phase where some part of his history or behavior or actions are investigated you go back to nixon and clinton and president bush and so forth. so what do these things do to presidencies and policies. >> the big question as always, tyler, what is the connection to the president. the voters know and the american people know every president has problems and every presidents have scandals and they come and go and affect short term popular opinion. if there is not a direct, it could go away. we'll see how long it trails on. look, is this important? of course, it is important

we don't know whether this is just a tip of the iceberg or half of the iceberg. >> sometimes even if there is a direct connection to the president, it is not that they go away but the president can survive them yes, there is only one time the president has to survive the scandal and that was nixon and watergate and other presidents of the white house have learned a lot and tried to avoid making the same mistake >> so as you look at what happened today with the guilty mee by mr. flynn, there is been at least one other guilty plea and charges against mr. manafort, what can you or do you as a student of these kinds of politics, what do you infer from it >> i know that there will be little immediate impact in the electorate

mueller clearly made a deal with flynn and the only way is flynn has some important information on higher ups. well, there is not that many higher ups, right? we'll have to see who it is and the names are floating around. we all know who's in the potential universe but it is too early to say lets be cautious i go back to another reference in hamilton. he was in the room when it happens. larry, let me spin forward and move away from flynn for a second i know one of the things you do is look at races across the country. as you look ahead to 2018, how do you handicap the house or whether the democrats may take it and the same for the senate what will are you s what are you seeing? >> in the house of representatives, democrats have to flip a net of 24 seats.

it is actually a big hill to climb because gerrymandering is making so many districts competitive. i would put it to close to 50/50 right now. democrats are likely to gain, 15 or 16 seats automatically because it is an off year, midterm election can they get the additional 10 or 12 or 50 seats to actually have a functioning majority in the house, that's the question we have to face, you know n the additional year that we got. the senate and other story entirely because seats are so beautifully positioned for republicans. it is not impossible if they can lose the senate in a big way given the seat that is are up, republicans ought to gain seats and you look at this at the map and i will tell you, there is a lot of places where democrats can lose and there is a couple of places where republicans can

lose and 25 of the seats are democrats that are coming in vulnerable places and carried by trump. republicans only have ate seats and they don't have much territory. >> 25 of the 33. >> that's amazing. >> i respect my colleagues and other parts of the media, we hear of the vulnerability of the gop all the time but if you dig into the maps, the republicans party has not controlled it. 33 states so this whole gop vulnerability thing. again, i am not being political and i don't understand the math. >> here is the argument, okay? >> you are right republicans have more governors since they had since the 1920s they got all of 16 of them >> all because of russia and facebook, right? >> this is beginning in 2010

it is really obama but what does it tell you now instead of having a democratic president who was frequently unpopular, you got a republican president who's unpopular. there is a price to pay in midterm election and democrats are in a deep hole because of obama. >> why is that >> because he was unpopular in the midterm election of 2014 and 2010 in both years, they grabbed a lot of governors and state legislatures but you are going to have to move back. >> the policies were unpopular >> yeah, the policies were apart of it. that's why presidents become unpopular. >> we are now in a republican presidency and that probably means democrats will begin to climb out of their hole but they got a lot of climbing to do.

>> let me lead you into the wild card area and ask you to speculate briefly. one of the things i see is an utter lack of charismatic popular leadership i don't see it who do you think emerges by 2020, who were the three that you would think and say could be the next leader of that party. >> well, certainly it is not anybody in their 70s or 80s. there is a whole bunch of them considering running for president. at some point retirement is a good thing i say that as a 65 years old so i cannot be accused of ages, i don't think. i am looking towards a younger generation for democrats, hey, who are the democrats that have won. john f kennedy and jimmy carter and barack obama they were all young in their 40s

and they were vigorous and they came from places that people did not expect to come from. >> camala harris >> come on, california >> now, western is a good thing. the democrats have never elected or no, ma'minated anybody less texas. it is time for them to go out west but they may want to look at montana or washington state rather than california >> larry, great as always to see you. larry sabato university of virginia >> much more to do you are watching "power lunch.

hey. pass please. i'm here to fix the elevator. nothing's wrong with the elevator. right. but you want to fix it. right. so who sent you? new guy. what new guy? watson. my analysis of sensor and maintenance data indicates elevator 3 will malfunction in 2 days. there you go. you still need a pass. there you go. so how old do you want uhh, i was thinking around 70. alright, and before that? you mean after that? no, i'm talking before that. do you have things you want to do before you retire? oh yeah sure... ok, like what? but i thought we were supposed to be talking about investing for retirement? we're absolutely doing that. but there's no law you can't make the most of today. what do you want to do?

i'd really like to run with the bulls. wow. yea. hope you're fast. i am. get a portfolio that works for you now and as your needs change. investment management services from td ameritrade. the dow is staging a big come back after the abc news of michael flynn. joining us with o'neill security, gordon, what do you think of this come back, why did it happen? >> the reaction of michael

flynn's news is a little over blown. but, we came in today today -- expected first day of the new month and a lot of action in here yesterday when the news hit the table, particularly defense and aerospace got hit heavily and you know there was a lot of uncertainty and uncertainty of at these levels are going get that kinds of volatility any chance the market can end positive today sometimes when you see those big, big declines of the last hour that happens and suddenly, you are after the races. >> certainly there is a chance that it could. it does not feel that it is going to in fact, it feels like it is starting to get weaker then certainly, i think it closes a little lower from here >> i think this whole flynn thing and what that whole next conversation about is -- that's going to take a couple of days

and i bikiy any stretch is goint indicate anyone. it is more to come >>. >> all right much more on the market and yos and your on thiso down and up rebound. kblaep let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online. i'm a small business, but i have...

big dreams... and big plans. so how do i make the efforts of 8 employees... feel like 50? how can i share new plans virtually? how can i download an e-file? virtual tours? zip-file? really big files? in seconds, not minutes... just like that. like everything... the answer is simple. i'll do what i've always done... dream more, dream faster, and above all... now, i'll dream gig. now more businesses, in more places, can afford to dream gig. comcast, building america's largest gig-speed network.

we are the driven... in more places, can afford to dream gig. the dedicated... the overachievers. we know our best investment is in ourselves. we don't take no for an answer. we fight for what we want. even for the things that were once a given. going to college... buying a home... and not being in debt for it for the rest of our lives. but we're only as strong as our community. who inspires and pushes us to go further than we could ever go alone. sofi. get there sooner. my name is jamir dixon and i'm a locafor pg&e.rk fieldman most people in the community recognize the blue trucks as pg&e. my truck is something new... it's an 811 truck. when you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you don't hit them when you're digging. 811 is a free service. i'm passionate about it because every time i go on the street

i think about my own kids. they're the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then i'll drive it every day of the week. together, we're building a better california. all right. a final check on the markets and your money at least this hour on your trading nation team katie stockton with btig, david seebu sea burg, hey, david, anything happen today i'm kidding. >> nothing, brian. >> let's talk about the market the, the initial reaction and subs queequent comeback. what do you see happening from here on out? i have no idea. >> look, a coin toss who the actual outcome is. snoeb knows. the reality is when the news came out, it was tapering the

algo skrks th they tried to push it lower. our phones were barely ringing from that perspective. people wanted to get their head around the information the reality is it doesn't change the narrative. the far tinarrative earnings go here, global growth initiatives have got us here we're in the position where things are working i'm not suggesting the market is going to continue to go straight u. i think we trade sideways until the end of the year anyone first quarter of next year people aren't blowing out of positions based on this news headline they realize there's a bigger scenario that brought the market currently at. >> katie, does the drop today do anything to take away the uptrend we have been in? >> no support levels were taken out. i really see it as an intraday shakeout, if you will. naturally after really close to 3.5% run-up in the s&p 500, we're going to see some sensitivity to any negative headlines. what happens is, you know, these things tend to get washed out

very quickly because the tape is so resilient that's the reflection of positive momentum. what we've seen this week is expanding breadth from technology into the likes of financials, industrials and so on so the rotations have been very health thisty this week. >> katie and david, we got to leave it there appreciate your views. thank you very much. breaking news with eamon javers. >> reporter: we're getting new news from the white house particularly on the role of jared kushner here nbc news reporting two people familiar with the matter are saying jared kushner is the, quote, very senior member of the presidential transition team who's mentioned in the statement of offense that we talked about earlier in terms of speaking to mike flynn the former national security adviser who pled guilty today on december 22nd about the u.n. resolution regarding israel. so one of the mysteries from that statement of offense now cleared up, the very senior official, two people telling nbc news, was jared kushner, himself. now the question is what kind of

pressure will that put on president trump? given that his son-in-law is now said to be one of the figures who's involved in all of these conversations that were laid out by the special counsel's office earlier today. the white house for its part has said that nobody else was implicated in this document today other than mike flynn who they said was only a part of the administration for a very short period of time minimizing his role here at the trump white house, brian back over to you >> all right, eamon javers, thank you very much. short break and we're back with more on cnbc in two minutes. and now the latest from tradingnation.cnbc.com and a word from our sponsor. >> a double top is a chart formation that suggests an uptrend may be ending and ready to reverse sometimes called an "m" formation because the pattern looks like an "m," a double top consists of two well-defined peaks at approximately the same price. traders often view a break of the lowe lstow in the formation as a bearish signal.

between two big events general michael flynn agreeing to a plea deal, and reports from abc news that, perhaps, he would testify against the president or about the president when it came to talking to the russians, initially, about isis. at the same time, we think we're getting close to a tax bill. actually getting passed. but then elylan pops on with moe

issues. >> there's a lot of sausage being made still i wuonder if they're going to ge a vote on it today. >> i'm beginning to wonder, myself. >> meantime the dow is up 2.7% this week and has never had december as the worst month of the year ever >> statistics on your side maybe. thanks for watching "power lunch. >> "closing bell" starts right now. hi, everybody, it's a fittingly wild finish to what's been a wild week welcome to the "closing bell," i'm kelly evans at the new york stock exchange. >> i'm bill griffeth i mean, if you're just tuning in, you missed a crazy day on wall street. the dow dropped by 350 points. that was at its low of the day we're just going to -- we're doing this in time lapse right now. when word got out just before s 11:00 a.m. eastern that michael flynn was pleading guilty to lies