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The Michael Flynn Guilty Plea Implications, Explained

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The Michael Flynn Guilty Plea Implications, Explained
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The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) and the SPDR S&P 500 ETF Trust (NYSE: SPYinitially dropped more than 1 percent on Friday following reports that former Trump administration security adviser Michael Flynn agreed to testify against members of the Trump family and other White House officials related to the administration’s contact with Russian officials during the 2016 campaign.

One analyst says the Robert Mueller investigation is still in its early stages and could pose a major threat to the Republican agenda in 2018.

The Analyst

Height Securities analyst Clayton Allen.

The Thesis

Flynn pled guilty Friday to lying to the Federal Bureau of Investigation, and reportedly said during a hearing that he had been instructed by President Trump to contact Russian officials. According to Allen, the relatively minor charges against Flynn are telling.

“Flynn has reportedly been cooperating with special counsel Robert Mueller for some months, and we believe this plea to a relatively minor offense signals that Flynn provided sufficient information to Mueller to protect himself and likely his son from serious prosecution,” Allen said.

In addition to Flynn, former Trump campaign members Paul Manafort, Rick Gates and George Papadopoulos have all been indicted as part of the Mueller investigation.

After the initial drop, markets bounced back mid-day Friday during a volatile day of trading. Allen said this type of resilience will likely continue to be the pattern until the investigation gets closer to Trump himself.

“Mueller’s investigation seems likely to continue its march toward the inner circle of Trump’s administration, with additional announcements sure to upset the narrative of congressional Republicans headed into a contentious 2018 election cycle,” he said.

Price Action

After briefly dipping below 24,000, the Dow Jones Industrial average recovered to the 24,150 level. The S&P 500 dropped as low as 2,605 before recovering to 2,628.

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Image credit: Gage Skidmore, Flickr

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