Trump touts tax cuts while Dow plunges as Friday sell-off continues

Trump got political in a speech on tax reform in Cincinnati, calling Democrats "un-American," and "treasonous."
12:40 | 02/05/18

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Transcript for Trump touts tax cuts while Dow plunges as Friday sell-off continues
That you see the president ending remarks in Cincinnati Ohio at the shaft for corporation. Manufacturing business that was among. Some of the many that have been handing out cash bonuses to their employees check for last month handing out a thousand dollars to their 126. Employees there as a result they say at the Republican tax cut plan president signed into law. Earlier this year but take a look at that. The president leaves the stage this is what's happening. In the markets right now this is the Dow right there again over a thousand points it seems to be recovering slightly with analysts 15100 at one point during the president's remarks. Let me bring in Larry Glazer right now he joins us live from Boston by a Skype he's at mayflower advisors there at Larry. This kind of an awkward bit of a two box there the president touting tax reform and the many strengthen the economy. At the same time the market is taking a significant date today what exactly is going on. Sure how ironic the president's victory for his big legislative victory. Of course tax reform he's also taking credit for a less burdensome regulatory environment. All of which is benefit the economy expecting corporate earnings he's speaking to is based. And he's really taking credit for all good things and it happened but with that said you see an economy that's in transition right now. You had the fastest rate of growth in the economy that we've seen in a decade. He also fast rate in wage growth but should be good news for main street should be good news for investors should be good news for consumers. And they certainly embrace that we've seen that optimism small businesses we see optimism with the investors and consumers. Maybe too much in a little bit too far too fast CAD stock market is giving back some of those gains perhaps we barred from next year's gains. Underlying fundamentals of the economy incredibly strong we have a really strong economy it really strong economic growth we also than you've got this year we've got a rising interest rates to the economy needs to take applies. We had very low volatility probably unsustainable let the underpinnings of this economy are very strong and that it's important for main street investors. So overall you seem Jermaine very confident about the thank you wanna ask you about last week that was the worst week for the markets and over two years now. We see today didn't look to be off to. A rather ending in a good way either so how do you explain how our everyday Americans meant to understand why this has happened. Again the good news to see 8000 dollar bonus your paycheck because a tax reform. It's good news this year for a and giggle it's not good news to see interest rates go we're getting new chairman of the Federal Reserve which is starting today after Joseph Powell. That's uncertainty. That's a question mark about what that means. Perhaps rising interest rates can be bad for housing can be back triggers that are of interest rate sensitive so I think what you. These huge significant gains in U get a sense of complacency. On mean street. You know volatility has been so well today we shall we start first 5% stock market decline that we've seen in years that's something that should happen several times during a given year. To give and that. This is a normal process but is interest rates rise which is also normal the markets are gonna take a step back investors are gonna. Look with uncertainty look with pause question that. I think we're also gonna look at corporate earnings earnings are gonna grow at double digits this year that's a very strong fundamentals in part due to tax reform. You don't companies like apple to bring back 250 billion dollars that is good news but trees don't artist guy in stocks don't go straight out there when you get a correction and you have. Act so long. It feels a lot worse than it is so we get a 10% correction it's gonna feel significantly worse and I think that's the hard part for investors that's where the emotional side really takes over and that's what we are today. So Larry help me understand this now you mention the word correction a lot of people wonder how. That will trickle down to them it's the difference between what happens on Wall Street what happens on main street see we're overdue for a correction as an inevitability to it. What does that mean for people out there if this is now smacked back her action. Short well certainly we don't want a president being judged by their by the values and borrow and Caitlin because stocks have gone up in anticipation. And good economic data and that's what we're seeing we're seeing better economic data so perhaps stop slept in anticipation not. Now they need to take applause you know we may think different companies do well in the years ahead companies that benefit from tax or what companies like financial companies like industrials. Overseas stocks it may not be that big technology companies everyone's been in public the FaceBook the out. Apple and Netflix the Google's doesn't have Iran. There's a lot of good news in the mean streak as we saw today the president's speech there's a lot of good news and small US companies. Maybe it's their turn to get their fair share and that's where she'd ever teach higher wages are critical for investors are critical for main street. Finally we're seeing higher wages but companies don't like paying higher wages and that's one of the reasons that you seeing stocks take apartment elected. Larry Glazer from mayflower advisors thanks for joining us there from lots and let's go now to Washington DC BC's political director Rick Klein joins me from our bureau there at Rick the president's been quick to take credit every time the economy. Has a high point and there have been a few already this year how the White House can explain this debt. That this is been a wild hour or so since the president started speaking to CDs crazy ups and downs a lot of it may be driven by machine training and automated. Trading but the thought the fact is that this lays bare. The risks that the president has in his strategy apparently is strategy for the mid term elections which that's how the tax cuts. Tout the economy. I can only imagine how the speech might have been different the president was aware of the wild swings we saw in the Dow as it was going down in the recovering some of those games. It gave back so many of the gains of the last of of the last month of 2018 to so called trump bomb. All of that seems to be up in smoke as of as of this afternoon we'll see what happens even by the time we're done speaking now on the but about it in is that it's the rest of the president runs he was out there touting the economy touting it down the and its affect on borrowing case is State of the Union Address just six days ago. He is also touting bipartisanship and then went on the attack. Even calling his Democrats his democratic colleagues who sat on their hands or it's in the union treasonous I'd never heard that before the presidents have used on the full on. Attack over economic policy in over pure politics. I'm Rick we should mention that presidents get to came out listing that speech as a remarks on tax reform. Uncovered on high ground we talked a Tony eighteen about when he when he Nancy Pelosi got a couple of name checks there at the state of the union and it felt protest casual allegation of treason. Top that they're actually reading what you missed it earlier take a listen to what the president had to say just moments ago in Cincinnati. Now is bad energy. You're up there you've got half the room going totally crazy while. They loved everything they want to do something great for a country. And you aside even on positive news really positive news like that. They like. Death. And un American. Un American. Somebody's it treasonous I mean. I guess why not. Do we call that treason line. And rake here the president there talking about what they're up against now coming up soon and when he eighteen a junior team up launch a whole series of reports looking at. Some of those key races coming up to them let's talk about this white are the Republicans up against what the president against in these mid turns. He's up against this story Kat wins it in a president typically in the first mid term elections of the presidency. I you give back seats and how president as a poll ratings are mired in. The meat thirties it's even more challenged. I was struck though by another right and that is our latest ABC news Washington Post poll which. Shows being advantage for Democrats in the so called generic ballot you rather have a Democrat or Republican. But the advantage is entirely driven by democratic areas of the country in Republican parts of the country there's still a preference for Republicans to retain control of congress. That's where the divisiveness of president from. Comes in and he spoke about it pretty explicitly today on not just in calling his critics in the Democrats Americans maybe treasonous. But also in in making the point that the problem that you have is the incumbent party is is complacency and Democrats. Are clearly have more gonna have more motivation this year so you can see a lot of the president firing up that pace sometimes going to be doing it in this in the ways we saw today. Quite frankly infuriating. To his enemies but a lot of his own supporters laughed along with the president say look this is exactly what what you mean when you say. We should take him seriously and not literally that he literally mean. That is critics are treasonous I think you or you're not in in the state though the words that he uses to fire them up will be critical this year. As lot of partisan language used there and that speech on the economy coming up the between eighteen. Mid term as well that rake there's another partisan battle bring back in Washington of course. They things that memo the infamous memo was released last week either with interment at the house intelligence. Committee there what is the latest win that now that we know the contents of that kind of an effect is having a conversation. While I think it's. Let very cleanly around partisan lines you have Republicans saying in Fox News saying breathlessly that. This is this shows that it fix was in inside the FBI. You have on the other side Democrats pointing out that this memo was a partisan document. I it seemed to be aimed at taking on the leadership of the FBI the president's office saying it proves that he is a clean bill of health as far as Muller's investigation. Is concerned with something that even even his Republican colleagues can't really back him up on. And now brewing is another controversy over a democratic memo. They'll be a vote this afternoon in the house intelligence committee on whether to release that that's that's a really enters a question for the president. If the house votes to approve that and haven't released in the same process that government last week's disclosure. Comes and the plight the president gets five days to decide whether to allow it to be released rhetoric acted in part. Clearly he's been talking about transparency when it comes to one side does that seem interest and transparency hold for the other in what could be a showdown. Between house and between Democrats and Republicans yes but made between the House of Representatives in the White House itself. And is another showdown brewing to want to bring in Lakeland being covered the justice department for us here at ABC and my last week he talked about that the little that. The fact that this memo and the release and the way it was handled really set up a very public battle. Between the White House and be FBI potentially undermining work done by law enforcement agencies. In the future where does that stand now what's been the word inside the FBI since the memo came out. Debt net as much of a political issue this might be up on partisan lines on Capitol Hill it certainly doesn't seem to be like at an all. Inside the FBI even conservative Republican pro Republican FBI agents and officials and I've known for years are really upset about how this happened. There there had they certainly had questions about how their leaders may have taken actions but the way this is being handled the public believe this is being brought into the public and really undermining they believe. What they're trying to do on a daily basis as does not partisan call it crosses off all spectrums. Sure there's a lot of speculation last week that the release of the memo the president signing off on that he classification for it to be released. Was going to lay ground work right to undermine the work being done by the FBI Justice Department. And then shall leave navy even leading to them. Being able take to let go of the guys running the rush investigation. Needs that now Republican members of the house and come out and said I don't think this indicates the president and I don't think it's aching to do. With the Russia investigation Callaway has continued to push that Nair and. And narrative it I think they're the broad efforts around a lot of this has been to try to undermine Muller try to underdog undermine Rosen sign. Undermine integrity of the of the investigation. In preparation for something I think we're beyond the point where the president is likely to fire Bob Lawler the reporting came out recently that he considered that last summer. I don't think we're there but I think now this is about kind of preemptive damage control. Around what he might end up finding. Cell lab like Levine is rod rose fifteen states that say as Bob Lawler safe what's the word. I wrote early last week middle last week you heard a lot of speculation even without within DOJ that. That maybe they would be pushed out of matters completely silenced if it's been very calm over the weekend I hear people got that. And that is the latest on this Monday afternoon we're keeping an eye on the Dow as well stay right here for the latest likely been big client thanks to you. He's an acute. And you can stay right here for the latest on all of those stories ahead of a Any time. Download ABC news that get all the breaking news headlines right to your for now I'm comment Abbas and the back here says.

This transcript has been automatically generated and may not be 100% accurate.

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