President Donald Trump arrives at the Morristown Airport, New Jersey, August 17, 2018. Chris Wattie | Reuters

President Donald Trump may have legal headaches, but they are unlikely to stall the bull market, unless revelations from the ongoing special counsel investigation tie him directly to a Russian plot to sway the 2016 election or cause a Democratic sweep of Congress in November. The latest developments involving two former Trump advisors, revealed to be guilty of criminal activity, initially weakened stock futures late Tuesday, but by Wednesday equities shrugged it off and were mixed. On Tuesday, one headline in particular drove down stock futures in late trading, and that involved Trump himself. His former lawyer, Michael Cohen, claimed the president instructed him to pay off porn actress Stormy Daniels, in order to influence the election. "I think something like today's news is more of a headline event than a bottom-line event. This is not the first time we've heard about something like this or even surmised it," said Sam Stovall, chief investment strategist at CFRA. "Most investors are saying tell me something I don't know or haven't surmised."

Cohen pleaded guilty Tuesday to tax evasion, bank fraud and campaign finance violations. Also Tuesday, a jury found former Trump campaign chairman Paul Manafort guilty of tax fraud, bank fraud and failure to disclose a foreign bank account. Strategists said so far the ties to Trump are loose and do not appear to be something he that would trigger impeachment. "If Cohen comes up with something that really connects Trump to a crime ... it can't be just any old crime, it has be about the Russians and the election," said Matt Maley, equity strategist at Miller Tabak. Stovall said the market was more likely focused Wednesday on the news that a trade deal with Mexico could be close at hand. While developments on the North American Free Trade Agreement were expected, the event may have been intentionally played up more by the White House, he said.

Trump's reaction

Other strategists agree that a White House strategy of deflecting from bad news is likely, though it may not always be developments the markets find to be positive. "The biggest wild card remains the near-term reaction by President Trump. We have observed a pattern of him seeking to change the media narrative following sustained negative coverage, frequently turning to announcements related to trade fights, geopolitical tension, government shutdown threats, and immigration debates," wrote Raymond James political strategist Ed Mills. Mills noted that Trump could either declare a trade victory or "double down on the trade war with China," or both to force a change in media coverage of the investigation. Daniel Clifton, head of policy research at Strategas, said the president may well become more aggressive on China, as it is viewed positively by his base. He also said there's "a lot of talk about renewed interest in indexing cap gains to inflation, something the president can do unilaterally," something the market would view positively.

Strategists said barring any disclosures that implicate Trump, the more important information to the market right now is how well the economy is doing and how strong earnings will be. By some measures, the stock market Wednesday became the longest bull market ever, besting the last historic one between 1990 and 2000 by a day. "In the first quarter, anything that posed a threat to President Trump's position was viewed pretty drastically. That's kind of been tamped down. I think people are more accustomed to this kind of business as usual. I think a lot of the risk that President Trump faces with going against a Democratically controlled Congress, that chance is pretty remote. I think that investors are weighing that perhaps the risk against the likelihood and are coming away unmoved," said Jack Ablin, chief investment officer at Cresset Wealth Management.

'Teflon' for now