Tax cuts versus potential legal troubles for the president: Which wins out in the markets?

The markets have been focused for months on global economic growth, record earnings and the premium in the market for tax cuts.

But traders have spent almost no time thinking about the risk premium in the market for President Donald Trump's potential legal troubles.

It was an issue earlier in the year. Remember, the Dow dropped more than 300 points on May 17, when reports of a memo from former FBI Director James Comey surfaced, saying Trump asked him to stop the investigation into former National Security Advisor Michael Flynn.

Comey had been fired just the week before.

It's important to remember that the rally in the past year has not been solely based on the global economic expansion and tax cuts, though they are the two most important factors. Another factor, more difficult to quantify, is the belief that this administration and this Congress would be particularly sensitive to business interests, everything from tax cuts to regulations.

"There is a strong sense that the administration is more business-friendly, and we have seen that with rising business sentiment," Joe LaVorgna, chief economist for the Americas at Natixis, told me.

Then there's the issue of Republican control of Congress.

CNBC contributor Larry Kudlow told "Fast Money: Halftime Report" earlier in the day, "If Trump is in trouble, that will damage the Republican Party in certain parts of the country."

Stocks are reflecting that concern.