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Market starting to price in possibility of real constitutional crisis: Wedbush equity head

  • The market sell-off Monday was about 80 percent related to concerns about President Donald Trump, says Ian Winer of Wedbush Securities.
  • If Trump fires the special counsel, people will start to question the president's legitimacy, he says.
  • However, strategist Art Hogan believes there is a "whole basket" of things for the market to be concerned about.

The market sell-off Monday was about 80 percent related to concerns about President Donald Trump, the head of equities at Wedbush Securities told CNBC.

Stocks fell Monday after Facebook dragged tech names down and investors digested Trump's twitter meltdown.

The Dow Jones industrial average dropped 482 points in intraday trading, while the Nasdaq pulled back 2.3 percent and the S&P 500 fell 1.9 percent.

"People are starting to price in the possibility of a real constitutional crisis," Ian Winer said an interview with "Power Lunch."

On Monday, Trump continued his attack on the investigation into Russia's meddling in the 2016 election by again calling it a "witch hunt."

On Saturday, his personal lawyer, John Dodd, called for a swift end to the probe. However, White House lawyer Ty Cobb said Sunday that Trump wasn't considering or discussing firing the special counsel conducting the investigation, Robert Mueller.

Winer said the first concern is if Trump decides to fire Mueller.

"People will be pretty angry and start to question his legitimacy," he said, referring to Trump.

"If we lose the president, you lose a big reason for the rally and then you start to get the Democrats in, regulations go back on and all of a sudden the market multiple compresses," he added. "That, to me, is the biggest fear and that's what I think the market is just getting a whiff of today."

However, Art Hogan, chief market strategist at B. Riley FBR, believes there is a "whole basket" of things for the market to be concerned about.

He said that includes Facebook, which fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent. Cambridge Analytica worked on Facebook ads with Trump's campaign in 2016.

Facebook said it has suspended Cambridge Analytica from its platform. Cambridge Analytica has denied violating Facebook's terms of service.

Then there is the "big unknown" with the Federal Reserve. Jerome Powell will address reporters for the first time as Fed Chair on Wednesday, at the conclusion of the two-day Federal Open Market Committee meeting.

However, Hogan also believes the market isn't going to stay resilient against the noise coming out of Washington forever.

"I'm less concerned about a constitutional crisis than I am about really faulty trade policy and making a mistake where we think we are negotiating and really end up in a trade war," he said on "Power Lunch.

"That's the biggest threat out of Washington," he added.

Sell-off 'not panicky'

Meanwhile, the market sell-off itself was orderly and "not by any stretch panicky at all," trader Kenny Polcari said.

"A lot of people have been kind of expecting the market to test lower after we had that disaster six weeks ago," said Polcari, referring the market correction that occurred in February.

Polcari, director at O'Neil Securities, is among those who have said the market wasn't done heading down after it quickly rebounded from that correction.

"This is just playing out what a lot of expectations are, which is why I don't think you are really getting that panicky feel to the market at all," he told "Power Lunch" on Monday.

"You have to expect that the market is going to test lower, make that the buyers are going to be there to defend that position and then we'll start to move ahead," he added.

Kevin Caron, senior portfolio manager at Washington Crossing Advisors, believes the market action has presented a buying opportunity for long-term investors.

He believes a lot the market rally over the last couple of years has been justified by fundamentals.

"This is just a market that's looking to figure out what happens next after a bunch of good things have affected the value of the stock market" he said on "Power Lunch."

— CNBC's Fred Imbert contributed to this report.

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