This is a rush transcript from "The Story," October 27, 2017. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, "THE STORY" HOST: We have some breaking news for you tonight. Moments ago, Byron York reporting that we are now learning some more about who funded some of the early opposition research against Republicans and that was handled by Fusion GPS. Lawyers for the conservative publication The Washington Free Beacon informed the House Intelligence Committee, Friday, that some of that funding came from the Beacon. We're going to have more on that in just a moment. But let's go back now.

You remember, of course, that Fusion GPS took the fifth when they were questioned by Congress about their funding and their clients. We know that the latter the part of the research which resulted in the hiring of former MI-6 Operative Christopher Steele, and that subsequent dossier was paid for by the Clinton campaign with money that was filtered through a D.C. lawyer. The FBI has also been able to keep their connection to Fusion GPS concealed in the name of protecting the ongoing Mueller investigation.

The Wall Street Journal has called for Robert Mueller to resign as Special Counsel of the Russia investigation. They argue that he ran the FBI for ten years and if the investigation turns to the agency's interactions with Fusion GPS and what they may or may not have known about the efforts to use Russian intel to dig up dirt against the U.S. Presidential Candidate Donald Trump; the journal questions whether or not Mueller can be impartial in this case. Trace Gallagher on a very busy night with this Fusion GPS story joins me from our West Coast bureau with the back story. Hi, Trace.

TRACE GALLAGHER, FOX NEWS CHANNEL REPORTER: Hi, Martha. You know, the bank records are key because they can lay out exactly who was paying for what and when. Washington Examiner Correspondent, Byron York, is now reporting that the Washington Free Beacon, which is you said is a conservative publication initially hired Fusion GPS to uncover dirt on the business dealings of then-candidate Donald Trump during the GOP primary.

When Trump became the nominee the free beacon apparently no longer needed Fusion GPS, and the firm was then hired by Mark Elias, a lawyer representing the Clinton campaign. That's when fusion hired Christopher Steele -- he's the former British intelligence officer who went on to author this Steele Dossier, a document would learn allegations about Trump that were widely discredited.

And the FBI also reportedly paid for parts of the dossier, though, the FBI won't reveal its connections to Fusion GPS, saying it's protecting the integrity of the ongoing investigation by the Robert Mueller. And now, our corporate cousin, The Wall Street Journal is calling for Mueller to step away from the Russian investigation probe questioning whether his ten years at the FBI would make it impossible for Mueller to remain impartial.

And then, there's the list of Democratic denials. First, Hillary Clinton Campaign Chairman John Podesta and former Democratic National Committee Chairwoman Debbie Wasserman Schultz told Congressional investigators they had no knowledge about any arrangement to pay for opposition research on Donald Trump. Podesta and Wasserman Schultz made those claims before we learned the Clinton campaign actually funded the dossier.

Now, current Democratic National Party Chair, Tom Perez, says he didn't know about the dossier until a few days ago, explaining it this way: "We knew that we were paying for opposition research at the DNC but we did not ask questions about who they're hiring in the context of doing their research." But the bank records may just be the tip of the iceberg. In fact, the latest headline in The Wall Street Journal is the Fusion GPS bombshells have just begun to drop. Martha.

MACCALLUM: Trace, thank you very much. Michael Caputo, who served as a Trump Campaign Senior Advisor, he wrote a piece back in April of 2015, raising questions about the Uranium One deal and the Clintons; and Zac Petkanas, a former Senior DNC Advisor who worked on the Clinton campaign joining me to go through the latest here on this. Michael, let me start with you. Your reaction to the news that the Washington Free Beacon, in part, paid for some of the opposition research against GOP candidates and the dates on that were from fall of 2015 through spring of 2016.

MICHAEL CAPUTO, FORMER SENIOR ADVISOR FOR THE TRUMP CAMPAIGN: I'm kind of shocked, actually. And frankly, that just means my return calls to the Washington Free Beacon will go unanswered from here forward. To me, I think, you know, that seems really out of character for a Washington media organization. But, you know, we're looking at a very different product that was put together after the Washington Free Beacon gave up the research and handed it off to the Clinton campaign and the Democratic National Committee. It's only then, actually, weeks after they started funding, the Democrats had Fusion GPS hire a British spy who then went out and talked with Russian spies who gave the British spy Russian intelligence information to give back to the Clinton campaign and the DNC. That smells a lot like collusion to me.

MACCALLUM: What we don't know here, you know, there's been a lot of speculation about who on the GOP side paid for the early stages of this opposition research. And remember, you know, obviously as we've all claimed, all campaigns do opposition research. Whether or not there was any connection to any of the other candidates or any of their campaigns, we don't know yet. And we watched how the money was funneled through on the DNC side and Clinton side through Mark Elias, his attorney.

We don't know what the case was in terms of who was generating -- who was the client and whether or not it was just the Washington Free Beacon and what they were exactly looking for, and whether or not they only used sort of the domestic auspices of Fusion GPS in order to get that opposition research. And Zac, as Michael points out, what changed in the game after that was the sort of acquisition of knowledge and bringing on board Michael Steele who was British, and who had connections to the Kremlin.

ZAC PETKANAS, FORMER SENIOR ADVISOR FOR THE DNC: Well, I mean, look -- I mean, whether it's the Republicans who paid for the dossier, whether it's the Democrats who paid for the dossier, or whether it was big bird who paid for the dossier, what matters is the content of the dossier and the leads in which reporters and investigators are able to follow or not. That's simply what it is. It is a document for investigators to be able to follow. Some of it may be a rumor, some of it may be true, but it is not correct to say that large swaths of it have been discredited. Large swaths have not been verified, but that doesn't mean that it is completely worthless. In fact, the underlying premise of the dossier itself is that the Russians intervene the election to help Donald Trump get elected -- which is exactly what Donald Trump's own CIA director and his director of National Intelligence themselves have both said.


CAPUTO: Well, I'll tell you, first of all, we don't know that there was a Republican at the nexus of this research. We've only heard that through leaks, through organizations like CNN. People talk about it like it's a truism, it's not; we don't know if there's a Republican there. I first started getting calls from reporters about this dossier in May of 2016, which apparently is a month after the Democrats took it over. So, from my perspective, we're looking at a document that also has precipitated a legal complaint by a watchdog group that this was funded, and funding mechanism hidden by the Clinton Campaign and the DNC. So, this is not the innocent piece of research that you're trying to say there, sir. There's a lot more to this. And we need hearings to find out what really went on.

MACCALLUM: Well, one of the other big questions is the FBI, and why it is that there's been some sort of, you know, effort in some ways to protect Fusion GPS. They pled the fifth when they went before Congress. Congress wants to know why they can't get their hands on the information that they've asked for. They have a deadline of Monday morning by which they want to see the list of all the clients that they worked for through the bank records of Fusion GPS.

And, you know, Zac, I understand what you're the getting at in terms of the underlying information here and whether or not it has been verified. But I guess what a lot of people want to know is whether or not there was a concerted effort on the part of Democrats and even some involvement by the FBI, potentially, to find dirt on this candidate and to influence the United States election in that way.

PETKANAS: The purpose of Fusion GPS was to expose the collusion by the Trump campaign and the Russian government. That was the purpose of it. It was not to find dirt on Donald Trump. It was to expose potential collusion between the campaign and the Russian government. That is not -- that is not collusion with the Democrats. And I think it is pretty outrageous to suggest that the FBI is doing something untoward; what they are doing is following leads. And, of course, they're going to protect their sources and their leads and not allow partisan Republican hacks to get in the way of their investigation. Maybe the dossier is not true, maybe it is true, but they are a bunch of leads brought by sources that may have some knowledge of this. So, it makes sense.

MACCALLUM: Yes, but if the -- Michael, and I want you to comment on this before we go. But, you know, if it turns out that that dossier was used as a substance for the investigation that was opened, and the unmasking that was done of members of the Clinton campaign team, it raises the kinds of questions that I brought up a moment ago, whether or not there was sort of a concerted effort on the part of these parties to find a way to undermine the Trump campaign, Michael.

CAPUTO: Well, no question. In fact, I've been told -- informed by sources close enough to the intelligence community that I myself was unmasked because of this dossier. And I've been told that it's not just 100 Trump associates or hundreds, it's over 1000 that were unmasked -- a lot of it due to the claims that were made in this dossier. And I'm telling you, I know some of the people who were used as sources in this dossier. Sergey, Milam, and others -- it's a caricature of intelligence. And somehow or another, this cartoon has been driving some of the investigation into people like me and my friends and the president of the United States. This is a travesty! And by the way, the chairman of the campaign and the chairman of the DNC most definitely knew about this and there is no way they weren't lying when they said they didn't.

PETKANAS: If you were getting unmasked or being looked at by the FBI, maybe you shouldn't be having such weird conversations with potential foreigners and other unsavory characters.

CAPUTO: Maybe your people shouldn't be breaking the laws, and lining up all these people in the government, unmasking people for innocent reasons.

PETKANAS: This is a guy who used to work for Vladimir Putin.


CAPUTO: This is coming back to you people. This is all a bogus investigation. And it's time for you, guys, to lawyer up.

PETKANAS: You are a Russian stooge who used to work for Vladimir Putin and it is coming back.

MACCALLUM: I got to let Michael respond to that. Michael, respond to that and then I want to read this to you then.

CAPUTO: I'm sort? Listen, you sit here and call me a Russian stooge. I served in the American military. I served my country. I'm tired of hearing accusations. I did not! You're lying through your teeth. I've never worked for Vladimir Putin. You people on the Democrat side are so confused by your talking points that you just lie through your teeth. You accuse me of working for Putin on a national television, you better get a lawyer, buddy.

MACCALLUM: Hold on one second, guys. Hold that thought there before we -- I have a statement here from the Washington Free Beacon and we want to read some of it. It's rather long, but let's see what we can share with you and where the important parts in these are.

"Since the launch in February 2012, the Washington Free Beacon has retained third-party firms to conduct research on many individuals and institutions of interest to us and our readers. In that capacity, during the 2016 election cycle, we retained Fusion GPS to provide research on multiple candidates in the Republican presidential primary just as we retained other firms to assist in our research into Hillary Clinton. All of the work that Fusion GPS provided to the Free Beacon was based on public sources and none of the work product that the Free Beacon received appears in Steele Dossier.

The Free Beacon had no knowledge of nor connection to the Steele Dossier; did not pay for the dossier and never had contact with knowledge of or provided payment for any work performed by Christopher Steele, nor did we have any knowledge of the relationship between Fusion GPS and the Democratic National Committee, Perkins (INAUDIBLE), and the Clinton Campaign.

Representatives of the Free Beacon approached the House Intelligence Committee today and offered to answer what questions we can in the ongoing probe of Fusion GPS and the Steele Dossier. But to be clear, we stand by our reporting and we do not apologize for the methods. We then consider it our duty to report verifiable information, not falsehoods or slander; and we believe that commitment has been well demonstrated by the quality of journalism that we produce. The First Amendment guarantees the right to engage in news gathering as we see fit," and you get the idea of the rest of that.

You know, it's interesting because there has been, since the beginning of this conversation, and as Michael Caputo pointed out, the suggestion that perhaps a GOP candidate, one of the candidates who was running during the primary may have funded this research. Now, we don't know if this news discounts that or if it replaces that. But it appears that it might. It appears that the notion that a GOP side had also invested in this research may be answered in this question that it was The Washington Free Beacon which is considered a conservative publication. Michael, before I let you go, do you think that that is what we're seeing here?

CAPUTO: I think it is. And listening to their statement, I think offices and research firms often do research for publications and news organizations. If they were looking at Donald Trump's business ties and his different businesses, and trying to find out if there's impropriety there that's probably a legitimate use of a Washington research organization. It's when the Clinton Campaign and DNC decided to hire a network of spies to work with watching information when things went a little awry.

MACCALLUM: All right. So, the problem is, you know, under the FPC regulations, you're not allowed to hire international bodies to do this kind of research; you're supposed to register who you pay for and who buys that research under some of the election rules, Zac. So, you know, that looks like a problem for the Democratic side.

PETKANAS: I have no idea what was or was not done. I didn't know about the dossier or the Fusion GPS until after the election. But what I do think is a potential problem, if we're talking about coordination with a foreign entity is what we learned yesterday which was that Trump's data team was actually working with Julian Assange -- a Russian cut out. And so, I think that this is --

MACCALLUM: Working with is not actually accurate, you know, according to the report.

CAPUTO: It's just another lie.

MACCALLUM: Just stick to the facts as we try to stay in the fact land here. What we do know about the story that Zac just mentioned is that there was outrage and that Julian Assange said, you know, I don't have them or I don't want to work with you on that. If I want to the put anything out, I'm going to put it out myself.

PETKANAS: They attempted to catalog all of the WikiLeaks stolen e-mails from WikiLeaks that the Russians stole from our campaign and from the DNC. So, that is at least an attempt to work with, and we don't know.

MACCALLUM: You know what, that's going to be part of the investigation. If there's more to it, we'll certainly see.

PETKANAS: Absolutely.

MACCALLUM: Michael Caputo, and Zac Petkanas, good to have you both here tonight. Lots to go on with this story. Up next, remember this?


JAKE TAPPER, CNN HOST: The one thing the markets don't like is uncertainty. And right now, we've been told that U.S. Stock Futures are down nearly 500 points.


MACCALLUM: Remember that? Remember all the doom and gloom on election night that the market was just going to plummet and tank the next day? So, that is not at all what happened. And we're going to show you the numbers, and the country is on track now for a record year in terms of the Dow Jones Industrial and growth. Christ Stirewalt and FBN's Gerri Willis joins us with the look at what's happened in the economy, the hard numbers, when we come back since President Trump was elected right after this.



CHRIS HAYES, MSNBC HOST: So, there is a lot of hot and panicky money global markets slashing around watching this with bated breath. Rachel, back to you.

RACHEL MADDOW, MSNBC HOST: Chris Hayes, thank you. Wow! Dow Futures down 500 points.


MACCALLUM: Wow! That sounds horrible, doesn't it? Remember the dire economic outlook on election night? It was a far cry from what we heard from the White House Press Secretary Sarah Huckabee Sanders just earlier today. Listen.


SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The engine of the American economy is revving up, and the president is ready to power in the rocket fuel through massive tax cuts and reforms.


MACCALLUM: So, the Commerce Department announces the GDP -- remember those horrible images we saw in Houston -- is doing a lot better than expected, especially given the fact that it happened during the time period when we have dealt with all of these hurricanes, Harvey and Irma in late August and early September. That withstanding, the economy grew by three percent in the third-quarter -- it's the first we've seen back to back three percent growth in, I want 14 --


MACCALLUM: Oh, in four years -- four years. I knew it had four in it.


MACCALLUM: And that is not all, the Dow Jones Industrials up for seven straight weeks, closing at 23,434, up 28 percent since President Trump was elected. And you saw the eve of that election, the dire predictions. It's just, you know, factually, numbers don't lie, and that is not the case. I mean, the numbers so far are pretty good. There are some things to be concerned about, which we'll talk about. Joining me now, Chris Stirewalt, Fox News politics editor; and Gerri Willis, Fox Business Network anchor. Welcome, to both of you. And before we get to the economy, Chris, I do want your thoughts on the breaking news that we just reported, that the Washington Free Beacon's involvement in purchasing opposition research in the early stages of the investigation into all of these candidates, it seems, and also Donald Trump in particular.

CHRIS STIREWALT, FOX NEWS POLITICS EDITOR: Look, Matthew Contanety is a great analyst, a great writer, a great thinker. There's good -- there is great stuff that they have produced over time. But you don't buy -- you don't private investigator firms, news outlets don't pay private investigator firms to dig up dirt on campaigns. That's why we hire us. That's what we do. I think in this case, this does not close the door on who another Republican donor could be, but the Free Beacon is attached to sort of the Republican donor class, so we might be getting closer to the ultimate answer about who hired Fusion GPS. And we should point out, Fusion GPS is stinky because they have long been attached to -- affiliated with or for some time the Kremlin-affiliated folks. Because they're the ones who tried to roll back the sanctions against Putin's oligarchs. These people have done some real wet work form the Kremlin.

MACCALLUM: They've worked to eliminate the Magnitsky Act in order to release a lot of Kremlin cronies and friends who don't like the sanctions that came along with it.


MACCALLUM: And to push back on Bill Browder who's been a guest on our show many times. I mean, it's possible that the Washington Free Beacon in the sense that we're looking at all of this is sort of the Mark Elias on the other side, that this is the entity perhaps that the purchase of this opposition research was funneled through at the behest of perhaps other donors and other people. But we know what we know so far, and that's what we're putting out there.

WILLIS: Martha, you know what's so interesting about that in terms of the markets and what goes on in the economy, is that the markets never steam to take a hit from any of this news.


WILLIS: In Washington, it's a big story and heads are rolling and people are upset, and the market's happy to see it and they go up another 100 points, and everybody feels a little bit richer.

MACCALLUM: And we're all hyperventilating and the market going, well, we've got pretty good numbers from Caton Technology today. So, in terms of the performance, and, you know, what you see as the highs and lows here?

WILLIS: Well, I've got to tell you, I feel like we're really at a tipping point, right? Three percent growth, you mentioned in the intro. That's three percent on top of three percent. This is very good news. We thought it was going to be much lower than that because of the hurricanes. Another surprise for the positive, we're on the 50th record close for the S&P 500 today. We have fabulous earnings Google, Microsoft, Amazon, all of that baked in. Unemployment at 4.2 percent; that is a multi, multi-year low. You have to think that this economy is now speeding up. Consumer confidence at a high, things are really turning around, people are getting jobs, it's getting better and all of this happening as Washington is about to cut each other's throats. And I think, actually, traders in the market sort of like the fact that Washington is on the sidelines and can't get anything done.

MACCALLUM: They're yelling at each other, don't mess with our economy. Obviously, this bodes well for the president at least for the being for Republican candidates, right?

STIREWALT: So, if you're Donald Trump, what Rachel Maddow said there about hot panicky money sloshing around, I don't know, that sounds like fun. I'd rather go where they have hot-panicky-money-sloshing around, that's all right. But look, the dire predictions about Trump haven't come to pass because Trump hasn't lived down to the dire predictions that they made about him. He'll start a trade war with China, he'll pull out of NAFTA, he'll do all of these crazy things, and everything will go (INAUDIBLE). And in fact, he has mostly governed as a sort of traditional Republican, and I think that has added confidence to markets and people have responded accordingly.

The question for Republican now, two-fold: one, how come they're not more popular? The economy is going well. People hate them. And the president's -- the party's approval numbers are bad, and Trump's approval numbers are worse. Not -- this doesn't make sense. If people feel good, they should have better feelings about the party in power. The second question is, how do you pass a tax cut, and maybe you know the answer, the economy -- she said, we're going to pour jet fuel in it. Well, if the economy is already growing, how do you convince people to do things that might not be in their short-term political interests to jump-start an economy that is already rev, rev, revving. That's become a harder sell; people don't want to take the risk. Reagan passed his tax cut, you know how?

MACCALLUM: A trillion dollars in annual debt. I mean, it's not like we don't have --

WILLIS: This is in jet fuel, Chris, not by a long shot. When you're taking away people's 401(k) deductions, pulling money actually out of the markets, when you're can't deduct your mortgage interests, when you're putting all kinds of restrictions on people taking money away. They sound more like Democrats than Republicans. I think that's what the problem is.

MACCALLUM: All right. We will see. Thanks, you guys. Great to see you both. Thanks for being here tonight. This is coming up next.


GEN. JACK KEANE, FOX NEWS CHANNEL MILITARY ANALYST: He's been given more power than any leader with the exception of Mao Zedong.


MACCALLUM: The leader of China, and now new concerns tonight that it is not just Xi that we need to keep in check. A new report praises Putin's power. What does that mean? These two individuals on the world stage as the president gets ready for a very important trip. Our power panel: North Korea Expert Harry Kazianis, former Congressman Jason Chaffetz, and former CIA Officer Buck Sexton, take that on, next. And he's being called "the Harvey Weinstein of media." That is not a label anybody wants, folks. Disturbing new allegations about Mark Halperin. Howie Kurtz, on how the media handles the coverage of this story and of its own.


UNIDENTIFIED FEMALE: I feel like the small thing that has happened even just with Harvey Weinstein is like the linchpin pulled out of the grenade, and we're about to see the grenade.



MACCALLUM: So three aircraft carriers now in the region and the message to North Korea is clear. The vice president hammered it home today. Watch.


MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: While President Trump made clear that the United States has, in his words, great strength and patience. All options are on the table. Our enemies should never doubt the capabilities of the Armed Forces of the United States of America. Anyone who'll threaten our nation should know that America always seeks peace, but if we are force to defend ourselves or our allies we will do so with military power that is effective and overwhelming.


MACCALLUM: That as our nation's top generals visits Korea Demilitarize Zone a week before President Trump landmark trip to Asia when North Korean aggression will be front and center.


UNINDENTIFIED MALE: Behind me to the north an oppressive regime that shackles its people, denying their freedom, their welfare and their human dignity in pursuit of nuclear weapons and the means of delivery in order to threaten others with catastrophe.


MACCALLUM: That's General Mattis today. But Kim Jong-un is just one of several strong men taking aim at the U.S. on this show last night. General Jack Keane made clear that China wants to be the super power of the world.


UNINDENTIFIED MALE: President Xi has just finish up the 19th communist party Congress where he sort of went through a coronation, and he's given more power than any leader with the exception of Mao Tse-Tung. And his ambitions are strategically critical. And he believes, and this is stated, that eventually China will replace the United States as preeminent global power.


MACCALLUM: This as Vladimir Putin continue to push boundaries, personally launching four ballistic missiles as part of a steady series or war games amid growing tensions with the west, and pictured here as a modern day czar on the cover of The Economist. And Putin awkwardly cozied a few months back with the Chinese leader saying that they're relations are at the best they've been in history. So what does all this means? We're joined by Harry Kazianis, director of defense study at the center for the national interest, former Congressman and Fox News contributor, Jason Chaffetz, and former CIA officer Buck Sexton. Gentlemen, welcome. Thank you very much for being here tonight. Harry, let me start with you. You know, we sort of laid out quite a bit of the pressure in terms of the dominance in the world. What do you make of all of that?

HARRY KAZIANIS, CENTER FOR THE NATIONAL INTEREST: Well, Martha, I think in terms of looking at North Korea, Russia and China, it's pretty clear. What they represent is essentially an authoritarian access of three powers getting together and essentially trying to challenge U.S. global dominance and influence and essentially the international system the United States created after World War II. And I think Russia and China, specifically, have been doing a lot of things to essentially mutually reinforce each other. I mean, think about this, the Russians sell the Chinese tons of oil, natural gas, minerals. The Chinese are buying tremendous amounts of Russian fighters, different types of military equipment, advanced air defense systems. So these are three countries that are mutually trying to help each other and trying to break U.S. influence throughout the world. And we have to be concerned about it.

MACCALLUM: Buck, what do you think?

BUCK SEXTON, FORMER CIA OFFICER: Well, I think what we see with China, so far, is they understand that because North Korea is such an eminent problem for us it's meant that's there's a bit of delay of tapping some of the other issues that President Trump pushed to the forefront when it comes to China, Trade imbalance, all the problems with the thief of intellectual property. I mean, President Trump made a big play of how we're going to challenge China on the issues of the economy. But, so far, we've seen with China we really need you for help with North Korea.

And the incredible military threat that we have with North Korea is a distinguishing characteristic, I think, from what was believe to be the case the previous administration, strategic patience essentially means we're just going to wait this out. And that is what the Obama administration did. With North Korea now we're telling them, look, there's not an endless amount of patience for diplomacy here. And with Russia it's going to be a lot of trying to find some common ground and also deal with the fact that their hand in the Middle East has gotten a lot stronger, they've a lot of leverage against us. They want to break up NATO. So the common ground is minimal, but it can't always just be aggressive and belligerent towards them. So the administration right now, President Trump has his hands full with these players.

MACCALLUM: He's got a lot on his plate. And when you look at, Jason Chaffetz, what Buck just brought up in terms of Russian involvement all over the Middle East, the relationship in Syria, the relationship with Iran, with Turkey, it's a pretty powerful combination.

JASON CHAFFETZ, FOX NEWS CONTRIBUTOR: Well, the paradigm has changed though because our leadership has changed. We have a much stronger president than we did under President Obama. Our allies didn't believe us, they didn't trust us, our enemies didn't fear us, and with President Trump you have a dynamic personality. It keeps them on edge because they don't know exactly what he's going to do next. The economy is roaring back to strength. The Congress is funded by tens of billions of dollars increase in the military. We put the majority of our naval forces in the Pacific with three carriers, and the president going to Asia. That's something terribly different than what Barack Obama was going with his approach towards appeasement. You've got a much stronger leader and I liken that on to Ronald Reagan.

MACCALLUM: Harry, when you look at North Korea, they haven't launched a missile in 40 days, the president is headed to the region, we have these aircraft carriers moving in. What do you think the president's message has to be when he speaks with the leadership in Japan and in South Korea for example?

KAZIANIS: Martha, I think this is obvious. I think what the president is going to do is he basically going to pivot his foreign policy strategy. During the campaign he talked a lot about America first, having a pragmatic, if you will, realist sort of foreign policy. I think he's going to focus very much on North Korea. It's going to end up actually being North Korea first. And that's -- the reason why are very obvious, the North Koreans have been detonating nuclear weapons since 2006, they tested two ICBM's this summer, I actually think the North Korea's right now could hit the United States with a crude nuclear weapon. So the president has to focus on that. I think he's going to go to Asia, he's going to reinforce our alliances, and show Kim Jong-un we mean business.

MACCALLUM: What about President Xi, Buck, in terms of that relationship and putting pressure on him to follow through with the sanctions, follow through with cutting them off in a way that would actually make a difference.

SEXTON: There's only so much that we can actually pressure the Chinese when it comes to North Korea, because we don't actually want the same thing at the end of the day when it comes to the Korean peninsula. The Chinese do not want a unified pro-U.S. Korea on their doorstep. They would much rather have a buffer state in place. So they will help us but they'll help us up to a point. And in the meantime, it allows them to push back on some of the other issues like I mention of trade. But right now the relationship between Trump and Xi is still at its infancy. So we really have to see where it goes. The table has been set that it will be a different administration. It won't just be a fake pivot to Asia. But what that means in practice remains to be seen.

MACCALLUM: Yeah. The president told Lou Dobbs the other night we have a very good relationship. He likes him. He thinks he's a very good man, speaking of President Xi. He says China is helping us. Russia is going the other way. So we'll see. Thank you very much you guys. Great to see you all tonight. So still to come this evening.


UNINDENTIFIED FEMALE: Because what happened to me behind the scenes happens to all of us in this society, and that cannot stand, and it will not stand.



MACCALLUM: Rose McGowan speaking out for the first time since her revelations about Harvey Weinstein. A new wave of sexual harassment allegation being leveled against a prominent journalist in the wake of that scandal. Just the latest though in a long list in recent weeks. Howard Kurtz is here to weigh in on how the media is handling these crises. Plus, it's what everybody was buzzing about, President Trump releasing some though not all of the highly anticipated JFK files. James Rosen -- who better than James Rosen to talk about the revelation that we have learned so far.


MACCALLUM: So we are watching this developing story tonight about the Washington Free Beacon and their funding of the early stages of the opposition research that was done into the Trump campaign and, apparently, according to the reports that we're hearing tonight, other GOP campaigns as well in the early stages of the primary and through the beginnings of the Trump candidacy after he achieved that nomination. We know that in 2016 that funding was picked up by Democratic entities and was funneled through the D.C. attorney. According to reports Marc Elias for the Clinton campaign and the DNC, although none of them have fest up to being having knowledge of those payments or being aware that they were funding that research group Fusion GPS and, ultimately, leading to some Kremlin contacts as well who were digging up dirt, ultimately, on President Trump. So a lot of developments in this story tonight. So we're going to turn to Howie Kurtz to this as we bring him in this evening on this breaking news, host of "MediaBuzz." Howie, you know, in terms of the Washington Free Beacon and why they would be funding this research, what can you tell us?

HOWARD KURTZ, HOST OF "MEDIABUZZ": Well, this is an extraordinary development, Martha. Just as we were getting used to the fact that it was the Democrats and Hillary Clinton's campaign that was funding this research later that led to the infamous dossier. I have a lot of respect to Matthew Continetti, he runs that site. But this is not what journalist do. They dig into things, they publish them. They don't hire opposition research firms and they don't act like politicians or political operatives. So this is a real blow to that publication which is small but has an important following here in Washington.

MACCALLUM: Yeah. I mean, they put out a statement that they basically have done that, that they do talk to opposition firms. And what was pointed out earlier in this discussion is the links of Fusion GPS, which is a very controversial group that was started by reporter at the Wall Street Journal, but that they have done a lot of work on behalf of the Kremlin in terms of pushing for things that the Kremlin wanted, such as the repeal of the Magnitsky Act, which was a sanction against Vladimir Putin and a lot of those high wealth cronies of Vladimir Putin who were hit hard by sanctions after the death Sergey Magnitsky. And, you know, you go through the rest of this story, Howie, and you go to the point where you have the Magnitsky Act being argued in front of Donald Trump Jr. and all of that. So Fusion GPS is tied to all of that. They've also have taken the fifth in front of Congress. So when you look at all the tentacles here with the Washington Free Beacon pulled into the mix of this, you know, as you're getting it all in there, what does it tell you?

KURTZ: Well, it tells me that, you know, we live in such a polarized culture now that something that is marketing itself as a news organization -- look, journalists go out and dig up dirt from sources, sometimes shadowy sources all the time. But to pay for it with an opposition research firm that itself is very controversial and secretive under cuts its credibility, and then makes the whole thing into a kind of a soap opera, I think people won't know what to believe.

MACCALLUM: Yeah. And you look, as you say, you know, story this week that the DNC paid for it. And now you've got this division sort of dividing line in whose -- Fusion GPS is getting paid by a lot of people, apparently, that much we know at this of point, by the Republicans early on, through the Washington Free Beacon, which has a lot of Republican donors and the like, and then you sort of cross the other line where Christopher Steele was brought into this, former MI-6 agent with a lot of Kremlin connections. That part of the story that the DNC apparently paid for, you know, in the latest information that we have, you know, brings into question whether or not it's ethical for them to have gone over that line. Paid a firm for the research that they have? It's a thick tricky wicket.

KURTZ: Right. And what people forget -- it's not cricket. This salacious dossier was unverified, was so controversial at the time that news organizations refused to touch it except for Buzz Feed which posted it and claim, well, we don't know if it's true now, we just think it should be out there. Obviously, some organizations, and I have to now include the Free Beacon, were more interested in damaging certain candidates than they were in trying to aggressively report on them.

MACCALLUM: Brings to mind the issue of fake news, which is also in your bailiwick in terms of covering of real journalism and fake news, right?

KURTZ: This is pretty fake and that it is not journalism. I mean, the opposition research might have found some things that are true. But when you hide the funding you're putting yourself behind a curtain and you're not being straight with readers, and viewers, followers on line because you've put money in the game and they don't know it.

MACCALLUM: Yeah. And as we know the bank records of Fusion GPS have been requested by Congress and they gave them a deadline of Monday morning at 9:00. So some of this information was about to start spilling out. And what we usually see is that people trying to get ahead of it. So that appears to be a bit of a Friday night dump from the Washington Free Beacon in terms of trying to diffuse this over the weekend and get this information out tonight before it is potentially revealed on Monday or heading into next week. Howie, thank you.

KURTZ: Exactly what it is.

MACCALLUM: Thank you very much. Good to see you tonight.

KURTZ: Thank you, Martha.

MACCALLUM: Thanks for coming in. So coming up next here, more on this breaking story with James Rosen when we return.


MACCALLUM: Developing tonight, learning more now about the moment that changed the nation forever, fascinating new details coming out of the newly released JFK assassination documents that were held for 25 years. Chief Washington correspondent James Rosen has been digging through the 2,800 pages, no doubt, since they came out. And he is live in Washington with what he sees as the biggest take-away in this story tonight. Good evening, James.

JAMES ROSEN, FOX NEWS CORRESPONDENT: Martha, good evening to you. Perhaps the most tantalizing tidbit from the 2,800 pages of declassified documents comes from the files of this man, James Jesus Angleton, the devious CIA counter intelligence chief who misled the Warren commission at critical points. In a memo to FBI director J. Edgar Hoover written three days after President Kennedy's death, Angleton related that the British intelligence service, MI5, had learned that an anonymous tip had been phoned into a reporter for a British newspaper, the Cambridge News, in which the tipster instructed the reporter to call the U.S. embassy in London for some, quote, big news, and then hung up. The important point, Angleton wrote, is that the call was made according to MI5 calculations about 25 minutes before the president was shot. The Cambridge reporter had never received a call of this kind before, Angleton added. And MI5 officials state that he is known to them as a sound and loyal person with no security record.

Unfortunately, this occasion is generating some fake news if only because knowing what is truly new here requires a familiarity with the literature of the Kennedy assassination most reporters lack. Many news outlet tonight are touting memos written by Director Hoover in which he spoke of the need to convince the public that Lee Harvey Oswald was the real assassination. And in which Hoover reported the Soviet Union initial reaction was to regard the murder as a right wing coup. Both of those quotes have been public for many years.

One intriguing and truly new document concerns E. Howard Hunt, the legendary CIA spy and spy novelist who along with G. Gordon Liddy organized the ill-fated Watergate break in. The JFK files include a 1978 summary of Hunt's career that showed he continued to take on, quote, operational sensitive missions for the agency on orders from the very top, even though most published accounts say Hunt was largely sidelined after the Bay of Pigs. Some conspiracy theorist including one of Hunt's sons have falsely asserted that Hunt played some role in the Kennedy assassination. The newly released Hunt files provide zero evidence for that, Martha.

MACCALLUM: James, it is fascinating. You know, when you look at the 25 minutes that that call was made within before the assassination attempt. You know, in your idea, when you look at this, what do you think is sort of the most fascinating take away? And what might you think might be there that people were digging for that could be in the documents that were not released yet?

ROSEN: Right. At least 300 documents, probably several thousand more that have been released partially and now still await full release, I think what we're going to find in those documents as others have been saying this whole week, is more evidence about Lee Harvey Oswald's trip to Mexico City two months before the assignation in September 1963. We still don't have a full accounting of everywhere he went and everyone he talked too during that time. We do know that Oswald in that time visited the embassies for Cuba and the Soviet Union. Phil Shenon, the author of the book, A Cruel and Shocking Act, the secret history of the Kennedy assassination, published in 2013, very well regarded book, establishes in there that during that trip to Mexico City, Oswald had a brief affair with a woman who was tied to the communist intelligence apparatus. So there's no contradiction, Martha, between believing that Lee Harvey Oswald pulled the trigger and killed President Kennedy in Dealey Plaza, but also perhaps believing that he was part of a conspiracy in so far there might have been encouragement or money provided to him in Mexico City.

MACCALLUM: Fascinating. That is such a fascinating angle of all these. And no doubt it gives a lot of -- those who want to continue to dig into it for many years to come based on this. I do want to ask you, James, in terms of this new information that we got tonight about the Washington Free Beacon being one of the sources on the GOP side, the conservative side, for the investigations that went into President Trump in the early stages of the nomination process and after?

ROSEN: Yeah. It's an interesting development. I think it's going to be seized upon by Democrats perhaps to obfuscate some of the other more important facts. That's the future of this. What we know is based on the Washington Free Beacons admission to Congressional investigators and the public statement that they have released tonight, that in 2015 once Donald Trump started to pick up some steam in his quest for the Republican nomination the Washington Free Beacon paid this company, Fusion GPS, to conduct some research into Donald Trump's past. Obviously, they weren't looking for salutary or positive information. But that effort between the Washington Free Beacon, a conservative news outlet, and Fusion GPS came to an end without anything like that dossier or the involvement of the people who created the dossier.

And then, Fusion GPS was able to get the case picked back up with someone else paying the tab, namely the Hillary Clinton campaign and the Democratic National Committee. And that is when this ex-British spy, Christopher Steele was retained, and that's when work began in earnest on this so-called dossier which was filled with unverifiable charges against Mr. Trump, in which eventually made its way into the hands of members of Congress, then to the FBI, and eventually was published in full, rather irresponsibility by most accounts, by Buzz Feed. And so again, the Democrats are going to seize on the acknowledgment by, most likely, on the acknowledgment by the Washington Free Beacon that they were the first to fund Fusion GPS with an effort to find information about Donald Trump. But that's very different from the dossier effort which was really funded by the Democrats and Hillary Clinton's campaign.

MACCALLUM: Yeah. And indeed it is. You know, there was always a lot of speculation about the opposition research that was happening on the GOP side because obviously a lot of Republicans and prominent Republicans who were running for office were stunned by the mediocre rise of now President Trump as he moved his way from state to state to state. The Daily Caller -- you know, everyone is going to try to figure out who was the money behind the Washington Free Beacon, which donors to the Beacon may have been wanting them to, sort of, you know, be the go between on this information. The Daily Caller is reporting this evening that billionaire hedge fund manager Paul Singer, who was a big supporter of Marco Rubio, may have been one of the people who was behind this. You know, I'm just looking at that, just crossing a moment ago, James, but your thoughts on that? Obviously, there were a lot of people who wanted to find bad information about Donald Trump and that is part of regular campaign life.

ROSEN: We should point out, Martha, that Senator Rubio himself has gone on record to say that he did nothing to commission any kind of creation of a dossier against Donald Trump or any kind of opposition research. He said, in fact, I was so desperate to beat Mr. Trump at the time, that if I had anything along these lines, I'm paraphrasing what Senator Rubio said, but faithfully he would have used it. But Paul Singer is an influential conservative donor. The Washington Free Beacon has, I think, never disclosed who its owners are. It did shift from its founding in 2012 from being a non-profit to being a for profit organization two years later

MACCALLUM: Yeah. And Chris Stirewalt, we spoke to him awhile ago about the origins of the Washington Free Beacon and, you know, the changes that have gone through. They've got of a bit of a battle ahead of them. Matthew Continetti is a very strong reporter, we all know. But they've got a lot of questions to answer in terms of why they would have been paying for this research if they consider themselves to be a journalistic organization.

ROSEN: If I could add one point on that very quickly. CBS News paid Richard Nixon's ex chief of staff, H.R. Haldeman, $100,000 for an on camera interview with Mike Wallace back in 1975. Checkbook journalism is nothing new.

MACCALLUM: Thank you. We've got to leave it there. That's The Story. We'll see you next time.


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