Unknown actors may have made billions from the turmoil Donald Trump has created in the markets through erratic tweets, shoot-from-the-hip foreign policy, and the trade war with China, according to a new report.
A Vanity Fair deep-dive into stock market activity has uncovered several instances where advantageous trades were made suspiciously close to market-moving events.
One trade, made just before Iranian drones attacked Saudi Arabian oil production facilities, netted $180m. Another trade, made shortly before Mr Trump announced a delay in tariffs on Chinese goods, made $190m. The biggest trade of all came on June 28, while Mr Trump was at the G20 meeting. There, he met with President Xi and announced trade negotiations were "back on track."
Those trades ended up being worth $1.8bn thanks to an 84 point boost in the S&P 500 index following Trump's announcement.
Though the story quotes an unnamed commodities trader as saying “there’s something fishy going on”, other analysts disagree. One who spoke to Bloomberg said that without the trading records, insider trading would be impossible to prove, and that in the futures market, trades that make large amounts of money fast are actually not uncommon. It's even impossible to know how if all that money went to one entity or perhaps several who happened to make a lucky bet.
“Millions of futures contracts trade a day, billions of dollars trade a day, so to make a connection, I feel like it’s very hard to do,” Michael O’Rourke of JonesTrading told Bloomberg.
According to Slate, just knowing when trades happen isn’t enough to prove how much money they made - you’d also need to know how long the buyer held onto those shares.
There's no suggestion in the article that Mr Trump or anyone in his circle is involved in insider trading.
Whether or not the story itself holds up - the author admits that it’s impossible to know who is making these trades without an SEC investigation - Goldman Sachs and JPMorgan have both said that they believe Trump’s tweets affect the markets. JPMorgan even created its now famous Volfefe Index - a combination of the Trump tweet typo “covfefe” and “volatility - to track the effects of the President’s tweets on the US bond markets.
According to Bloomberg, tweets with the words “China,” “products,” “billion,” “great,” and “Democrats” were most tightly correlated with market movement.