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Traders Rake in Billions With Apparent Knowledge of Trump Announcements

Traders Rake in Billions With Apparent Knowledge of Trump Announcements
(Dave Angerer/Getty Images)

By    |   Thursday, 17 October 2019 08:32 AM

A series of “incredibly lucky” trades at the Chicago Mercantile Exchange reportedly have reaped billion for traders with apparent knowledge of market-moving announcements by President Donald Trump.

Traders in the Chicago pits have been watching wagers on “S&P e-minis”— electronically traded futures contracts linked to the Standard & Poor’s 500 stock index — with an increasing mixture of shock and awe since the start of the Trump presidency, Vanity Fair reported.

“They are used to rapid fluctuations in the S&P 500 index; volatility is common, of course. But the precision and timing of these trades, and the vast amount of money being made as a result of them, make the traders wonder if all this is on the level,” the report said.

Vanity Fair cited a handful of examples of suspect dealings. However, the most apparently egregious was “in the last 10 minutes of trading on Friday, August 23, as the markets were roiling in the face of more bad trade news, someone bought 386,000 September e-minis. Three days later, Trump lied about getting a call from China to restart the trade talks, and the S&P 500 index shot up nearly 80 points. The potential profit on the trade was more than $1.5 billion,” Vanity Fair reported.

“Are the people behind these trades incredibly lucky, or do they have access to information that other people don’t have about, say, Trump’s or Beijing’s latest thinking on the trade war or any other of a number of ways that Trump is able to move the markets through his tweeting or slips of the tongue? Essentially, do they have inside information?” the report asked.

Calls to the Chicago Mercantile Exchange, where the trades takes place, the Securities and Exchange Commission, which regulates the equity markets, and to the Commodity Futures Trading Commission, which regulates futures contracts, such as e-minis, were "answered in different ways," Vanity Fair said. 

Christopher Carofine, at the SEC, declined to comment. The CFTC did not respond to inquiries, while a spokeswoman for the CME says the trades in question did not originate from a single source and they were of no concern, Vanity Fair said.

“There is definite hanky-panky going on, to the world’s financial markets’ detriment,” one longtime CME trader told Vanity Fair.  “This is abysmal,” he said.

Wall Street has been watching the timing of certain market moves and  Trump's comments.

To be sure, RBC analysts say Trump’s tweeting about the Federal Reserve, trade and tariffs has influenced gold prices. 

While Trump has basically never directly tweeted about the yellow metal, gold has been on a strong run in 2019, rising 16.5%, CNBC.com explained.

Previous studies have found Trump’s social media feed influencing the market’s rate expectations. Low rates can mean higher inflation, which benefits gold, experts say.

Over the summer, a day after posting its first 1% loss in two months, the S&P 500 posted its first 1% reversal of the year, with Thursday’s recovery from Fed Chairman Jerome Powell’s press conference torpedoed by a Trump tariff tweet, Bloomberg reported.

To recap: stocks plunged as Powell described the Federal Reserve’s rate cut as a “mid-cycle adjustment,” which traders interpreted as signaling fewer reductions. After bouncing back, equities tumbled anew when Trump said he would impose a 10% tariff on $300 billion in Chinese imports that aren’t yet subject to levies. Dutifully, traders of fed funds futures boosted the amount of easing they expect from the Fed this year after the tweet hit.

Some equity players doubt it’s coincidental. By their logic, after the Fed chairman said his rate cut was justified by trade tensions, it makes sense the president would be tempted to create more of them.

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A series of “incredibly lucky” trades at the Chicago Mercantile Exchange reportedly have reaped billion for traders with apparent knowledge of market-moving announcements by President Donald Trump.
traders, billions, knowledge, trump, announcements
Thursday, 17 October 2019 08:32 AM
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