Trade

Who is Making Billions Off Trump’s Chaotic Trade Whims?

JM Ashby
Written by JM Ashby

It's an open question how much of Trump's chaotic trade policy is a result of his mood swings and how much is a result of intentional manipulation of the market, but whatever the case may be -- someone is making a lot of money off of it.

Vanity Fair reports that large trades of electronic futures contracts or "e-minis" have occurred in recent months that appear to have been coincidentally (or not coincidentally) timed to coincide with announcements from Trump or the Chinese government and this resulted in enormous profits.

In one especially large case, a purchase of futures returned a profit of $1.8 billion after Trump's fake "truce" with Chinese President Xi Jinping was announced at the end of June.

But these wins were peanuts compared to the money made by a trader, or group of traders, who bought 420,000 September e-minis in the last 30 minutes of trading on June 28. That was some 40% of the day’s trading volume in September e-minis—making it a trade that could not easily be ignored. By then, President Trump was already in Osaka, Japan—14 hours ahead of Chicago—and on his way to a roughly hour-long meeting with China’s President Xi Jinping as part of the G20 summit. On Saturday in Osaka, after the market had closed in Chicago, Trump emerged from his meeting with Xi and announced that the intermittent trade talks were “back on track.” The following week was a good one in the stock market, thanks to the Trump announcement. On Thursday, June 27, the S&P 500 index stood at about 2915; a week or so later, it was just below 3000, a gain of 84 points, or $4,200 per e-mini contract. Whoever bought the 420,000 e-minis on June 28 had made a handsome profit of nearly $1.8 billion. [...]

There is no way for another trader, let alone an outsider such as me, to know who is making these trades. But regulators know or can find out. One longtime CME trader who has been watching with disgust says he’s never seen anything quite like these trades, not at least since al-Qaida cashed in before initiating the September 11 attacks. “There is definite hanky-panky going on, to the world’s financial markets’ detriment,” he says. “This is abysmal.”

The obvious and biggest question is if Trump himself is doing this.

I find that doubtful for some reason, but it's not hard at all for me to imagine that someone close to Trump is making bank through the ultimate example of insider trading.

If whoever is doing this continues to, we should expect to see them make another large purchase just before the APEC summit in November where Trump will meet with Chinese President Xi Jinping and sign off on another "truce."

Trump may break their next truce in a matter of weeks, again, but that doesn't mean certain individuals won't get rich(er) off of it.

  • muselet

    No, it’s not Donald John Trump Senior. *taps side of nose*

    (No, DJTJr doesn’t have the nous to pull off a scam of this size. He does, however, have access to money and people who do have the necessary intelligence and skills. And he has a father, brother and sister—and brother-in-law—venal enough to think this is a pretty neat idea.)

    –alopecia

  • Aynwrong

    I don’t expect this to become the scandal it deserves to be. It rarely does if it’s in anyway complicated and the R’s don’t want to talk about it. If Republicans are pushed on it I expect to hear the “victimless crime” defense.

  • gescove

    I doubt Trump has the intelligence to do this. But he seems to have a feral cunning about gaming things to accrue to his own benefit, so… maybe. Regardless, I think it would be in the financial markets’ best interests to investigate. Nobody wants to play a rigged game — after all, if someone made a $1.8B profit, someone else suffered a $1.8B loss.