By Shawn Langlois, MarketWatch
‘There is definite hanky-panky going on, to the world’s financial markets’ detriment. This is abysmal.’
That’s one longtime CME trader’s troubling assessment of what he views as stock-market manipulation the likes of which he hasn’t seen since al Qaeda cashed in before initiating the Sept. 11 attacks.
In Vanity Fair’s deep dive into “ the fantastically profitable mystery of the Trump chaos trades ,” William Cohan takes a look at how some timely presidential pumping of the stock market made some futures traders billions of dollars.
One windfall, in particular, triggered Twitter /zigman2/quotes/203180645/composite TWTR +0.34% buzz. On June 28, a trader, or group of traders, snatched up 420,000 September e-minis, which amounted to about 40% of the total trading volume, shortly before the closing bell. Trump the following weekend emerged from a meeting with President Xi to say the trade talks were “back on track.” The market cheered the announcement and stocks rallied enough to apparently turn that trade into a $1.8 billion profit.
That was just one of many that drew strong reactions across social media:
Cohan says traders in Chicago, long accustomed to dealing with volatility, have been increasingly wary of the action surrounding Trump’s updates.
“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?” Cohan wrote in his Vanity Fair piece. “Essentially, do they have inside information?
Frequent Trump critic George Conway, husband of White House adviser Kellyanne Conway, didn’t shy away back in August from accusing the president of committing of crime with regards to manipulation:
The Securities and Exchange Commission declined to comment for the story, while the Commodity Futures Trading Commission didn’t even bother to respond. The Chicago Mercantile Exchange, however, told Cohan that the trades did not originate from a single source and were of no concern.
Members of Finance Twitter also played down the allegations:
Nevertheless, Cohan says it’s time for action for authorities, starting with a look at this particular scenario: “In the last 10 minutes of trading on Friday, Aug. 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 /zigman2/quotes/210599714/realtime SPX +0.24% shot up nearly 80 points. The potential profit on the trade was more than $1.5 billion.”