One of the problems with having a president whose only talent is a willingness to present his erratic and frequently incoherent behavior in front of cameras and microphones, is that the world must react or not react to this volatility. This is the basis for a new article published on October 16, written by William Cohan for Vanity Fair. In it he highlights billions of dollars made by incredibly lucky stock moves, by mysterious traders, right before Donald Trump made announcements, or world events took place, that would send stocks soaring or plummeting. Specifically, Cohan’s article discusses the big money being made in the e-minis, electronic futures trading.
An example of how “lucky” one might get is when “someone bought 82,000 S&P e-minis,” in the last minute of trading on September 10. A few hours later the Chinese government announced it would lift some of the tariffs they had levied on American products.
The news was viewed positively. The S&P index moved swiftly on September 11 to 2996, up nearly 30 points. That same day, President Donald Trump said he would postpone tariffs on some Chinese goods, and the S&P index moved to 3016, or up 47 points since the fortunate person bought the 82,000 e-minis just before the market closed on September 10. Since a one-point movement, up or down, in an e-mini contract is worth $50, a 47-point movement up in a day was worth $2,350 per contract. If you were the lucky one who bought the 82,000 e-mini contracts, well, then you were sitting on a one-day profit of roughly $190 million.
It is important to note that Cohan does explain that this may be a group of traders or an organization. The Vanity Fair article cites a few more examples, including one lucky set of last-minute e-mini purchases that resulted in $1.8 billion in profits. Cohan spoke with sources in “Chicago pits” who find that while trading in futures can be volatile, the “precision and timing,” of moves they have seen over the past few months, along with the extraordinary financial windfalls that have come of them have left them wondering where everything is kosher.
Bloomberg released an article on October 17, questioning the Vanity Fair piece. There are two main points of skepticism in the Bloomberg story. The first is the assertion that there isn’t enough evidence to make a claim of conspiracy in the first place. One analyst explained that “Unless you have the trading records, which you don’t, you can’t tie one and one together to make two the way this story is laid out.” The second point of skepticism is, in essence, that a marketplace under someone as erratic as Trump is always going to breed big winners and losers, people who look super “lucky,” and others who look “dumb.”
Cohan responded to the Bloomberg story, saying he stood by his reporting. He points out, correctly, that he doesn’t accuse anyone of anything in the article, “I don’t make any allegations, I don’t know what really happened. I was just being reportorial about what traders in the pit were seeing.” He went on to say that he trusts his sources and their opinions, and realizes that other analysts probably have other opinions on the matter, but he highlights that his reporting shows that there are issues in the marketplace that need to be investigated by the regulators “whose job it is to see these things and investigate them.”
Cohan makes this point in his article, as he explains that outsiders like you or me cannot find out who is making these kinds of trades, but regulators can—and should investigate them. He illustrates this point by ending the article reviewing another set of last-minute high-volume trading that resulted, after surprise Trump news, in around $1.5 billion profits.