Trump's Econ Team Warned Billionaires About Coronavirus Economy While Telling You Everything Was GRRRRREAT!
Monetizing mass death — it's not just for senators! Hedge funders also did their fair share of disaster investing. And they did it after getting tipped off by their pals in the Trump administration.
The New York Times reported last night that way back on February 24, members of Trump's economics brain trust gave a private briefing to board members of of the conservative Hoover Institution at Stanford University, saying the economy might be in for a bit of a bumpy ride.
On the same day that Trump assured Americans that "Coronavirus is very much under control," his senior economic adviser Tomas J. Philipson "told the group he could not yet estimate the effects of the virus on the American economy" as a part of "a series of informal, off-the-record discussions with Trump administration officials and Republican lawmakers."
LOL, remember when private citizen Hillary Clinton was excoriated for failing to cough up the "transcripts" of her speeches to Goldman Sachs? Anyway, don't bother asking what government employees said to a rightwing think tank, because that shit is off the record!
The next day, February 25, Trump lost his shit because Dr. Nancy Messonier of the CDC told reporters, "It's not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen." How dare this scientist risk Trump's perfect, perfect stock market by dispensing timely, accurate, scientific information.
Larry Kudlow rushed to assure CNBC that "We have contained this. I won't say airtight, but pretty close to airtight when it came to excluding the virus," adding, "The business side and the economic side, I don't think it's gonna be an economic tragedy at all. There will be some stumbles. We're looking at numbers; it's a little iffy, but at the moment [...] there's no supply disruptions out there yet."
That would be the same day he told the Hoover people that it was "contained in the US, to date, but now we just don't know."
And the Hoover people noticed the difference, with high-wattage hedge fund veteran William Callanan drafting a widely circulated memo that provoked a wave of sell-offs and shorting based on information that ran directly counter the White House's public assurances that there was nothing to fear.
"What struck me," Callanan wrote, was that White House officials were bringing up the virus without being asked, "as a point of concern, totally unprovoked."
"Short everything," was the reaction of the investor, using the Wall Street term for betting on the idea that the stock prices of companies would soon fall.
That investor, and a second who was briefed on the Hoover meetings, said that aspects of the readout from Washington informed their trading that week, in one case adding to existing short positions in a way that amplified his profits. Other investors, upon reading or hearing about the memo, stocked up on toilet paper and other household essentials.
Callanan also detailed his concerns in an email to billionaire David Tepper, founder of the hedge fund Appaloosa Management, and from there the warning made its way to a select group of friends who could use that non-public information to make more money.
Inside Appaloosa, the email circulated among employees, who in turn briefed at least two outside investors on the more worrisome parts of Mr. Callanan's email, according to people who received those briefings.
Those investors in turn passed the information to their own contacts, ultimately delivering aspects of the readout to at least seven investors in at least four money-management firms around the country within 24 hours. By late afternoon on Feb. 26, the day the email bounced from Appaloosa to other trading firms, U.S. stock markets had fallen close to 300 points from their high the previous week.
Tepper assured the Times that Appaloosa had already shifted to a defensive footing before Callanan's email. "We were in the information flow on Covid at that point," he told the Times. "Because we were so public about this warning, people were calling us at this time." Which may well be true — Tepper did refer to the virus as a "game changer" on February 1. But his references to Callanan's email in Appaloosa's internal documents suggest that it did influence his position.
Now lest we get ahead of our skis here, this is not insider trading. Nor is it the same as Richard Burr dumping his own stocks based on non-public information he received in congressional briefings. No one is going to jail here. But we are looking at yet another instance where the Trump administration lied to the public while telling the truth behind closed doors to their wealthy friends who were best placed to monetize it. When they shorted those stocks, they bet that the price was going to go down, and someone who didn't get inside info direct from the White House was going to lose.
So, yeah, none of this is surprising. The president hypes Regeneron, and Pence's consigliere Marc Short owns hundreds of thousands of dollars of stock in drug and PPE companies, even as he runs the White House covid task force. But it's not a good look. At all.
These people have got to go.
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Liz Dye lives in Baltimore with her wonderful husband and a houseful of teenagers. When she isn't being mad about a thing on the internet, she's hiding in plain sight in the carpool line. She's the one wearing yoga pants glaring at her phone.