Profiting from war

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Trump gives out a stock tip

In the five days prior to launching a strike that killed Iran’s most important military leader, Donald Trump roamed the halls of Mar-a-Lago, his private resort in Florida, and started dropping hints to close associates and club-goers that something huge was coming.

According to three people who’ve been at the president’s Palm Beach club over the past several days, Trump began telling friends and allies hanging at his perennial vacation getaway that he was working on a “big” response to the Iranian regime that they would be hearing or reading about very “soon.” His comments went beyond the New Year’s Eve tweet he sent out warning of the “big price” Iran would pay for damage to U.S. facilities. Two of these sources tell The Daily Beast that the president specifically mentioned he’d been in close contact with his top national security and military advisers on gaming out options for an aggressive action that could quickly materialize.

“He kept saying, ‘You’ll see,’” one of the sources recalled, describing a conversation with Trump days before Thursday’s strike.

Unusual trading occurs immediately before the assassination

Here I am going to reference an excellent article in Vanity Fair that documents what happened in futures trading immediately before the assassination was announced.

According to the article, at 90 minutes before the assassination announcement the E-mini market was handling about a thousand contracts every 10 minutes. And then:

. . . . in the 70 minutes between 8:30 p.m. ET and 9:40 p.m. ET, 76,000 E-mini contracts were sold.

Once the assassination was announced, the index dropped 50 points. Someone obviously profited:

A 50-point drop in the index generates a profit of $2,500 per contract, assuming those contracts were sold short, which in this case they were. 76,000 contracts sold short, at a gain of around $2,500 per contract, equals some $190 million in profit—on paper anyway—for whomever, or group of whomevers, was clever enough or lucky enough or informed enough about the impending bombshell news out of the Pentagon that the important Iranian leader had been killed.

Additionally, defense stocks had also risen in the days prior to the assassination:

Dean Baker, an economist and the cofounder of the Center for Economic and Policy Research, in Washington, tweeted that it was “very interesting” that Lockheed Martin’s stock went up 2% on January 2. “Looks like a lot of people should go to jail,” he wrote. Bill Corbett, who describes himself on Twitter as an “unapologetic Masshole,” tweeted that it wasn’t just Lockheed’s stock that went up either. He noted that the stocks of General Dynamics, Boeing, and Raytheon—big defense contractors all—also “began to spike” after the Mar-a-Lago New Year’s party and before the killing.

I thought we had laws against trading on non-public news?

We do. (Remember Martha Stewart?)

From CNBC earlier today:

Presidential contender Elizabeth Warren is demanding a federal investigation into whether President Donald Trump provided advance notice of the deadly strike on Iran’s Gen. Qasem Soleimani to stock traders who may have profited illegally from the tip.

I'm not betting on anything happening, however.