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Treason in the Futures Markets

paulkrugman.substack.com

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Re: Treason in the Futures Markets

#31

Post by sonzohan »

the_gipsy wrote: post #10

Excuse my ignorance, but why can't this be traced? It's not crypto wallets, why is there no transparency here?

It's not that it can't be traced, the author is stating it won't be traced because high-ranking government officials are selling those secrets.

This is actually not new in this administration. Last year the president posted on social media telling people to buy stocks a few hours before he announced tariffs (https://apnews.com/article/trump-truth-social-djt-tesla-musk...).

The bigger problem isn't whether or not it can be traced, or if it should be traced. It can and it should. The central issue at stake here is the sale of government secrets to private and (presently) anonymous groups for profit. The author is stating that since we don't know who the trader of that commodity is, and because that commodity's price is tightly coupled to actions related to the war, that trader could be helping enemies of the U.S. Without the knowledge of who the person is, or how they knew to make such a huge market movement, a claim of treason can be argued.

The biggest problem is the intelligence community is heavily rooted in trust. Movements like these signal there's an intelligence leak to the general public, or more appropriately, someone with $580 million lying around. An intelligence leak reduces trust; allies are less likely to share information if it's leaked. Conversely, trust is returned when the leaks are found and plugged, and measures put in place to prevent those leaks in the future. The author is stating that these leaks are unlikely to be plugged, which will reduce trust in American intelligence. After all, as the president said, "Let's say I was gonna do it or let's say I wasn't gonna do it, why would I tell you?" (https://www.bbc.com/news/live/c4gqjyk0vx3t)

Except he is telling someone, and that someone is making a lot of money.

Re: Treason in the Futures Markets

#32

Post by kasey_junk »

Grimburger wrote: post #16
rich_sasha wrote: post #4

While I agree it is very suspicious, needs investigating and far, far greater oversight in general, I'm not sure there is enough to conclude this definitely is insider trading. Markets are weird. People trade for weird reasons, sometimes gently and in small size, sometimes aggressively and all at once. We're zooming in at a short window just before the tweet. If you look at random windows you'll find these too. 6.49…

> I'm not sure there is enough to conclude this definitely is insider trading. Markets are weird. This was 6-8x the size all the existing trades on market combined, with zero other publicly available information early on a Monday morning 15 mins before an announcement that significantly moved the market. Not even the biggest hedge funds in the world with coked up yolo traders go make 1.5 billion dollar bets like that…

To be clear when people quote the billion dollar number they are quoting the notional value (of the entire market move of at the announcement).

Those contracts have between 8-15x leverage depending on margin rules.

This doesn’t remove the corruption problem but it brings the number down into realistic values. And while the volumes were odd for the overnight they aren’t that strange for normal hours trading.

Re: Treason in the Futures Markets

#33

Post by kasey_junk »

Grimburger wrote: post #24
QuadmasterXLII wrote: post #8

Earlier quoted context omitted.

*580 million

There was equity futures and oil contracts both at the same time. Total risked with zero public news was approx $1.5B

Notional. Those contracts have between 8-15x leverage. Looking at the CNBC graph linked you can see the volume better (though not the actual lot sizes). The likely at risk dollars was probably closer to 10M across both.

Re: Treason in the Futures Markets

#34

Post by anonu »

"Treason" is a bit hyperbolic. Futures are governed a bit differently around MNPI versus equities - based on CFTC rules. If the MNPI was obtained through a duty breach then it still "might" be illegal. Most futures MNPI enforcements have been around energy data or FOMC announcements. But its usually noticed due to consistent, repeated patterns. A one-off event like this, while egregious, is probably not going to be chased. Not saying thats right... I am just saying the grift will continue...

Re: Treason in the Futures Markets

#35

Post by yifanl »

magpi3 wrote: post #19
stephbook wrote: post #13

Earlier quoted context omitted.

It can be traced, but the people who could and should be tracing this have been told not to. Even if they found the culprits, what's a judge's verdict against a presidential pardon?

> Even if they found the culprits, what's a judge's verdict against a presidential pardon? This is bad logic. A presidential pardon at least exposes the corruption, and exposing the corruption is more important than a prison sentence.

Is there anyone who isnt Trump4Life who still needs to be convinced theres corruption happening very high up in the government?

We've very little doubt its happening, and it does us no good if there arent actions taken against it.

Re: Treason in the Futures Markets

#37

Post by patall »

So, who is paying the bill here? I am assuming the insider trading itself is zero-sum (its obviously different if what's happing happens only to allow insider trading) and while some (like passive investors like me that buy every month) win a bit, others lose a bit, someone loses big on the futures market. Is that the high frequency and quant traders? Because I assume, someone must be really mad? Especially since, and I again 'assume', that there must be easier and less public ways to bribe the admin

Re: Treason in the Futures Markets

#38

Post by throw0101c »

sonzohan wrote: post #31
the_gipsy wrote: post #10

Excuse my ignorance, but why can't this be traced? It's not crypto wallets, why is there no transparency here?

It's not that it can't be traced, the author is stating it won't be traced because high-ranking government officials are selling those secrets. This is actually not new in this administration. Last year the president posted on social media telling people to buy stocks a few hours before he announced tariffs ( https://apnews.com/article/trump-truth-social-djt-tesla-musk... ). The bigger problem isn't whether or not it…

> It's not that it can't be traced, the author is stating it won't be traced because high-ranking government officials are selling those secrets.

"US SEC's ex-enforcement chief clashed with bosses over Trump cases before leaving, sources say":

* https://www.reuters.com/business/finance/us-secs-ex-enforcem...

"SEC enforcement director quits":

* https://www.cfodive.com/news/sec-enforcement-director-abrupt...

The head of the SEC didn't want the SEC's investigation division to investigate (certain things).

Re: Treason in the Futures Markets

#39

Post by kasey_junk »

patall wrote: post #37

So, who is paying the bill here? I am assuming the insider trading itself is zero-sum (its obviously different if what's happing happens only to allow insider trading) and while some (like passive investors like me that buy every month) win a bit, others lose a bit, someone loses big on the futures market. Is that the high frequency and quant traders? Because I assume, someone must be really mad? Especially since, an…

The losses would be diffuse. In the commodities markets you have a blend of speculative action and real economic activity. The blend is different based on the contract as well. The emini futures are pure financial engineering so it’s harder to track directly to the underlying economic activity.

Wti is much easier. Lots of real economic actors that produce or consume oil are active in those markets.

Re: Treason in the Futures Markets

#40

Post by patall »

rich_sasha wrote: post #4

While I agree it is very suspicious, needs investigating and far, far greater oversight in general, I'm not sure there is enough to conclude this definitely is insider trading. Markets are weird. People trade for weird reasons, sometimes gently and in small size, sometimes aggressively and all at once. We're zooming in at a short window just before the tweet. If you look at random windows you'll find these too. 6.49…

Maybe a naive question: those transactions are traceable. But we assume this admin will not turn itself in. However, such transactions in other nations would be investigated. Are there cases of similar transactions before the US presidents tweets in i.e. Europe?
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