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Trader Smells Something Fishy in 'Trump Chaos Trades'

But other market observers downplay concern over some hugely profitable moves
By Newser Editors,  Newser Staff
Posted Oct 17, 2019 2:31 PM CDT
In a file photo, clerks shout in the pit at the Chicago Mercantile Exchange.   (AP Photo/Anne Ryan, File)

(Newser) – A provocative post at Vanity Fair is calling into question some seriously lucrative trades at the Chicago Mercantile Exchange. The piece by William Cohan recounts a number of trades that have paid off spectacularly well for somebody—a trader or perhaps a group of traders—after big market fluctuations brought on by Trump actions. The big example: On Friday, June 28, someone bought 420,000 "September e-minis" in the closing minutes of trading. That weekend, Trump announced good progress in talks with China, and the June 28 purchase soon realized a profit of $1.8 billion. Cohan ticks off similar examples with profits ranging from $82.5 million to $1.5 billion, and he says CME traders "have been watching these kinds of wagers with an increasing mixture of shock and awe since the start of the Trump presidency."

One longtime trader tells Cohan "there is definite hanky-panky going on, to the world’s financial markets’ detriment." Others disagree. A CME spokeswoman says the trades did not originate from a single source and therefore are not of concern. MarketWatch notes that reaction in the financial world is mixed, with some smelling insider trading at play and others shrugging off the story as overplayed. "Wait, the whole story is that big directional bets are happening at the end of trading days and then things happen the next day which put those bets in the money?" asks Yahoo Finance reporter Myles Udland. Cohan, for his part, thinks regulators ought to take a closer look. (Read more Chicago Mercantile Exchange stories.)

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