Dividends and How private White House talks gave some traders an early COVID advantage

If you remember the trading markets this year, you will remember the markets declining over 10% and wondering who made money? It turns out there were some who made money but should have not. If you remember the movie Wall Street – the character Gordon Gecko says to the Bud after Bud gave him information about the pension of an aircraft company, what else do you have. Wall Street runs on information and it is better to have it before everyone else. Later Bud thinks is that insider trading? and wonders how much is enough? It turns out the White House gave some people insider information.

In an article by Kate Kelly and Mark Mazzetti of the New York Times Service, you may remember White House tapes of Bob Woodward, the President said COVID will be much worse than expected and is transported by air. Originally people thought that was the only person the President told and Mr. Woodward did nothing with the information.

On February 24, the President declared COVID very much under control, but hours earlier senior members of the President’s economic team privately addressed board members of the Hoover Institution. Tomas Phillipson, a senior economic advisor to the President told the group everything was not rosy, the outbreak could prove worse than the President was telling the public through news and twitter.

A hedge fund consultant wrote a document to be shared with other members, and wrote What struck me was that nearly every official raised the virus as a point of concern totally unprovoked. The document was circulated and they all though the same manner – short everything. One of the reasons why was the hedge fund consultant not only heard the virus will be worse that the public was being told, but the administration was not prepared to combat the pandemic.

By February 26, the US markets had fallen 300 points.

Other information gained on February 24 was the administration was asking for $2.5 billion in additional funding. On February 25, Nancy Messonnier told the public, it is not a question of if this will happen, but when will it happen.

The reality was President Trump knew but said he did not want to panic the nation. Some people started putting the pieces together and they said how do your make money, short the market. The market fell and their returns were higher.

Linking to dividend paying stocks, all words of the President matter. Whether the words are from the President of the US or President of the company you work for or invest in. There are always interested parties trying to put together pieces to make the pie and then they can make a decision. It looks like by saying one thing in public and another thing in private, those with assess to private discussions were able to take action before the general public. If the President had been more forthcoming everyone could act and make rational decisions for themselves.

There are more questions than answers, till the next time – to raising questions.

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