Trust is Market Kryptonite.
Never mind the price of oil, a lack of trust will deflate any Bull Market.
Insiders and government officials are profiting handsomely while public anger is boiling.
Last Monday, a person or persons made a ton of money speculating in oil futures contracts.
It’s reported that between 6:49 and 6:50 a.m., 6,200 oil futures contracts valued at $580 million traded.
Coincidentally or not, 24 minutes later, at 7:04 a.m., President Trump announced he would not bomb Iran’s oil fields for the moment and was pivoting toward negotiations.
Not surprisingly, the Stock Market jumped, and oil plunged from $133 a barrel to $96.
The timing of this transaction was, to put it mildly, suspicious.
Trades like this have become more the norm than the exception.
Pro Publica reports:
“More than a dozen high-ranking executive branch officials and congressional aides have made well-timed trades” in advance of Trump’s Liberation Day announcements, during which he imposed tariffs on dozens of countries, which sank the markets for several days.
Republicans aren’t the only ones with their hands in the cookie jar.
Former House Speaker Nancy Pelosi’s stock portfolio returns are epic. She credits her husband’s expertise for the mind-blowing results. It’s hard to take seriously that she married a latter-day Jesse Livermore and ignore the fact that she sat on several committees awash in potential market-moving insider information.
Numerous bills have emerged to eliminate elected officials’ stock speculation. Shockingly, none of them has become law. Probably just another random coincidence.
Speaking of random coincidences, Polymarket has brought the potential for insider shenanigans to unprecedented levels. Polymarket is a prediction market that enables participants to wager on events such as wars, coups, and Natural Disasters.
Many consider these bets perverted, but the truth is, people with insider info are cashing in and out at a voracious pace.
For example, on January 2, President Trump ordered a military operation intending to depose Venezuelan dictator, Nicolas Maduro. Someone began placing bets on the probability of a successful outcome.
According to the WSJ:
A series of Polymarket trades raised suspicions that someone cashed in on advance knowledge of the opration. In late December and early January, a mystery trader placed about $34,000 on Venezuela-related bets, mainly on contracts that would pay off if Maduro lost power by the end of January. The final wager was placed at 9:58 p.m. ET on Jan.2, less than an hour before Trump’s order.
The mystery guest pocketed $400k on this random wager.
Outraged Democrats cried for a bill banning federal officials from using nonpublic information to trade on prediction markets. Republicans castigated this as another example of TDS or Trump Derangement Syndrome. Gridlock is the favored bipartisan solution for such matters.
American anxiety has already passed the boiling point regarding AI job loss, the housing crisis, and the rising prices of just about everything else.
The last thing we need is a loss of faith in the capital markets, with trust in most of our major institutions plunging to all-time lows.
Warren Buffett once wisely said:
‘It takes twenty years to build a reputation, and five minutes to ruin it.”
A Bear Market in trust in the Stock Market would be the cherry on an already suspicious cake.
Everything has a price, including market manipulation.
