Ayyyeee… What’s Goodie Everyone. So I got some tea and it involves Trump administrations private briefings and The stock market.
Senior members of the president’s economic team privately addressing board members of the conservative Hoover Institution, were less confident about the Coronavirus. Tomas J. Philipson, a senior economic adviser to the president, told the group he could not yet estimate the effects of the virus on the American economy. To some in the group, the implication was that an outbreak could prove worse than Mr. Philipson and other Trump administration advisers were signaling in public at the time.
President Donald Trump declared on Twitter February 24th that the coronavirus was “very much under control” in the United States, one of numerous rosy statements that he and his advisers made at the time about the worsening epidemic. He even added an observation for investors: “Stock market starting to look very good to me!”
The next day, board members which many of them Republican donors got another taste of government uncertainty from Larry Kudlow, the director of the National Economic Council. Hours after he had boasted on CNBC that the virus was contained in the United States and “it’s pretty close to airtight,” Kudlow delivered a more ambiguous private message. He asserted that the virus was “contained in the U.S., to date, but now we just don’t know,” according to a document describing the sessions which obtained by The New York Times.
The documents written by a hedge fund consultant who attended the three day gathering of Hoover’s board, was stark.“What struck me,” the consultant wrote, was that nearly every official he heard from raised the virus “as a point of concern, totally unprovoked.”
Interviews with eight people who received copies of the memo or were briefed on aspects of it as it spread among investors in New York and elsewhere provide a glimpse of how elite traders had the access to information from the administration that helped them gain financial advantage during a chaotic three days when global markets were teetering.
The memo was breathless and inchoate. It appears to have overstated the gravity of some administration officials warnings to the group and included dire projections from the Centers for Disease Control and Prevention, without clear attribution, that do not appear to have come from the gathering.
The memo was written by William Callanan, a hedge fund veteran and member of the Hoover board. A research institution at Stanford University that studies the economy, national security and other issues, Hoover has been directed since September by Condoleezza Rice, the secretary of state under President George W. Bush. Its board includes the media mogul Rupert Murdoch and the venture capitalist Mary Meeker, neither of whom attended the meetings in February, which were a series of informal, “off the record” discussions with Trump administration officials and Republican lawmakers.
David Tepper, the owner of the N.F.L. team the Carolina Panthers, was one of the first prominent money managers to signal concern over Covid-19 in the United States.
During an interview at a Super Bowl event in Miami on February 1, Mr. Tepper described the virus as a possible “game changer,” saying that investors needed to be “cautious” until more was known about its reach. Many investors regarded his remarks, broadcast on CNBC on February 3, as a reason to either sell investment positions or short the overall market.
Callanan described the Hoover briefings in a lengthy email he wrote to David Tepper who is also the founder of the well known hedge fund Appaloosa Management, and one of his senior lieutenants about the level of concern among American officials over the spread of the virus domestically. In the email, he also touched on how to unprepared health agencies appeared to be to combat a pandemic.
The email circulated among employees, who in turn briefed at least two outside investors on the more worrisome parts of Callanan’s email, according to people who received those briefings.
A book that was published in September, the journalist Bob Woodward revealed that Trump told him on February 7 that the novel coronavirus “goes through the air” and is “more deadly than even your strenuous flus” the opposite of what the president was saying publicly.
The Hoover Institution according to The New York Times; has a close relationship with the Trump administration, and the White House has pulled from its ranks to fill top positions. Joshua D. Rauh, one of the White House economists addressing the Hoover crowd on February 24, has returned to the institution, where he worked previously. Kevin Hassett, who moderated the panel and has served as the chairman of the White House Council of Economic Advisers, is now a Hoover Institution fellow.
Dr. Scott W. Atlas, a Hoover fellow and Stanford professor known for his unorthodox positions on encouraging “herd immunity,” was named to Mr. Trump’s coronavirus task force in August.
The government was investigating financial transactions made in early February before the market spiraled by Senator Richard Burr (R-N.C) who was forced to step aside as the chairman of the Senate Intelligence Committee in May over the inquiry.
Legal experts claim the briefings with administration officials are a very different situation, and it is not apparent that the communications about the Hoover briefings violated securities laws. The Justice Department and the Securities and Exchange Commission would have several hurdles to clear before establishing that Appaloosa or other funds that received insights from Mr. Callanan, either directly or through intermediaries, acted improperly.
By the way, those investors in turn passed the information to their own contacts, ultimately delivering aspects of the readout to at least seven investors in at least four money management firms around the country within 24 hours. By late afternoon on Feb. 26, the day the email bounced from Appaloosa to other trading firms, U.S. stock markets had fallen close to 300 points from their high the previous week.
Information provided by the courtesy of the New York Times and shall not be duplicated nor copied.