I did not blog it at the time, but when Trump overthrew the government of Venezuela with his military action, an article in The Atlantic noted that some people profited very handsomely by correctly betting on that outcome via the prediction markets:
When U.S. Delta Force commandos slipped into Venezuelan airspace over the weekend, they did so in secrecy. And yet, in the hours before President Donald Trump gave the final order for the strike, someone bet more than $20,000 that Nicolás Maduro would be ousted as the country’s leader by the end of January.On Polymarket, the online platform that lets people wager on almost anything, an anonymous trader somewhere in the world placed a series of suspiciously well-timed bets. Using a fresh account created last month, the individual made just a few bets in the days leading up to the raid, according to The Wall Street Journal—all on the possibility of imminent regime change in Venezuela—and appeared to come away with more than $400,000.
The Guardian made the same observation and interpretation:
The online wager platform Polymarket has angered some gamblers by declaring it will not settle millions of dollars’ worth of bets on a US invasion of Venezuela, arguing that the capture of the then president, Nicolás Maduro, does not qualify.Before Donald Trump’s forces seized Maduro on Saturday morning, some traders appeared to have anticipated the shock move by placing bets on “prediction markets”.
These were not random "man on the street" bets. Someone had inside knowledge and bet accordingly. The publicly available data do not allow one to judge whether the people doing this are friends of Trump, or military commanders, or low-level communications staff.
Now it has happened again. The embed at the top of this post is a cropped photo of my television, which was tuned in to Bloomberg at about the start of the trading day. Donald Trump had announced (via Truth Social for crying out loud...) that he was going to scale back military action, which might lead to a easing of tensions and the reopening of the Gulf of Hormuz and (theoretically) lowering the price of oil.
The circled data point in the charts show that someone (??who??) traded options on the S&P 500 (proxy for the general market) and oil futures to the extent of more than a billion dollars IIRC. The purple line in the bottom graph is either Brent or West Texas Intermediate, which immediately traded down when the market opened (and the equity indexes immediately traded up).
Someone knew this would happen. Again, available data (at least public data) don't show whether it was a Trump friend. But somebody is making big bucks from Trump's decisions.
I know someone who is buying a leveraged position on oil prices on Fridays and settling on Mondays (shorting was never something I got into, but the principle is you borrow the prospect on the promise of paying it off in the future. So if oil is high on Friday and low on Monday you're selling the borrowed high and paying off low. ). Consistently for the past couple of weeks they've been making money. Too rich for my blood.
ReplyDeleteIt's like the "five day|" halt on bombing energy infrastructure was announced on Monday, so that after the markets close on Friday they can announce forces landing in Iran, either to take Kharg, look for Uranium or both. Or none - I wouldn't know, I don't have that insider info.
This is just more of the same after the flip-flopping on tariffs that sent global stock prices into a sawtooth pattern.
I'm shocked,
ReplyDeleteI'd like to see more statistical data to say if someone had inside information. If all you knew is that there was going to be an announcement, you could bet either high or low as the result of the announcement. And if the odds were good enough, it might be reasonable to make a bet with a 50/50 change of it paying off. So how many people made winning bets? versus how many people made losing bets?
ReplyDelete" If all you knew is that there was going to be an announcement..."
DeleteHow would you know there is going to be an announcement if you didn't have inside information?
Trump might say on Sunday "We're doing something pretty big on Monday" - but you wouldn't know if that was invading Kharg or a peace treaty (or indeed nothing). So you could be in both directions.
DeleteI am not sure why you're asking this question, but there is an article in the wsj about oil rich nations. They're diversifying as well...
ReplyDeleteTypically the White Houses releases a fairly detailed Presidential schedule the evening before the day scheduled. It includes things like "Presidential Announcement on events in the Persian Gulf" (to make up an example). You dont know what the annoucement is, but you know he's going to make some annoucement 12-24 hours ahead.
ReplyDeleteI would also note that the decision to do something like strike Iran was made several days ahead, and the logistics support and strike orders written and sent out well before the announcement. Trump, like any other President, doesnt just step into the Press Room on the spur of the moment, order something, and the government executes the order immediately. For a major operation like this, there are weeks of planning, and detailed orders prepared days in advance, before the public announcement.
This was not like that. Not a military order to be executed by someone else. It was "here's what I'm going to do to lower oil prices". And five minutes BEFORE he pressed the "send" button, someone was already buying futures contracts.
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