So why do I think the Trump Trade money came from SFOs? Because the amount of money they control is staggering, but the number of people involved is relatively small. Who else had the money to reverse what appeared to be a market consensus? Who had an personal stake in lower taxes? In which economic strata are there the most people who subscribe to the ideology that tax cuts always have a powerful stimulative effect on the economy? And what other group is small enough that it could have been lined up to move hundreds of billions of dollars from cash to stock in the event of a Trump win without anyone in the financial media getting wind of the plan?
The way the Trump trade started (if I’m right) was really quite brilliant. Rather than argue that the market should and would go up and not down following a Trump victory, this huge group stood aside and let it go down. When the buying started (the owners and managers of the kind of money I’m talking about have ways of trading when the market is closed, such as through institution-to-institution trading) prices had just been knocked down, so the rich traders got things for a discount, as was the plan.
Of course, for SFOs to act together in such a manner, they would have to be in active communication with each other. Whether such communication / planning might have been in some way improper, I’m afraid I don’t know. Technically, any effort to manipulate the market is illegal, but on the other hand, the brokers on Wall Street talk to each other about their plans all the time. This is done so openly that it is even done, to a large degree, through the financial media.
In other words, the new money was the smartest money on the market, at first. Then, something went wrong. What? Well, here’s a hint. Remember a couple of paragraphs ago when I used the word ideology. Ideology is merely unfortunate when applied to personal views; it’s disastrous when applied to investments.