Can Trump rig the stock market? How Russians are gaining financial control

Normally a headline like this would bode ill for both the stock market and the sitting president:

How Much Will the Trade War Cost You by the End of the Year?

Normally a headline like this would bode ill for both the stock market and the sitting president:

Oil Falls as Deepening Trade War Stokes Growth Concerns

Normally a headline like this would bode ill for both the stock market and the sitting president:

US-China trade war escalates as markets take another hit

But what if those headline writers are giving Trump just what he wants?

What if a very volatile stock market puts billions into the pockets of those who engineered Trump's rise to power? Russian oligarchs are the obvious culprits, but others might also be profiting.

Most people know about the eldritch financial phenomenon known as short selling, the mechanism by which an individual can make tons of cash by betting that a stock will go down. It's illegal to short the market based on inside information. Nevertheless, it happens all the time.

What if a market drop -- or a sharp market rise -- is engineered by the president himself? In essence, the president would be the ultimate inside trader. Note that Trump has gutted the SEC: See here.

Trump knows full well that he and he alone is the reason why the market has seen such astounding volatility during his administration. Under Obama, the market saw a slow, steady, boring rise. Through both word and deed, Trump has shaken things up like an eight-point quake.

Everyone knows that this man says things that no other president would say. It's as if he wants panic.

His funders/enablers/handlers can make money from both a sharp downtown and a sharp rise. What generates obscene wealth is financial violence; direction doesn't matter. "Slow and steady" doesn't win this race.

Something of the sort happened quite recently:

It looks like Trump lied about the trade war to boost stock markets — his bluster may soon start falling on 'deaf ears'

On Monday, Trump told reporters that he held "high-level talks" with China about the trade war, adding "this is the first time I've seen them where they really want to make a deal."

Global stocks instantly reversed what looked to be another day of heavy losses, following the Dow's 600 point drop on the previous Friday. His comments soothed anxious investors.

But China said that those talks never actually happened.

And yet, just days before:

Trump dropped one of his biggest bombshells yet on Friday, when he ordered U.S. companies to start seeking “an alternative to China” after Beijing imposed new tariffs on U.S. goods. The escalation of the U.S.-China trade war sent stocks reeling as the Dow Jones fell 623 points, or 2.4%, to 25,628.90, and the S&P 500 slumped 2.6%, to 2847.11.

The Trump family itself could be making insane profits from these drops and rises. Of course, the Trumps would have to hide their interest via cut-outs.

I'm hardly the first to contemplate this idea. On this forum, a contributor named Ross explains what short selling is and what a put option is.  He then adds:

It is pretty simple. Trump (or more likely, his minions) could easily "short" a company that would likely be hurt by his trade policies. This could include manufacturers (who pay more for steel or aluminum) or those likely to be hurt by reciprocal actions (e. g. Harley Davidson). Those companies may never regain their value, but Trump would make a bunch of money. As any investing book will tell you, trying to time the overall market won't get you that much money. But if you can time sectors, or individual stocks, you can make ridiculous sums.

There's already an app for this:

Software exploits presidential tantrums aimed at big biz

US President Donald Trump's tweets about Boeing, General Motors, and Toyota have affected the companies' stock price – and creative agency T3 believes that consequence will be repeated.

So the self-styled think tank created the Trump and Dump Bot to profit from presidential tweet-lashings. The bot shorts stocks based on the algorithmically detected sentiment expressed in the tweet – the assumption being that castigation by Trump will depress the value of the stock.

If the app makers have discovered how to profit from Trump's flapping gums, then we can reasonably presume that Russian oligarchs and other shady players got there first. Obviously, this app can't possibly generate the kind of wealth available to those who receive a "heads up" message days or weeks beforehand.

Could Russians profit from these manipulations? Yes. Indisputably.

A number of large-scale Russian holdings in the U.S. via private investment funds have already made the press, and many more likely remain unreported. The sanctioned Russian businessman Viktor Vekselberg invested in the U.S. through Columbus Nova, a private investment firm. Vekselberg’s company, Renova, was Columbus Nova’s largest client. LetterOne, the international investment group co-founded by the billionaire owners of Russia’s Alfa Group, maintains a U.S. office and over $2 billion of investments in the United States.

More about shady Russian investors. The next paragraph does not directly concern the topic of today's post, but it's definitely worth noting:

Altpoint Capital, the private equity firm of Russian billionaire Vladimir Potanin – who made his fortune in metals and mining– made the news recently because in 2015 it bought a company that has the contract to store Maryland’s statewide list of eligible voters on its servers. Governor Larry Hogan has stated that Maryland was unaware of Potanin’s ownership until informed by the FBI. The contract still appears to be in effect. The same company has also won data center work for the Department of Defense and the Department of Labor. Another data center company in which Altpoint has invested received an Energy Department contract last year.

And yet the red-capped sheeple continue to be upset by the Rosatom uranium deal, which they falsely blame on Hillary. Of course, Trump could have undone that deal with the stroke of a pen -- he has the authority to force a divestment -- but he has not done so. Instead, he is allowing Russians to buy up our elections systems and to gain access to scads of data from DOD and the Depart of Energy.

Classified data? Very likely. Worthy of investigation, I'd say.

Let's continue looking at this under-noticed article from last year:

Under the current framework, there are three main gaps related to private investment funds:[3]

Fund managers are not required to report or maintain records of the identities of the beneficial owners of the funds they manage. Fund managers are only required to report to the Securities and Exchange Commission (SEC) the percentage of investors who are foreign, without disclosing their names or nationalities.

Fund managers are not required to disclose their investments in the United States. SEC rules generally mandate that fund managers disclose only positions in publicly traded stock.[4] Recently passed reforms to the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign acquisitions for national security risk, will improve the U.S. government’s ability to block high-risk transactions that were previously outside the Committee’s purview, especially transactions in which foreign actors gain influence but not control over a U.S. company. Increased disclosure requirements for private investment funds would be complementary to, rather than duplicative of, the CFIUS process and would help inform the allocation of the Committee’s resources.[5]

Fund managers are not required to maintain an AML compliance program or file suspicious activity reports. By contrast, banks, broker-dealers, and mutual funds must do both. Since private investment firms are among financial institutions’ most important clients, this opacity inhibits the effective functioning of banks’ and broker-dealers’ compliance programs. The Treasury Department issued a proposed rule to close this gap in 2015 (after withdrawing its 2002 rulemaking in 2008) but has yet to complete the process. Congress called for such requirements in Section 352 of the USA PATRIOT Act, passed in 2001. Closing this gap would also bring the United States into compliance with global AML standards.[6]

Strange history. Yes, I'm proposing a conspiracy theory. Remember all of the outrageous financial hugger-mugger we learned about in 2008? If anyone had talked about such things in 2006, that person would have been dismissed as a conspiracy theorist. Not all conspiracy theories turn out to be wrong.

Now, it is absolutely true that zealots, boobs, rubes and neo-fascists have come to dominate America's "conspiracy culture." But that unfortunate fact doesn't mean that people can't use underhanded methods to steal billions.

If you are conversant with the literature of paranoia, you may know that variants of this "Let's rig the stock market" theory have been around for more than half a century. Back in 1967, one of the all-time strangest JFK assassination books appeared: Were We Controlled?, written by a fellow calling himself "Lincoln Lawrence." Even at the time, readers understood the name to be a pseudonym. This short book makes a few big, weird claims -- including the big, weird claim that someone profited from the massive stock market downturn that hit right after the assassination.

Guess what: This particular "big weird claim" may well have some basis in fact. Nobody has mounted a counter-argument.

That book, I later learned, was actually written by a fairly prominent journalist named Arthur Ford, who usually didn't write about politics. His whole world was jazz; musicians loved him, and he loved them. For a while, he hosted a TV program called Art Ford's Jazz Party, a few examples of which can be found online. Here's a segment he did with Billie Holiday. (Sorry for the wretched video quality, but that footage is still precious.)

How did a guy like that come to write a book like Were We Controlled?? The full tale remains untold, although a few years back, I managed to piece together some of the book's "origin story," which is -- of course -- very bizarre and downright Mad. (Note the capitalization.) At another time, I may write down what I learned.