A theory about recent stock futures activity is spreading around the US that suggests a conspiracy involving President Donald Trump. It has become known as the “chaos trades” theory, and surely more will be heard of it between now and election day a year from now.
The spreading view is that there are traders who benefit from the chaos that the President, with a single tweet, or a casual remark made before boarding a helicopter, can inflict upon Wall Street and upon the related futures market in Chicago.
William Cohan gave this theory a classic formulation for VANITY FAIR in recent days. Cohan said that “the President’s talk can move markets — and its made some futures traders billions. Did they know what he was going to say before he said it?” Cohan quoted a longtime trader at the Chicago Merc, who said: “There is definite hanky-panky going on, to the world’s financial markets’ detriment.”
There has been a good deal of pushback against Cohan’s “hanky-panky” conclusions, even from people who have no interest in defending President Trump’s policies. Still, the issue is likely to bubble along in the months to come.
The Thing to Know:
All of the five biggest single-day point losses in the history of the Dow Jones index have taken place during the Trump administration. Though the general movement of the Dow during the Trump era has been up, it has been a very bumpy ride.