WH Tipped Off GOP Investors On COVID Danger While Publicly Saying All Was Fine
On Feb. 24, President Trump tweeted that the U.S. had the coronavirus under control, but that same day, senior members of his economic team privately told members of the conservative Hoover Institution they were less confident.
- According to a document obtained by The New York Times, “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.”
- Larry Kudlow, director of the National Economic Council, followed up the next day saying publicly that the virus was contained “pretty close to airtight” but told board members it was “contained in the U.S., to date, but now we just don’t know.”
- “The document, written by a hedge fund consultant who attended the three-day gathering of Hoover’s board, was stark," The Times wrote.
- Hedge fund veteran William Callanan wrote that nearly every official raised the virus “as a point of concern, totally unprovoked.”
- The memo, which circulated among parts of the investment world, made a clear implication: “The president’s aides appeared to be giving wealthy party donors an early warning of a potentially impactful contagion at a time when Mr. Trump was publicly insisting that the threat was nonexistent.”
- The Times interviewed eight people who either had copies of or were briefed on the memo, showing how “elite traders had access to information from the administration that helped them gain financial advantage during a chaotic three days” for global markets.
“Short everything,” was the reaction of the investor, using the Wall Street term for betting on the idea that the stock prices of companies would soon fall.
That investor, and a second who was briefed on the Hoover meetings, said that aspects of the readout from Washington informed their trading that week, in one case adding to existing short positions in a way that amplified his profits. Other investors, upon reading or hearing about the memo, stocked up on toilet paper and other household essentials.
- The Times reported that Callanan passed information from the Hoover briefing to another key player:
Mr. Callanan described the Hoover briefings in a lengthy email he wrote to David Tepper, 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 ill-prepared health agencies appeared to be to combat a pandemic.
Inside Appaloosa, the email circulated among employees, who in turn briefed at least two outside investors on the more worrisome parts of Mr. Callanan’s email, according to people who received those briefings.
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.