Bulwark Takes - Insider Trading? Or Just Another Day in Trump’s America?

Episode Date: April 10, 2025

Trump’s sudden 90-day tariff pause sent markets soaring, and raised big questions about insider trading. Did someone get a heads-up? JVL and Sam Stein break down the chaos, corruption, and long-term risks.

Hello, everyone. This is JVL here with my bulwark colleague, Sam Stein, and the Trump tariffs are paused, kind of, sort of, maybe, for some people. We'll see. And, Sam, in the wake of this, as everybody is picking up the pieces today, it seems that some people did really well in the markets yesterday. Yes. So this was kind of. Wow. What great luck. Yeah. It was either expected or corrupt or both, I suppose.

But this was beginning picking up steam last night where people noticed that early in the day, Trump had before he did his complete reversal, he had tweeted something akin to a it's a great time to buy. And that kind of piqued interest, obviously. And then it was observed that right before, like 90 minutes, maybe less, before he actually issued that statement on truth saying, hey, I'm going to go with this pause, an inordinate amount of trading activity took place. Yeah. Now, look, I'm just a simpleton. Who knows, right? But it strikes me that this is the easiest

way to make a huge amount of money, which is Trump gives you a heads up that, hey, I'm going to actually put a 90-day pause on these things. And the first thing you do is you say, you know what? I bet the Dow is going to skyrocket off of this. And lo and behold, it does. Now, the reason it got kind of juicy, though, is that, first of all, there's going to be some revelation about whether members of Congress made transactions in this time period because they're required to divulge what kind of transaction they did. And last night, Alexandria Ocasio-Cortez – And the laws are super duper strict these days. Yeah, exactly.

Very straight. Very tight. There's no way to get around it. Alexandria – but Alexandria Ocasio-Cortez, I will just say this. This is very intriguing. She tweets last night, any member of Congress who purchased stocks in the last 48 hours should probably disclose that now I've been hearing some interesting chatter on the floor. Disclosure deadline is May 15th. We're about to learn a few things.

It's time to ban insider trading in Congress. We can get to that last point later, but it seems like, look, there's a lot of chatter that shit went down. And I am guessing that at some point, some revelations will happen. Yeah.

I mean, this is my Claude reigns moment. I am shocked, shocked, you know, and it's a good thing we still have three people left of the SEC to go and look into this stuff. Do we even have that many? Yes, we have the three commissioners. Yes. Okay. It's, you know, so there is an interesting philosophical question here about what is insider trading? What is market manipulation?

And my boy, Matt Levine from Bloomberg, wrote about this earlier in the week. Roaring Kitty. You may remember Roaring Kitty from the film Dumb Money. He was the Redditor who basically organized the short squeeze on GameStop. Okay. And he tweeted out or posted on, I don't even know where, but I think it was a tweet. Simply a picture of a video game controller, at which point GameStop stock went right back up again. And is that market manipulation? can say right elon musk goes out

and buys a bunch of dogecoin right dogecoin not a security technically so right it's not marketing and then announces i've just bought 11 billion dollars worth of Doge, Dogecoin goes up. Is that market manipulation? Right. And so this is, I mean, again, there is an esoteric question. And the way Matt Levine deals with this is he says everything is securities fraud. Would you define, are you in the Levine camp? I mean, it seems to me sort of that it is.

Yeah. I mean, what matt says basically is that everything is securities fraud okay and i think i kind of go with that and the point of the government is to try to create arbitrary fences around this in ways that are that basically make sense to try to protect consumers. Because the truth is, yes, everything is securities fraud, and not all these rules can be extended all the way out to the horizon. They can't be real hard and fast.

But you have to make them. I think the Trump administration's view is, no, everything is securities fraud, and it's all legal now. Yeah. Ain't no law in Deadwood. You just legalized the fraud. I mean, this is – to your point, I mean, this is one of the many downsides of investing all this market-moving capacity in one person's portfolio, right? Like Trump can get up tomorrow and say, you know what?

Terrorists are back on. And I think if anyone has talked to Trump in the preceding minutes or hours, they would move to inoculate themselves from that. So we're in a really bad place when it comes to this type of fraud. When a guy like Walter Bloomberg can tweet something erroneously and the market goes up, $4 trillion in market value goes up, and then suddenly he's like, oh, no, he misread the Fox News clip. Yeah. This is, yeah, I mean, it is almost like a classic literary trope. I feel like there's an Evelyn Waugh novel in which some journalist becomes disgraced because he reports the death of a prime minister and the stock market crashes or something like that. But the prime minister is not actually dead and uh that's the world we live in for real now but then you find out that the journalists have been trading on the news or something like that yeah

right something like that well let me ask you uh stepping back what did you make of what do you make of uh trump i guess backing down because of the bond market and what do you think is going to happen in 90 days? Yeah. So this is the part where everybody's going to click stop on the YouTube. No, I think nobody wants to talk about bond markets. But it's it's kind of the most important thing. I remember during the Clinton years, I think I think it was James Carville, but it might

have been Bill Clinton himself who complained the exact quote. I don't remember. But it was something like, it turns out I'm president of the United States and I can't do any fucking thing without looking to see what the bond market will allow me to do. OK. And so here's what the bond market is. The bond market is the market for debt. Right. And it is how credit is allocated.

And without the bond market, you can't get credit. Without credit, financial markets can't function. So this is why the bond market is vitally important to the underpinnings of the entire financial system. So what does the bond market measure? It basically measures risk. The bond market is where, as William Cohen from Puck says, is where risk goes to hide. And what we have seen was since in the two weeks since we began this amazing tariff adventure, the yield on the 10-year treasury went up 17%, which is a tremendous amount. After Trump

announced the pause in the tariff, it only ticked down a tenth of a point. And then it went back up, right? I don't think so. I think it settled yesterday at 4.4. It may be back up today. But the point is the Trump administration was clearly hoping for more. They were hoping that the bond market would be reassured, and it was not. Because the thing is you can't negotiate with a market.

This is what Trump doesn't quite understand. You know, he like it's all out of the deal. It's all negotiation. You can't there is no counterparty in a market. Right. You can't you can't you can't coerce the market. You can't you know, you might be able to manipulate it for a little bit in the short term and the long term. It's too big and diffuse and powerful.

And what's your theory as to why it picked up? Is it just instability and people were not couldn't trust people couldn't trust the US economy in the long term? Correct. And so what happened is the bond market seems to have rendered a verdict. And that verdict is America is not a safe place to do business day to day anymore because we have no fucking idea what the rules are going to be in five minutes and then in five days and then in five weeks. And without that, you can't, if you're a business, make plans about building a factory. You can't even project what your earnings are going to be next quarter because you don't know what demand is going to do. You don't know what your costs are going to do. And all this is like flashing warning lights saying, don't do business with America. Go do it someplace else where the

rules are more stable. And that's why the 90-day pause doesn't really make sense. If we're going to be back in the situation in 90 days and if this is just a subject of like 70 separate negotiations for individualized trade deals, I can't imagine that's going to provide any sort of long-term stability that the people who are interested in the bond market are going to create. So – and also you have people coming out like Kevin Hassett being like, you know what? We're never negotiating this 10% tariff level. It's like you just said that. You're never negotiating before and then saying, of course we did because it's all about negotiation. This time we're really never negotiating and that's why it's like you know this whole notion that

well he's such a genius and there's no real downside to doing all these you know series of negotiations and bluffs and deals miller is because your word loses value and people don't believe you anymore and countries aren't going to invest in america because they find it too unstable yeah and this is the problem these things don't go back together again. Like we spent 80 years building up the rule of law and business practices and regulations, which made the market a safe haven for capital. And once you break ago, the tariffs were still on, but we were in the phase where we were having discussions with countries about individual deals. And China was the most hostile one. And I forget who said it, but they're like, you know what, we're going to get all these Asian countries together and we're going to isolate China by crafting a big trade negotiation. Like that sounds just like the Trans-Pacific Partnership that you pulled out of in 2017.

We should have thought of that. But to your point, when you don't have long-term planning and thinking, you lose sight of these things. And I think that's the real problem with what's been happening over the past 10 days is that we're just gonna have no long-term thinking. I mean, so that's part of it.

But the more foundational problem is that Donald Trump does not imagine that the United States has interests independent of Donald Trump. Exactly. And so he views, you know, l'état c'est moi, that he is the state. He's the state.

And so what makes him happy in this moment is what's good for america and there are no long-term interests in america that extend beyond his trip on this mortal coil and uh like you can't you can't run a country like that in a successful way i want to i just want to very quickly to dip back into bonds yeah the chinese The Chinese hold something like $760 billion worth of treasury securities. At the next auction, if the Chinese just decide to not buy more or to buy fewer, that is going to drive the yield up. And it's going to fuck with the bond market in ways which are retaliatory. But Trump can't do anything about like he just doesn't seem to have thought of this and uh like all of this you know the real like scary scary thing is drives at the heart of does the dollar remain the world's

reserve currency because that is like a nuclear umbrella, like the single most valuable thing America has in the world. And if a decade from now that's gone, like it's not going to be gone during Trump's years. But if America becomes risky enough that the rest of the world decides we can't just go to the dollar, like we have to make alternate arrangements.

Maybe we need a basket of currencies. Maybe we need euros. Maybe we need reminibus, then that is going to fundamentally alter the entire economics of the American economy. Because like our ability to run debts and deficits to pay for our entitlement programs and Medicare and Social Security just evaporates if that happens. So like this stuff is all boring, but it's incredibly important. Deeply, deeply important, yeah. All right, man. Good note to end on.

Sam, yeah, it's great. Hey, good luck, America. Follow the feed. Hit like. Hit subscribe. Be here with us in the bulwark as we rocket sled to hell together.