The $1.5B Insider Trade Before Trump’s Iran Post — ft. Anthony Scaramucci

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Today's number 77.

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Here's an Irish joke.

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One less drunk.

If money is evil, then that building is hell.

Welcome to Profty Markets.

I'm Adelson.

It is March 26th.

Let's check it on yesterday's market vitals.

The major indices swung through the day, but ended the session in the green.

Oil declined.

Treasure yields fell and finally, matter and Google shares were a little changed after

the companies were found liable of negligence in the social media addiction trial.

Okay.

What else is happening?

The Iran War is shining a spotlight on insider trading, and Washington may be at the

center of it.

On Monday morning, roughly $1.5 billion in S&P futures were purchased, and $192 million

in oil futures were sold.

That was five minutes before President Trump announced that productive conversations

with Tehran were underway.

The position netted $60 million minutes after the true social post, Senator Chris Murphy

called it, quote, mind-blowing corruption, and asked publicly whether Trump, a family

member or a White House staffer, was behind the trade.

Meanwhile, the FT separately flagged $580 million, and crude oil futures that traded 14

minutes before the announcement.

Okay.

Here to help us untangle what is going on here, we're speaking with Anthony Scaramucci,

the founder and managing partner of Skybridge Capital, Anthony, thank you for joining us.

Please, I know you have thoughts.

Well, it's great.

It's great to be on.

I want to add to that if you don't mind.

Please.

So, April 2nd, 2025, Liberation Day.

They put trades on.

They got short the market prior to the announcement.

Trump came down from Mount Evil, like Orange Moses, with the big tablets.

Okay.

They got short the market prior to that devolgement.

A week later, prior to Trump saying he was pulling back the tariffs, there was going

to be a 90-day moratorium.

They got along the market.

Okay.

On October 10th, about an hour before the tweet went out, related to the rare earth minerals

and the fight that he'd be starting with China, they got short the market, they got short

the crypto market.

So this is another example of it, but it's been very consistent throughout the administration.

Tens of millions, if not hundreds of millions of dollars, are being made.

And so much so that the head of the enforcement area that's supposed to police this stuff,

she resigned last week, because she said she can't get the agency focus on this.

Now we sent Martha Stewart, and so you're young yet.

I think you know she is.

I watched the documentary.

So I know.

So for your younger viewers, she had $45,000 a profits that she had a discord.

And she's spent five months in a federal prison, because they caught her, quote unquote,

insider trading.

This is hundreds of millions of dollars, okay?

But there's a bigger problem here for the American people.

And that is, this is rampant.

Trump has taken it exponential with his team.

But you know, a Democratic representative is Kelly Morrison.

So Kelly Morrison bought Seronic technologies, so name I didn't know.

But she bought Seronic technologies, which is an autonomous warship company, nine days

after the beginning of the war with Iran.

Right as the Navy was awarding Seronic contracts, her office said that her portfolio is managed

by a blind trust and an investment manager, and she had no prior knowledge.

The government watchdog said, hey, whoa, this is a pretty clear conflict of interest.

So what I'm here to tell your viewers and listeners, Trump has gone exponential.

But Nancy Pelosi, she's traded her account better than any hedge fund manager that I've

ever met in my life.

Myself included, you pick the biggest hedge fund managers, and it's not just her.

It's bipartisan.

Okay.

So they're running rampant in Washington with the corruption.

Is it American?

I'm embarrassed by it.

As an American, I would like it to stop.

The insider trading at the Congress level is legal.

The insider trading at the Trump level is probably not legal because it's not Trump himself

doing it, but it's people close to him that are actually doing it.

That probably makes it illegal.

So here's two things I would say very quickly.

Thing number one, if you're a young kid, if you're the younger version of me growing up

in the 1970s, Professor Galloway, growing up in the 1970s, we had hope on our side and

aspiration.

I'm not saying there wasn't corruption, Ed, in the country, but it was veiled.

It wasn't this big.

It wasn't this traumatic.

And when you have corruption like this, at this scale, if you're a young kid, if you're

a young Scott Galloway, a young Anthony Scaramucci, you're looking up and you're seeing a concrete

ceiling.

You're saying, okay, oh my God, there's a two tiered system.

There's one tier for those guys, a different tier for us, we're never going to make it.

And it creates a tremendous amount of cynicism in a society.

So I'm heartbroken by it, but nothing's going to happen.

And they're going to make some more tweets and trade the oil markets.

Somebody got short oil before the president's announcement yesterday where we said we're

getting this big gift from Iran.

And it turned out, I guess one of the Thai tankers was able to pass through the straight

or horror moves as a sign of good faith, which was lots of oil coming back onto the international

markets.

And of course, oil went down and guess what they did, they closed the short position.

So I think the stuff's reprehensible, but I don't think it's changing.

I'm so glad you mentioned all of the previous instances that this has happened because

it seems that everyone is focused on look at the inside of trading as it relates to Iran.

And then my mind goes back to, yes, exactly, liberation day when we seem to see the same

thing.

Then the post liberation day taco, we've seen this constantly over and over again.

As you say, it's happened on both sides, but the level with which it has been, I guess

shameless, the fact that they don't seem to care at all, the fact that the kids are investing

in these drone companies as well, before we go and launch these attacks on Iran, combined

with the fact, as you also mentioned, you made all the points that I hoped you would make,

which is the SEC director has left because she tried to investigate this stuff and she

got scolded by her bosses and we saw similar things with the DOJ as well.

And so I guess the question becomes, I mean, how bad has this gotten?

And do you think that people are properly recognizing this?

Because I see what's happening.

This is like the greatest corruption we've ever seen, or at least that I'm aware of.

That to me is like, it's a cut above just regular political gripes.

This seems to me like this is a serious issue that, I don't know, that people need to

at least vote on or at least consider voting on.

So the woman that you're referring to is, her name is Margaret Ryan, because she was

just with the SEC for many years, and she basically resigned under protest because she said

that she cannot get any enforcement of any of these actions.

And by the way, these are easy to tag, and these are easy to de-geocenter the tag on

the trading.

You can find out immediately who's doing all this stuff, and then you can start bringing

cases, and she's been told by her bosses that she cannot do that.

So I think that's reprehensible, but I want to take you back, because you said this

is the worst corruption ever.

We had the T-pop dome scandal, unbelievable corruption, but those people got prosecuted.

That was at the turn of the century, the 1800s and the 1900s.

We had the abscam case when I was in high school.

This is back in the 1980s, where two congressmen were caught on a bribe, where the FBI had

a wire on them, and they got caught saying, oh yeah, give us that money and we'll change

our position on this policy inside the government, and they got caught.

So the point I'm making, we have corruption in the country.

We have political corruption, banking corruption, all sorts of corruption, but attached to that

corruption was some level of law enforcement, and some level of justice.

I'm not saying it's perfect, but at least there was a supposition in the country's, oh

wow, do something wrong like that.

That bald face, there will be repercussions, and that repercussion ed creates a deterrent

for people.

Yeah.

You see what I mean?

I was speaking at the 92nd Y with a guy who got caught inside of the trade, and he wore

a wire for the federal government, and he stopped a huge insider trading ring in the 2006,

2007 and eight time period on Wall Street.

That stuff is over.

It makes the markets unfair, it makes the pricing and the market manipulative, and it's

giving a license to these people to do what they want.

And look, the flip side is, the congressmen are going to say, you pay me $180,000 a year,

I can't afford to live, and so I'm going to enrich myself by doing this.

And I want to make this last point, because I need your listeners to hear this.

We have this thing called Citizens United, which means people can give unlimited donations

to the congressmen, right?

All political candidates, all policies, unlimited donations.

So here's what's going on, the congress has a 14% approval rating.

It's slightly above Kim L. Jung, the North Korean dictator.

However, the individual congressman has a 95% incumbent rate.

So they're narrative to their people as who cares, man.

I'm going to do whatever the hell I want.

The money's coming in from big food, big pharma, big business, big wealthy.

I'm going to get reelected.

And so what are we trade in today?

What information am I going to get?

You know how many times a congressman has bought defense stocks the day before, two days

before the contract is announced that the appropriations is going to that defense contractor?

I mean, it is staggering, and it is sad, and it is tragic.

And it's very unfair to the American people.

My question to you before we let you go, I mean, you're in the politics game, or at least

you're a political commentator, you have been in politics.

I mean, this, to me, seems like it could be the issue going into the midterms and perhaps

for the presidential elections, while that, I mean, there are certain issues that are

political issues.

There are certain things that are cultural.

There are issues with DEI, there are, you know, some people believe that tariffs are

a good idea.

Some people think it's a bad idea.

But this issue seems to be so brazen and so criminal that it makes me believe that this

is probably going to be the ultimate issue.

And that is the issue of corruption and insider trading and profiting off of being elected

into a position of power as someone who's, you know, in politics.

And do you think that that will transpire?

So I don't.

And it should.

But I don't.

Let me tell you.

Let me give you a quick history.

Peter Switzer wrote about this insider trading stuff in 2012, 60 minutes did a big story

on it.

And the Congress said, oh, we're going to pass something called the 2012 Stock Act, which

prohibited the use of non-public information for trading.

And so there was an eight-month period of time where the Congress was handcuffed and

they couldn't trade.

And by voice vote, Ed, they didn't want to go onto the floor because they didn't want

to be seen on C-SPIN by voice vote that called in and said, let's put it back in.

Wow.

OK, we're going to vote on putting it back in.

Yes, we're voting and putting it back in.

So now fast forward, it's 14 years later.

And the last 14 years, they've been running this racket.

So Chris Murphy, you mentioned him earlier in the program, he's a senator from Connecticut.

He's trying to come up with something now that's called the No Betz Act.

OK.

And he's basically trying to say if we can stop the prediction markets, make it illegal

to bet on assassinations or make it illegal to bet on wars, it's called the Betz Off Act,

I should say.

But in any event, I don't think that's going to pass.

And by the way, if it does pass for political purposes leading into the midterms, as soon

as the midterms are over it, they're going to vote back to get it put it back on.

I'm just telling what these guys do.

This is why people don't like them.

Exactly.

It's very depressing.

We could talk about it for hours, but I've got to let you go.

Anthony Scaramucci, founder and managing partner of Skybridge, Capital, Anthony, always

appreciate it.

Thank you.

Thank you.

You're real pleasure to always be on with you, man.

Thank you.

After the break, Alon Bell's sound off in private credit.

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We're back with Profty Markets.

Private credit is in crisis, and investors are rushing for the exits.

Aries management and Apollo both capped with drools at 5% this week after redemption requests

came in at more than 11%.

That means investors got back less than half of what they asked for.

Meanwhile, Moody's downgraded a fund run by KKR, and a future standard to junk status

on Monday, saying the fund's asset quality had worsened more than its peers.

The latest wave of fear wiped out more than $10 billion in market cap from Aries, Apollo,

Blackstone, and KKR on Tuesday.

And here to tell us what is going on here, what is driving this turmoil in the private

credit market we are speaking with Steve Iceman, the legendary big short investor, also host

of the real Iceman Playbook.

Steve, thank you very much for joining us again on Profty Markets.

We wanted to have you on to talk about this because you were the guy who was telling us

about this a few weeks ago when we had you on that Friday episode and things seem to

have gotten even worse.

So just remind us what is happening in the private credit markets and what we've learned

here.

The final thing is that from my podcast, I do this weekly wrap that I put out every Friday

and every week for the last probably two months, I'm speaking about private credit.

And I just amusing for your viewers, you know, I start writing the wrap when I wake up

Monday and I do work every single day.

And so for the last several weeks, the way it's been written and it goes, and then there

was some more bad news about private credit on Monday, blah, blah, blah.

And then I wake up Tuesday and then I add a paragraph, and on Tuesday, blah, blah,

and on Wednesday, and so it's absolutely relentless.

Yes.

So let me, let's take a step back.

There are two issues here.

They're related, but they're not exactly the same.

The two issues are should private credit have been sold to retail.

And I think the answer to that question is mostly no, and we're suffering the ramifications

of that right now.

And the second issue, which is related, is are we starting a credit cycle in private credit

and how bad is it going to be?

So let me address the first question first, and then we'll get to the second question,

because that's every piece of news that you hear is related to that.

And your private credit funds were originally created for institutional money, and that makes

a lot of sense because you're talking about long-term illiquid loans and institutions know

what they're getting.

They're getting a higher yield in exchange for less liquidity, and that's fine.

After private credit basically sold their funds to every single institution on planet

earth, they looked around and they say, okay, now what do we sell it to?

And they said, let's sell it to retail.

The problem is that with retail, you have to create liquidity.

So what they did was they created mostly what I like to call the illusion of liquidity,

or semi-liquidity.

Now all this was disclosed, none of this is illegal.

So no one's going to jail for this.

This was all disclosed in the prospectus is whether the retail investors actually understood

what they were getting into, who knows, but no question it was adequately disclosed.

All these funds have quarterly caps in their documents.

Most of the funds have a 5% quarterly redemption cap.

Some have seven, but most have five.

And so what's been happening is, for the last year, the news on private credit has gotten

steadily worse, and we could talk about where that's happened.

And so the redemption notices are universally coming in now above the 5% cap, and with

the exception of blackstone in the most recent quarter, which did honor a 7.9%, redemption

notice, even though the cap is 5%, everybody else is just honored the cap.

That's part one.

Part two is that we have not had a credit cycle in the United States since the Great Financial

Crisis.

And that has bred a tremendous amount of complacency amongst lenders.

And we are overdue for a credit cycle.

And traditionally, if you know anything about lending history, whenever there is a credit

cycle, the place that it takes place almost 100% of the time is the asset class that grew

the most.

So in the Great Financial Crisis, the asset class that grew the most was subprime mortgages,

and that blew up the most.

Since the Great Financial Crisis, the banks have not had much loan growth at all.

All the loan growth has really been in private credit.

Private credit 10 years ago was a 300 billion per year market, and now it's close to a 2 trillion

per year market.

So you're starting to see cracks in credit.

You mentioned that this KKR fund got downgraded by Moody's.

By the way, the rating agencies are always very slow.

If the rating agencies are downgrading it, you know it's a real problem.

No, it's a problem.

Because if you're in the rating agencies and if there's a problem, you know, problem.

So you have one downgrad of a fund, because it's non-accruals were too high.

I think they were 5.5%, which is probably the highest in the industry.

You have an, what the, there's private credit, there are three parts of private credit.

There's direct lending, there's asset back lending, and then call it other.

The biggest category is direct lending and then asset back lending.

Direct lending, which gets the most press, 80% of that business is basically private credit

lending money to private equity to buy companies.

What makes this sort of incestuous is that most private credit funds are run by private

equity companies.

So in a sense, what you have is private equity raising money in its private credit funds

to lend to itself to go buy the companies that it wants to buy.

If that sounds circular, it's only because it is.

So 80% of private credit is related to that.

Now between 2018 and 2022, private equity went on a buying binge of software companies.

Yep.

Now, that looked like a great decision, because you know, for the last 30 years, the best

place in tech to be was in software.

You have the SaaS model software as a, I think it's called software as a service model

where you pay monthly.

So everybody loves that because it's so easy to model, you know, software companies have

done exceptionally well as technology has grown and they want them on a buying binge.

So apparently about 25% of all direct lending is in software companies that were bought

between 2018 and 2022.

Now, those companies were bought when interest rates were considerably lower than the where

they are today.

You know, a lot of that happened during COVID.

And about 11% of those loans are going to need to be refinanced next year.

And another 20% are going to be refund, need to be refinanced the year after that.

And if they are refinanced at all, they're going to be refinanced at considerably higher

interest rates.

So that's a problem.

And some of them may not be refinanced at all because people are literally freaking out

about the impact of AI on software as I'm sure you've told your viewers many, many times

that I've told mine.

So what's happened?

And then there was a piece of news today that I thought was very interesting, which was

not in the direct lending world.

There was in the asset back world, Barclays put out a press release.

I don't know if it's a press release, it was a Bloomberg story.

I think it was a Bloomberg story.

That Barclays has dramatically pulled back from making asset back loans to small to medium

size companies.

So it'll only make asset back loans to large corporates.

This is what happens at the beginning of a credit cycle.

The news gets bad.

People start to worry about losses, underwriting standards start to tighten.

Certain borrowers are cut off and lending gets tight.

Yes.

And when that happens more often than not, but not all the time, you go into a recession.

Private credit is now big enough and it has been the entire growth engine of lending

for the last 10 years that if private credit starts to get very, very tight, that's going

to hurt our economy a lot.

So I think that is the big question for regular investors, because I mean, we saw what happened

when that credit cycle occurred in 2008.

People got crushed.

It was just total chaos and everyone knows about your role in that story.

It's not going to be as bad as that.

Yeah.

Everybody's got to calm down.

I mean, we'll talk about that.

If there's a recession, it'll be a recession.

It's not going to be.

I feel very strongly won't be a financial crisis, which is an important point because that

is where the mind goes to.

That's where the mind goes because of PTSD.

Yes.

Everybody has it from 2008.

But it does seem, I mean, when you think about the dynamics here, if I could just try

to simplify really what's happening, it's almost like this big, a huge amount of leverage

was built up on top of these software acquisitions.

And now that everyone has decided, actually, maybe those acquisitions won't such a good

idea.

Suddenly, it means that the lending that was built on top of those acquisitions wasn't

even worse idea.

Those could get totally wiped out.

And the dynamics.

Well, the equity gets wiped out first.

Yes.

And here's the problem with analyzing this.

It would be nice to know what is the average for your typical one of these software companies.

Let's say I'll just make up a number.

Let's say $100 million was lent to buy this company.

That's the debt.

How much is the equity?

Is there a 100 million in equity?

Is there 10 million in equity?

I don't know.

And these companies aren't disclosing it.

So if there's a lot of equity there, then maybe the lenders are protected.

Just the equity gets wiped out or really are heard very, very, very badly.

Right.

But we don't know because we don't have enough data.

And in that dynamic, what you have is, as we've discussed here, these withdrawal requirements

that are becoming more and more discussed in the news, which has the feeling of a bank

run.

It's like, oh no, I'm not so confident anymore.

I want to take my money out.

And the bank say, no, you can't take your money out, which makes people even more anxious.

They want to keep taking the money out, which is kind of the problem.

And in the case of a regular bank, the people who are trying to take their money out are

regular people.

Yes.

In the case of the private credit markets, it seems that it's mostly not regular people,

but also kind of regular people because as you say, they opened it up to retail.

Well, let's retail as people with 401Ks, it's people with brokerage accounts.

It's not, it's not, I would say, it's not lower middle class people, right?

It's people with money who are upset that they can't get that money back.

I'd be upset too.

Yeah.

I guess the final question before I let you go here is, you know, if this occurs, if the

credit cycle does occur here, how bad would it be?

What would that recessionary moment look like and how much better would it be compared

to say 2008?

Okay.

That's actually a very, very important question to address.

What made 2008 as a calamitous as it was?

Was it not only was there a recession, but there was an actual fear that the entire banking

system was going to collapse.

And then when the banking system collapses, I mean, if you go to the bank, you can't get

your money.

That's planet earth burns situation.

And that's why the government had to step in.

Since the financial crisis, I think the Federal Reserve, which is the chief bank regulator

of the United States now, that was what happened there from Dodd-Frank, has done a very, very

good job recapitalizing the banking system and reducing its risks.

I think it has no risk.

This industry does have, does make loans to these private credit funds.

But I would categorically state that the U.S. banking system is better capitalized and

it has ever been in history, hard-stop.

It's never been even close to this well-capitalized.

It has never, it also has never had as much liquidity on its balance sheets as it has today.

Now I don't worry if there is a recession that there's a banking crisis, leaving Silicon

Valley aside, which is a very, very unique kind of situation.

If we have a credit cycle, private credit could put the economy into a recession.

And it'll be a garden, I think a garden variety recession, people will lose, I mean, it's

not going to be pleasant.

Nobody's going to be happy and say, oh, it's only just a recession.

Nobody's going to put candles on a birthday cake and say, how wonderful is this?

But it'll be a garden variety recession and the economy will slow.

People will lose jobs and eventually we'll come out of it, but you're not going to, no

one's going to be worried about JP Morgan or city group or Wells Fargo or any of the

backs.

It's just, it's unimaginable to me at this point.

Yeah, equal parts, encouraging and also quite worrying at the same time.

Well, probably you have to do another episode on this TV deeper, I'm sure we're going

to see a lot more ahead.

Oh, you think there's going to be more news?

Like, maybe tomorrow.

Exactly.

You have to redo your, your, your monologue again, after redo my rap, your rap.

Steve Eisenman, host of the real Eisenplay book, Steve, always appreciate it.

Thank you.

Thank you.

Thanks for having me.

Well, we've already discussed the insider trading scandal as it relates to Trump and Iran,

the fact that $2 billion worth of oil and S&P futures were traded 15 minutes before Trump

announced he was in talks with Iran and the fact that we likely won't see any retribution

because Trump has essentially gutted the SEC, the agency whose job it is to go after

these crimes.

We've discussed all of this, but I think we should also just take a moment to put this

specific insider trading scandal into context and acknowledge the fact that actually this

isn't the only one we've seen.

No, we have seen plenty of other insider trading scandals during this administration,

which Anthony correctly highlighted, but each time it happens, and after we've expressed

a little bit of outrage, we seem to forget about it.

And then we just move on to the next thing.

So let me just remind you of a few of those scandals.

Let's start with the tariffs, for example.

Most of us were busy worrying about how bad the tariffs would be for the economy and

for inflation and for trade relationships, and indeed we were right.

What we forgot about, though, was the fact that millions of dollars were likely being

made by insiders who already knew what Trump's tariff policy was going to be.

For example, more than a dozen government officials and congressional aides made big

stock market trades before Trump came out with his first liberation day announcement.

After that, he pulled those tariffs, and he famously tar-code, but just a few minutes

before he did so, we saw once again a huge spike in S&P options trading with some trade

skyrocketing more than 2,000% in a single hour.

It was one of the largest jumps in the S&P's history, and a handful of people mysteriously

seemed to know exactly what was about to happen.

We also have to mention the insider trading in crypto.

The fact that Trump coin netted more than a billion dollars for 58 anonymous crypto accounts.

Accounts whose operators happened to sell at the exact right time, right before millions

of Americans lost literally billions of dollars of their own money.

The same thing happened with Melania coin, the same thing happened with world liberty

financial.

In fact, Eric Trump is now bragging about how much money his family made off of these

crypto grifts.

But I'm not done yet.

We could also talk about the billions of dollars Jared Kushner raised from foreign governments

to invest in Middle Eastern assets before he personally steered us into war with Iran,

as was literally admitted by Trump himself.

We could also talk about the millions of dollars the Trump kids invested in defense

companies and drone startups.

Again, before we decided to go to war in the Middle East, we could also talk about the

WITCOF children who have been personally brokering real estate deals in the Middle East,

while their dad runs the United States Foreign Policy for the region, or even we could

talk about David Sachs, who continues to invest in AI companies through his VC firm while

he simultaneously runs our AI policy for the entire nation.

I could go on and on here.

This is just scratching the surface.

And as I explained yesterday and as Anthony explained to, this is only going to continue.

Because the SEC and the DOJ and even the FBI have decided they don't want to do anything

about it.

Why?

Because if they do, they'll probably get punished.

Maybe they will get fired.

This is a classic case of corruption.

This is what happens in Russia.

This is what happens in the fictional world of Batman and Gotham.

The criminals are now in bed with the cops, which leaves us with one option.

We have to vote them out.

But it also leaves Democrats with an interesting opportunity, especially the Democrats who are

running for election.

And that is you could make this your platform.

You could promise that if you win, you will put every Trump affiliated insider trader behind

bars.

In fact, every insider trader for that matter, that could be your campaign.

And even better, if you win, you could actually follow through with that promise.

And you could actually put these people in jail, not because it's performative and

not because it got you the votes, but because it is the right thing to do.

Billions of dollars have been made off of insiders connections to the president.

But the more honest way to put it is that billions of dollars have been stolen by insiders

connected to the president.

The grift and corruption is reaching a level here that is simply untenable.

And I think we can all agree it is time we put an end to it.

Okay, that's it for today.

This episode was produced by Claire Miller, an Alice Weiss, edited by Joel Pasin, and engineered

by Benjamin Spencer.

Our video editor is Brad Williams.

Our research team is Daniel Lahn, Isabella Kinsel, Chris Snowdon, here in Meals of

Vario.

Our social producer is Jake McPherson.

Thank you for listening to Prof. Markets from Prof. Media.

If you liked what you heard, give us a follow.

I'm Ed Elson, and tune in tomorrow for our conversation with Bill Gurley.

Today's number 77.

That's how many people are in Ireland's, I don't know why I said it with an Irish accent.

That's super weird.

I can't stop again.