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

0:00Support for this show comes from Virgin Atlantic. A lot of people dread flying. I've been on some bad flights and I've been on some truly miserable flights. But it's a whole different story when an airline shows up for you and the crew treats you like a VIP. Virgin Atlantic offers warm, one-on-one service from the moment you step on board. Its upper-class cabin features four-course meals, fully laid-flat seats, and drinks delivered on demand. Make the journey as exceptional as the destination when you fly Virgin Atlantic. Go to virginatlantic.com to learn more. Once upon a dismal day, Bob's ice cream van looked gloomy and gray.

0:37Although he had big ambitions, his socials lacked creative vision. That bad? Maybe vamp it up a tad? I have an idea. Bob launched Canva and got into gear. Create a video in the vampire team and make it the funniest I mean. It went viral. Bob's business? A revival. Now, imagine what your dreams can become. when you put imagination to work at Canva.com. Once upon a dismal day, Bob's ice cream van looked gloomy and gray. Although he had big ambitions, his socials lacked creative vision. That bad? Maybe vamp it up a tad? I have an idea. Bob launched Canva and got into gear. Create a video in the vampire team and make it the funniest I mean.

1:22It went viral. Bob's business, a revival. Now, imagine what your dreams can become when you put imagination to work at Canva.com.

1:32Steve Eisman:Today's number, 77. That's how many people are in Ireland's Navy Reserve, one of the smallest in the world. Here's an Irish joke. What's the difference between an Irish wedding and an Irish funeral? One less drunk. Money market's mad. If money is evil, then that building is hell. The show goes on! The folks in there have watched the show! Show! Welcome to Prof G Markets. I'm Ed Elson. It is March 26th. Let's check in on yesterday's market vitals. The major indices swung through the day but ended the session in the green. Oil declined, treasury yields fell, and finally, Meta and Google shares were little changed after the companies were found liable of negligence in the social media addiction trial.

2:23Steve Eisman: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 Truth 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 in crude oil futures that traded 14 minutes before the announcement.

3:11Steve Eisman: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, first of all, it's great to be on. So I want to add to that, if you don't mind. So April 2nd, 2025, Liberation Day. They put trades on. They got short the market prior to the announcement. You know, when Trump came down from Mount Evil, like Orange Moses with the big tablets, okay, they got short the market prior to that divulgement. A week later, prior to Trump saying he's pulling back the tariffs, there was going to be a 90-day moratorium.

3:53They got long the market. OK, on October the 10th, about an hour before the tweet went out related to the rare earth minerals and the fight that we started 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, you know, 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 focused on this. Now, we sent Martha Stewart.

4:30And so you're young, Ed. I think you know who she is. I watched the documentary, so I know. Okay. So for your younger viewers, she had$45 ,000 of profits that she had to disgorge, And she spent five months at a federal prison because they caught her, quote unquote, insider trading. This is hundreds of millions of dollars. OK, 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 do you know a Democratic representative is Kelly Morrison? So Kelly Morrison bought Saronic Technologies, a name I didn't know. But she bought Saronic Technologies, which is an autonomous warship company, nine days after the beginning of the war with Iran, right as the Navy was awarding Saronic contracts.

5:22Her office said that her portfolio is managed by a blind trust and an investment manager, and she had no prior knowledge. But government watchdog said, hey, whoa, this is a pretty clear conflict of interest. So 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 picked 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. As an American, I'm embarrassed by it.

6:02As 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. And 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.

6:40It wasn't this big. It wasn't this dramatic. And when you have corruption like this, at this scale, if you're a young kid, if you're a young Scott Galloway, 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. You know, somebody got short oil before the president's announcement yesterday where he said we're getting this big gift from Iran.

7:24And it turned out, I guess, one of the Thai tankers was able to pass through the Strait of Hormuz as a sign of good faith, which was, you know, 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 this stuff is reprehensible, but I don't think it's changing.

7:44Steve Eisman: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 insider 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.

8:37Steve Eisman: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, 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.

9:33And by the way, these are easy to tag and these are easy to 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 teapot dome scandal unbelievable corruption but those people got prosecuted that was at the turn of the century the 1800s into the 1900s we had the ab scam 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.

10:27So 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 is, oh, wow, do something wrong like that. That bald face, there will be repercussions. And that repercussion, Ed, creates a deterrent for people. You see what I mean? Like I'm going to speak at the 90-second Y with a guy who got caught insider trading. He wore a wire for the federal government, and he stopped a huge insider trading ring in the 2006, 7, and 8 time period on Wall Street.

11:16That stuff is over. Okay? And so it makes the markets unfair. It makes the pricing in the market manipulative. and it's giving a license to these people to do what they want. And, you know, look, the flip side is, you know, 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.

11:57So here's what's going on. The Congress has a 14 % approval rating. It's slightly above Kim El-jung, the North Korean dictator. However, the individual congressman has a 95 % incumbent rate. So their narrative to their people is, 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 do 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?

12:41I mean, it is staggering and it is sad and it is tragic. And it's very unfair to the American people.

12:48Steve Eisman: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 election as well. 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.

13:34Steve Eisman:And that 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, 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 Schweitzer 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.

14:13Then by voice vote, Ed, they didn't even want to go onto the floor because they didn't want to be seen on C-SPAN. By voice vote, they called in and said, let's put it back in. Wow. Okay, 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 Bets Act. Okay. 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.

14:53It's called the Betts 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 you what these guys do. This is why people don't like them.

15:10Steve Eisman: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. Real pleasure to always be on with you, man. Thank you. After the break, alarm bells sound off in private credit. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at simplyput.profgmedia.com.

15:44Support for the show comes from Factor. Eating healthy requires time, effort, and commitment. The problem? You don't have any of that. So what do you do? Starve? No? Not really. Not a good long-term solution, but Factor might be a great option. They provide fully prepared meals designed by dieticians and crafted by chefs. Ready in two minutes, no planning, no cooking. With 100 rotating weekly meals to keep things fresh and delicious, Factor provides meals that fit your goals and schedule. No refined sugars, no artificial sweeteners, no refined seed oils. Meals that fit your goals and schedule, healthier eating and calorie management.

16:17Factor sent some people on my team a box and they are raving about it. They said it's delicious, easy to follow instructions. Plus they said it's perfect for busy people who don't have time to cook but want something healthy. Okay, enough of that. Back to work. Head to factormeals.com slash markets50off and use code markets50off to get 50 % off and free breakfast for a year. Offer only valid for new Factor customers with code and qualifying auto-renewing subscription purchase. Make healthier eating easier with Factor.

16:53This is Advertiser Content brought to you by Virgin Atlantic. Like, Ed, a couple weeks back, I got you a birthday gift. Not to pat myself on the back, but it was a pretty good one.

17:02Steve Eisman:It was indeed. You surprised me with Virgin Atlantic upper-class tickets to London. So tell us all about it. It was pretty incredible. From the moment I entered that upper-class cabin, I have to tell you, I felt like a VIP. Anything I needed, a drink, snack, assistance with the seat. Flat seats. Flat seats. That's the key. Flat seats, exactly. Exactly. Had the four-course meal, got my champagne, very delicious, enjoyed the food. And the journey home? The journey home was great. I went to the Virgin Atlantic LHR Clubhouse. That's the Heathrow Clubhouse. Heathrow Clubhouse was awesome. Got myself a coffee, headed over to the meditation pod that they call the Soma Dome.

17:42Steve Eisman:Kind of felt like a sort of spaceship where you relax and think nice thoughts. So I did that for a little bit. Then we went over to the wing, which are these acoustically sealed booths where you could do some work. You could even record a podcast. I didn't do that, but maybe I should have. It was a very enjoyable experience. So, Ed, the real question here is, what are you planning to get me for my birthday? See the world differently with Virgin Atlantic. Flying should be more than just transport. It is part of the adventure. Go to virginatlantic.com to learn more. Tickets and lounge access provided by Virgin Atlantic.

18:23This is advertiser content brought to you by Stonyfield Organic. Our cows, them going out to pasture, they love it. They're so excited to go out. Every day, they wait right at the door. In fact, we milk them and we just open up the laneway and let them just go right out to pasture. I'm Rhonda Miller Goodrich, and I'm a dairy farmer in Cabot, Vermont. Our farm is Molly Brook Farm. We're an organic dairy farm, and we are a supplier to Stonyfield. Molly Brook Farm has been in my husband's family since 1835. We started our organic transition in 2015. We had 53 acres of corn ground, and of course we had to use herbicides and pesticides, and the soil was dead, really, for all intents and purposes.

19:10We stopped growing corn and stopped using herbicides and pesticides, and we seeded that down to perennial grasses. After that, we began to see biodiversity in that soil again. To be organic certified, our cows need to be in pasture at least 120 days. I think the organic practices really benefit our animals. You know, having good feed, good water, a nice light area, that's what's important to us and that's what's important to Stonyfield. Visit stonyfield.com to find Stonyfield organic yogurt near you.

19:59Steve Eisman:We're back with Prof G Markets. Private credit is in crisis and investors are rushing for the exits. Aries Management and Apollo both capped withdrawals 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 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 Eisman, the legendary Big Short investor, also host of the Real Eisman Playbook.

20:50Steve Eisman:Steve, thank you very much for joining us again on ProfitG Markets. We wanted to have you on to talk about this because you were the guy who was telling us about this just a few weeks ago when we had you on that Friday episode, and things seemed to have gotten even worse. So just remind us what is happening in the private credit markets and what we've learned here. So the funny thing is that for my podcast, I do this weekly rap that I put out every Friday. And every week for the last probably two months, I'm speaking about private credit. And just amusing for your viewers, I start writing the rap when I wake up Monday.

21:31And I do work every single day. And so for the last several weeks, the way it's been written 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, blah. And on Wednesday, and so it's absolutely relentless.

21:53Steve Eisman: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? Right. And I think the answer to that question is mostly no. 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 every piece of news that you hear is related to that. You know, private credit funds were originally created for institutional money.

22:43And 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 who do we sell it to? And they said, let's sell it to retail. And 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.

23:21None of this is illegal. So no one's going to jail for this. You know, this was all disclosed in the prospectuses. Whether the retail investors actually understood what they were getting into, you know, 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.

24:09And 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 has 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.

25:03Since 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. Wow. 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 bad. That's a real problem. Now it's a problem. Because if even the rating agencies admit there's a problem, you know, problem. Yes.

25:48So you have one downgrade of a fund because its non-accruals were too high. I think they were 5.5%, which is probably the highest in the industry.