Well, here we are again. The revolving door between Washington and Wall Street is spinning so fast it might generate enough electricity to power Manhattan.
According to Fox Business senior correspondent Charles Gasparino, Trump administration officials have been quietly briefing well-connected Wall Street executives about trade developments—including an "agreement in principle with India"—before sharing this market-moving information with the public.
Let me say that again: Government officials with access to market-moving information about international trade negotiations are apparently passing this information to select financial players before announcing it to everyone else.
Is this illegal? Not necessarily. Is it ethical? That's... a more complicated question.
I've covered financial regulation for years, and there's a reason we created Regulation FD back in 2000—to prevent exactly this kind of selective disclosure in corporate contexts. But government information? That exists in a strange regulatory netherworld where the rules are fuzzy at best.
The administration could be using these Wall Street bigwigs as a sounding board. "Hey, if we announce these tariff reductions, what happens to manufacturing stocks?" That sort of thing. There's a certain twisted logic to it. Or perhaps they're floating trial balloons to test market reactions before finalizing decisions.
But let's not kid ourselves. Information is currency on Wall Street—perhaps the most valuable currency. Knowing which way trade negotiations are heading even 30 minutes before the rest of the market? That's not just an advantage; it's practically printing money.
What makes this story particularly fascinating (or disturbing, depending on your perspective) is that it comes from Fox Business, typically considered friendly territory for the administration. Gasparino must have some pretty solid banking sources who clearly didn't see this practice as problematic enough to keep quiet about.
The markets have been extraordinarily sensitive to trade news during Trump's presidency. Remember those wild swings during the China negotiations? Stocks would plummet on a single tweet suggesting tensions were rising, then soar the next day when the administration suggested progress. Against that backdrop, advance knowledge becomes even more valuable.
Look, selective disclosure isn't unique to Trump. The cozy relationship between Washington and Wall Street has transcended administrations for decades. What changes is who gets the golden tickets to the information chocolate factory.
(And yes, I just made a Willy Wonka reference in an article about financial regulation. Sometimes metaphors choose themselves.)
The fundamental issue here is about market fairness. Markets function best when information is distributed evenly—when the playing field, while never perfectly level, isn't tilted at a 45-degree angle. When some traders know which way policy winds are blowing before others, the whole concept of "price discovery" becomes a sad joke.
Next time you see markets mysteriously moving before a major policy announcement? Now you know. Somebody got the memo early. And they probably work somewhere with spectacular views of either the Hudson River or the Potomac.
In a properly functioning system... well, I was going to explain what should happen, but who am I kidding? This is the system we have—one that runs on relationships, information arbitrage, and knowing exactly which White House aide takes breakfast meetings at which downtown hotel.
Meanwhile, the rest of us? We'll just have to settle for reading the news after the connected folks have already traded on it.
