Wary private White House coronavirus prognoses in February tipped off certain investors to the coming crash

President Trump's economic advisers met privately at the White House with the board of the conservative Hoover Institution in late February, and their assessment of the economic fallout from the nascent COVID-19 pandemic spurred one attendee, veteran hedge fund consultant William Callanan, to warn of coming economic tumult in a memo that was then circulated among a small group of elite investors, The New York Times reports.
When Callanan sent the memo to the founder of Appaloosa Management and a top lieutenant on Feb. 25, the U.S. had just 17 known COVID-19 cases and Trump and the White House were publicly saying the virus was completely under control. "Stock market starting to look very good to me!" Trump said Feb. 24, the same day his White House economic advisers were meeting with the Hoover board members. "What struck me," Callanan wrote in his memo, according to the Times, was that nearly every official he heard from raised the coronavirus "as a point of concern, totally unprovoked."
"To many of the investors who received or heard about the memo, it was the first significant sign of skepticism among Trump administration officials about their ability to contain the virus," the Times reports. "Traders spotted the immediate significance: 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." Some investors told the Times they used the warning to their financial advantage.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Callanan told the Times his memo, which quickly spread to a small circle of well-connected investors without his knowledge or consent, contained "personal and professional views based on extensive research and publicly available information." This doesn't appear to be a legally problematic use of insider information, according to legal experts. Read more at The New York Times.
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
August 31 editorial cartoons
Cartoons Sunday’s political cartoons include FEMA's new scheme, Gavin Newsom's antics, and a clue in the Epstein files
-
Disarming Hezbollah: Lebanon's risky mission
Talking Point Iran-backed militia has brought 'nothing but war, division and misery', but rooting them out for good is a daunting and dangerous task
-
Woof! Britain's love affair with dogs
The Explainer The UK's canine population is booming. What does that mean for man's best friend?
-
New York court tosses Trump's $500M fraud fine
Speed Read A divided appeals court threw out a hefty penalty against President Trump for fraudulently inflating his wealth
-
Trump said to seek government stake in Intel
Speed Read The president and Intel CEO Lip-Bu Tan reportedly discussed the proposal at a recent meeting
-
US to take 15% cut of AI chip sales to China
Speed Read Nvidia and AMD will pay the Trump administration 15% of their revenue from selling artificial intelligence chips to China
-
NFL gets ESPN stake in deal with Disney
Speed Read The deal gives the NFL a 10% stake in Disney's ESPN sports empire and gives ESPN ownership of NFL Network
-
Samsung to make Tesla chips in $16.5B deal
Speed Read Tesla has signed a deal to get its next-generation chips from Samsung
-
FCC greenlights $8B Paramount-Skydance merger
Speed Read The Federal Communications Commission will allow Paramount to merge with the Hollywood studio Skydance
-
Tesla reports plummeting profits
Speed Read The company may soon face more problems with the expiration of federal electric vehicle tax credits
-
Dollar faces historic slump as stocks hit new high
Speed Read While stocks have recovered post-Trump tariffs, the dollar has weakened more than 10% this year