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.

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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.

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Peter Weber

Peter Weber is a senior editor at TheWeek.com, and has handled the editorial night shift since the website launched in 2008. A graduate of Northwestern University, Peter has worked at Facts on File and The New York Times Magazine. He speaks Spanish and Italian and plays bass and rhythm cello in an Austin rock band. Follow him on Twitter.