On Friday, Oct. 10, just ninety minutes before President Trump took to social media threatening 100 percent tariffs on China, two anonymous accounts placed bets that cryptocurrencies would fall in the short term. By the end of the day, the cryptocurrency market had plunged $19 billion, resulting in a $160 million gain for those traders.
The plot thickens. Sunday night, before the futures market opened, the president took to the airways again, this time calming fears over a trade war with China. When markets opened on Monday and cryptocurrencies were skyrocketing higher, the same account placed a fresh short bet, this time for $160 million, that crypto would fall even further. Tuesday, after China upped the ante in its trade spat with the U.S., crypto crashed again.
Either someone is extraordinarily lucky or prescient. Traders were quick to accuse this anonymous account of insider trading. Is this just a case of bad feelings, envy, or is there something fishy going on in the markets? Obviously, there is no conclusive evidence of insider trading, and even if there were, it is harder to prove and prosecute in the lightly regulated cryptocurrency market.
This is not the first time this has happened. Front-running important news has become a lucrative pastime this year. A week before Liberation Day on April 2, a key official who shapes the Trump administration's trade policy sold off $30,000 worth of stock. Two days before that ill-fated day, a state department official sold $50,000 in stock. Readers may recall that the stock market plunged dramatically after President Trump's reciprocal tariff announcements. More than a dozen U.S. officials in total sold stocks before the announcement that sent stocks plunging that day.
Democrats were quick to accuse the White House of insider trading, demanding an investigation into all the transactions by staffers leading up to April 2. Kush Desai, a spokesperson for the administration, argued that they should instead investigate their own Nanci Pelosi if they were interested in an insider trading probe.
The Democrats' accusations are a proverbial case of the pot calling the kettle black. Members of Congress of both parties are permitted to trade stocks, and almost all of them own shares in publicly traded companies. Congressional lawmakers have access to nonpublic information that has been shown to move markets, individual stocks, and sectors. A New York Times investigation found that 18% of congressional members trade stocks in industries related to the work of the congressional committees on which they serve. Talk about a conflict of interest!
There are laws in place that prevent front-running and insider trading. The Securities Exchange Act of 1934 aimed to prevent insider trading on the stock market by mandating disclosures; however, this requirement did not apply to members of Congress. The STOCK Act, passed in 2012, partially closed that loophole. It requires Congress to disclose stock trades of more than $1,000 within 30 days. Penalties for failing to do so are a mere $200 for a first-time violation.
And guess who investigates legislators' violations—Congress. The proceedings are private, and enforcement is inconsistent at best. Insider abuse is so well-known that there are at least six internet services that track congressional stock trading, and at least one that tracks Nanci Pelosi's stock picks daily. If you ever wondered how elected officials manage to acquire vast fortunes on their congressional salary, now you know.
Regarding the accusations against the Trump administration, a research paper by Paul Odin, Assistant Professor of Law, published in the Oxford Business Law Blog, argues that, under the definition of market manipulation as outlined in the 1934 Act, neither Trump nor his team violated the law. As for insider trading under the Stock Act, "theoretically," Trump may have been in breach of its provisions. That would be difficult to prove, and in any case, he is protected by presidential immunity.
The facts are that no sanction for insider trading has ever been imposed under the Stock Act, and given Congress's track record, it is unlikely that it ever will. The president has stated publicly that he has not engaged in insider trading, but he admitted that he cannot definitively claim that members of his administration have not.
A recent poll found that 7 in 10 Americans hold unfavorable views of Congress, and a majority of both Republican and Democratic voters support a ban on congressional stock trading. Leaders from both parties, including President Trump and President Biden, House Speaker Mike Johnson, Minority Leader Hakeem Jeffries, Congresswoman Nanci Pelosi, and Treasury Secretary Scott Bessent, support some form of a ban on congressional stock trading. So far, no legislation has crossed the finish line.
As for the mysterious whale that cleaned up in the crypto market, it is doubtful any action will be pursued. The truth is that leaking information to players in the financial markets and other insider trading schemes have been in existence for longer than anyone can remember. Have you ever noticed that markets sometimes rise or fall substantially in the hours leading up to the announcement of a significant economic data point? The same can be said for stocks, and lately, even sectors, more often than I would like to see. It is hard to imagine, given this golden age of grift, that curbs on these illegal practices will be forthcoming anytime soon.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
Friday morning started well enough until a post by the president ruined everyone's day. Irritated by several recent moves by the Chinese, he lashed out, threatening a "massive" increase in tariffs and canceling a scheduled meeting with China's leader. Markets fell on the news.
The last time I looked around noon on Friday, all three stock market averages were lower by one percent or more. NASDAQ was down more than 2 percent. After several weeks of everything going our way, Donald Trump has had a temper tantrum. I am sure his mood was already somewhat dampened. Maria Corina Machado, the Venezuelan opposition leader, was awarded the Nobel Peace Prize today.
It is an award that Trump has coveted and lobbied for all year. It could be a coincidence, but I suspect China was an easy target for his disappointment. At the same time, some of his hardcore supporters who are China hawks have been accusing him of being soft on China lately. Ostensibly, his outburst was in response to recent Chinese actions on the trade front. They have tightened export controls on rare earth minerals, added new port fees on American ships, and launched an antitrust investigation into Qualcomm.
Before this blowup, the markets meandered within a moderate trading range all week. One positive result of the government shutdown has been that Market volatility has dropped sharply, enabling equities to continue to climb to all-time highs.
Next week, quarterly earnings are once again on deck. Analysts expect corporate results to be relatively strong, which could support the markets. On October 15th, the military, along with other federal workers, will either receive a paycheck or not, depending on the outcome of shutdown negotiations. It appears that the Republican stance against any change in their position is beginning to crack around the edges. The Democrats' health-care concerns are shared by many on both sides of the aisle.
Polymarket betting indicates an 84 percent chance that Congress will pass a funding bill sometime after the middle of the month. Both houses of Congress would need to approve any bill before it is sent to the president. How long would that take? The betting odds indicate a 76 percent chance that this will occur by the end of the month.
My guess is that we will start to hear more compromise talk after Oct. 15, and the end of the current drama will follow a week or so later. If this were to come to pass, all the threats, sword rattling, and dire predictions would melt away. Any damage done will be reversed, and investors will continue with their business.
The only real issue with this shutdown business is that markets continue to operate without crucial economic data, such as inflation numbers, economic growth, and the state of the labor market. The Fed meets at the end of the month, but it is hard for me to believe that the central bank is as much in the dark as we are. I suspect that they have the resources to at least have a general idea of how the economy is functioning despite the blackout.
Investors remain convinced that the Fed will cut interest rates again at its October FOMC meeting at the end of the month. It is the primary reason stocks continue to climb, although 6,800 on the S&P 500 Index has been a difficult level to pierce on the upside. Precious metals and cryptocurrencies, which have experienced a strong run, are also starting to stall.
These could be early signs that the markets are due for a pause in the weeks to come. Do not be surprised if that were to occur.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
American farmers are set to receive another bailout from Trump's tariffs. The holdup is due to the lack of any additional money that lawmakers can deliver, as well as furloughed administration staffers to finalize and implement the aid package.
Readers may recall that during Donald Trump's first tariff war, which occurred in 2018-2019, farmers were devastated as China retaliated by suspending purchases of U.S. agricultural imports. It took $20 billion of taxpayer money to stop the bleeding. Once again, the same scenario is unfolding as the administration prepares another multibillion-dollar bailout.
Under the first bailout, farmers who earned less than $900,000 a year and produced one of the agricultural products affected by the U.S.-China trade war could apply for relief. The bailout's limit of support for a single farmer was $125,000 per person of a legal entity.
This time around, we are still unclear about the details or how the government will fund it. That is because the government shutdown has removed the administration’s ability to determine if they can use tariff money to pay for it or the need to ask Congress for the funds. Last time around, Trump used funds from an Agriculture Department entity called the Commodity Credit Corp. That avenue is no longer viable since the CCC has depleted its cash.
I still recall the televised announcement when the President claimed he had made a significant trade deal with China, promising to purchase $200 billion of U.S. agricultural products over two years. It turned out that, through 2021, China had only managed to buy 83 percent of that commitment.
While some argue that China deliberately reneged on that promise, I suspect the COVID-19 pandemic had a much more significant impact on the shortfall in purchases, as China struggled to contain the epidemic. Through the Biden years, China continued to purchase farm products. It was only after President Trump restarted the trade war in his second term by increasing tariffs on China by 100 percent that purchases ceased.
Last year, China accounted for more than half of the 24.5 billion of U.S. exports of soybeans. Currently, thanks to Trump's tariffs, China has ceased buying American soybeans since May and increased its purchases from producers in South America. Since the 1950s, the U.S., Brazil, and Argentina have accounted for 80 percent of global soybean production. Soybeans are the second-largest crop in the U.S., with 85 million planted acres over the past five years. That is about the size of the entire Northeast.
That crop contributes, on average, about $124 billion per year to the economy. There are approximately 280,000 soybean farmers in the country, primarily located in the Midwest, with four out of the five largest producers based in states that supported the president in the last election. However, just two multinational corporations, Corteva and Bayer, control more than half of all soybeans (as well as corn and cottonseed) production in America.
Farmers' incomes have been sucking wind for years. Most have lost money over the past two years, and thanks to several different variables, losses will likely mount this year and into 2026. Costs for fertilizer, machinery, and seeds have increased at a rate higher than inflation, while prices for almost every row crop are below the cost of production. Interest rates and climate change have also taken their toll.
The Biden administration and Congress passed a $10 billion bailout for farmers in December 2025, but that is just a drop in the bucket. Republican lawmakers estimate that farmers will need as much as $50 billion in economic support today. Right now the talk centers around another $10 to $14 billion in aid. The American Soybean Association president, Caleb Ragland, called that "putting a Band-aid on an open wound."
While my heart goes out to America's farming community, I cannot help but wonder why farmers have been singled out for relief once again. At the same time, the rest of us continue to suffer from the same fallout from tariffs, including higher food prices that exceed the inflation rate, and increased health care costs as the Republican-controlled Congress continues to reduce benefits.
Is it because the farmers are mainly from states where Trump voters are prevalent? Is it because our Secretary of the Treasury Scott Bessent owns thousands of acres of soybean farmland? Will half the spending end up in the pockets of the two major corporations that control the soybean market?
The last bailout was limited to those who earned less than $900,000 per year. There are many small businesses throughout the country that earn less than that. Where is their bailout? What is the solution to turning around our farmers' plight? It is simple. Drop the irrational tariffs on China.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
Markets turned higher this week on news of the government shutdown on Oct. 1. It isn't the market's first rodeo in this area, so most investors are taking the long view.
The facts are that every government shutdown in history has been followed by a government reopening 100 percent of the time. Present betting indicates that this one could last anywhere from 10 to 29 days, but Oct. 15 seems the most popular bet.
It wasn't too difficult to predict this government shutdown. Both parties sought the drama, hoping to galvanize their partisan constituencies. Thus far, only the media, politicians, and federal employees have expressed much concern about the fallout. For Wall Street, the absence of specific key economic data, such as today's lack of the jobs report, is uncomfortable and inconvenient but not dire.
At a time when so much depends on timely information, such as the Consumer Price Index and non-farm payrolls reports, the market is in the dark to some extent. The Fed, for example, is expected to cut interest rates again at the October meeting, but that depends on the job data. No data means less confidence. Of course, the last few months of labor reports from the Bureau of Labor Statistics have been nothing to write home about, so missing a report or two may not be all that disastrous.
My conspiracy theory of last week has proven more accurate than I suspected. I wrote that a shutdown would likely occur, sending the dollar and bond yields lower still, which are tactical goals of U.S. Treasury Secretary Scott Bessent. Better still, the president wants to cut spending in what he sees as liberal programs of the Democrats. So far, he has axed $8 billion in funding for green energy projects in 16 blue states, as well as $18 billion in infrastructure projects in New York. In addition, the shutdown provides him with an opportunity to reinvigorate his court-stalled DOGE agenda by firing more government employees.
All of this can be accomplished in a shutdown while blaming the Democrats every step of the way. I am surprised that the Democrats fell for it, but politics is not my bailiwick. Given their experience thus far under a second Trump administration, they must question whether discussions with Republicans without this shutdown would ever yield a compromise solution.
I do understand their desire to safeguard the health and well-being of millions who depend on Medicaid and Obamacare. And I do believe that Trump and his Republican legislators are worried about the optics of these issues as well, going into elections despite their tough stance today. Much of these spending cuts and firings, if they occur, will be overturned in the courts anyway, but it is the narrative, not the substance, that counts among voters today.
As for investors, they are much more interested in the government's continued commitment to opening the floodgates of state capitalism. This week, it was all about Big Pharma. In exchange for reduced drug pricing, along with company commitments to invest in the U.S., Trump offered tariff relief on pharmaceutical imports.
Pfizer was first to tip the scales by cutting drug prices on a host of older drugs in its pipeline. The president is also expecting more investment announcements from companies in that sector that will further his goal of relocating drug manufacturing back to the U.S.
However, that is just the tip of the iceberg. The administration is working on deals across as many as 30 industries, talking to dozens of companies that the government deems critical to national or economic security. The flurry of activity encompasses various segments of the economy, from semiconductors and quantum computing to non-tech areas such as energy, shipbuilding, battery production, critical minerals, and now pharmaceuticals. The administration maintains a list of 54 crucial minerals it is targeting, which is updated almost weekly. Six more minerals were added this week, along with potash, the most recent addition.
Interest in equity stakes in companies now includes foreign companies as well. For example, the U.S. government has offered to purchase equity in Australian critical mineral companies as part of a funding package aimed at expanding its supply and reducing its reliance on China.
At the same time, the proliferation of new tariffs on industry and/or specific products has replaced the more sweeping country-wide levies that are now being adjudicated in the courts. As I advised readers in past columns, the courts may slow the tariff war but not end it. A "Plan B" is already in progress. In preparation for a possible defeat of his use of the Emergency Powers Act, these new tariff efforts will follow a more traditional route.
Section 232 of the Trade Expansion Act of 1962 authorizes Trump to impose tariffs or quotas on imports if the product or industry is deemed to threaten national security. They are not subject to challenge. It is the reasoning behind his announcements of fresh investigations into lumber, movies, semiconductors, drugs, trucks, jet engines, and commercial aircraft, among others. The list can go on forever.
If these investigations determine that the products are a threat (and they will, since the investigators are all Trump supporters), tariffs are sure to follow. While these tariffs would be far less sweeping than his reciprocal tariffs, they offer significantly stronger legal protection. The race is on to accomplish all of this before the mid-term elections.
Stocks, bonds, commodities, and other assets continue to gain. The global bull market remains alive and well, with new highs almost daily. October, as we all know, is a dangerous month for the markets from a historical and seasonal perspective.
The risks are that this shutdown could provide the volatility that traders need to justify a sell-off if it lasts too long or takes an unexpected turn for the worse. Another concern is that the Fed might hold off on reducing rates again at the end of the month until it sees more data. I give that a lower probability.
However, on the other side of the ledger, there is a high probability that the Fed will cut interest rates again this month. Quarterly earnings announcements are also forecasted to be robust. My conclusion: stay invested, hedge a little if you feel worried, but otherwise ride the inflows higher.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
Sept. 19 was National Coffee Day. Starbucks, Dunkin', Dutch Bros., and other coffee chains offered discounts on coffee. That did little to relieve the sticker shock most consumers are feeling now. The 20 percent price hike year over year for their morning brew has been hard to swallow.
In the futures market, Arabica coffee has traded as high as $4.18 per pound in September, the highest price in almost a year. In grocery aisles, ground roast coffee prices recently reached $8.41 per pound before falling back over the last two weeks. Overall, the cost of coffee imports to the United States has increased by more than 300 percent since the lows of 2020. Five years ago, a bag of coffee was fetching roughly $80 per standard bag (132-154 pounds or so). Today, that same quantity is approaching $368.
More than 99 percent of the coffee Americans drink is imported, as only Puerto Rico and Hawaii grow significant quantities of the crop. Coffee is the second most popular beverage in the U.S., after bottled water, with 63 percent of Americans drinking it daily.
Like most commodities, the prices of soft commodities fluctuate according to supply and demand. Last year, for example, I discussed the skyrocketing cost of cocoa and its impact on chocolate prices. Since then, cocoa prices have dropped from a high of $12,626 per ton to $6,759 today. Coffee prices react similarly.
Consumers may also notice a price differential depending on whether they purchase their caffeine fix from a grocery store, a restaurant, or a coffee chain. Supermarket prices fluctuate more than a cup of coffee at Starbucks or other coffee chains. That is because grocers are quick to raise store prices as coffee prices rise and reverse just as quickly when they fall. Coffee chains, on the other hand, prefer to draw down on their existing coffee inventories rather than buy expensive beans on the open market.
The primary factor underlying the price of coffee (like cocoa) is climate change. Coffee cultivation and yield are highly sensitive to the environment. Extreme weather in both Brazil and Vietnam, major coffee-producing countries, has damaged the coffee crop frequently in the past few years. A severe drought in Brazil during last summer season decimated the coffee crop. Given that Brazil supplies 40 percent of the world's coffee, the shortfall had a significant impact on import prices for the U.S., which accounts for 32 percent of Brazilian coffee exports.
The number two producer, Vietnam, also suffered a drought, resulting in a 20 percent reduction in coffee production last year. Making matters worse, the nation experienced precipitation whiplash (an increasingly common occurrence in climate change). That is where drought is followed by heavy rainstorms, wiping out even further production. Supply chain disruptions are also contributing to the rising cost of coffee, as are global inflation and trade policies. The price of coffee reached a near-50-year high in February of this year.
In the last two weeks, prices in the futures market for coffee have declined slightly, trading around $376 per pound. Traders are hedging their bets ahead of a meeting between U.S. President Trump and his Brazilian counterpart, President Lula da Silva. After bumping into each other during the U.N. General Assembly last Tuesday, the president said that "we agreed to meet next week."
A deal could provide some price relief. What do presidential politics have to do with the price of coffee? Plenty. The president has levied a 50 percent tariff on Brazilian imports, including coffee. Once one of our strongest allies in South America, Brazil is now at odds with the president. The country refused to drop charges against its former President Jair Bolsonaro, a friend and ally of Donald Trump.
Bolsonaro was subsequently tried and convicted of plotting a coup and sentenced to 27 years in prison. As a result, an angry Trump slapped tariffs on the country. He justified these levies by claiming that Bolsonaro's conviction somehow created an economic emergency for the U.S. America has a $6.8 billion trade surplus with Brazil, meaning it imports more than it exports from the U.S.
A bipartisan group in Congress is well aware of that. They claim the tariffs put a new tax on coffee every morning and have recently introduced the "No Coffee Tax Act." The legislation would repeal the Trump-era tariffs on coffee imports from Brazil, Vietnam, India, Mexico, and Indonesia. Good luck with that. I wouldn't count on Congress for much of anything without the president's approval.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
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