In recent coverages, Finbold has been diligently tracking Congressional trading activity, uncovering intriguing insights into the stock market maneuvers of influential US representatives.
From heightened investments in military and defense stocks amid Middle East tensions to forays into the tech sector, Finbold’s revelations have shed light on the financial choices of lawmakers.
Yet, a notable trend emerges as bearish sentiment takes hold, with substantial sales constituting a significant portion of Congressional trading volumes.
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64% of Congressional trading volumes in 2023 are sales
Notably, Congress members have been “betting against the economy like crazy recently,” as highlighted by Quiver Quantitative, an alternative trading data platform, on November 17.
According to its findings, the percentage of trading volume by Congressional traders that came from sales in the past has fluctuated between 44% and 56%. In 2023 so far, that number is significantly higher, at 64%.
When it comes to trading, the busiest member of Congress is Josh Gottheimer, the US representative for New Jersey’s 5th congressional district. Gottheimer traded $80 million in stocks and options this year, by far higher than any other US representative. Remarkably, more than half of that figure is represented by sales, per Quiver Quantitative’s chart.
Not so close behind him is Daniel S. Goldman, a representative who is running for Congress in New York’s 10th Congressional District. Goldman traded roughly $50 million worth of stocks and options in 2023, around 75% of which were sales.
Other Congress members who belong at the top of the chart for trading activity are Tommy Tuberville – who, according to Quiver, made “more suspicious trades than any other Senator” – Kevin Hern, and Rick Scott, among others.
Why is Congress selling stocks amid a market rally?
Put simply, the above data suggests that the most active investors in the US Congress are turning increasingly bearish. Interestingly, this revelation comes amid a period when the stock market is thriving.
The benchmark S&P 500 index recently surged above the 4,500 mark – the highest it has been since mid-September – as the macroeconomic pressures alleviated amid declining inflation and easing Treasury yields. This, in turn, led to growing convictions that the Federal Reserve likely reached the end of its rate-hiking campaign.
So why is Congress selling stocks?
Despite marked improvements in macroeconomic conditions, the US economy remains susceptible to a potential recession. Numerous economists maintain their projections of an economic downturn in 2024, attributing this impending challenge to the Fed’s implementation of 11 rate increases over the past year and a half.
If the downturn occurs, as some projects, it would likely lead to a significant sentiment change among stock traders, and push them away from risk assets toward more safe-haven alternatives.
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