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The market manipulations are now exposed

Dec 28, 2018

About two months ago, I wrote how market volatility increases just before a collapse, much like a giant reeling back and forth just before he falls.

But two months ago I was writing about the stock markets moving up and down 300-400 points. Now the markets are moving in increments of 600-800 points at a time up and down, and this week the markets shot up a record-high 1086 points in a single day. Then it dropped 600 points, only to shoot up another 850 points.

The new normal seems to be volatility levels of 800-1000 points in a day. That is not a good sign for the markets, and traders are “bewildered.”

I have known for decades about the Plunge Protection Team that was put in place after the 1987 market crash. The problem is that when the government steps in to manipulate the markets, it is more difficult to know what stocks are really worth. In a manipulated market, everything is artificial, and when the market is on life-support, we are all told that “the patient is stable.”

When Steve Mnuchin publicized the Plunge Protection Team last week, he forced the news media to acknowledge that the government manipulates the markets. That was a huge revelation, one which many traders can hardly grasp. This has left them confused and bewildered, because the “fundamentals” are no longer very relevant in determining if a company’s stock price will go up or down.

The confusion is caused by the fact that they can no longer rely on their past training in reading charts and balance sheets. When government props up a dying bank by buying its stock, the dying bank suddenly seems to come back to life when everyone has predicted its demise.

Instead of studying the fundamentals, they should study the PPT and learn what it intends to do. If they could learn which stocks the PPT is purchasing to prop up the markets, then they would know which stocks to buy. Just do as they do, regardless of the health of the corporation itself.

https://www.zerohedge.com/news/2018-12-28/im-golf-course-nobody-has-any-idea-how-trade-market

In an early morning comment, Citigroup was painfully honest about how traders enter today's session: "how the market moves today is really anyone’s guess. As the end of 2018 approaches, price action is becoming ever more bewildering."

Those two sentences perfectly encapsulate trader confusion this morning following 3 weeks of violent, historic moves that have left analysts, portfolio managers, strategists and ordinary mom and pop traders dazed, confused and stunned, with feeling as if they are "watching Pulp Fiction."

It’s “completely bizarre,” says Stephen Innes, head of trading for Asia Pacific at Oanda Corp. “It’s incredible just how harmful markets veer when sentiment slides."

While December was shaping up as the worst month for markets since the Great Depression until this Wednesday, the late arrival of the biggest ever pension fund rebalancing out of bonds and into stocks, sent markets screaming higher, stopping out countless limit orders and sending momentum-chasers reeling yet again, just as CTAs and other trend followers had turned "max short" every single major market...

Fenton, like Matthews, is also hunkering down, betting that the U.S. economy is robust and the sell-off will bottom out. For this time of year, he’s “probably a little more focused on the market,” he says, but that doesn’t mean he’s got reasons for the moves. “Trying to explain short-term movements in the markets is an exercise in futility because generally it’s pretty random,” he says.

No, it’s not “random.” It’s market manipulation. It’s only “random” to those who fail to understand this fact.

It appears that many have not yet grasped the significance of Steve Mnuchin’s revelation. I have complained for years, while watching market reports, how the commentators avoid talking about the PPT and its interventions. Invariably, they have attributed sudden end-of-day market rallies to “traders” suddenly going on a buying spree. Even now, they are continuing to do this. It is evident that they do not approve of Steve Mnuchin’s revelation and are continuing to pretend that we have a free market. After all, is that not the foundation of “capitalism?”

Well…. Not really. The Deep State has turned us into a Fascist State, where corporations “partner” with the government. In other words, government is really run by the big banks, beginning with the privately-owned and “independent” Federal Reserve Bank. It appears that President Trump's anti-Fed strategy includes forcing the news media to acknowledge the PPT and to expose our long slide into Fascism.

For those of you who missed it, here is where you can read the actual transcript of Mnuchin’s press release about the PPT, which is officially called “the President’s Working Group on financial markets.”

https://www.zerohedge.com/news/2018-12-23/plunge-protector-mnuchin-reportedly-called-bank-ceos-calm-markets-ahead-monday-open

Secretary Mnuchin convened individual calls with the CEOs of the nation's six largest banks

The banks all confirmed ample liquidity is available for lending to consumer and business markets.

Washington — Secretary Mnuchin conducted a series of calls today with the CEOs of the nations six largest banks: Brian Moynihan, Bank of America; Michael Corbat, Citi; David Solomon, Goldman Sachs; Jamie Dimon, JP Morgan Chase, James Gorman, Morgan Stanley; Tim Sloan, Wells Fargo. The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations. He also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly.

Tomorrow, the Secretary will convene a call with the President's Working Group on financial markets, which he chairs. This includes the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodities Futures Trading Commission. He has also invited the office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to participate as well. These key regulators will discuss coordination efforts to assure normal market operations.

"We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business," stated Secretary Mnuchin and added "With the goverment shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other critical functions within the department."

The Wikipedia says this:

https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order.


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Category: News Commentary
Blog Author: Dr. Stephen Jones