Guest Post by Paul Craig Roberts
After the extraordinary sudden loss in equity values, today (2-6-18) brought gains back to the stock indices.
What happened? Did the market sneeze, cough, or was something misread and today perceived in a different light?
In my opinion this is what happened:
The Plunge Protection Team, as they have done on previous equity market drops, or the Federal Reserve operating for the Working Group on Financial Markets, sent a purchase order for S&P futures to the trading floor. The hedge funds, seeing the incoming bid, front-ran the bid by stepping in and buying S&P futures. This pushed the market back up, ended the correction, and prevented financial panic.
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The Plunge Protection Team was created in 1987, approaching the end of the Reagan administration, in order to prevent a market correction from costing George H. W. Bush the presidential election as Reagan’s successor. The Republican Establishment was desperate to reestablish its control over the party. The Republican Establishment, convinced by Wall Street that the Reagan tax cut would result in high inflation, found themselves instead confronted with a long economic expansion. In those days that meant that the expansion could be nearing its end, and a stock market correction could deny the presidency to George H.W. Bush.
To prevent any such correction, the US Treasury and Federal Reserve created a “working group” to intervene in the stock market in order to support values. Whenever the market starts to drop, the team purchases S&P futures which halts the market decline.
We have witnessed this on several occasions. And, most likely, again today.
Pundits who speak about “market forces” are speaking about something that doesn’t exist. “Market forces” are the interventions that support existing values with money infusions.
How long can the fradulent valuation of equities continue? My sometimes coauthor Dave Kranzler and I think it can continue until the dollar as reserve currency comes under attack. Neither of us believed that the fraud could be perpetrated this long. The two other world powers, Russia and China, are moving away from use of the US dollar, but the consequence for the dollar could still be in the future. In the meantime, liquidity supplied by central banks and the interventions of the Plunge Protection Team could send equity prices higher.
As I said when the Dow was dropping like a rock, where was the PPT? The PPT is activated when market conditions are adverse to elite gains. That should tell you who was short on Friday and yesterday.
“In my opinion this is what happened:
The Plunge Protection Team,………{cough} BULLSHIT {cough}”
Our Deep State owners are twisting and gyrating in agony as Trump & Pals put the screws to them.
The Deep State is d e s p a r a t e to pull off a big false flag to steer your consciousness away from the tsunami of undeniable fuckery the Deep State actors are involved in as will be evidenced by the follow-on effects of releasing The Memo. If they can cause a 15,000 point drop in the Dow or if they could kill a train full of GOP members not many will be concerned about The Memo.
Enjoy the show!
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Politics is like a toilet bowl. It goes round and round and down. Then comes back up for more.
Been waiting for a good place to post this:
Anyone? Buhler?
Would include it on my guardian of the galaxies mix tape, if I ever had to do one!
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Fuuuck! Via drops from Q and digging by anons it looks like Scalia was murdered to prevent him from overturning certain Obama EO’s and the WJC/LL tarmac meeting in AZ was to promise LL a position on the SC when Hitlary got (s)elected in return for her covering it up at DOJ.
NYT and CNN are next.
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The PPT seems to be running things, as they have from the start as the Author referred to, in the Bush years. The rise after the big 666 and 1175 point drop seems to be their hand in calming things.
The question seems to be then, who called for the initial panic? I’m looking at 3 players; the Fed, some component of the deep state and the Trump administration. The Fed seems to be a go along to get along group, with no conspirational agenda, as they roll regardless of the politics and only want to not be blamed for any market panic. For the last year, they seem to be content with some hope of the economy gaining strength with the Trumps administration becoming business friendly. This leaves the mysterious deep state as the unknown variable. And unknown they will remain, as evidenced with the GOP train wreck and the hit on the GOP congressman and the Las Vegas massacre…. if there isn’t a clear motive or conclusion for whatever tragedy is thrust upon us, it would be best to just assume a deep state false flag event, move on and prepare for more.
It appears the deep state has come to a conclusion that a political solution is no longer tenable, so plan B now becomes viable, that will include blood being spilled, repeated attacks on the market until the PPT can no longer compensate and anything else you can imagine that can be done to run the country into the ground.
As a Christian, I thought with the Obama years and the prospect of Hillary completing the work of destroying America and making it into some component of a world wide Godless government, I was preparing to “meet my maker,” but with this Trump reprieve, I believe we may turn back the evil for a time and have some hope for the future.
Of course, it will only take one nuclear detonation or something of that magnitude to set us right back into serfdom to our NWO tyrants, so today I feel the most appropriate response to what we are witnessing is to pray fervently, that we may be able to stand for righteousness and avert the coming disaster.
Is there hope for this? Read the Old Testament book of Jonah.
I’m thinking the majority of trading is done by computer algorithm.
Change a few lines of code and change where the market goes and how fast it goes there.
A good thing that no foreign or domestic cyber attackers have thought of this.
I’m the “Ivy League grad, multi-generational Fed family” guy, etc. who at 71 actually knows a thing or two, maybe even three (!) about how this stuff works, though I’m retired and am “alright Jack” so don’t much care anymore, but PCR knows what he’s talking about when it come to the US funny-money system. Ignore him at your peril. Sorry, but most folks, perhaps even some of y’all, have very limited understanding of what the sharpies have done, are doing and will do to skin you alive while you stick to complaining.
Last survivor of the Nostromo, signing off. Best of luck to all you well-intentioned folks!
“Big Mistake”: Trump Slams Market For Going Down On “Good News”
by Tyler Durden
Wed, 02/07/2018 – 10:16
Seemingly furious with the inability to tweet about the market’s relentless meltup anymore after the biggest point drop in Dow Jones history, Trump decided to take a passive-aggressive route this morning and the president who less than two years ago called the market the biggest bubble of all time, tweeted the only thing he could in the current context, namely stating that the stock market is now dropping on good news, contrary to what it used to do in the past. Trump’s conclusion: this is a big mistake.
“In the “old days,” when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!”
While it was not explicit just which “good news” Trump had in mind, the problem is that “good news” at this juncture means higher rates, something the 10Y at 2.80% confirms.
The irony here is two-fold.
First, Trump’s fiscal stimulus plan will make the “good news” even better, further reducing slack, and forcing the Fed to remove even more accommodation by rising rates, which – of course – will send the market reeling, as the S&P is where it is not due to the state of the economy but thanks to $15+ trillion in central bank liquidity, something which Trump clearly was aware of in Sept. 2016 when he told Reuters that “The only thing that is strong is the artificial stock market.” Oh, and he also told the WaPo in April 2016 that “I think we’re sitting on an economic bubble. A financial bubble.”
He was right.
Second, and more important, is that Trump is already aware of all this: in September 2016 it was Trump himself who said that “The only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down”, once again adding for good measure that “we are in a big, fat, ugly bubble.”
And now that Trump finds himself trapped for having taking so much credit for the market’s surge since the election, one wonders if Trump will then admit that the inverse is true: that stocks surge on bad news – i.e. more QE and lower rates as deflation returns… and just how will Trump reconcile that particular non-sequitur in the coming weeks.
The biggest problem for Trump, however, is that he now “owns” the market: which was great for Trump on the way up, but any crash and it will be Trump’s fault, precisely as the real culprit behind the bubble, the Federal Reserve, wanted all along.
Trump should have stuck with what worked during the campaign. It did get him elected. I am not sure why when a person gets in to power, all truth and logic go out the window, and then it is just the “party line” from that point forward. Maybe a Kennedy had something to do with it.
This is simple math. Nothing more. As interest rates go up, asset values will come down, as the servicing cost goes up of borrowed money, and demand / supply dynamics change. Simple. At best, all the PPT can do is act as a shock absorber to keep a 1200 point drop from turning in to an all out hyper nova of panic and going down 3000 or more in a day. Not even the PPT can stop a bear market, it cannot buy ALL of the S&P futures coming in to the market from everywhere. Think China, they are open about participating in the markets, and they got routed.
Something broke, this is how it started in 2006 and early 2007. Everyone saw the first big shot, then everything calmed, and the MSM said – no worries, bull(shit) market saved. Then, the hits kept coming like Chinese water torture, and then it just could not hold back any longer.
You have been warned.
Come on, people! It does not make any real difference whether there is a plunge protection team (PPT) or not!
The reason is that by buying any quantity of S&P futures, whoever does so is IN THE MARKET, along with everybody else. The only way they can get out of the market is by selling, just like everybody else. Regardless of how big the position is, its power to move the market is limited by the fact that it is only a fraction of the total market. Yes, there may be brief effects, based on prices at the margin, but so what? Any short-term impact resulting from ‘intervention’ contrary to the real,overall trend will get ruthlessly whipsawed away. By and large, what gets bought gets sold — and that doesn’t leave much room for any sustained conspiracy. There are many other economic issues to focus on besides the old, tired PPT conspiracy.
And to address the issue of machines and algorithms taking over the market — let’s not forget that the algorithms and machines are produced by humans. These things have designs strongly influenced by the emotions, biases and thoughts of the humans that created them. They therefore are just more efficient conduits of underlying social mood.
You don’t change the stock market by buying stock index futures — you change the stock market by printing trillions of dollars, buying treasury bonds and watching a lot of the net new money persistently make its way into stocks. Now THAT is how to exert an effect on the stock market! And by God, it worked!