The Market Giveth, The Market Taketh Away, And Giveth Again

Stocks went on a wild ride Thursday, a phenomenon confounding to novice investors but completely understood by market observers who have been in the game for a few decades or more.

There's little doubt that the Dow's plunge of 600 points and last-hour rally were the work of the Plunge Protection Team, or PPT, or as they are formally known, the President's Working Group on Financial Markets.

Here are a few links for reference:

Mnuchin Calls Plunge Protection Team; Stocks Soar One Day Later

President's Working Group on Financial Markets

Happy Holidays!

You've been played.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36
12/26/18	22,878.45	+1086.25	-2660.11
12/27/18	23,138.82	+260.37	-2399.74

At the Close, Thursday, December 27, 2018:
Dow Jones Industrial Average: 23,138.82, +260.37 (+1.14%)
NASDAQ: 6,579.49, +25.14 (+0.38%)
S&P 500: 2,488.83, +21.13 (+0.86%)
NYSE Composite: 11,285.31, +81.22 (+0.72%)

Reversion To The Mean... Can It Happen? Mnuchin Panics Markets With Calls To Banks, PPT

Stocks and math really should be on everybody's radar, if not today, then certainly every other day the markets are open. It's a major cause of angst and stupidity that people don't apply mathematic principles to investments. Math runs everything, it's immutable, and unmoved by emotion, which is what often moves stocks and other investments into absurd areas.

Speaking of absurd, how out of line were the valuations of stocks just a few months ago?

The answer is, historically speaking, VERY. Stocks were valued as if nothing negative would ever happen ever again in the world. US unemployment would forever be under four percent. GDP would always be above three percent. Politicians would never, ever lie again. Democrats and Republicans would make peace and compromise in support of the American people, and ordinary citizens in France would just accept the uber-liberal policies that are taxing them out of existence and stop their silly protesting.

Yeah, sure. Throw in some unicorns that barf up rainbows and poop gold and you'd be close to the kind of valuations the stock market was assigning to banks (bailed out in 2008), tech companies (many which have never experienced a severe recession) and plenty of other stocks. The distorted valuations of the past ten years exist because of easy money policies and corrupt corporate executives who used stock buybacks to reduce the number of shares outstanding, thus boosting the value of their stocks via higher earnings per share.

Let's put the past behind us, where it belongs. The Fed is trying, despite serious criticism from the president (he's wrong about the Fed being the real problem... the Fed can be a solution, and should be, since they created the problem originally) to right the global financial ship. The Fed and other central banks extended too much credit prior to the sub-prime debacle, and did it again in its aftermath, bailing out the banks who loaned money to people who could not make the payments.

Now, the Fed is drawing back on the easy money. Nobody likes it, but it must be done. Interest rates of two to three percent are an anomaly, unlike any time in history. The 10-year treasury note should ideally be in a range of 4-6 percent, which would make borrowers think twice about borrowing, and lenders would scrutinize their potential loans with much more dedication and diligence than to standards with which they've become comfortable.

Bad debts, many of them left over from the GFC, need to clear.

Policies are changing, and, with that, valuations will adjust, so here comes the math part of today's monologue.

Using the CAPE ratio for the S&P, stocks closed out today - another disaster, by the way - at 26.02. The mean CAPE ratio for the S&P is 15.69. If reversion to the mean occurs, at some point in the near future (3-12 months), the S&P will decline from it's current value of 2,357.54, to 1,552.20, because it is 65.84% above the mean. That would wipe out the gains of the past six years, sending the S&P back to where it peaked in 2007.

That actually would be a good outcome, since the 2007 levels were later found out to be a bubble, and they went south from there. So, it's very likely that the S&P will overshoot the mean, sending the index down to maybe 1400 or even 1300. Some people with good memories will recall that the S&P bottomed out BELOW 800 at the depths of the Great Financial Crisis of 2008-09, so 1300 or 1400 would be a pretty good outcome.

The same can be applied to the Dow, NASDAQ, NYSE Composite, Dow Transports, the Russell, or whatever US index one chooses. Take the current level, multiply by 65, divide by 100, and you'll have a good estimate of the mean valuation, and maybe even the actual bottom, but, chances are good that the bottom will be quite a bit lower than the mean, that is, if fundamentals matter once again, and we are done with the Fed backstopping every decline via asset purchases, the PPT, QE, ZIRP, NIRP, bailouts, fancy derivatives and generally speaking, voodoo economics (a favorite term of George HW Bush, BTW, in reference to Reaganomics or trickle-down theory).

Just because Money Daily likes to focus on the Dow, the mean is probably somewhere around 14,164.93. You may notice that is a further decline of more than 7000 points, but that should not be out of the equation since the Dow has already lost more than 5000 points just since October 3 (26,828.39, the all-time high) and it's down more than 3700 points just this month.

As has been the theme here for some time now, this is only the beginning of a long decline in stocks.

Treasury Secretary Steven Mnuchin made calls to six major banks and the Plunge Protection Team, and announced that he did so to the press and the general public. Talk about transparency! These kinds of inside baseball moves were, in former times, kept very, very quiet. Mnuchin's up-front attitude about this was meant to panic markets, not calm them. In that regard, he did the bidding of the Fed and his Wall Street friends. Remember, Mnuchin is a Goldman Sachs alum. Surely, his buddies at GS and JP Morgan Chase, Bank of America, Morgan Stanley, Citi, and Wells Fargo aren't losing money nor sleep over these most recent declines in the stock market. Their clients may be losing massive amounts, but, hey, they're just the little people, muppets, right?

Unless you've got a million or more for these guys to manage, you're not worth their precious time.

Merry Christmas. Ho, Ho, Ho.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36

At the Close, Monday, December 24, 2018:
Dow Jones Industrial Average: 21,792.20, -653.17 (-2.91%)
NASDAQ: 6,192.92, -140.08 (-2.21%)
S&P 500: 2,351.10, -65.52 (-2.71%)
NYSE Composite: 10,769.83, -267.01 (-2.42%)

WEEKEND WRAP: The Week The Wheels Fell Off

Was this the week that everything fell completely apart?

The answer is a matter of perspective and speculation, but it sure looked pretty bad. Stocks, with no significant deviation between the Dow, NASDAQ, NYSE Composite, and S&P 500 companies took a major hit, or, rather, a series of heavy blows. Stocks were bludgeoned with regularity, flogged within an inch of their lives, only to be flayed again the following day without respect to any particular sector or class.

Monday was the only positive day of the week, with all the major indices closing nicely in the green. Tuesday was a nightmare, with the Dow dropping nearly 800 points and the other indices dragged down the same abyss. By virtue of the death of former president George H.W. Bush, current president, Donald J. Trump issued an executive order, closing all federal offices for a day of mourning, thus shutting down not just mail service and other government functions, but the financial markets as well.

After the surprise day off, traders got right back to selling again, whacking away with the same ferocity as on Tuesday, but, by mid-afternoon, a suspicious rally emerged, sending the S&P and NASDAQ into positive territory by the close, leaving the Dow with a minor loss of 79 points after it had been down more than 700 during the session. As many expected, the lift late Thursday was either short-term short covering or some button-pushing by the PPT (President's Working Group on Financial Markets... remember them?), setting up Friday for a major collapse of another 558 points on the Dow with the other indices following the lead lower.

What actually was behind the carnage was difficult to discern, as a convergence of events helped shape the worrying. Wrapping up the G20 meeting in Buenos Aires on Sunday, President Trump and China's president, Xi Jinping, announced a 90-day calling off period on new tariffs that were supposed to go into effect and increasing the percentages on others already in force on January 1. Those changes were postponed until March 31, with the intent of the two leaders to work out a framework for trade policy going forward. Markets were obviously pleased on Monday, but by Tuesday felt that a mere 90 days would not be enough to develop long-term policy for either nation.

Politics also is playing a role in the background, as Special Counsel Mueller's bogus "Russia collusion" investigation drags onward with the expectation that a final report will is forthcoming in the very near term. The corrosive political climate in Washington is not only a worry for those involved or tangentially aligned, but it's also having a somewhat chilling effect on investments. Nobody likes uncertainty, but especially so, Wall Street, and when it involves the highest levels of the federal government, the fear gauge goes bonkers and skepticism reigns.

On top of that, there's still a general perception that stocks are not just fully valued, but some are significantly overvalued. More than a few analysts have maintained that the effects of the Trump tax cuts are wearing thin, the federal government is running enormous deficits and a profits squeeze will be apparent by the end of the first or second quarter of 2019.

A minor inversion of the treasury yield curve occurred - almost without notice - on Monday, when the yield on the three-year bill rose above that of the 5-year note. On Tuesday, the 2-year joined in, and both the 2-and-3-year yields ended the week above that of the five. The 2-year closed out Friday at 2.72%, the 3-year the same, and the five-year at 2.70%. The 10-year note was last seen with a yield of 2.85%, and the 30-year down to 3.14%. Bond vigilantes were out in force, and the flight from stocks sent both short and longer-dated bonds soaring. While not quite the textbook inversion of the 2s-10s that have preceded every recession since 1955, the indications are not at all rosy.

Finally, on Friday, November's non-farm payroll data came in woefully short, with expectations of 198,000 jobs met with the reality of just 155,000 new jobs for the month.

The short explanation is that the bull market is getting awfully long in the tooth, the economy is set to slow down a bit in 2019, and the big money on Wall Street is heading for the hills, i.e., bonds and cash or cash equivalents. Dow Theory is about to signal a bear market. The Dow has already sent the signal with its close at 24,285.95 on November 23. Confirmation will come if the Dow Transports close below 9,896.11. It closed Friday at 9,951.16.

With the Fed's FOMC meeting scheduled for December 18-19, and the widely-accepted view is that the Fed will raise the federal funds rate another 25 basis points, there's more than one good reason to be getting out of stocks and those in the know - or at least those who think they know - have been scurrying like rats off a sinking ship.

With the S&P now in correction and the NASDAQ, NYSE composite and Dow Transports already having been there, only the Dow remains above the magic mark of -10 percent. All the major indices show losses for the year and the Dow is just a few hundred points from correction.

Elsewhere on the planet, the number of countries in which their stock markets are already down more than 10 percent continued to grow, with Germany's DAX just a shade above bear market status. That's a huge issue, since Germany is Europe's strongest economy. Given the angst over Brexit, the unwinding of the ECBs massive balance sheet, and Japan's upcoming announcement about the end of QE measures, the focus could easily be on Europe, as it will almost certainly be headed for a recession in 2019. Since Japan's been in something of a recessionary decline for the past 25 years, any slowing of growth on the island nation will barely elicit more than a yawn.

If Europe is about to fall over, the US will almost certainly follow. So much for Making America Great Again (MAGA). The disassembly of the globalist power structure, the rise of populism (marches and violent riots in France) and a global economy on its knees after 10 years of fake stimulus may all be leading to a recession that will have long-lasting and severe consequences.

So, yes, this was the week the wheels fell off.

Here's how the Traveling Wilbury's see it, with the cheery "End of the Line."



Happy Holidays!

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51

At the Close, Friday, December 7, 2018:
Dow Jones Industrial Average: 24,388.95, -558.72 (-2.24%)
NASDAQ: 6,969.25, -219.01 (-3.05%)
S&P 500: 2,633.08, -62.87 (-2.33%)
NYSE Composite: 11,941.93, -202.48 (-1.67%)

For the Week:
Dow: -1149.51 (-4.50%)
NASDAQ: -361.28 (-4.93%)
S&P 500: -127.09 (-4.60%)
NYSE Composite: -515.62 (-4.14%)

History Repeats: "When The President Does It, It's Not A Crime"

Nine minutes. 108 points.

That's what happened when the Dow slipped into the red at 10:23 am ET on Monday. Instead of continuing lower, the market simply changed direction, suddenly, without reason or cause and was on its way to a better day, a brighter future, a higher close.

Richard Nixon once famously said, "when the president does it, it's not a crime." Apparently, the same twisted logic applies to central bank and/or government meddling in markets. For now, the meddlers want to keep markets up, and, if one were to ask the common man or woman's opinion on this type of activity, they might think that it's OK, so long as they are putting money into the market to keep it from crashing... or some other variant of pretzel logic, or the absence of logic altogether.

Lest one is not familiar with the President's Working Group on Financial Markets, often referred to as the PPT or Plunge Protection Team, there is verifiable proof of its existence. In case one is not convinced that the "Working Group" is "working," a little research will reveal some of the more stunning, rapid advances on entire stock indices over the past 30 years which will make Monday's nine minute, 108 Dow points pale in comparison.

Here is just one article on the topic.

The problem with a mechanism such as the Working Group is that it causes distortions in markets, creates unreasonable values in individual stocks, and eventually is a losing gambit fueled by counterfeit money created by the Fed out of thin air. With that kind of magic at their disposal, is it any coincidence that stocks are still aiming at highs amidst the longest bull market ever, or are current stock valuations a true reflection of the strength of the corporatist economy?

The second, larger problem, lay in the circumstance when the Working Group decides to take a day off, like when they decided to allow Lehman Brothers to fail in 2008. All they need do is stand by and watch stocks vaporize, which they did back then and will again, when it pleases their purposes.

Maybe this is not what you came here to read, but, it's never a bad idea to consider what's behind the curtain, lurking in the shadows, unseen and mostly unknown.

Tuesday is election day, so get out there and vote, because, as we're told every two or four years, this is the most important election in our lifetimes.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94

At the Close, Monday, November 5, 2018:
Dow Jones Industrial Average: 25,461.70, +190.87 (+0.76%)
NASDAQ: 7,328.85, -28.14 (-0.38%)
S&P 500: 2,738.31, +15.25 (+0.56%)
NYSE Composite: 12,424.31, +102.51 (+0.83%)

Rally Continues; Assimilation Of Entire Global Economy By Central Bankers Is Nearly Complete

Just for the heck of it, look up a couple of things on your favorite search engine (ours is Bing; we've supplied the links):

The Crime of '73

Creature From Jekyl Island

President's Working Group on Financial Markets

Bank for International Settlements (BIS)

If it's not already obvious, the international cartel of banking has been at this game a long, long, long, time.

Just for fun, here's an article from FEE.org (Foundation For Economic Education) by Robert Higgs: Wartime Origins of Modern Income-Tax Withholding.

If you allow (and who hasn't?) the government to take your money before you ever see it, you're owned. Sure, your retirement fund looks good, but try adding up all the taxes you've paid the last ten years (spoiler alert:: you'll be shocked).

That's all for today, including new record closes for the S&P and NASDAQ.

At the Close, 5/25/17:
Dow: 21,082.95, +70.53 (0.34%)
S&P 500: 2,415.07, +10.68 (0.44%)
NASDAQ: 6,205.26, +42.23 (0.69%)
NYSE Composite: 11,640.73, +19.50 (0.17%)

Stocks Rage into the Close; PPT Mentioned on CNBC

Good stuff on Zero Hedge, when Asher Edelman brought up the PPT (Plunge Protection Team) on CNBC's "Fast Money."

People really don't mention the Plunge Protection Team much anymore, ever since the Fed and their central bank cohorts began their financial asset buying spree in 2009. The Fed money-printing machine puts the PPT (otherwise known as the President's Working Group on Financial Markets) to shame.

The Federal Reserve added liquidity to markets by directly intervening through outright asset purchases of mortgage-backed securities and treasury bills and notes. Known as Qualitative Easing (QE), those in the know simply call it "money printing" or "creating money out of thin air." Both are correct, and, despite all the best intents of Keynesian economics, those actions are supposed to create inflation, which has occurred in stocks, housing and elsewhere, but not in the many and varied consumer staples and discretionary items.

Most consumer prices (and incomes) have somewhat stagnated since the Great Financial Crisis of 2008-09, and, with the Fed threatening another rate increase in June, they probably won't be moving soon. The dislocations in the housing market and the massive transfer of wealth from the poor and middle classes to the very rich, however, have been direct results of Fed action.

So, it's somewhat funny that the commentator would single out the PPT, though he's probably spot on in his general assessment. The bigger issue would be the almost total control of the equity markets by key players, notably, central banks and large commercial firms, i.e., Goldman Sachs, Morgan Stanley, et. al.

Whatever method was in play today, it certainly worked wonders as stocks levitated after 2:00 pm ET into the close.

At The Close, 5/24/17:
Dow: 21,012.42, +74.51 (0.36%)
NASDAQ: 6,163.02, +24.31 (0.40%)
S&P 500: 2,404.39, +5.97 (0.25%)
NYSE Composite: 11,621.23, +16.61 (0.14%)

Dow At Record Highs 11 Staight Sessions; Eye On PPT, Central Bank Intervention

As has been the case for multiple sessions over many years, a rally in the final hour of trading pushed the Dow Jones Industrial Average to a new all-time high, with the NASDAQ and S&P averages also closing up, but short of record highs. They NYSE Composite was fractionally lower.

In the red the entire session, the Dow gained 70 points from 3:00 to 4:00 pm ET, with other major averages also gaining. This kind of activity has been a market feature since at least 2001, when the existence of the Plunge Protection Team (PPT) turned from urban myth to global reality. The PPT, created by Presidential Order #12631, signed on March 18, 1988 by President Ronald Reagan is also known as The Working Group on Financial Markets, is, in reality, a body of financial authorities consisting of:

• The Secretary of the Treasury, or his or her designee (as Chairperson of the Working Group);
• The Chairperson of the Board of Governors of the Federal Reserve System, or his or her designee;
• The Chairperson of the Securities and Exchange Commission, or his or her designee; and
• The Chairperson of the Commodity Futures Trading Commission

Writers such as John Crudele of the New York Post have been critical of the Working Group's market-bending actions and foreign journalists from the Daily Telegraph and The Observer have suggested that the group has often exceeded its mandate.

Thus, tin-foil-hat type conspiracies have continued to suggest that the Federal Reserve and other central banks have been manipulating markets higher for years, and, while such coordinated action has yet to be unearthed by the mainstream media, sites such as ZeroHedge.com and other fringe outlets report that while the PPT may or may not be always active in markets, there's no doubt that central banks, notable, the European Central Bank (ECB), Swiss National Bank (SNB) and Bank of Japan (BOJ) are heavily invested in US and other global equities, making a mockery of the global regime of fiat money.

There are those who say intervention by government-sponsored agencies is not altogether nefarious, and some who believe such market-rigging is a good and reliable replacement for Adam Smith's "invisible hand" of the markets, it cannot be understated adequately that such activity will eventually undermine the integrity of financial markets and instruments.

Being based almost entirely upon faith and trust, financial markets have become the backbone of the global economy. If that faith and trust is broken - an unlikely occurrence, as the central banks, governments, and major brokerages work hand-in-hand largely toward the same end (higher stock prices) - the fragile system would crumble. An antecedent (and, much larger market) to the inner workings of financial markets is the bond market, which has also been pistol-whipped regularly by central bank policy and directive. On Friday, the US Treasury 10-Year Note fell to its lowest level in nearly three months, closing out the week at 2.3170, a direct result of higher stock prices, also known in the investing world as TINA (There Is No Alternative... to stocks).

With central banks and government agencies regularly interjecting themselves and their policies into financial markets, the natural question becomes: how stable and trustworthy are these markets and who gains from such manipulation?

Answering the question bluntly, the markets are only as stable as the institutions behind them, which is today a matter of considerable conjecture and discordant viewpoints. Purists posit that the mountains of debt produced by individuals, businesses, and governments is simply unsustainable and that a rout and crash, while unpredictable, is inevitable. The obvious conclusion to the other half of the question "qui bono" (who gains) is those in power and in control of such vast swaths of money, the governments, oligarchs, commercial and central banks. Beyond that, those in power consider themselves to be benefactors of the millions who gain from higher stock prices, inflation and boosts to massively underfunded pension funds.

With this degree of chutzpah in and on the minds of the central bankers and government leaders of the world, there is little doubt that they believe their actions to be highly beneficial to the orderly running of global finances while also not taking into account the falsity and pervasive inequities that are given rise by those same actions. Those with power over financial markets hold an incredible degree of responsibility, a responsibility that seemingly has gone beyond the pale, over the moon and into its own orbit.

Essentially, those who have questioned or taken positions contrary to the policies of the Fed and their brethren central banks, especially since the GFC of 2008, have been serially decimated in the markets. With stock indices raging without underlying fundamental bases, the planet may have reached a point of no return, wherein all matters financial are no longer in the control of individuals, but, rather, controlled by an opaque group of self-appointed masters.

One can only hope that they are well-grounded and essentially good-natured, because the alternatives would be brazen in concept and bizarre in execution.

At The Close, 2.24.17:
Dow: 20,821.76, +11.44 (0.05%)
NASDAQ: 5,845.31, +9.80 (0.17%)
S&P 500: 2,367.34, +3.53 (0.15%)
NYSE Composite: 11,541.29, -14.87 (-0.02%)

For the Week:
Dow: +197.71 (0.96%)
NASDAQ: +6.73 (0.12%)
S&P 500: +16.18 (0.69%)
NYSE Composite: +30.38 (0.26)

Perception Trumps Reality and Why You Should Not Trade Stocks

A large part of investing consists of paying attention to details. It's not enough to know what a certain company or industry is experiencing over a short-term basis, but to examine the details and to put those details into historic perspective.

It is in this light that today's presentation will advise anyone and everyone to distrust the mainstream media reports of the economy in general, and often, even the specific.

Back in the early portion of this century, word began circulating about a mysterious group called the Plunge Protection Team (PPT for short), which had the extraordinary power of pulling the entire equity market out of a crash, thus restoring confidence to traders and investors.

For a long time, people who believed that the PPT existed at all and was causing the wild fluctuations seen in the summer of 2001 and 2002, were dismissed as conspiracy nuts and tin-foil hat wearers. However, the PPT had been exposed beforehand, and it was indeed real. Its true name was the Working Group on Financial Markets, and it was created via an executive order 12631, signed on March 18, 1988 by US President Ronald Reagan, largely in response to the market turmoil that resulted in a 22% drop on October 19, 1987.

The PPT is real, though current manipulators may not exactly match the same original cast of characters, there is still a shadowy group of government people making sure the equity markets don't crash, or, at the very least, they enter the market to manifest a desired outcome.

Just in case you still don't believe in the power of the PPT, or that the market can be massively manipulated on a short-term (leading to long-term) basis, consider that today from 3:17 to 3:38 pm ET, a span of a mere 21 minutes, the Dow Jones Industrials jumped from 16,261.93 to 16.444.04. That's 182.11 points, a number that would be exceptional (a better than 1% gain) for an entire session.

Thus, the Dow - and along with it, the S&P and NASDAQ - went from near the day's lows to modestly positive, nearing the close of the session. These heady days, as perception exceeds reality by a longshot, that result will be precisely ONLY what the mainstream media reports. Not that markets were in turmoil and extending losses from last week, or, that market conviction suddenly changed dramatically, but ONLY that stocks were up on the day. All is well. Nothing to see here. Move along.

That there are government entities meddling in what used to be fair, honest and open markets should be enough to discourage just about any thinking person to not only abhor the practice of manipulation, but to remove themselves and their money from the fraud that is Wall Street, because, if government operators can make the market go up, they have an equal power to make it go down, or up-then-down or whatever they wish it to be.

In essence, stock markets are not fair and open and free anymore, and haven't been for quite some time. Most stocks these days are wildly overvalued, and for good reason. The retirements of millions of Americans are tied to stocks. Not only that, but the entire economy of the planet is tethered, one way or another, to the US equity markets. There are sovereign wealth funds, trust funds, hedge funds, mutual funds and all other manner of funds, ETFs and investment vehicles that are inexorably tied to the success or failure of stocks.

Suppose there is a massive bear market in stocks, like we witnessed in 2000, and again in 2008. People panic. They sell. But that's old news. People don't move markets any more. Computers do, and those are controlled by the barons of Wall Street, the banks and brokerage firms.

Thus, the PPT does not have to exist at all anymore. There only needs to be a mechanism for all the main traders to move at once in the same direction, and that mechanism is probably already in place, has been used in the past, is being used presently and will be used in the future, either to make stocks cheaper (down) or more expensive (up). Either way, the trading firms will have the upper hand, advance notice and the blessing of the federal government.

US markets are not what they appear to be. For instance, they are much more thinly traded than ever, by fewer participants, many of whom are nefarious, criminal and immoral. Individual investors would likely be better off stuffing cash into a mattress, buying gold or silver, or trading comic books, baseball cards, Beanie Babies or other collectibles. Realistically, the collectible market is very robust and smart individuals can actually make a good living on places like eBay or Craigslist. The art market is also very good, especially for rarities.

Leave the stock market to professionals. If you like to gamble, try the lottery, the horses, or fantasy sports betting, because the Dow Jones Industrials, the S&P, the NASDAQ and the NYSE have become nothing more than sophisticated casinos, operating without gaming licenses, and the house always wins.

Always.

Today's closing quotes:
S&P 500: 1,923.67, +1.64 (0.09%)
Dow: 16,398.57, +52.12 (0.32%)
NASDAQ: 4,637.99, -5.64 (0.12%)

Crude Oil 31.31 -5.58% Gold 1,095.60 -0.21% EUR/USD 1.0855 -0.60% 10-Yr Bond 2.1580 +1.31% Corn 351.25 -1.61% Copper 1.97 -2.52% Silver 13.85 -0.49% Natural Gas 2.39 -3.16% Russell 2000 1,041.90 -0.41% VIX 24.30 -10.03% BATS 1000 20,518.11 -0.16% GBP/USD 1.4540 +0.22% USD/JPY 117.7050 +0.79%

Speculators Step Up to End Dull Trade with a Bang

Think zero interest rate policy and money for virtually free doesn't have its upside?

Ask fund and managed account managers what they think of this trading environment and they'll likely respond in unanimity that it's never been better. After eight straight days of lackluster, low-volume trading, the wheeler-dealers went to work in concerted fashion, driving all risk assets higher on Thursday.

When the biggest banks and their trading arms can borrow money at 25 basis points or less overnight, what happens is trading like today, shutting off the noise about a sputtering, topped out market with a quick, one-day ramp up on strong volume for a nice turn of profit for the week.

The particular catalyst could be anything, from Angela Merkel's comments today about floating more bailout money to save the Euro, to benign initial claims figures (op a mere 2,000 from the prior week, to 366,000), to July housing starts dropping to 746,000 annualized from 754,000 or the Philadephia Fed's manufacturing index gaining to -7.1 in August from July's horrific -12.1. Well, forget those last two as they don't quite fit the hopium narrative.

Indeed, if conditions on Wall Street get any better, the feds may just cancel the November election and proclaim President Obama the winner by default. After all, the campaign money flows from Wall Street and other major investors, multi-millionaires and billionaires to the candidates or their PACs, and Wall Street has been having a rousing good time the past three-and-a-half years. Why end the party now?

At some point, analysts are going to poke around the numbers a bit and find that stocks are extremely overvalued, priced for perfection, at levels unsustainable for the long run unless corporations severely fudge their books to show better-than-expected results (oh, that's never been done before, not in America).

It doesn't matter what analysts or the best chartists in the business conclude, however. Stocks will continue to go up as long as markets continue to be manipulated by the central planners scattered around the globe in investment houses, central banks and government ivory towers.

What's that? You don't believe the US markets are not manipulated? Maybe you need a little convincing from experts in the field.

Take J.S. Kim, for example, who posits that potential gold and silver investors are continually fed disinformation about a market manipulated by contrived futures and trading patterns in a false, paper market

Perhaps one could take advice from Chris Martenson's commentary, headlined "What to Do When Every Market Is Manipulated?"

For a more general understanding, one could comb through the 29,800,000 results for the search term "market manipulation," and see what kind of gems are unearthed.

The control, rigging or manipulation of markets in the United States has been going on in a large manner ever since Ronald Reagan created, by executive order, the President's Working Group on Financial Markets (otherwise known as the PPT, or Plunge Protection Team) after the massive market crash in the wake of "Black Monday," when the Dow Jones Industrials plummeted 508 points Oct. 19, 1987 and was called into action again when Long Term Capital Management (LTCM) nearly brought down the house of cards in 1998.

After 9/11/2001, the PPT, as it became known, has been on keen alert to any signs of a meltdown in markets, but not even the heft and might of the underhanded, underground operatives of the government could deflect the market forces pushing against them in the fall of 2008.

Since then, the manipulation in equity markets has become almost overt, with the Fed guiding the way by the light of quantitative easing (QE) and ZIRP.

While here at Money Daily we deride the pimping and pumping of markets by insider forces, there comes a time when one must admit that investing in risk assets such as stocks and commodities over the past three years has never been easier. All one needs to do is hold a basket of stocks or index contracts long enough and they're sure to rise. It's become a permanent feature of US markets that they cannot fall for long and there is no end in sight to the manipulation.

It's just that easy for the rich to get richer and the rest of us to remain in a stupefied trance-like state of amazement and contentment.

Dow 13,250.11, +85.33 (0.65%)
NASDAQ 3,062.39, +31.46 (1.04%)
S&P 500 1,415.51, +9.98 (0.71%)
NYSE Composite 8,089.82, +60.81 (0.76%)
NASDAQ Volume 1,901,789,500
NYSE Volume 2,898,041,250
Combined NYSE & NASDAQ Advance - Decline: 3862-1572
Combined NYSE & NASDAQ New highs - New lows: 230-30
WTI crude oil: 95.60, +1.27
Gold: 1,619.20, +12.60
Silver: 28.21, +0.40

Who Goosed the Stock Market? The PPT Did, That's Who

The more one endeavors to make sense of the movements of the major equity indices, the more one becomes convinced that there is major manipulation going on behind the scenes and today was just another prime example to throw into the conspiracy hopper.

While the Dow gained 78 points today, all of the gains were produced in roughly a one hour period, from 10:30 am to 11:30 am ET, on extremely light volume. The Dow moved from barely unchanged (12,760) to a gain of nearly eighty points (12,340), which just so happened to be roughly where it closed.

Did Greece's private debt holders agree to a deal at that hour? No.

Did ADP report a gain of 216,000 net private job gains for February. Sorry, that happened at 8:15 am, and the response was pretty muted.

So... let's see. Low volume (if today wasn't the lowest volume of the year, it was certainly close), stocks sliding back near unchanged right after a major selloff the previous session... like the calvary riding to the rescue in a cliche old time Western movie, the PPT - otherwise known as the Plunge Protection Team and officially known as the President's Working Group on Financial Markets has been hard at work ever since 1988, keeping US stock indices safe from free-falling collapses and lately, from even slight declines that might make the markets appear to be as weak as they really are and boosting stock prices when the trading activity all but dries up.

While Joe and Jane Sixpack reads just the headlines and understands nothing except, "honey, our retirement pension fund is up again!" out in the real world its endless money printing and insider stock manipulations that keep the American Dream alive and well.

It's become so blatant and obvious that it is rarely commented upon by even the most suspicious bloggers and underground financial writers. The mainstream press never mentions that the PPT has offices right in New York's financial district - the easier to send orders flying into the fray - or that said offices are owned by the NY Fed.

So, forget everything you just read and move along. You are not supposed to think, analyze or ask any questions. There's nothing to see here, or at least nothing you're supposed to see. In ten seconds your computer will automatically destroy this posting, and your brain will be wiped clean of the heretical commentary presented.

9...8...7...6...

Dow 12,837.33, +78.18 (0.61%)
NASDAQ 2,935.69, +25.37 (0.87%)
S&P 500 1,352.63, +9.27 (0.69%)
NYSE Composite 7,979.83, +59.69 (0.75%)
NASDAQ Volume 1,560,044,000
NYSE Volume 3,515,704,500
Combined NYSE & NASDAQ Advance - Decline: 4287-1316
Combined NYSE & NASDAQ New highs - New lows: 93-43
WTI crude oil: 106.16, +1.46
Gold: 1,683.90, +11.80
Silver: 33.58, +0.80