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%)

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%

BUMMER: The Plunge Protection Team Is Back in Action!

The Markets

Let's face it. US equity and commodity markets are completely, irretrievably, unconscionably manipulated beyond any basic sense of fairness.

On the morning of the first trading day of the week, US equity scalpers were met with futures that forecast a dismal Monday. Every index in every foreign country was lower on the day. In Asia, the Hang Seng led the way with a loss of greater than 4%. European bourses, shattered for the better part of the past three months, were all lower, the French CAC-40 taking over from the German DAX in leading the way to oblivion with a 4% decline.

But here in America, we have advantages. We have Ben Bernanke, the brilliant, often uninspiring and always shaking Chairman of the Federal Reserve. We have Timothy Geithner, the diminutive (matching his brain power) Treasury Secretary who keeps a watchful eye over the nation's exploding debt.

And we have printing presses (actually, they've been replaced by computers) spitting out US dollars faster than a 9th Avenue hobo picks up pennies thrown his way.

More than anything else, however, we have the fabled Plunge Protection Team (PPT), aka the President's Working Group on Financial Markets created by President Reagan in the aftermath of the LTCM blowup in 1987.

According to Executive Order 12631, the "Working Group" was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence.

In other words, when the markets are crashing, the Working Group, or PPT, springs, like trained attack Dobermans, into action to rescue witless investors from parting with their increasingly worthless cash.

Today, the PPT got busy early on. Stocks were hammered at the open, in response to the rest of the world in a near panic over Greece potentially defaulting and European credit market spreads blowing out all over the place. Stocks were down huge in the opening minutes of trading, as an extension of Friday's selloff and the continuing global debt implosion. The fact that Greece will eventually default on a large portion of their debt and ungraciously remove itself from the Euro standard (back to the Drachma) is unimportant to the functioning of the PPT. They buy futures. They buy stocks. They buy whatever is falling fastest, which on Monday, was just about anything that had a ticker symbol.

The PPT doesn't always prompt rallies. Their normal function is to keep US indices from falling too far, too fast, like today, like about six times in the past three weeks, like about a thousand times since the dotcom crash of 2000. And today was no different. They kept he markets in a sane neighborhood, down somewhere between a half and one per cent, until, that is, all the lights turned green.

Around 2:30, the Financial Times, another overstuffed relic from the days of ink and newsprint, ran a story that China was interested in buying Italian bonds, many of which will go up for bid this week as the Italian government seeks to finance its long-standing tradition of turning investor dough into pasta salad, along with assorted mafia side dishes and Berlusconi desserts.

Since noodles are noodles, whether they're doused in marinara or lobster sauce, the nitwits on CNBC were led to believe that this was a great idea, and the markets turned from merely moribund to miraculously magnificent in the final hour-and-a-half of trading. The US wins again. All of the US indices ended the day in positive territory.

Now, some may cheer that the US government has investor's backs, but the stark reality is that the PPT is all that's left between regular day-to-day life and a most serious, full-blown market crash of stupefying proportions. The global economy is on its knees due to too much debt, too many goods and too many currencies trying vainly to devalue themselves. The entire affair is deflationary in the most absolute sense as goods and services become more and more worthless, while the relative value of the currencies which buy such goods plummets into an phalanx of money-crunching debt.

Ah, for the good old days of really free, open markets, like back in the sixties and seventies, when a stock could be worthwhile returning a reasonable four to five per cent dividend along with annualized growth of 15-20%. A quarter point here, a half point there. We were all invested and looking forward to a safe, sensible and sane retirement.

Nostalgia. It's what one gets when one sees the fruits of labor lavished on the already rich.

And by the way, the day should not pass without acknowledging that Jaime Dimon, CEO of JP Morgan Chase, thinks the Basel 3 rules requiring the largest banks, such as his, to hold 9.5% of tier one capital, are "un-American." Right. FU, Jaime. Is JPM the next bank to start selling off assets? Probably should, but probably won't. Hey, the world is an imperfect place, suitable for misfit rich kids like Jaime.

Dow 11,061.12, +68.99 (0.63%)
NASDAQ 2,495.09, +27.10 (1.10%)
S&P 500 1,162.27, +8.04 (0.70%)
NYSE Composite 7,047.12, +2.11 (0.03%)
NASDAQ Volume 1,994,098,375
NYSE Volume 5,034,112,500
Combined NYSE & NASDAQ Advance - Decline: 3178-3364
Combined NYSE & NASDAQ New highs - new lows: 19-514
WTI crude oil futures: 88.19, +0.95
Gold: 1815.80, -42.80
Silver: 40.29, -1.09

Astute readers will understand what it means when all the major indices are up, but the A-D line is negative and especially when the new highs - new lows are tilted so heavily in favor of the lows. For those who still need guidance, it's a con, a complete, total, 100% sham. That oil futures are up while gold and silver suffer heavy losses really cinches it.

Idea: Fresh out, though working hard on "Making a budget and sticking to it," and "Saving 10% of your income." More tomorrow.

Credit Crunch

The continuing downfall of Wall Street's fanatical credit ponzi scheme is unmistakable. The housing sector implosion is spreading like wildfire, into corporate junk bonds, credit cards (have you gotten your "notice" yet? The one that says your interest rate is going up?), and mainstream mortgage lending.

The plain fact is that we're on the verge of a complete economic meltdown - caused by loose credit and regulatory policies - that not even the Secretary of the Treasury and his cohorts in the Working Group on Financial Markets (aka, the PPT, Plunge Protection Team) are powerless to stop it.

Dow 13,211.99 -146.32; NASDAQ 2,546.27 -37.01; S&P 500 1,455.27 -18.64; NYSE Composite 9,554.50 -68.68

Add to that over-arching concern the idea that the United States has been under the control of a gang of half-cocked thugs who have raided the Treasury, destroyed our military (to say nothing of the irreparable damage done to the nation of Iraq) and broken laws with impunity. The Congress has been unwilling to take the necessary action to remove these treasonous criminals from office and the media has been complicit in undermining the will of the people by simple avoidance of real news.

We're in one heck of a mess and even the titans of Wall Street are afraid. Well they should be. They stood by, taking profits and looking the other way for the past 6 years.

With the markets down another day - make that 6 of the last 10 - the unwinding has only begun. Anyone with any smarts is already 50-60% in cash or other liquid assets (a case of booze does count) or short or buying puts on the CBOE. Playing the downside is the only reasonable way to make money right now.

The damage was evident in our two key metrics: Decliners led advancers, 7-5 and new lows checked in at 657 to 133 new highs.

On top of all of this, oil futures for September delivery were up $1.38 to $78.21, an all-time high. Like salt in the wound, you have to pay more to get nowhere at any speed.

Gold was up $2.30 to $679.30; silver rose 11 cents to $13.02. From the looks of things, it might be the absolute right time to invest in the metals. The markets are a wreck and the books have been cooked.

Impeach or die.