With the Dow having fallen almost 900 points the last two days, look for a “surprise” announcement, or at least a strong hint, next week that the Fed won’t raise the federal funds target 25 basis points next month after all. From Charles Hugh Smith at oftwominds.com:
The herd must be turned away from selling by any means available, and at this point, that means coordinated buying by all the world’s Plunge Protection Teams.
Central bankers are watching Marx’s dictum all that is solid melts into air play out in global stock markets with a terror informed by the scalding memories of 2008’s global financial meltdown.
Once the trap-door opens, there is no bottom without prompt action by the world’s Plunge Protection Teams–the plausible-deniability action heroes of the hyper-speculative status quo who leap into action when global stock markets threaten to melt down.
After half a decade of ceaseless saves, we all know the mechanics of Plunge Protection.
Since the majority of trading is now done by software programs (trading bots, algorithms, etc.), the first step is to create positive momentum so the bots will detect an “up day” and buy, buy, buy.
The easiest way to generate positive momo is to buy a truck load of S&P 500 futures in a time of low volume, where the impact will be the greatest. usually this is pre-market open.
If this fails, the next step is to send a central bank Talking Head out to discuss more quantitative easing. Announcing the central banks’ readiness to do more of what has goosed markets higher for six years will generally spark a buying frenzy, as those who have bet against central banks over the past six years have had their heads handed to them on a platter.
If this fails, grandiose but purposely vague claims of “doing whatever it takes” are issued. There is no need to actually have a plan, or to lay out a plan in public; the open-ended announcement is generally enough to reverse a trap-door decline.
If this fails, it’s now serious. The Plunge Protection Team must start buying equities. This is usually done by private proxies via dark pools or offshore accounts or by state agencies–investment funds, retirement funds, etc.
When things get very serious, the central bank can buy assets directly, and in such massive quantities that the markets are forced to respond appropriately.
If this fails, the last resort is a coordinated buying campaign by all the central banks, acting in concert. This last stand has a rallying cry: Plunge Protection Teams of the World, Unite!
Of course the PPTs of the world monitor key technical support levels, but what the PPTs are really monitoring is the dangerous sentiments of fear and panic. When the trap-door opens and the herd turns to selling, the entire six-year prop-job will crumble.
The herd must be turned away from selling by any means available, and at this point, that means coordinated buying by all the world’s Plunge Protection Teams.
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Welcome back. Great article. I will be watching to see the 6 step implementation scenario.
Thanks, great to be back.
Gee, who’da thunk it?
Excuse for QE to infinity was/is needed. Hence the China Syndrome. Hence our “correction”. 500 points? How about 5000 points as a start. The stawk market is bullshit and has been for a very long time.
I’m not saying the world is not a debt fused toilet bomb, just that ALL efforts to maintain the status quo will be utilized until no more are possible. See Japan for how far the game can be played. There will be “helicopter money” and when that happens and fails we are well and truly on our way down the yellow brick road. Until then this is just another scheme to enrich the scuzz who run the show in ether land.
On the bright side, my garden looks great and tomatoes are still rocking out some great product. The brussels weathered the cabbage looper storm and appear to be out of intensive care, they will make a full recovery. I just enjoyed some delicious Chicken of the Woods with garlic and butter. Free food rocks. GFYS fed reserve criminals!
Let It Burn 2016!
When the powers that be were maintaining the status quo they were handing to the potential counter-revolutionary right a gift of TIME.
Tell me, when the interior of the USA is cut off, which foreign country will save you?
Please cease hoping the stock market will fall.
B.G.McMahan
It doesn’t matter whether I or anyone else is “hoping” the stock market will fall. The busting of the massive credit expansion makes a stock market fall inevitable. As I said in the article: “Rendezvous with reality are never bad things.” Your quarrel is not with those who are hoping and may be profiting from a stock market drop; it is with those who articially inflated it.
Hello, Mr. Gore
It is Jeff’s Nyquist’s viewpoint that the USA is not prepared internally for a major war. I agree. I also think a major stock market collapse in the USA, at this specific point in time would have BAD long-term consequences for liberty. That’s were I’m ‘coming from’.
If you, or anyone you know is completely invulnerable to threats, or bribes, or personal ambition, direct that person to my website.
Thanks,
BGM
I see where you’re coming from, but I think prepared or not, a major stock market collapse is coming. I agree it may well have bad long-term consequences for liberty. And I don’t know anyone, including me, who is completely invulnerable to threats, bribes, or personal ambition, but leave your link because I’d like to check out your website.
Robert, The link is http://www.mycroft1.proboards.com or google NNX4 and brave.
My main idea is rather “radio-active” as in don’t come close unless you don’t mind getting a burn. (from the gov)
Brendan Guy McMahan
born: Everett, WA.
1956
Ex-objectivist/natural libertarian, then to Nyquist, then to Nyquist and Barnhardt, then to a desire for political power — because, you know, if not me, then who?
All this article affirms is the for most purposes the Market is fixed or at least manipulated. Thanks to the Quants the ability of the market to self correct itself has been broken. Thankfully I have not been in the market in over a decade.
drdog09, If you are, or have been, a taxpayer, the feds put you in the stock market. Congratulations! You own a chunk of GM. Did I mention you also own a part of all the big defense contractors? No benefit to ownership. I feel better investing in Nigerian E-mails.
Knuck,
Irrefutably true. But I will just go with the fiction since I don’t have the stock certificates I have no control over the situation. I won’t voluntarily reenter the market till I see Suits falling from the sky and Taxpayers smashing up super computers.