The Plunge Protection Team real?
- Thread starter beefcaketrade
- Start date
Something happened in 2009, reflected in all the charts.
Agency MBS Historical Operational Results and Planned Purchase Amounts
https://www.newyorkfed.org/markets/ambs/ambs_schedule.html
Can't find any selling here..
Agency MBS Historical Operational Results and Planned Purchase Amounts
https://www.newyorkfed.org/markets/ambs/ambs_schedule.html
Can't find any selling here..
Does the US do it? How much? I don't know.
Is it possible? Of course it is. Don't you pay attention to China?
Will it work out? I doubt it.
(three different questions)
Is it possible? Of course it is. Don't you pay attention to China?
Will it work out? I doubt it.
(three different questions)
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Especially in a down trending bear market.LOL-True
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LOL
I saw/kept an IBD news paper, full page 2008 bear chart; fun started when the fed did surprise the shorts rate cut LOL. But like DOW Theory notes, no body, no fed is bigger than the market;
so not to long after that, 2008 was still a down=trending bear market. If there is a plunge protection team ,they're not very good@ all in a bear market. LOL
Yeah, this plunge protection team sounds pretty sorry, to me. From my understanding, they were supposedly established in the 80s but since then, we've had a few pretty wild bear markets.
Think of it logically. Daily volume of the US stock market is anywhere from 100 to 300 billion dollars in notional value. To meaningfully influence a price, the buying pressure should be upwards of 5% (10% is probably more like it for a large basket such as a whole market). Let's conservatively assume 1%, which is then 1 to 3 billion dollars a day, making is 250 to 750 billion a year.
CBs have experimented with equity purchases, most notable being current BoJ ETF buying program as well as HK CB buying A-shares to prop up the currency during the '98 crisis.
http://www.cftc.gov/stellent/groups...nts/ifdocs/rul012914cmecbotnymexandcomex1.pdf
https://www.cmegroup.com/company/membership/files/CBIPFAQ.pdf
CBs have experimented with equity purchases, most notable being current BoJ ETF buying program as well as HK CB buying A-shares to prop up the currency during the '98 crisis.
Meh. It's a program for all sorts of non-US government financial institutions. The application was lodged with CFTC in 2013 and is specific to NON-US central banks/pensions/trusts (first link). Do you think Central Bank of Nigeria is propping up the US equities market as we speak? Also, there is no need to link it to some conspiracy web site, you can see the original version on the CME web site (second link):
http://www.cftc.gov/stellent/groups...nts/ifdocs/rul012914cmecbotnymexandcomex1.pdf
https://www.cmegroup.com/company/membership/files/CBIPFAQ.pdf
Bank of Japan, a central bank, openly buys Japanese equity ETFs. (https://www.ft.com/content/885b3eba-bc9c-11e6-8b45-b8b81dd5d080). Is it such a stretch that any other gov or central bank buys stocks?
But volume is erroneous and has been changing (increasing) over time since the advent of computerized/HFT trading and increased listing of companies on exchanges.
Also, out of curiosity, why do you say it takes 5% of total volume of buying activity to push prices up?
But volume is erroneous and has been changing (increasing) over time since the advent of computerized/HFT trading and increased listing of companies on exchanges.
Also, out of curiosity, why do you say it takes 5% of total volume of buying activity to push prices up?
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My understanding is if there is nobody selling, then it's easy to push price up as long as you bid among comrades just chucking the hot potato back and fourth. If noone is selling, you can keep the charade up. The only problem is when there is real selling at the top by real holders, and you continue to try to prop price up by selling and buying between partners at an elevated prices, that eventually you run out of money to play this game. But now the question is, can you ever run out of money if you're an entity that can print money? The only downside is inflation then. But if all you care about is growth at all costs then you don't care, right?
EXAMPLE:
Imagine a stock has a total of 10 shares IPO at $1. You own 4 shares, I own 4 shares. 2 shares owned by 2 other guys. Me and you don't sell. Those two buy/sell from each other. Keeps bidding it up slowly and buying and selling among the two of them. Now it's $10. "Wealth" created out of thin air for all. Suddenly I sell 1 share. They try to keep the charade up so they buy it. Then you sell 2 shares. They try to keep the charade up again and buys that. But they're out of money and own too much. Suddenly I sell all, and they don't have money to buy. Can only offer lower bids. Price falls. But if you and I never sold, those 2 can prop it up to infinity? This example also assumes they have limited dry powder, which does not apply to entities that can print unlimited money at will.
Now look at example trades of propping prices up:
(1) IPO at $1. Stock = $1
(2) A buys 1 share from B at $1.5. A owns 2 shares, $1.5 expenditure. B owns 0 shares with $0.5 net profit. Stock = $1.5
(3) B buys 1 share back from A at $2. A owns 1 share, net profit $0.5. B owns 1 share, $0.5 net expenditure. Stock = $2
(4) A buys 1 share from B at $2.5. A owns 2 shares, $2 net expenditure. B owns 0 with $0.5 net profit. Stock = $2.5
(5) B buys 1 share back from A at $3. A owns 1 share, net profit $0.5. B owns 1 share with $1.5 net expenditure. Stock = $3
Etc etc. Share price moved up by 2 guys tossing it back and fourth with the rest of the owners sitting on their hands.
Meanwhile, going by price of stock and hence networth due to stock, everybody gained on paper. You, me and A and B. By bidding to $10 stock, they are worth $10 due only to the stock they own, and you and I at $40 just sitting on our hands. Yes, they need to be well capitalized to keep the charade up. But it's never a problem if you and I don't sell.
EXAMPLE:
Imagine a stock has a total of 10 shares IPO at $1. You own 4 shares, I own 4 shares. 2 shares owned by 2 other guys. Me and you don't sell. Those two buy/sell from each other. Keeps bidding it up slowly and buying and selling among the two of them. Now it's $10. "Wealth" created out of thin air for all. Suddenly I sell 1 share. They try to keep the charade up so they buy it. Then you sell 2 shares. They try to keep the charade up again and buys that. But they're out of money and own too much. Suddenly I sell all, and they don't have money to buy. Can only offer lower bids. Price falls. But if you and I never sold, those 2 can prop it up to infinity? This example also assumes they have limited dry powder, which does not apply to entities that can print unlimited money at will.
Now look at example trades of propping prices up:
(1) IPO at $1. Stock = $1
(2) A buys 1 share from B at $1.5. A owns 2 shares, $1.5 expenditure. B owns 0 shares with $0.5 net profit. Stock = $1.5
(3) B buys 1 share back from A at $2. A owns 1 share, net profit $0.5. B owns 1 share, $0.5 net expenditure. Stock = $2
(4) A buys 1 share from B at $2.5. A owns 2 shares, $2 net expenditure. B owns 0 with $0.5 net profit. Stock = $2.5
(5) B buys 1 share back from A at $3. A owns 1 share, net profit $0.5. B owns 1 share with $1.5 net expenditure. Stock = $3
Etc etc. Share price moved up by 2 guys tossing it back and fourth with the rest of the owners sitting on their hands.
Meanwhile, going by price of stock and hence networth due to stock, everybody gained on paper. You, me and A and B. By bidding to $10 stock, they are worth $10 due only to the stock they own, and you and I at $40 just sitting on our hands. Yes, they need to be well capitalized to keep the charade up. But it's never a problem if you and I don't sell.
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