What markets are manipulated and what will cause it to stop?

[DrPepper]

I appreciate the intelligent comments thus far from people who obviouisly know a lot more about this subject than me.

There has been some confusion about what I am referring to as market manipulation. I was referring to secret, undisclosed government investments into bonds, gold, stocks, etc. for the purpose of causing a market to move in a particular direction that serves the government's purpose of being able to finance our debt, support the value of the dollar or persuade the public that the economy is recovering.

Although some people believe that such manipulation is occurring due to unusual market behavior, no one has presented any concrete proof except for the Martensen article which MG disputes. Everyone agrees that the government is openly manipulating the markets through bailouts, MBS purchases, etc. However, a majority of commenters seem to believe that there is no secret government manipulation.

Instead of being due to covert manipulation, the rising stock is simply due to historically low interest rates which is allowing the banks to invest cheap money into quality stocks.

 

[austinp]

Quote from FattBurger:

We have not had a free market in the past 30 years, when we left the gold standard.

no, but we've had two-way stock markets up until about one year ago. then they became one-way stock markets that went up overnight, first 15min, last 15min or every other ugly way possible for day traders to navigate.

any wonder why tumbleweeds blow thru the P&L section where big profit reports used to post? any wonder why the CME stuffs seat license leases inside crackerjack boxes now? any wonder why ES intraday volume is 1/2 to 1/3 what is was one year ago right now?

the new boss ain't the same as the old boss this time around.

 

[Lojanica]

Quote from austinp:

fwiw, I'm not spouting sour grapes. I made money today, and I make money more days than not. But it's one helluva slugfest with the tapes right now, overall consistently deadest intraday tapes anyone has ever seen since pre-1999.

stock markets go straight up overnight or final few minutes of a no-volume session. any time there is any volume surge, it is always on a selloff

commodity markets sensitive to USD all spurt and jerk with no trend, just pure carry trade offsets and little else.

tapes across all assets are as abnormal and unstructured on a daily basis as I have ever seen. edges still exist as they always have but they are fewer, fleeting and smaller than otherwise unfettered market action.

the game has always been rigged, will always be rigged by someone(s) in control. Just never before so blatantly and openly stepped on by our U.S. government: democracy, republic... whatever the hell it is constitutionally supposed to be in theory.

Like a tape recording of my exact sentiment. Slugfest is the correct description.

The risk premium is too low. Artificially low. That is the definition of manipulation whereby risk is skewed by either insider trading or forces other than free market.

The corollary is the equities market is much riskier than the premium. This is artificial and represents direct and indirect manipulation of the markets by the FED.http://www.fundmymutualfund.com/201...-canary-in.html * The former Fed chairman said the U.S. economic recovery has been driven “to a very large extent” by a resurgence of stock prices. “You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”

* A continued rally in share prices could help sustain the expansion, Greenspan said.

 

[austinp]

Quote from Lojanica:

Like a tape recording of my exact sentiment. Slugfest is the correct description.

The risk premium is too low. Artificially low. That is the definition of manipulation whereby risk is skewed by either insider trading or forces other than free market.

every decision and every act that the US Fed makes in the past 1.5 years has been to indirectly or directly impact financial markets. US financial markets = consumer sentiment. Consumer sentiment is the US economy.

Look at all of the magazine and newspaper articles now. They all contain the phrase, <i>"now that the economy is improving / on track / rising" </i>everywhere you look.

Fed's mission accomplished. Press financial markets up at all costs, do not let them back off or correct two inches. Build the perception that all is returned to normal... if in doubt, check your 401 or IRA for verification.

A friend of mine bought ford at $2 and is holding until it hits $20 or better. Ford... a 10 bagger inside of two years? Is this a two-way market free to back & fill, ebb & flow?

 

[gastropod]

Quote from DrPepper:

I appreciate the intelligent comments thus far from people who obviouisly know a lot more about this subject than me.

There has been some confusion about what I am referring to as market manipulation. I was referring to secret, undisclosed government investments into bonds, gold, stocks, etc. for the purpose of causing a market to move in a particular direction that serves the government's purpose of being able to finance our debt, support the value of the dollar or persuade the public that the economy is recovering.

Although some people believe that such manipulation is occurring due to unusual market behavior, no one has presented any concrete proof except for the Martensen article which MG disputes. Everyone agrees that the government is openly manipulating the markets through bailouts, MBS purchases, etc. However, a majority of commenters seem to believe that there is no secret government manipulation.

Instead of being due to covert manipulation, the rising stock is simply due to historically low interest rates which is allowing the banks to invest cheap money into quality stocks.

I posted this here over a year ago -> http://www.elitetrader.com/vb/showthread.php?s=&threadid=147142&highlight=currency

The New York Fed was clearly manipulating the FX markets to make a profit to hide from the US population the losses incurred in the disgusting bailing out of AIG.

-gastropod

 

[RiceRocket]

Does everyone forget about a 0 fed funds rate? With that kind of firepower, the large banks are gorging on every asset class. So, I would say, in a way there is manipulation, but it is by the large international financial institutions, aided by 0% overnight borrowing.

So, in effect, as long as overnight rates stay negative, there will be a bid in every asset class, especially equities. Borrowing for free, has allowed banks to have free reign on asset prices. They can dictate whatever they want as long as their competitors are in agreement and collude in the process. You will not see true competitive, bull on bear markets until the fed removes excess reserves, and raises overnight rates to a non-negative real rate.

 

[gastropod]

Quote from RiceRocket:

Does everyone forget about a 0 fed funds rate? With that kind of firepower, the large banks are gorging on every asset class. So, I would say, in a way there is manipulation, but it is by the large international financial institutions, aided by 0% overnight borrowing.

So, in effect, as long as overnight rates stay negative, there will be a bid in every asset class, especially equities. Borrowing for free, has allowed banks to have free reign on asset prices. They can dictate whatever they want as long as their competitors are in agreement and collude in the process. You will not see true competitive, bull on bear markets until the fed removes excess reserves, and raises overnight rates to a non-negative real rate.

Good point, but I think it is even worse than you describe. The a$$hole banks are "borrowing" at 0%...just to put the money back into the Fed and get interest on "their" "reserves" - total bullshit!!! Where do people in America think the Federal Reserve is getting the money to pay this "interest"? Straight from the American taxpayers' wallets!

-gastropod

 

[ammo]

Quote from Martinghoul:

[. I have gone through the numerous errors/fallacie There was nothing secret about the activities of the NY Fed in that regard either, so I am not sure how you've managed to imply something clandestine and sinister from Greenspan's statement. [/B]

hasn't pimco , who have tracked bond buyers and sellers for decades,been on the news several times saying the usual playeres who made up the purchases on bond auctions, been at only 10-20 %, and the other 80 is ,not proven, but who else has this kind of green, the US ,you must have seen these reports, whats your take? If my banks were getiing run and i printed money to keep out the collapse, how would i borrow money to cover, sell my car? Well if i turn back the milage about 80% i can get a substantially larger sum if it's a cream puff,so if the milage were the US economy and i jacked that up ,instead of trying to sell americas future at a 900 point drop in spx in 15 months and probably drop more, i will borrow the money on my creampuff assets that are up nearly 75% in the last 12 months, what part of market manipulation or bust scenario leaves any room for doubt?

 

[Martinghoul]

Quote from ammo:

hasn't pimco , who have tracked bond buyers and sellers for decades,been on the news several times saying the usual playeres who made up the purchases on bond auctions, been at only 10-20 %, and the other 80 is ,not proven, but who else has this kind of green, the US ,you must have seen these reports, whats your take? If my banks were getiing run and i printed money to keep out the collapse, how would i borrow money to cover, sell my car? Well if i turn back the milage about 80% i can get a substantially larger sum if it's a cream puff,so if the milage were the US economy and i jacked that up ,instead of trying to sell americas future at a 900 point drop in spx in 15 months and probably drop more, i will borrow the money on my creampuff assets that are up nearly 75% in the last 12 months, what part of market manipulation or bust scenario leaves any room for doubt?

We have discussed this at great length in another thread that DrPepper started a while ago.

 

[MKTrader]

Quote from austinp:

no, but we've had two-way stock markets up until about one year ago. then they became one-way stock markets that went up overnight, first 15min, last 15min or every other ugly way possible for day traders to navigate.

any wonder why tumbleweeds blow thru the P&L section where big profit reports used to post? any wonder why the CME stuffs seat license leases inside crackerjack boxes now? any wonder why ES intraday volume is 1/2 to 1/3 what is was one year ago right now?

the new boss ain't the same as the old boss this time around.

I don't know...there was some extremely low-volatility trading after the 2000-2002 bear and 2003 rally. In fact, there was a 5-year+ period where the S&P 500 never even had a 10% correction (and rallies were limited, too). Many people here said day trading was dead..and then a fire began to light in 2007 and the real flames came in 2008.

There was a similar period in the early 1990s before the bull took off. I think it was that period that ruined "turtle trading" and other simplistic breakout/trend systems.

I can't speak for the smaller time frames as well as you can, but for swing/position trading, this seems very similar to part of 2004 and 2005. I remember an entire week in '05 when the S&P stayed in an 8-point range.

Having said all that, it could be the same "manipulative" forces or algo trading that caused the low-volatility. Who knows.