MarketWatch Calls Out Fed To Disprove It Is Manipulating Index Futures

Zero Hedge ^ | 1/5/10 | Tyler Durden

[FromLori]

A week ago we presented the observations of TrimTabs' Charles Biderman, who laid out a logical case for why there is significant circumstantial evidence that the Fed is manipulating markets by purchasing index futures in the aftermarket: "One way to manipulate the stock market would be for the Fed or the Treasury to buy $20 billion, plus or minus, of S&P 500 stock futures each month for a year. Depending on margin levels, $20 billion per month would translate into at least $100 billion in notional buying power...This type of intervention could explain some of the unusual market action in recent months, with stock prices grinding higher on low volume even as companies sold huge amounts of new shares and retail investors stayed on the sidelines. For example, Tyler Durden of ZeroHedge has pointed out that virtually all of the market’s upside since mid-September has come from after-hours S&P 500 futures activity." Today MarketWatch has an open appeal to the Fed to put Biderman's allegation to rest by publicly disproving that it is involved in any direct market manipulation. "Biderman's accusation of PPT market manipulation is another argument in favor of a complete public audit of the Fed's books...there is a widespread belief that the PPT does manipulate stock prices on a daily basis to enrich its pals and screw individual investors. It would be useful to prove them. " We couldn't agree more.

Here is a summary of MarketWatch's Washington Bureau Chief thoughts on the issue:

Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.

In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can't be explained by the usual sources of funds flowing into the market -- such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases.

The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It's like the dark matter that astrophysicists conjecture must be there, even if we can't detect it.

The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government's response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission. And while direct confirmation of PPT actions would be in a legal gray area, and maybe not result in the immediate incarceration of all those at the Federal Reserve and ancillary Wall Street firms who are aware of this activity, "doing so would likely violate the Federal Reserve's investment policies, and could violate federal law if not disclosed properly."

While non-circumstantial evidence of the PPT is still missing, numerous truth seekers have made their life pursuit to catch the Fed red handed in what will likely be the biggest piece of financial journalism ever, when disclosed. Alternatively, Bernanke can go on the record and confirm that he does not know or participate in any Fed-sponsored or directly initiated (choice of words here is very critical) purchasing of equity securities. Somehow we don't think we will hold our breath on that one.

[FromLori]

ping

also at site

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http://www.zerohedge.com/article/december-rolling-tax-witholdings-collapse-multi-year-low

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http://www.zerohedge.com/article/gmac-q4-loss-comes-5-billion-week-after-taxpayers-acquire-defunct-company

China Between Rock And Hard [Place/Case] After Public Anger Mounts Over House Unaffordability, Real Estate Bubble

http://www.zerohedge.com/article/china-between-rock-and-hard-place-after-public-anger-mounts-over-house-unaffordability-real-

[bd476]

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[remaxagnt]

love that article lori went to go post it and u beat me to it as always! my rep the corrupt pete visclosky is having a town hall and i am going to write a bunch of financial questions and statements. anything you think i should ask or say?

[April Lexington]

There is no doubt in my mind that Geithner and his sleasy quant buddies are manipulating the equity and debt markets to prop up a socialist, kumbaya dream. When reality sets in, these markets are toast and the USA collapses! America deserves what it elects. Let them eat cake....

[MeneMeneTekelUpharsin]

I am convinced that the stock index AND stock prices are all manipulated and have been for some time. It is beyond doubt.

[Sleeping Freeper]

Manipulation is happening on a large scale. This house of cards will collapse soon.

[FromLori]

I’m glad to see others are reading and posting these articles and the ones from the market ticker,epj, etc., they really dig up the dirt.

I don’t know there is so much to ask those creeps I can never seem to get a straight answer. How about throwing him a curve ball and asking him what sense it makes that we have to pay for foreign aide by borrowing from abroad because we are broke?

[AngieGal]

Thanks for the post. I’ve been suspecting this for a long time. My hunch is the market will continue to be propped up until the liberal’s legislative agenda has passed, health care certainly. Maybe they can hold out long enough for amnesty and cap & trade also.

[remaxagnt]

thats a great one! i love it.

[Rational Thought]

It would explain a lot of what's happening.

The Fed is openly buying treasuries and MBS, so why not index futures?

[FromLori]

http://thedailybell.com/681/Nelson-Hultberg-The-Fed-is-a-Fascist-Cartel.html

[Chgogal]

“One way to manipulate the stock market would be for the Fed or the Treasury to buy $20 billion, plus or minus, of S&P 500 stock futures each month for a year. Depending on margin levels, $20 billion per month would translate into at least $100 billion in notional buying power...”

Only $20 Billion plus/minus per month?

[jiggyboy]

A great comment on the article:

“Let’s see how much confidence there is in the markets: Thumbs up if you believe Your Government DIRECTLY manipulated common Equity prices excluding CPP. Thumbs down if you believe they only used what they came public with: OMOs, Term Discount Window, TAF, PDCF, Tri-Party Repos, Foreign Swap Agreements, SL, TSLF, ABCP MMFLF, CPFF, MMIFF, TABSLF, CPP,....”

- JohnnyNash | 6:15 p.m. Jan. 5, 2010

[NVDave]

I’m not sure I understand your question...

[Neidermeyer]

The Fed is openly buying treasuries and MBS, so why not index futures?
*******************************************************
Careful now ,, you’ll have JasonC jump in here and argue that the Fed is as pure as the wind driven snow and does not buy treasuries.. it’s all some kind of grand conspiratorial lie that they do.

[Chgogal]

Can the Fed/Treasury with just +/-$20 billion an month manipulate the market from 6000 to 10500?

[The Californian]

bttt

[NVDave]

It would require such an alignment of favorable conditions that I’m dubious of the net:net outcome. I’m not saying a flat-out “no,” just that $20B/month in the markets, especially using an instrument like futures where you either have to roll them constantly or settle up at the conclusion of the contract... meaning that ultimately, more than $20B/month is involved.

As an example of what happens when you keep rolling contracts with a steady inflow of funds into a position, take a look at what a beast the USO (The US Oil ETF) has become. Or the GLD US Gold ETF. When they roll their book ... jeez. I don’t think either one can get it done in one day anymore...