Just my guess.
Posted on 01/14/2010 4:28:52 PM PST by mikelike
Are Federal Reserve and U.S. Government Rigging Stock Market? We Have No Evidence They Are, but They Could Be. We Do Not Know Source of Money That Pushed Market Cap Up $6+ Trillion since Mid-March.
The most positive economic development in 2009 was the stock market rally. Since the middle of March, the market cap of all U.S. stocks has soared more than $6 trillion. The “wealth effect” of rising stock prices has soothed the nerves and boosted the net worth of the half of Americans who own stock.
We cannot identify the source of the new money that pushed stock prices up so far so fast. For the most part, the money did not come from the traditional players that provided money in the past:
-Companies. Corporate America has been a huge net seller. The float of shares has ballooned $133 billion since the start of April.
-Retail investor funds. Retail investors have hardly bought any U.S. equities. Bond funds, yes. U.S equity funds, no. U.S. equity funds and ETFs have received just $17 billion since the start of April. Over that same time frame bond mutual funds and ETFs received $351 billion.
-Retail investor direct. We doubt retail investors were big direct purchases of equities. Market volatility in this decade has been the highest since the 1930s, and we no evidence retail investors were piling into individual stocks. Also, retail investor sentiment has been mostly neutral since the rally began.
-Foreign investors. Foreign investors have provided some buying power, purchasing $109 billion in U.S. stocks from April through October. But we suspect foreign purchases slowed in November and December because the U.S. dollar was weakening.
-Hedge funds. We have no way to track in real time what hedge funds do, and they may well have shifted some assets into U.S. equities. But we doubt their buying power was enormous because they posted an outflow of $12 billion from April through November.
-Pension funds. All the anecdotal evidence we have indicates that pension funds have not been making a huge asset allocation shift and have not moved more than about $100 billion from bonds and cash into U.S. equities since the rally began.
If the money to boost stock prices did not come from the traditional players, it had to have come from somewhere else.
~SNIP~
“We Have No Evidence They Are, but They Could Be.”
Sorry, not good enough.
What’s responsible is that the market was absurdly oversold to begin with, over what was an overhyped crisis in order to help Obama win the White House.
...part of the rally at least is due to guys like me who bought blue chip stocks at beaten down prices...and I’m micro-miniscule compared to whales like Warren Buffett who snapped up large positions....after March 09 the bargain hunters moved in...
To answer the question posed by the title - The People who are busy robbing you and your children of a future!
Just my guess.
The FIX has been in for a long time.
Every time there was bad economic news, the DOW went UP.
That’s rigged, manipulation, plain and simple.
I thought a hallmark of truly free markets was transparency.
Why is it the case that hedge funds get to hide their buy/sell patterns from the rest of the market?
I'm not a finance person by any means, but when you think about it where else can people put their money? Real Estate is still dropping, treasury's and CD's are paying next to nothing so what do you do? If you're a small fish like most of us you buy stable dividend paying stocks, at least while dividends are still taxed at only 15%. The other option is gold/silver coins and look at whats happened to them. The down side of gold/silver is it provides no income stream.
</Just my 2¢>
OUTSTANDING comments at zerohedge. Thanks for posting.
Or we can hope liberals bought their own “line” - and are investing in their “hope” and change...
Trillions in cash have been dumped into the economy. Other than the stock markets there is no place else to invest that cash. Hence, the market is rising even though the economy is a joke.
I think you are right. The Fed in concert with the Treasury are manipulating the stock market. When, and if, this comes to light, you will see a real crash. The crash in the value of the dollar and faith in the US economy. Someone is going to get left holding the bad end of this stick. Argentina Redux with a twist.
In this current age of Pravda-like disinformation one has to develop the fine art of reading between the lines through deductive reasoning. Here the hypotheses is proved through elimination which leaves no evidence.
The question remains, is the release of the money supply through the capital markets healthy and what are the dangers? It would appear better than releasing it through inefficient government spending but what happens to a market that is artificially inflated as a result of externalities and how long can it continue?
For most of 2009, from the “bottom” in March until nearly the end of the year, there was a near-perfect inverse correlation between the strength of the US dollar and the US markets; the dollar strengthened, the markets went down, the dollar weakened, the markets went up.
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