CNBC Guest Says Absent Plunge Protection Team Stepping In, Market Would Fall; Wien, Kernan Disgusted

Zero Hedge ^ | 07/08/10 | Tyler Durden

[TigerLikesRooster]

CNBC Guest Says Absent Plunge Protection Team Stepping In, Market Would Fall; Wien, Kernan Disgusted

Submitted by Tyler Durden on 07/08/2010 08:44 -0500

A highly amusing exchange occurred earlier on CNBC when guest Damon Vickers of Nine Points Capital had an unexpected moment of truthiness and turned some heads when he said that "unless the plunge protection team comes in over the next couple of days, the markets are looking very dicey here." When a disgusted Joe Kernan asks if Vickers was making a joke about the PPT, the response is "absolutely not - it's common knowledge that the government steps in and does things to step on the gas and buy stock here and there." To which Byron Wien has a strong retort: "I don't believe it." All that and much more in the clip below. In the meantime, the market is sure having a field day with stocks as once again bad news are discarded and the smallest glimmer of positivity serves as a springboard for yet another ramping short covering spree.

[TigerLikesRooster]

P!

[circlecity]

For those of us layman, is the analyst saying O is manipulating the market to mask bad news?

[April Lexington]

I personally do not believe that the PPT exists. If our markets are regularly manipulated by government then nobody in their right mind would invest savings into a manipulated market. It becomes a government program to ensure the safety of EQUITY investments. The whole idea is insane. Having said that... I am sometimes wrong. And, if I am wrong this time, many, many people will lose serious money once it becomes “believed” that the PPT exists to manipulate markets. A government insurance policy against down markets? Wow...

[CrappieLuck]

I’ve suspected for a while that this is where the vast majority of the Stimulus funds have gone.

Our government is manipulating the stock market and picking winners with our tax dollars.

[jiggyboy]

Not O himself, but the infamous “they”, a higher authority. The question of whether the PPT works independently of the White House is a matter to be discussed over a few pitchers of beer.

[April Lexington]

and picking winners with our tax dollars.

Just meditate on this fact for a moment. If you knew which stocks the government would support you could make billions of dollars in profit. if you didn't, you could easily get wiped out. Whatever happened to the SEC and the idea that its job was to police free and fair markets for the protection of investors?

[patriot preacher]

Interesting take....He makes some sense....

[April Lexington]

and picking winners with our tax dollars.

Just meditate onthis fact for a moment. If you knew which stocks the government would support you could make billions of dollars in profit. if you didn't, you could easily get wiped out. Whatever happened to the SEC and the idea that its job was to police free and fair markets for the protection of investors?

[jiggyboy]

If you knew which stocks the government would support you could make billions of dollars in profit

You do know that the six biggest "too big to fail" investment firms ALL had PERFECT trading records for the first quarter, at the same time that, for example, Goldman Sachs' "Conviction Buy List" for its clients was much worse than a coin flip, right?

[ReleaseTheHounds]

Byron Wien was the guest host today — still defending Obama and his policies and reluctant to admit to the many many mistakes.

I didn’t see this segment but I think the guy makes a good point regarding the plunge protection team. Yesterday’s rally could represent such a manipulation because the technicals in this “rally” really are looking weak and maybe dangerous.

[April Lexington]

In the JP Morgan days, the “bigs” would get together and prop up the market because nobody felt like going broke. This can work to a point. But, the US markets are a subset of global markets and it is very difficult to prop up the world. My fear, no... make that terror... is that “they’ will figure out that Uncle Sam has a DUTY to prop up markets so the rich keep getting rich. If the government uses a Fed-like structure to manipulate equities to prevent down markets on a regular basis, the concept of a stock “market” is over. Equity valuation will be set by fiat... frightening consequences... gov takes the risk out of investing...

[jiggyboy]

oops that would be four not six; Morgan Stanley had four days during the quarter where they didn’t make money.

http://www.nytimes.com/2010/05/12/business/12bank.html

[April Lexington]

I think about this every day. Either we have a plethora of money managers who are acting like Crazy Sex Poodles and buying at the fist glimmer of positive news, or, we have a government who is propping up the stock market in some crazy attempt to influence the November elections. Either way, this is not a sane market and I'm no the sidelines because I just KNOW something is out of whack here and I don't want to be without a chair when the music stops...

[brytlea]

Soros....

[jiggyboy]

Some hyperinflationists suggest that a constantly-rising stock market that doesn’t keep up with inflation is a possible long-term strategy. Everybody “makes money in the stock market” but can’t figure out why they can’t quite afford that nice vacation.

[April Lexington]

A thought. But not even the socipathic self-hater has the kind of money necessary to move the US equity markets. This has to be a coordinated effort by the Fed and the Treasury or a collusion of very LARGE money managers who can somehow pump billions into the markets without detection to stabilize prices. I'd like to lean toward a gaggle of naive money managers all stampeding, but its happening too often to maintain coordination. Something is amiss here...

[sheana]

Anyone who watches the markets all day every day (as I do) knows that the big firms trade on pivot points, moving averages, and support and resistance. You can see the big bids and asks sitting there if you have level 2 and/or real time quotes.
The markets can be moved but it is the big firms and shadow firms doing it.

[dalereed]

“If our markets are regularly manipulated by government then nobody in their right mind would invest savings into a manipulated market”

No one in their right mind would put money in the market whether it exists or not.

[an amused spectator]

I personally do not believe that the PPT exists.

http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.

The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".[1]

As established by Executive Order 12631, the Working Group consists of:

    * The Secretary of the Treasury, or his designee (as Chairman of the Working Group);
    * The Chairman of the Board of Governors of the Federal Reserve System, or his designee;
    * The Chairman of the Securities and Exchange Commission, or his designee; and
    * The Chairman of the Commodity Futures Trading Commission, or his designee.

Plunge Protection Team "Plunge Protection Team" was originally the headline for an article in The Washington Post on February 23, 1997,[2] and has since become a colloquial term used by some mainstream publications to refer to the Working Group.[3][4] Initially, the term was used to express the opinion that the Working Group was being used to prop up the markets during downturns.[5][6] Financial writers for British newspapers The Observer and The Daily Telegraph, along with U.S. Congressman Ron Paul and writers Kevin Phillips (who claims “no personal firsthand knowledge” and is “not interested in becoming a conspiracy investigator”)[7] and John Crudele,[8] have charged the Working Group with going beyond their legal mandate. Claims about the Working Group, which are labeled conspiracy theories by some writers, generally include that it is an orchestrated mechanism that attempts to manipulate U.S. stock markets in the event of a market crash by using government funds to buy stocks, or other instruments such as stock index futures—acts which are forbidden by law. In August 2005, Sprott Asset Management released a report that argued that there is little doubt that the PPT intervened to protect the stock market.[9] However, these articles usually refer to the Working Group using moral suasion to attempt to convince banks to buy stock index futures.[10]

Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole." His statement has been used to claim that the Fed actually did act in that way. Mainstream analysts call those claims a conspiracy theory, explaining that such claims are simplistic and unworkable.[11][12]

more @ Wiki