Market WrapUp (Friday 02-28-03

Financial Sense Online ^ | 2/28/03 | Mike Hartman

[arete]

“The Exchange Stabilization Fund (ESF) of the United States Treasury was created and originally financed by the Gold Reserve Act of 1934 to contribute to exchange rate stability and counter disorderly conditions in the foreign exchange market. (NOTE: There are many “disorderly conditions” in the currency markets right now!) The act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit, under the exclusive control of the Secretary of the Treasury subject to the approval of the President.” I used this quote to simply show that “managed markets” are a given. It happens. It’s real. Just think of that in the context of free and open markets. Which is it?

Just what we need -- a bunch of Washington political nitwits spending our tax dollars supporting the Wall Street crooks and scam artists. This is getting to be a three ring circus.

Richasrd W.

[arete]

Market WrapUp is Delivered for yet another day.

Richard W.

[dalereed]

"Under a scenario like that, I could easily see gasoline at $5.00 per gallon. In order to buy oil from the Middle East we would have to buy euros which could then be used to buy the oil."

This is the scariest part of the entire thing!

If that happens we will be sent into a depression that will last for years!

[muleboy]

3 rings and a tent on the side.

If I remember correctly, I read that Iraq began demanding Euros for it's oil two years ago and the US became concerned that other oil producers might follow Iraq's lead.

It would certainly make one context of the current situation clearer, the reticence of France and Germany. If they can establish themselves as the dominating/controlling powers of the EU, and circumstances conspire to move away from the Dollar, especially concerning oil, then France and Germany stand to profit from the subsequent windfall.

With Blair's finger in the dike, while Putin plays the wild card. Meanwhile China sits back and enjoys the show.

If the US can keep the plates spinning and get out of this without a severe recession it will be truly miraculous. And by severe, I mean equal to the last three years destruction all in one year. Probably 2005, post re-election. 2nd terms are usually rough.

[Starwind]

The act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit,

So, assuming this 'dealing'/intervention is taking place today, what do they do? Buy indexes or actually pick individual stocks they deem influential (regardless of fundamentals)? Would they short stocks in international markets?

This would have to drive technical traders nuts.

[Blue Highway]

So, assuming this 'dealing'/intervention is taking place today, what do they do? Buy indexes or actually pick individual stocks they deem influential (regardless of fundamentals)? Would they short stocks in international markets?

This would have to drive technical traders nuts.<<<<

Shorting international stocks - good one.

[muleboy]

I am wondering the same thing.

It seems that the last report of BuyOnClose orders, issued at 3:40 EST, has a pronounced effect on the last twenty minutes of trading each day.

I wonder if these are the machinations of the "Plunge Protection Team" established in the aftermath of the Long Term Capital Management scare?

[arete]

This would have to drive technical traders nuts.

Whatever they are doing, they aren't going to be sharing the info anytime soon. Nothing quite like becoming a super secret government that doesn't have to be accountable for anything.

Yes, it is driving the TA people nuts as well as all us more fundamental people as well. New home sales (the whole economy rests on new home sales and refis) plunge and unemployment claims increase, and the market goes up? Got to keep Joe-6-pack and the buy and holders believing in the good tooth fairy I guess.

Richard W.

[Cicero]

The speculation is that if the US attacks without global approval, then it would give the Middle Eastern countries along with Russia the incentive to conduct all purchases for crude oil in euros rather than in US dollars.

This is the only part of the article that makes no sense to me. The Muslims would like very much to start getting oil off the dollar standard. That's why Malaysia started the move toward a Gold Dinar, and that's why France and Iraq are trying to work toward pricing in Euros. China and Russia have also shown some interest in moving from dollar reserves toward the Euro or gold.

In my view, that may well happen UNLESS we go into Iraq and some of the neighboring countries. It's not certain whether, in the long run, anybody can control these matters. But having our hands on the oil fields would surely make it more difficult for our enemies to deal us out.

[Starwind]

I guess while we/I'm on the subject of the Plunge Protection Team, I took Puplava's challenge a few days back and started searching for evidence of the PPT, ESF, etc.

My homework is incomplete and inconclusive to date. For the record, I'm willing to believe PPT intervention could be happening, but I'd like to see some hard proof that it is and I've yet to find it.

However I do see some patterns. Most of the advocates of PPT activity seem to be pushing precious metals. Most of the 'evidence' cited of PPT intervention is anecdotal (not surprisingly) and frequently contradictory in that either the PPT is responsible for every upward move in the last 3 years, or some PPT theorists pick some moves as evidence while other PPT theorists pick different moves, but there is not a lot of concensus.

Which, if the PPT intervention is true, I find surprising and brings me to this question: How could something so big as the 'miracle private buyer' who enters huge market-turning sales remain un-identified? There is a whole industry of inside and institutional trade watchers who seem to know the trading bread-crumbs of everybody except the mysterious 'miracle private buyer'. I know a little about how brokerages and trading floors work, and I find it hard to believe that such a secret could be kept so well for so long. Further, such massive trades I would think would need to be spread across several brokerages, and I'd think someone, sometime would divulge what was happening at least once. Or traders would talk shop and compare notes and agree that they all received the same market order on any given plunge.

But as I said, so far the factual evidence I've been able to find is non-existant. So how is this PPT intervention kept secret?

[Starwind]

correction: huge market-turning sales trades

[arete]

You must not be looking very hard. Not only is it common knowledge that the PPT exists, but there is plenty of proof. Just go to google, or follow either of the following links.

Working Group on Financial Markets

Plunge Protection Team

You can decide on your own just how involved they are right now, but as far as masking their trading activity, you must be kidding. Citigroup and JPM are practically government agencies and are owners of the FED itself. They easily covered for Enron and helped facilitate the crime so well that even CEO Lay didn't know what was going on. Enron simply ran out of money -- something Greenspan and the Treasury Dept. will never do as long as they have the printing presses.

Richard W.

[Starwind]

You can decide on your own just how involved they are right now, but as far as masking their trading activity, you must be kidding. Citigroup and JPM are practically government agencies and are owners of the FED itself.

Yes I know they exist, I've seen their 'charters'. I said as much in my prior post.

It is precisely 'just how involved' they are I'm trying to assess on my own, and aside from anecdotal reports and presumptions.

As far as PPT 'masking their trading activity', no, I'm dead serious about looking to confirm it. Are you saying if I watched Citigroup and JPM brokered trades, especially during anomalous plunge reversals, I'd see the PPT in action?

[arete]

As far as PPT 'masking their trading activity', no, I'm dead serious about looking to confirm it. Are you saying if I watched Citigroup and JPM brokered trades, especially during anomalous plunge reversals, I'd see the PPT in action?

Do you actually think that they are going to announce or admit to any market interventions? This is part of the shadow government and much of their power comes from keeping their activities secret. They must maintain the illusion of a free market. All hell would break loose otherwise. Got to keep Joe-6 flim flamed and scammed.

Richard W.

[Starwind]

Do you actually think that they are going to announce or admit to any market interventions?

No.

Does a statistical correlation exist with any large tradeing program? Yes. If the PPT is intervening, there are bread crumbs (somewhere) to follow.

Do you have any concrete suggestions as to where to look to confirm such PPT activity, or have you simply assumed that all the anecdotal reports consitute proof of the PPT and not some other effect (companies protecting their share prices and buybacks on the dips, for example)?

[arete]

Do you have any concrete suggestions as to where to look to confirm such PPT

Oh yeah, they send me an e-mail telling me when they are about to buy the S&P futures. Then they call the NY Times and enter it into the Congressional Recond. You really aren't getting this are you?

Richard W.

[Starwind]

You really aren't getting this are you?

What I 'get' is Puplava's challenge to look it up on the web, confirms nothing more, so far, than speculation, and when said speculation is probed, the result is sarcasm.

Puplava issued a challenge. I assumed there was something substantial behind it (beyond a few thousand speculative anecdotes, many of which had their roots in a common report from the same precious metals trader) to be found.

Why should I accept on faith the rumors of a few gold bugs?

You really aren't getting that are you?

[jwh_Denver]

Why should I accept on faith the rumors of a few gold bugs?

You shouldn't and I don't expect anybody to. Intervention/manipulation takes time to see. I admire the fact that you have started your homework and have noticed patterns but no real evidence of it. That will take time to see and even then you may have no hard facts to confirm it, maybe. With the central banks, various brokerage firms, and God knows who else are in on the intervention they can work this scheme from so many different angles it would be very difficult on a micro level to pin it down. But on the macro level it starts to become more obvious something is going on to hold the markets up. I'm sure you've noticed that the big 3 indexes have hovered around their support points for quite awhile even going above them at times. This is normal for a normal market or even a stock. But when the news is bad and keeps getting worse? Again, no hard evidence but what is holding the indexes up?

I have been bullish on gold for almost a year now, but one thing about gold and finding information on it has led me to disdain is I've ended up in so many "John Birch" meetings it was enough to make me puke. All the conspiracies, gag. Problem was though that I started seeing time and time again that gold was being manipulated. There used to be a hard and fast rule gold will rise no more than 2 bucks in a day. That changed after gold passed 330. But you have said you've noticed some kind of goings on with the PM's.

I bought gold after studying the fundamentals for about a month before I bought a dime of PM's. Actually TA works quite fine even in an manipulated market.

[EVO X]

Why should I accept on faith the rumors of a few gold bugs?

On the way home from work yesterday, I heard voices coming from the radio that said the market was going up at least 30% after we know what is going on with Iraq. This was supposedly based on general Wall Street consensus. Should I accept that as good advice?

[steveegg]

It's more like rings inside of rings, but that's still apt.

It is mighty interesting how the economic war is starting to shape up, and whether that fallout is going to trigger WWIII, with the US and Britain against the world.