By Brian Maher
This post Did the “Plunge Protection Team” Save the Market? appeared first on Daily Reckoning.
Notorious vulture investor Asher Edelman raised a gale this week when he argued the “Plunge Protection Team” is responsible for the post-election Trump rally:
We have seen the most extraordinary lack of volatility… since Trump has been in office. And it’s interesting because the night he was elected you may recall that the futures came down about 400 or 600 points.
You may recall by the next morning they were even again. To me, watching this Plunge Protection Plan for the last 10 years… I was pretty certain that that’s what happened.
They hatched the “Plunge Protection Team” — or the Working Group on Financial Markets, if your tastes run formal — to prevent another Black Monday.
The Dow plunged 508 points that fateful October day in 1987… some 22% of its value.
The PPT mounts the white horse and buys the market whenever it thinks stocks might go to pieces. Its massive buying stabilizes markets.
So goes the theory.
But the PPT slinks in shadow… working unseen levers… yanking invisible strings.
No one’s ever nabbed it in flagrante delicto.
But is Edelman right? Did the Plunge Protection Team orchestrate the Trump trade?
We take up the question anon. Let us first swan in on today’s market action…
We do hope you’re sitting down, for we bear shocking news — stocks are up again today.
The Dow rose another 70 points. The S&P worked another 11-point rise of its own. The Nasdaq extends its run into record territory. Up another 42.
We’re beginning to feel like a Los Angeles weather man with his daily reports of sunshine.
But the question of the hour…
Has the Plunge Protection Team been in operation?
The answer is likely no… and yes…
The “Plunge Protection Team” on Election Night was probably market shaker Carl Icahn and his understrappers.
Jim Rickards, post-election:
Legendary stock trader Carl Icahn, a close friend of Donald Trump, left the Trump victory party in the middle of the night and ordered his traders to buy $1 billion of stocks even as the stock index futures were plunging.
No PPT needed.
Then the computers sniffed out Icahn and went to work. Analyst James Deporre describes the dynamic:
The computers and ETFs are what drive price movement now, and those things are nothing more than market players trying to find an advantage.
And since the PPT springs to action only at moments of wild alarm, it can’t be responsible for the market’s six-month spree.
Ah, yes… but didn’t we just suggest the PPT has likely been in operation?
We did.
But this time it’s working in the bond market — and in plain view, no less…
Recent spikes in volatility have collapsed almost immediately.
Have you wondered why? You wouldn’t be alone.
From the Heisenberg Report, a financial blog:
Some folks like to suggest that the reason volatility has either been absent, or, to the extent it makes an appearance, it quickly exits stage left around important …read more
Source:: Daily Reckoning feed
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