Is the Fed propping up the stock market?

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Feb 2 - 5 futures activity was three to four times the daily average of the previous month. (E-mini S&P 500)

 

Pam Martens and Russ Martens of Wall Street on Parade alert their readers, "It’s not every day that three well-credentialed men are willing to put their names and reputations behind the allegation that the U.S. Federal Reserve is rigging the stock market. But that’s exactly what happened yesterday."

Indeed, Paul Craig Roberts, Michael Hudson and Dave Kranzler write,

"It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals...."

Paul Craig Roberts is a former Associate Editor of the Wall Street Journal and Assistant Secretary of the U.S. Treasury. Michael Hudson is an Economist, and Dave Kranzler a Wall Street veteran. They continue:

"If central banks can produce zero interest rates simultaneously with a massive increase in indebtedness, why can’t they keep equity prices far above the values supported by fundamentals? As central banks have learned that they can rig financial asset prices to the delight of everyone in the market, in what sense does capitalism, free markets, and price discovery exist? Have we entered a new kind of economic system?"

 

They continue:

"Looking at the chart of futures activity on the E-mini S&P 500, we see an uptick in activity on February 2 when the market dropped, with higher increases in future activity last Monday and Tuesday placing Tuesday’s futures activity at about four times the daily average of the previous month. Futures activity last Wednesday and Thursday remained above the average daily activity of the previous month, and Friday’s activity was about three times the previous month’s daily average. The result of this futures activity was to send the market up, because the futures activity was purchases, not sales."

[Read the full article]

[Chart source]


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