Quote: (02-15-2019 04:45 PM)DonnyGately Wrote:
The Fed does not intervene in the markets to prop up the equities in the US. Stop with that nonsense. [False and Incorrect Statement]
Secondly, the market sets all interest rates other than overnight bank borrowing from the Fed based on inflation expectations, which is why the 10-yr has dropped 60 bps.
Respectfully request you refrain from commenting in my thread as you clearly do not know what you are talking about in this regard...
"The simplest way for the Working Group to intervene in market plunges would be through buying stock market index futures contracts, either in cooperation with major banks or through trading desks at the U.S. Treasury or Federal Reserve"
https://seekingalpha.com/article/4230695...stor-costs
The Plunge Protection Team, The Fed & The Investor Costs
Dec. 30, 2018 11:22 AM ET
Daniel Amerman, CFA
CFA, research analyst, long-term horizon
Research, Tutorials & Videos
(955 followers)
Summary
The Working Group on Financial Markets (WGFM) was established by an executive order in 1988, and includes the Treasury, Fed, SEC and CFTC.
The "Plunge Protection Team" (WGFM) is not a conspiracy theory, and interrupting the momentum of a breakout to the downside that threatens financial stability - is its job.
The Federal Reserve's use of unconventional monetary policies has in some ways made it a much more powerful version of the WGFM.
Both the WGFM and the Fed can cause three types of investor losses in the attempts to maintain economic stability and financial system stability.
The "Plunge Protection Team" is the colloquial name for the Working Group on Financial Markets (WGFM). The Working Group was established by the executive order of President Reagan in 1988, in the aftermath of the stock market plunge of October, 1987.
The group reports to the President, and the official members of the group include the Secretary of the Treasury, the chairman of the Federal Reserve, the chairman of the SEC, and the chairman of the CFTC. In other words, the group members are the four most powerful financial officials in the United States. In practice, the committee can be composed of senior aides and officials that have been designated by those top officials.
According to Treasury Secretary Mnuchin, the WGFM met by telephone on the afternoon of December 24th, to discuss the ongoing plunge in U.S. stock indexes. The very next trading day, the Dow Jones index experienced its largest ever single day point gain, closing up over 1,000 points. The following day, more than half of the 1,000+ points in gains were temporarily lost - until there was a late day reversal that came out of nowhere, and the Dow climbed by over 600 points to close with another gain.
Coincidence?
There is no doubt that the Plunge Protection Team does exist, and that it convened on Christmas Eve. The hotly debated question is whether the WGFM does more than just talk and persuade, and whether it can and does actually intervene in the markets on a more direct basis when needed.