Zillionaire Asher Edelman was quoted on ZeroHedge the other day saying he has ‘no doubt’ that the Plunge Protection Team is behind the stock market’s steep rally since the election. With all due respect for Mr. Edelman and others who believe this, it is conspiracist poppycock. Yes, the Plunge Protection Team, which is officially known as the Working Group on Financial Markets, does exist, having been created under President Reagan. And I have no doubt that it will be pressed into action some day when the inevitable avalanche hits Wall Street. But the source of the stock market’s ongoing buoyancy at present is not the PPT, which has no reason to act unless there’s a crisis, but rather the unlimited sums of credit available at zero or near-zero interest rates to institutional investors and to companies that continuously buy back their own stock to artificially inflate earnings per share.
This dynamic is quite sufficient to keep the markets buoyant as long as the easy-money spigot remains open. Moreover, the bullish effect is powerfully augmented by short-covering, the most urgent source of buying — indeed, the only source of buying sufficiently powerful to push the broad averages through heavy layers of supply to new record highs. With that kind of boost the stock market hardly needs the Plunge Protection Team to keep the bull market going. Ultimately, however, and as any student of history could tell you, when the forces of nature usher in a bear market as is inevitable, the PPT will be powerless to affect it, let alone stop it.
Rick – The implication I get from NY Post article is that Swiss Bank is doing part of the Fed’s work.
Seems similar to what Bank of Japan has been doing with propping the Nikkei.
One only has to look at asset purchases made by the BOJ of Nikeii issues in 2016.
Seems like the Fed is though its own efforts and that of intermediaries following the same path.
Wish such wasn’t the case.
Where in history have we had a quasi governmental agency that actually prints our money supply become an active investor in stock market equities?