PPT, fact or fiction?

Discussion in 'Trading' started by crgarcia, May 20, 2007.

  1. Maverick74

    Maverick74

    #11     May 21, 2007
  2. SDticks

    SDticks

    I agree with you. If it does exist, which I don't really have an opinion on either way, I think it would only be useful in slowing down panic selloffs during catastrophic events.

    If you need something to sit there and support markets long term, all you need to do is call the Fed and have them add some money to the economy.
     
    #12     May 21, 2007
  3. Maverick74

    Maverick74

    Right I agree, but how does that stop the HSI from falling, or Shanghai, or the Dax?

    Look, I'm not saying the gov't has no control over the economy through monetary policy. All they have to do is have the treasury issue more debt and try to drive yields down. There is no guarantee what effect this will have though, so it's a risk.

    But the idea that our treasury is purchasing sp 500 futures contracts to drive the market higher would serve no useful purpose. But the whack jobs (bears) on this site continue to believe that.
     
    #13     May 21, 2007
  4. are you saying Robert Heller was a wackjob? He's the one that suggested it...



    "An appropriate institution should be charged with the job of preventing chaos in the market: the Federal Reserve....The Fed already buys and sells foreign exchange to prevent disorderly conditions in foreign exchange markets. The Fed has assumed a similar responsibility in the market for government securities. The stock market is the only major market without a marketmaker of unchallenged liquidity or a buyer of last resort." ... "The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole."

    -- Former Federal Reserve governor, Robert Heller in the Wall Street Journal on October 27, 1989
     
    #14     May 21, 2007
  5. Maverick74

    Maverick74

    Yes, if he was backing up your argument, I would call him a whackjob. But he is not, he is simply hinting at the possibility of it just as I would say it is possible for an alien space ship to land on the white house lawn. Of course that is possible in the hypothetical world.

    Again, I come back to this question, if you really believe the Fed is buying our index futures how can you explain how we are actually LAGGING all the other world markets that are also rallying to new highs. In fact, if you lay the charts on top of each other, they are all almost completely identical except in some cases, in magnitude.

    So again, do you care to respond to this point? It seems that none of the PPT nuts have an explanation for this. I fall back on Occam's Razor, all things being constant, the simplest explanation is usually the right one. In this case, markets are going higher on corp earnings growth, low bond yields and shorts who continue to provide momentum on the long side. Who needs PPT when the natural forces of the market will drive it higher?
     
    #15     May 21, 2007
  6. nkhoi

    nkhoi Moderator

    We have the responsibility to prevent major financial market disruptions through development and enforcement of prudent regulatory standards and, if necessary in rare circumstances, through direct intervention in market events.
    Alan Greenspan, January 14, 1997.
    http://www.federalreserve.gov/Boarddocs/Speeches/1997/19970114.htm
     
    #16     May 21, 2007
  7. only dropping in to point out that your 'aliens landing on the wh lawn' scenario has a basis in comments from both legitimate media and the fed governor himself

    why should the relatively higher growth rates of emerging economies have a mutually exclusive relationship to the fed's hypothetical support of US mkts?

    US dollars get paid and spent all over the world. you could say the world sits under a mountain of our paper. who's to say china isn't buying everything else? i don't see how the point that the US isn't the only market in the world proves or disproves anything regarding Fed influence in equity prices ...

    as far as PPT stuff, i honestly don't know how anyone can draw hard conclusions from qualitative speculation. are you trying to do that?
     
    #17     May 21, 2007
  8. Maverick74

    Maverick74

    That's as ambiguous as the Da Vinci code. LOL. And yes, I do believe the fed intervenes during a time of credit crisis vis-a-vis our credit markets when banks are on the verge of blowing up. Not in buying index futures. Here is a fun question for everyone, if the PPT is actively involved in supporting our markets, where were they when the nasdaq went down 80%? Oh, they stayed out of that one. LOL. How selective of them. LOL.
     
    #18     May 21, 2007
  9. Maverick74

    Maverick74

    Because AC, if there is select intervention you should not see 100% correlation, or close to it between all the world markets. It's analogous to saying that when the sp 500 is going up, all sectors should go up equally. They don't. The drugs usually get hit as do the consumer cyclicals and the utility stocks.

    When the chips rally, the retailers may sell off. When internet stocks rally, it might at be the expense of telecom stocks. If there is select intervention in our markets, the rest of the world should not be following tick for tick.

    Yes, there are US dollars all over the world but that does not mean those dollars should go into index markets? Why are they going into equities at the expense of debt or commodities? These are the questions that have to be answered.
     
    #19     May 21, 2007
  10. I dont know if the PPT is real or not BUT I know for a fact that central banks do actually get involved in the futures markets as one of the European central banks from the North was one of our clients and used to swing it around in the bunds.

    So if they were active the credit derivative markets what would stop them being active in the equity derivatives market?

    Cheers
     
    #20     May 21, 2007