MarketWatch Calls Out Fed To Disprove It Is Manipulating Index Futures

Tyler Durden's picture

A week ago we presented the observations of TrimTabs' Charles Biderman, who laid out a logical case for why there is significant circumstantial evidence that the Fed is manipulating markets by purchasing index futures in the aftermarket: "One way to manipulate the stock market would be for the Fed or the
Treasury to buy $20 billion, plus or minus, of S&P 500 stock
futures each month for a year. Depending on margin levels, $20 billion
per month would translate into at least $100 billion in notional buying
power...This type
of intervention could explain some of the unusual market action in
recent months, with stock prices grinding higher on low volume even as
companies sold huge amounts of new shares and retail investors stayed
on the sidelines. For example, Tyler Durden of ZeroHedge has pointed
out that virtually all of the market’s upside since mid-September has
come from after-hours S&P 500 futures activity." Today MarketWatch has an open appeal to the Fed to put Biderman's allegation to rest by publicly disproving that it is involved in any direct market manipulation. "Biderman's accusation of PPT market manipulation is another argument
in favor of a complete public audit of the Fed's books...there is a widespread
belief that the PPT does manipulate stock prices on a daily basis to
enrich its pals and screw individual investors.
It would be useful to prove them.

" We couldn't agree more.

Here is a summary of MarketWatch's Washington Bureau Chief thoughts on the issue:

Charles Biderman, chief executive of TrimTabs Investment Research, is
the latest and most credible person to charge that the Federal Reserve
and the Treasury (in league with top Wall Street firms) is rigging the
stock market on a daily basis.

In a special report released Tuesday, Biderman said the $6 trillion
increase in U.S. stock-market capitalization since March can't be
explained by the usual sources of funds flowing into the market -- such
as mutual funds, direct retail investment, pension funds, hedge funds
or foreign purchases.

The only logical explanation for the extent of the rally, he suggested,
is secret buying by a government committee known colloquially as the
Plunge Protection Team. It's like the dark matter that astrophysicists
conjecture must be there, even if we can't detect it.

The PPT was established by President Ronald Reagan in 1988 after the
1987 stock crash to coordinate the government's response to market
meltdowns. It consists of the Fed chairman, the Treasury secretary, the
head of the Securities and Exchange Commission and the head of the
Commodity Futures Trading Commission.

And while direct confirmation of PPT actions would be in a legal gray area, and maybe not result in the immediate incarceration of all those at the Federal Reserve and ancillary Wall Street firms who are aware of this activity, "doing so would likely violate the Federal Reserve's investment policies, and could violate federal law if not disclosed properly."

While non-circumstantial evidence of the PPT is still missing, numerous truth seekers have made their life pursuit to catch the Fed red handed in what will likely be the biggest piece of financial journalism ever, when disclosed. Alternatively, Bernanke can go on the record and confirm that he does not know or participate in any Fed-sponsored or directly initiated (choice of words here is very critical) purchasing of equity securities. Somehow we don't think we will hold our breath on that one.

h/t Mike

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Jesse's picture


It is more likely, in my opinion, that if this is occurring the Treasury is doing this through a bank, like JPM, rather than the Fed.

The Secretary of the Treasury is the chair of the Working Group on Markets, and the funds to undertake this program would most likely originate in the Exchange Stabilization Fund which is very private.  I don't think any group has oversight of their disbursal of money.

So, Bernanke can easily claim no direct knowledge, and an audit of the Fed might very well show nothing.

GoldmanSux's picture

Agreed. Bernanke was asked this question directly under congressional oath.

Careless Whisper's picture

A bunch of lyin' crooks. The Fed is redistributing the wealth from the taxpayers to the bankstas. They have been doing that since 1913.

LA Times editorial: Ron Paul's loopy ideas now making sense


El Hosel's picture

The Fed,GS,JPM,Bernanke, the PPT.... Lump them all together, call it what you want. I like to call them all the "DRTYFRKRS", it has a nice ring.

They are "making" the markets for now, reality and history will re-make all of it.


Anonymous's picture

Agreed. It's completely f*cking asinine to waste time discussing which blood-sucking entity is actually used to try and disguise this fraud.

What do you expect them to do? - take out a full page spread in the WSJ listing who, when, why together with the guy's name who actually places the trades? Good grief!

Anonymous's picture

Agreed. It's completely f*cking asinine discussing which blood-sucking entity is actually used to try and disguise this fraud.

What do you expect them to do? - take out a full page spread in the WSJ listing who, when, why together with the guy's name who actually places the trades? Good grief!

Tyler Durden's picture

Alvarez never explicitly said the Fed (through the 33 Liberty op or otherwise) does not have any interference in futures trading. As noted in the post, exact phrasing, when dealing with career lawyers is critical, and alas Grayson did not narrow his question enough.

Screwball's picture

Understood, thanks Tyler.  But he does finger JPM.  Not a lawyer, but I remembered the exchange.  Just trying to help.

ZerOhead's picture

Loved the link BTW... took Grayson 53 seconds of waterboarding Alvarez before he coughed up JPM at 7:13... I love that guy!... thanks Screwball!

Cognitive Dissonance's picture

"I was not aware........"

"This was not brought to my attention......"

"I would have no way of knowing........."

As Tyler said, it's all about what the word "is" is and the 10 million derivations of the word games lawyers are paid big bucks to play. It's often a rigged game, in that the questioner is in on the fix and structures the question in such a way that it sounds like it's hard hitting. But it allows the answer to be phrased in a way that allows the train to pass through the mouse hole with room to spare.

This is one of the reasons Washington, and especially Congress when in session, play the extremely polite-to-each-other game. In this atmosphere, it would be extremely rude to directly question anyone with the intent to remove any wiggle room. Plus, if you let me go this time, I'm play ball with you when your ass is on the line.

Grayson did know, or should have known, how to phrase the question to force a direct answer. The fact that he did not speaks volumes.

The Potomac Two Step. 

Anonymous's picture

Is Alvarez right-handed or left-handed?

If Alvarez is right-handed there is a better than 50/50 chance that the gold the Federal Reserves lists as being in it's ownership and possession is NOT there.

The critical moment is at exactly 5:51 when Alvarez shoots his eyes up and to the left (our left). It is the most exceptional gesture he makes under questioning. Check it out... anybody?

ZerOhead's picture

I've got a double post coming up guys... sorry...

Does anyone know if Alvarez is right-handed or left-handed?

According to this information right-handed people who lie look up to the left (our left) when thinking up or telling a lie. The process is called visually constructive imaging...

Grayson asks Alvarez if the Federal Reserve has possession of all the gold it has on it's books. At exactly 5:51 Alvarez takes a second to ponder and unlike any other moment stares high and to the left before he answers in the affirmative.

So if he's right-handed you may want to pick up just a little more of the shiny stuff... just sayin'...

Cognitive Dissonance's picture

Brings new meaning to the term "those lying eyes" doesn't it?

I was going to say, check to see which of Alvarez's hands are calloused. But in circle jerk Washington, both hands are calloused. Brings new meaning to the term "ambidextrous" doesn't it?

ZerOhead's picture

Don't want to get a 'bend' in the shaft now do we?

Water bottle says right... glasses say left... take your pick...

loki's picture

He is right handed.  See this clip  at 00:04.

Water bottle: right hand.   Glasses: right hand (right handed folks remove glasses w/LEFT hand so they can wipe them with the right hand.   But pen in right hand is the give away... unless he is ambidextrous, then r hand dominant ambi.

Look for watch,  on Left for R handed, on Right for L handed.   etc etc.

ZerOhead's picture

See lower... I jumped the gun... maybe... good video shot BTW!

WaterWings's picture

Awesome, if not for the comedy! You guyses noticed Grayson's tie, no? Zing! Not the first time he's worn it. It's his grillin' tie. But I think he's trying to co-opt RP.

merehuman's picture

signing documents, autograps gives testimonity of left or right hand

knukles's picture

He definitively answers in the affirmative as to the ownership of the gold.  The micro expression under examination has to do with the question put forth as to whether the GAO has ever audited such.  Further, he unequivocally states that independent auditors in fact do so. 

However, is he therein referring to the gold held on behalf of other nations at the FRBNY or the US balance sheet gold held in Ft. Knox?. 

That is the question, for the FRBNY vaults would be required to be audited by the depositors.  To my knowledge, nobody of an independent nature has access to Knox for physical audit count or assay integrity of the bars. 

ZerOhead's picture

Yup... you're right...

So the potential 'lie' would be ensconced in the statement he "believes the GAO has the authority to audit the gold... (doesn't say if they have so they probably haven't)... but goes on to say the Feds "independant accountant" is capable of verifying the golds presence and does"

And somewhere in there probably lurks a lie.

And we still know nothing of the ownership of said gold.

That clears everything up doesn't it.

GoldmanSux's picture

Agreed. Look at Bernanke's body language when answering the question. He answers so quickly in the negative that my first thought was, he knows who's doing it. More specific questions are definitely in order.

deadhead's picture

As noted in the post, exact phrasing, when dealing with career lawyers is critical, and alas Grayson did not narrow his question enough.

Bernanke's response to Sen. Bunning fits this bill as well.  The response was very carefully parsed and certainly open to interpretation.

Our incompetent Congress has all the power in the world to get to the bottom of this but unfortunately, it is likely that they won't.  It is possible that the day will come but it is more than likely it will be in the aftermath of an enormous implosion in our financial system.  The USA power structure simply will not proactively take reasonable steps to solve problems if it causes even the slightest amount of pain: only a flow blown crisis will prompt any action, most of which will involve enormous efforts of wagging fingers back and forth between Dems and Repubs.

The USA is past its peak, no question about it.  At this juncture, the question is how long until we find ourselves on the trash heap of busted civilizations. 

DaveyJones's picture

Corruption induced incompetence. I'm with CD. Covering each others asses, like priests in a child inquiry

Oracle of Kypseli's picture

Why don't we all arrange our finances as if there is no gold?

Isn't that a safer bet?

10044's picture

this clip is just a masterpeice, Grayson bombards the bastard. Hysterical, I fell out of my chair watching it, and I've watched it over 5 times.

Just fantastic

Scooby Dooby Doo's picture

Agreed. It's a non-issue. Put this puppy to bed. You'll never discover the real truth. And poking around may upset months of work put in to find a few of the gang. IYKWIM.

Oracle of Kypseli's picture

But since we all know it or it is say, 90% apparent that the PPT is buying, what difference does it really make?

Cursive's picture

Brilliant, Jesse.  The last thing we need is to develop a hypothesis that can be easily refuted.  Maybe it's the FRB, maybe it's a Treasury-sponsored bank or hedge fund.  There has been talk of a "Reston 6".  The audit/investigation can also look into these strange bearer bond episodes such as the one on the Italian border....

Mongo's picture

Nothing to see here.. move along now

koaj's picture

marketwatch cares about the Fed all of the sudden? clicks must be low



carbonmutant's picture

Either that or they have employed someone to do God's work.

Charles Mackay's picture

The Exchange Stabilization Fund is under the joint control of the Fed and Treasury.  I believe there is some type of system where investments the ESF makes are shared and equal between the Fed/Treasury.  The Fed's investments in the ESF should appear in the "other investments" line of the Fed balance sheet.  While that amount has risen by about $52 billion over the last year, a good portion of that is accounted by the purchase of various toxic assets when the financial system was collapsing.

It's also possible that the Treasury side of the ESF is buying stocks without the Fed.  While I am not a legal expert, it does appear that the ESF has the ability to buy almost anything - therefore I think Marketwatch wrong about the legal ramifications. Unless there is outright fraud here somewhere, the actual amount of money invested in the market could not have exceeded $40 billion - and that is a very high guess.   More likely, the amount actual committed to the market would be much less.   Still with leverage, a cumulative investment $20 billion in futures could have bought $200 billion in notational value of stocks.  That's quite a chunk, but unlikley to be increased much more. 

P.S. This is not my guess, but only a possibility of what could have happened.  

Rainman's picture

A $ 6 trillion market cap funds flow that can't be traced to the usual suspects.......??

Never underestimate the cast iron balls on the Boyz behind the curtain.

They could buy France with that much fiat currency.

Waterfallsparkles's picture

I have been trading for years and it is so undeniably evident.  I have never seen a Market like this one.  No matter what the news the Market creeps back up to even.  Day after grinding day for the last 11 months. It is beyond comprehension.  Even the Floor Traders have cashed out and are not Trading. I think Art Cashin on CNBC said he cashed out in October.

China is directly buying Oil, Gold and Copper and I have my suspicions that the Fed is buying Oil, Gold and Copper stocks. This way they can own the commodity without drawing suspicion.

It is impossible to day trade as there is no volitility.  Looks to me like the Fed has eliminated the daytraders entirely.  This helps to keep the Market stable and protect their investment in the Futures or Stocks they have purchased.  As I am sure the Fed is not used to any kind of volitility in their investments.

Between the FED buying Futures all day long an the HFT Trading this is not really a Market in my opinion.  Just a form of Price Fixing as there is no real discovery of price if the Market is artificially proped up from an outside source (FED) and then maintained by the HFT Computers all day.

john_connor's picture

Well said.  Speaking of manipulation, look for the run up to continue to the State of the Union where the allmighty will declare things allright.  Then add another week for good measure, and we might have a few 0.5% down days.

Waterfallsparkles's picture

What helps it appear like the FED is buying Futures is the CONSTANT Gap Up everyday. I have never seen the Market Gap Up so consistently without any news or reason. Then of course the HFT maintains the price the entire day.

I also have never seen a situation where the Market literally flatlines every day until about 3:45 PM.

No matter what anyone says the Market is not behaving in a normal manner.

Screwball's picture

Agree.  I'm no expert by any means, but how many times when it looks like the market is going to take a nice dump, you see these big green candles pushing it right back up.  I've watched it hundreds of times it seems.  Maybe that's normal, but it sure seems funny.

March 10th ( A Tuesday, after a nothing Monday but still the closing low.  The 6th was intraday low of 666) when it all started, was the leaked internal memo from Citi to Bloomberg "Pandit Says Citigroup Having Best Quarter Since 2007" - - so it started out as bullshit too.  But that was good for +379 on the Dow that day and we were off to the races.

For the technical guys, since March the rally has defied every Bearish flag/signal it has encountered.  There has been 3 or 4 Bearish candle patterns and the head & shoulder pattern of July, specifically the 13th.  Futures were down -18 on the Dow at 8:00, then around 8:50 Merideth Whitney was on CNBC and upgraded Goldman, and we were off to the races again.  The techs were waiting to see which way to go off the 875 neckline. Shorts got whacked again.

loki's picture

my shorts got burned off.... I'm finally, 90 cash, 5 s&p, 5 gold.  Burned enough....  I'd like to sit out this ass-fucking but my ass is too burnt.

Anonymous's picture

Well the ESF sure as hell wasn't using its firepower on supporting the dollar last year...

Scooby Dooby Doo's picture

I know... But maybe a little late for this now, no?

Meredith cuts Goldman Sachs estimates again

Doesn't she know where Lloyd was in December?

For pricing inquiries on our Bubble Machine software (Nation Builder Edition) please contact Mr. Faryar Shirzad.

whacked's picture

"non-circumstantial evidence of the PPT is still missing"


And no doubt will continue to be the situation.


Do not fight the Fed.


"Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole." His statement has been used to claim that the Fed actually did act in that way. Mainstream analysts call those claims a conspiracy theory, explaining that such claims are simplistic and unworkable"


Cannot see Paul's audit bill becoming legislation. If it passes the Senate then Obama will veto it. Money dictates who is in power, not morality nor ethics.

Rainman's picture

Heller's analysis is only productive if market credibility does not undergo long term irreversible damage.....which is fast becoming the case.

When the Dot Com bubble burst, Nasdaq returned to half its top end valuation and remains in that range to this day. Fantasy was washed out of that market.

Uncle Sugar's Cash 4 Equities program is an ariticial fantasy as well. It is not a strategy. It is a scheme that generates unsupportable valuations through artificial demand . Just like the banker buy-ups of equities in the early 30s. When manipulated demand was revealed and ceased ( AFTER the looting, of course ), market confidence evaporated and the equity sector tanked for a very long time.

How can this end any way but very badly ??

We damn sure need to audit the Fed.

Anonymous's picture

I think there is a way to extract that info. I am sure there are many hedge funds who suffered losses due to shorting the market. they might have a legitimate reasons for a class action suit against the FED. there is no ban on shorting,and yet if it is true that an entity with an unlimited resources is secretly your opposing trade,then for sure you will always be the loser. But that is for the big money to go after them. The alternative would be to publicly ban short selling and announce to the general public that the FED would be actively intervening in the market. In all cases,economically(aside from profit or loss for investors),the general economy will not benefit from that kind of monkey business. Look at it this way:From 2007-2009,there was nothing but money transfer from long to shorts first,and then from shorts to longs later. What was the actual growth for say GE when its stock was at $30-$6-$15?So basically,and beside Wall st. companies,the general economy is not going anywhere,whether the s&p=600 or 1200.

Johnny Dangereaux's picture

Maybe we can even have different models of guillotines...the 'Marie' for the small ones and the 'Robespierre' for the big ones.....

In a metaphorical sort of way of course!!

Did you know silver kills germs? Yes, it's an Anti-Microbial

Perfect thing to be passed around from person to person.

Oh yeah, and it rallied a buck in 2 friggin days...go figure!

(I am hitting my button now like kramer)



Johnny G.'s picture

Just buy $700BB notional of "way out of the money" S&P futures and watch the quants hedge delta.  The market goes up, everyone feels better.

I posted that last October on this site.   I have repeatedly said that in March and April '09 there was a crazy amount of SPX Dec 1250, 1000, 950 and 900 call buying.  Along the line of $25MM (per strike) in premium "thrown away" (same went for Sep, Oct and Nov) on calls that were 50-100% out of the money.  Such a large amount of notional (well over $100B in notional) - forced the market to stop dropping due to the hedge needed to sell such an option.  Then, as the market went up, it forced additional hedging; until it became self-fulfilling.

The question was, who had $500MM to throw away on a bet that was at least 50% out of the money?  It's too large a bet for any hedgie.  I doubt even the Squid would throw $500MM into a shredder.

I didn't have access to the Time & Sales of the SPX futures which would be the place to begin such an investigation.

BTW, it turns out, they made a fantastic "bet" and made a killing on everything but the 1250's.

Overpowered By Funk's picture

Who indeed has $500mm? I've been saying this since April and got a tin foil hat this summer as a joke for my birthday from colleagues at work.