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Things That Make You Go Hmmm... Like Rigged Markets (All Of Them!)

Tyler Durden's picture




 

While Grant Williams can’t speak for anybody else, his nearly thirty years immersed in equity, bond, and commodity markets all around the world, have shown him enough to absolutely confirm in his own mind that the markets are rigged. Not just some of them. All of them. In different ways, to be sure, but they’re all rigged. Not only are they rigged, but they are rigged in ways that beggar belief; and in many places they are rigged by the very people who ought to be responsible for stopping any rigging.

...

Whether Bill O’Brien likes it or not, Michael Lewis was speaking the truth when he said the market was rigged. He was talking about US equity markets, but rigging goes much, much deeper.

Whether Bob Pisani, Stephanie Ruhle, or any of the other talking heads who form the informational front lines between the public and the markets care to admit it or not is immaterial; the markets are rigged.

Arguing about whether the rigging is a “tax” on investors is so spurious as to be ridiculous.

In order for market rigging to be stopped, the changes have to come from those entrusted with regulation, in the form of stern punishments for those caught rigging them, and there must be changes to the rules to close the loopholes that allowed this kind of activity to occur in the first place.

Instead, the bodies which supposedly oversee the markets are involved in the most serious rigging of all.

What chance is there that we will see any change?

Get used to it, folks. As anyone who looks at financial markets up close with their eyes open will tell you, they are all rigged — it’s simply a question of degree.

The question is, do you adapt and work around the rigging, or do you simply decide not to play?

Central banks and governments seriously hope you choose the former option.

...

(Dictionary.com): rig: verb (used with object), rigged, rig·ging.

1. To put in proper order for working or use...
2. To manipulate fraudulently

Now, the Fed will argue that the first definition applies to their actions and that they are putting the market in “proper order for working or use.” I would assert, however, that (a) their manipulation of the market is utterly beyond contention and (b) it would be hard to find a more egregious example of fraud than the creation of money out of thin air.

Manipulation and fraud. To me, definition 2 is the correct one.

But IT DOESN’T MATTER which definition you choose. BOTH apply to the action of “rigging.” The anomaly here is that the people rigging the market are essentially the same people in charge of policing it; so, of course, everybody simply looks the other way. It helps that the Fed’s particular form of manipulation is moving asset prices of all descriptions in predictable  directions, which makes money for everybody who tags along for the ride. When manipulation leads to profit, investors are willingly complicit.

Yes, the US government is the largest buyer of its own debt. This is not something we didn’t know, but think of the practice in terms of whether it’s “rigging” a market.

Is the world’s largest market trading where it would be under normal conditions and with freemarket forces allowed to exert themselves?

Of course not. It’s rigged.

Greek, Italian, and Spanish bonds? UK gilts? JGBs? Rigged, rigged, and rigged. Rigged. Rigged.

Like the Fed, the forces at work in these supposedly free markets will point towards the first definition of rigging and suggest they are putting those markets in proper order; but the truth is, creating a marketplace whereby Greece can sell $4 billion of 5-year debt at a yield of only 4.95% (as they did this week in a triumphant return to the bond market) made possible an implicit backstop by the ECB is fraudulent. It ensures that the price does NOT accurately reflect the underlying risk.

Thank heavens the bond markets are rigged. If they weren’t, this could get ugly.

Want more “rigging”?

 

Grant Williams' Full letter below...

TTMYGH - Whats the Frequency

 

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Mon, 04/14/2014 - 20:39 | 4658996 knukles
knukles's picture

Bloomberg said all the markets were rigged except gold.

 

(if you need this sarc, you need serious professional help)

Mon, 04/14/2014 - 21:04 | 4659063 aVileRat
aVileRat's picture

On a related note, Pulitzer awarded to the Snowden authors, including the one who originally filed his reports under annon with his editor in the first edition. Would not be shocked if the rigging cases/ reverse-repo-repo news stories lay the groundwork to an interesting 2015 nomination short list.

 

Mon, 04/14/2014 - 21:10 | 4659074 linniepar
linniepar's picture

Who do I call to have my MyRA contributions directed into Greek bonds?

Mon, 04/14/2014 - 21:33 | 4659157 Keyser
Keyser's picture

and it's gone.........................

 

Tue, 04/15/2014 - 08:39 | 4660137 sodbuster
sodbuster's picture

Well, at least wrestling isn't rigged!

Mon, 04/14/2014 - 21:05 | 4659064 remain calm
remain calm's picture

I love the section were Jamie Diamond says the Feds exit from QE will be easy. He has his head up Yellen's pussy so far, he can easily French Kiss her

Tue, 04/15/2014 - 05:19 | 4659849 negative rates
negative rates's picture

Professional help is rigged, by the mkts of course.

Mon, 04/14/2014 - 20:39 | 4658997 db51
db51's picture

And the point is?

Mon, 04/14/2014 - 20:43 | 4659007 maskone909
maskone909's picture

Lieutenant Riggs, im too old for this shit.

Mon, 04/14/2014 - 20:45 | 4659011 MFL8240
MFL8240's picture

Rigged the markets are AT THIS POINT but, the time is approaching where this group of liars called the Federal Reserve will lose control of the debt monster and the dollar will go causing the rigging to end.

Mon, 04/14/2014 - 21:01 | 4659055 i_call_you_my_base
i_call_you_my_base's picture

It could be argued as an advantageous rigging if all participants had an equal share in the market being rigged. But the rigging really only benefits those with assets, and inordinately so for the wealthy and extremely wealthy. All the rigging does is make the rich richer as everyone else stagnates in a poor, or very poor economy. And money continues to be invested badly as the real economy tanks perpetually.

Mon, 04/14/2014 - 21:03 | 4659058 TammanyBrawl
TammanyBrawl's picture

Hide, no slide orders? In what world is that not rigging the market?

Mon, 04/14/2014 - 21:07 | 4659070 buzzsaw99
buzzsaw99's picture

The question is, do you adapt and work around the rigging, or do you simply decide not to play?

If done right either option works.

Mon, 04/14/2014 - 21:28 | 4659139 TammanyBrawl
TammanyBrawl's picture

Yeah, but to work around the rigging you'd have to know how it's taking place. If the exchanges and HFT traders are colluding to increase order flow, consequently disadvantaging other market participants and removing transparency, how does one counter that. 'Greater fool' means that someone is acting on information you don't have. if the very exchange is the one making you the greater fool, then it's not an exchange. It's a racket. 

Mon, 04/14/2014 - 21:36 | 4659165 buzzsaw99
buzzsaw99's picture

well the first thing is don't play in their kitty box. stocks, bonds, currencies, all are the province of the maggots.

Mon, 04/14/2014 - 21:10 | 4659076 SweetDoug
SweetDoug's picture

'

'

'

The London Gold "Fix".

 

Says it all…

 

•?•
V-V

Mon, 04/14/2014 - 21:10 | 4659077 Stuck on Zero
Stuck on Zero's picture

If you're looking to turn a profit then go along with the rigging.

 

Mon, 04/14/2014 - 21:25 | 4659127 Youri Carma
Youri Carma's picture

Frankly I think this goes under the category 'Things That Make You Go AaaaaHHH!!!'

Mon, 04/14/2014 - 21:33 | 4659155 intric8
intric8's picture

It has to be a corrupt market. The opportunities are way to compelling and the oversight is atrocious. And, how can you possibly enforce central bankers who arent subject to audit? What a masterful system theyve set up!

Mon, 04/14/2014 - 21:37 | 4659168 AdvancingTime
AdvancingTime's picture

To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong.

An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. More on this subject in the aticle below.

http://brucewilds.blogspot.com/2013/07/markets-more-lies-and-munipulatio...

Mon, 04/14/2014 - 23:03 | 4659443 DipshitMiddleCl...
DipshitMiddleClassWhiteKid's picture

markets have always been rigged.

Mon, 04/14/2014 - 23:07 | 4659463 besnook
besnook's picture

anything that can be rigged will be rigged. nothing can be rig proofed so everything is rigged. so either you are the rigger or the riggee or in the gap playing rigging arbitrage.

Mon, 04/14/2014 - 23:11 | 4659474 besnook
besnook's picture

hence the spawn of iex. goldman was wise to jump aboard. the truth becomes the disruption in a dishonest market.

Mon, 04/14/2014 - 23:40 | 4659527 TrustbutVerify
TrustbutVerify's picture

No mention of the giant deficit, $17 trillion of debt, and 4x5 times the $17 trillion in debt of unfunded entitlement mandates - all this at just the US federal level.  

And this isn't rigging the market? ...and the economy as a whole?  It ain't just the Fed.  We're rigged to fail. 

Tue, 04/15/2014 - 00:52 | 4659643 VWAndy
VWAndy's picture

I upvoted Rigged to fail.

Tue, 04/15/2014 - 09:11 | 4660286 CHX
CHX's picture

So it should be "Too Rigged to fail" ? Makes sense to me.

Tue, 04/15/2014 - 02:42 | 4659756 Kina
Kina's picture

 

Bloomberg said all the markets were rigged except gold

They can say all markets are rigged but why are they so scared that they need to lie about gold.

who are they protecting ?

Tue, 04/15/2014 - 09:08 | 4660269 CHX
CHX's picture

Gold is not rigged, paper gold is rigged. EOM.

Tue, 04/15/2014 - 07:52 | 4659973 falak pema
falak pema's picture

Market rigging is a manifestation of Oligarchy rule and winning at any cost; even when the facts prove you have no clothes on.

Don't cry about the symptoms of decadence but about root causes. 

Tue, 04/15/2014 - 09:05 | 4660253 TrustWho
TrustWho's picture

And Jon Corzine played the rigged market and someone decided to take him down. Corzine was absolutely correct about periphery Europe bond rates falling, but for a brief moment the rates increased.

Did the power elite need a head to cover-up the rigged markets? ZH has been talking about rigged markets for years. The powerful should have called the rigged market long ago, but they decided to make money instead. Their failure to perform their fudiciary responsibilities will make 2008/09 look like a cake walk once reality (Invisible hand) takes control.

All financial leaders have failed the common citizen of the USA and the world. The greed, fear, cover-up lies driven corruption will end badly. The shame is Hitler II may bring the citizens the justice they crave. Oh! what a tangled web we weave.

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