Bank of America Explains How Central Banks Rigged And Manipulated The Market

Tyler Durden's picture


It used to be the provenance of "conspiracy theorists" - alleging that central banks have manipulated, rigged or otherwise broken the "efficient market." That is no longer the case.

As we previously showed, now even the big banks admit it.

However, since for some unknown reason the broader media has yet to catch on to this concept which exonerates the "tinfoil" crowd and makes a mockery of the "bull market" of the past 7 years while posing some very troubling questions about how it all ends, here again is Bank of America explaining not only how "central banks have unfairly inflated asset prices" with the "market aware the price of risk is not correct", but why the biggest risk to the financial system is a "loss of confidence in this omnipotent CB put"


And the cherry on top comes from JPMorgan which declares "Mission accomplished - QE drives up equity valuations"

Sources: "Fragility is the new volatility" by Benjamin Fowler, Global Equity Derivatives Rsch, Bank of America, December 9, 2015; "Eye on the Market Outlook 2016" by J.P.Morgan Private Bank

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Sun, 01/03/2016 - 11:57 | 6990507 richsob
richsob's picture

Wash, rinse, repeat.

Sun, 01/03/2016 - 12:01 | 6990514 zorba THE GREEK
zorba THE GREEK's picture

Bank Of America and a few other big banks are the Fed. It is like Obama saying the Government is corrupt.

Sun, 01/03/2016 - 12:24 | 6990566 TeamDepends
TeamDepends's picture

Yes, but what does this mean? It means that they are TELLING us they are robbing us. Just like Barry is going to TELL us this week that he is going to disarm us to further facilitate the robbery. Is anyone listening?

Sun, 01/03/2016 - 12:38 | 6990610 LawsofPhysics
LawsofPhysics's picture

LOL!! Good luck with that. "Laws" that cannot be enforced are irrelevant. Just ask anyone who lived through the collapse of the Soviet Union or that lives in South America Today.

Sun, 01/03/2016 - 13:09 | 6990730 Troy Ounce
Troy Ounce's picture



It is as they are looking for a scape goat in 5..4..3..2



Sun, 01/03/2016 - 22:02 | 6993028 Manthong
Manthong's picture


Somebody from BoA ML saying the game is rigged.


OMG.. I can’t breathe…………………….

Sun, 01/03/2016 - 12:24 | 6990568 Rabbi Chaim Cohen
Rabbi Chaim Cohen's picture

"Shields Up!" Both preparing an alibi, and artful dodging of the ugliness that is about to make landfall...

Sun, 01/03/2016 - 12:54 | 6990669 zeropain
zeropain's picture

they have been liquidating their customer portfolio's.  they are getting out of wall st and back to main st.  they realized they are not crooks after all.  my cash is going to them.

Sun, 01/03/2016 - 17:36 | 6991861 lincolnsteffens
lincolnsteffens's picture

When investment banks start talking like this it is probably because they have already positioned themselves to benefit by the markets going down. Now that they are ahead of the crowd, it is safe to tell the know nothing crowd to panic.

Sun, 01/03/2016 - 22:09 | 6993066 Manthong
Manthong's picture

But Cap’m..

We’ve diverted all the power to the shields..

We’re giving it all that we got…

We canna’ last mooch longa…

Sun, 01/03/2016 - 12:16 | 6990549 RiverRoad
RiverRoad's picture

     "the..... BOUGHT AND PAID has yet to catch on to this concept"

Sun, 01/03/2016 - 22:12 | 6993086 Manthong
Manthong's picture

B A P F....

gee..  like R Y A N.

Sun, 01/03/2016 - 12:26 | 6990572 RiverRoad
RiverRoad's picture

Historically nothing generates a greater loss of confidence in the markets than a series of big unwinds followed by even bigger reversals. When the clapping for Tinkerbell is over,  there will be nothing but the sound of one hand clapping.

Sun, 01/03/2016 - 11:58 | 6990508 kliguy38
kliguy38's picture

You are looking over the abyss right now and most people are saying "oh my isn't that a pretty view".......

Sun, 01/03/2016 - 15:05 | 6991278 GRDguy
GRDguy's picture

Right on. Just over 100 years ago, Jack London published:

Sun, 01/03/2016 - 22:24 | 6993129 Manthong
Manthong's picture

"looking over the abyss"

um.. it that like looking up Hillary's panties? about not a pretty view.

Sun, 01/03/2016 - 11:59 | 6990510 indaknow
indaknow's picture

Yeah no shit. Now where did that hat go...

Sun, 01/03/2016 - 12:00 | 6990512 wonderatitall
wonderatitall's picture

so? get used to it. obama and the gnome are god, at thats what he and the democrats say , so fake it some more for hillbilly

Sun, 01/03/2016 - 12:19 | 6990515 JRobby
JRobby's picture

When the enemy joins your choir

It is time to join a different choir

When the lying thief on the corner takes up the tune in your head, you need to start singing a different tune.

Sun, 01/03/2016 - 12:05 | 6990523 Cautiously Pess...
Cautiously Pessimistic's picture

B of A might as well have released a report on how the 'sky is blue' or 'water is wet'.  They are neck deep in the whole debt based monetary ponzi system and have benefited handsomely within the scheme.  I pray they are completely swept away in the coming flood. 

Sun, 01/03/2016 - 12:14 | 6990544 adonisdemilo
adonisdemilo's picture

We can only hope that when the derivates hit the fan, as well as getting covered in doodoo, they won't be able to rig anything anymore. Not even the long awaited indictments and subsequent trials .

Sun, 01/03/2016 - 12:18 | 6990553 jomama
jomama's picture

No mention of how they benefitted?


Yes folks, they are laughing in your face because America really is that stupid.

Sun, 01/03/2016 - 12:22 | 6990561 JRobby
JRobby's picture

B of A was "assigned" Merril & Countrywide

If you put yourself in a position where you end up in the line where they are assigning diseases, you might get a real bad disease.

Sun, 01/03/2016 - 12:36 | 6990600 LawsofPhysics
LawsofPhysics's picture

LOL!!! Yeah, really tough when one can create money out of nothing. Go fuck yourself you stupid fuck. These assholes OWN the very same politicians that made that "assignment".

The TRUTH is that in the current monetary system bankers/financiers have access to all the money they want FOR FREE, yet they don't create anything of real value, nor do they ever face any REAL RISK (they always get a bailout or golden parachute).

Yet another ignorant fucking sheep that can't see the forest through the trees and the SOCIALIZATION of PRIVATE losses that has been going on for 40+ fucking years.

I will be more than happy to put your fucking head on a pike as well you stupid fuck.

Should have let ALL these fuckers (including GM) go fucking bankrupt and restored mark to MARKET!!!!!!!!!!!!!

We would have been well into a real recovery and economy by now.

Sun, 01/03/2016 - 18:51 | 6992141 Seagate
Seagate's picture

Actually I was assigned ML.  But I overslept and missed the meeting.

Sun, 01/03/2016 - 12:20 | 6990558 ZombieHuntclub
ZombieHuntclub's picture

Such transparency.

Much honest.


Sun, 01/03/2016 - 12:34 | 6990602 dogfish
dogfish's picture

Wow the markets are rigged thank you BOFA for that info.

Sun, 01/03/2016 - 13:00 | 6990692 ejmoosa
ejmoosa's picture

Higher asset prices equals less risk?  Should we define what risk they are talking about?


Higher asset prices means that there is more risk in falling asset pries in the future. Lower asset prices means that there is a greater potential to rise in the future.


Fundamentals the last 10 years have been more than "less relevant".  They are non-existent.

Amazon has a P/E of 363.

What fundamentals justify that?


Sun, 01/03/2016 - 15:02 | 6991259 The Once-ler
The Once-ler's picture

  That’s funny…  the owner of  The Washington Post  says the fundamentals are GREAT!

Sun, 01/03/2016 - 13:03 | 6990701 eltxamo
eltxamo's picture

The only thing investors seems to buy with confidence is GBTC a bitcoin trust, and it's trading at a premium, i wonder why?, because, why buy paper bitcoins when you can buy the real deal delivered to your mycelium app wallet?

Sun, 01/03/2016 - 13:07 | 6990719 ThisIsBob
ThisIsBob's picture

Pot calling the kettle...

Sun, 01/03/2016 - 13:15 | 6990763 Element
Element's picture

Is this the BOA confessional now? ... lol

Sun, 01/03/2016 - 13:24 | 6990807 Nanur
Nanur's picture

A bunch of thieves calling another bunch of thieves, thieves?  I'm confused.  Please tell us which thieves stealing from us are we to consider the "good" thieves?

Sun, 01/03/2016 - 13:26 | 6990816 I Write Code
I Write Code's picture


All BofA is saying here is what the Fed wants you to believe.

That's bullcrap.

The Fed has inflated asset prices, like the share price for Consolidated Lint, not by ZIRPing up MBS and Tbonds, not even by encouraging hedge funds to buy Consolidated Lint for the dividend, but by the Fed directly (or via proxy) buying shares of Consolidated Lint.  Don't even pretend otherwise.  And that applies, by my guess, to virtually every publicly traded stock.  What a story, if and when this ever breaks.

I'll say this, the Fed's actions have affected the overall market by encouraging many publicly traded companies to start paying tiny 1% to 2% dividends, which a rate-starved public then has soaked up.  But that's a tertiary effect, and about to be unwound as the Fed finally bumps up rates.

Sun, 01/03/2016 - 18:53 | 6991202 tc06rtw
tc06rtw's picture

…  you left out  National Dust,
             Amalgamated Swamp
                                and  United Cannonball !

Sun, 01/03/2016 - 13:31 | 6990840 ejmoosa
ejmoosa's picture

I've had some friends I never would have thought would be interested in "The Big Short" go see it this week.

After they yave vented to me about what the banks did and how they exploited the system, I let them catch their breath.

Then I ask one simple question:

What enabled these banks to do this in the first place?

After some pondering, the answer eventually comes to them.

The guarantees from the Federal Government....

Without that, it might still happen, but not to the scale we saw, and certainly not without consequences.


Sun, 01/03/2016 - 14:14 | 6991043 Canoe in the Desert
Canoe in the Desert's picture

Follow the Yellow Brick Road to the Land of Oz.

Sun, 01/03/2016 - 14:28 | 6991108 tc06rtw
tc06rtw's picture


 …  Pay no attention to that man behind the curtain!

Sun, 01/03/2016 - 14:29 | 6991113 buzzsaw99
buzzsaw99's picture

it's a man baby! [/austin powers]

Sun, 01/03/2016 - 14:23 | 6991070 buzzsaw99
buzzsaw99's picture

risk is an antiquated notion that only applies to the piker 99%.

Hush now, baby, baby, don't you cry
Janet's gonna make all of your nightmares come true
Janet's's gonna put all of her fears into you
Janet's gonna keep Wall Street right here under her wing
She won't let you fly but she might let you sing
Mama's gonna keep HFT algos cozy and warm...

Sun, 01/03/2016 - 14:37 | 6991151 nowhereman
nowhereman's picture

Any Floyd reference automatically gets a +1

Sun, 01/03/2016 - 17:34 | 6991848 buzzsaw99
buzzsaw99's picture

damn, forgot to change the mama to janet in the last line

Sun, 01/03/2016 - 14:22 | 6991083 assistedliving
assistedliving's picture

is this the same BofA that borrows from us(a) at 0.50% and charges me 19.99% on my BankAmerica card

and then demands I bail them out?  

Sun, 01/03/2016 - 14:35 | 6991137 Watch Bird 1
Watch Bird 1's picture

OK BofA - prove your concern. resign your Fed membership. Dare ya!

Sun, 01/03/2016 - 14:38 | 6991156 hooligan2009
hooligan2009's picture

Central Banks have invalidated the generally accepted (last 60 years) definition of INVESTMENT MARKET RISK - note ...not generic "risk"...just one side of INVESTMENT MARKET RISK or the two way volatility of capital market returns. Central Banks have exaggerated the upside volatility of returns and removed the downside, by acting in concert to print money and artifically set interest rates regardless of the probability of default (credit risk) in their countries.

INVESTMENT MARKET RISK is two way - it is the distribution of the range of upside and downside returns over any given time period, (by the second, the hour, the day, the decade etc.)

Upside/downside INVESTMENT RISK is the range around an expected or forecast return and provides a clue as to the the degree by which the investor could be wrong on the upside or the downside. So, if your expected return is 10% with a risk of 20%, your exepcted return for whatever period is somewhere between -10% of +30% and here's the kicker - this range is what can reasonably be expected to occur for 2/3 of outcomes over your time range and is called A STANDARD DEVIATION. Two standard deviations means that the range of outcomes will be somewhere between -30% and +50% (with the same 20% standard deviation and 10% expected/forecast return).

Central Banks have proven that they can remove the downside investment risk entirely following severe market stress when they act in concert for an extended period (almost ten years at the moment since the GFC).

Japan proved that if a central bank acts independently it will fail. Note that the BoJ has been using monetary economics since its crash from a peak in the Nikkei of 39,000 in 1991. The Nikkei bottomed during the GFC at close to 8,000 and is around 19,000 now - still 50% below its peak.

The end game of centrazl bank intervention is close. Once  entral banks have monetized their own government debt and as much of other countries government debt as they can get away with, they will be left with only corporate debt and equity to monetize.

Once this happens, all countries will be communist and capitalism will fail. Any investment will have zero downside risk with the return distribution somewhere between zero and another number - a high number, say 25% to sart with, falling to zero (a la Venezuela, Brazil and Argentina of today).

It is clear that Governments have no intention of repaying governemnt debt and have made promises that require funding equal to many times the current levels of government debt. Elected governments will always run fiscal deficits because they are incompetent to manage the affairs of voters/tax payers.

The logical corrollary of the failed experiment of ramping capital market prices is that central banks firstly own all government debt (Japan) or that government debt is priced with a negative yield (Europe) Of course, all central banks are now trying to maniplate capital market prices using exchange rates or by pruchasing each others capital market instruments since they have nothing else left to do.

The pretty clocks describing the investment credit cycle are no longer valid. Centra banks have been screaming "CLEAR" and applying shock treatment to the dead whilst the living are burning through limited resources to supply the power.

Self reliance and producing something that others value is getting critically important.

Sun, 01/03/2016 - 15:09 | 6991297 williambanzai7
williambanzai7's picture

Fuck Bank of America

Sun, 01/03/2016 - 15:26 | 6991359 saveUSsavers
saveUSsavers's picture



Sun, 01/03/2016 - 16:02 | 6991461 andrewp111
andrewp111's picture

Nice description, but what is the endgame? Ultimately, financial systems fail in only 2 ways - either some systemically important institution can't make required payments and cascading defaults bring down the tower of debt, or the currency is hyperinflated away to worthlessness. Only a hyperinflation or a default that the CB's can't legally or politically cover can bring an endgame. Neither outcome is yet visible at the horizon, so we still don't know how it all plays out or what to invest in.

Sun, 01/03/2016 - 16:37 | 6991598 hooligan2009
hooligan2009's picture

the answer is a collapse due to a shortage of collateral...that asset that isnt owned by the central banks and which produces income with low investment risk... we are on that path to no collateral and japanese style communism.

whether that end point is a collapse or the utopia of complete denial of any rational thought other than that of the politburo is a matter for your political persuasion

Sun, 01/03/2016 - 17:50 | 6991931 GreatUncle
GreatUncle's picture

The problem with driving up asset prices you left a whole nation of ordinary people devalued unable to take advantage of the manipulation.

1.) Why was this? Well to manipulate it and give it fairly to all the position remains the same.

2.) So why? Scared of losing some of their stolen wealth, putting it into assets then inflating those assets made sure it was a nice little earner.

or ...

3.) Can't see you exluding yourselves why? That is a wealthy person making themselves poorer.

Excluding the ridiculous ones like turkeys voting for xmas 1.) & 3.) are ruled out so ... one left it was number 2.)

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