Manipulation Becoming Laughably Obvious

The next time someone tells you that the price of oil has nothing to do with the stock market, tell them that they’re dead wrong on two counts:

1.  propping up CL is all it takes to prop up stocks;

2.  given #1, the stock market can hardly be considered a “market.”

2016-02-23 CL v SPX 5 1344We started writing about this kind of manipulation months ago [see: CL Algo Madness.]  But, lately, it’s become laughably obvious.  This tells me that The Powers That Be are getting desperate.

This should not be interpreted as “the market is about to crash.”  I mean, it might.  But, it doesn’t have to.  As long as TPTB are willing to pay the price, they can keep the crap game afloat.  As we illustrated yesterday, it’s fairly straightforward.  It’s just not cheap.*

Central Bank Market Support FlowchartFortunately for the guys who script this crap, funding is cheap.  Investors all over the world are now paying central banks interest for the privilege of investing in their bonds.

The Bank of Japan was the most recent grand prize winner.  Technically bankrupt, it has the most to gain — and, the most to lose when it collapses.

NIRP CBs 2016-0222That’s right.  It will end in tears.  But, what central banker has the balls to stand up and admit it?  It’s much easier to continue easing, ostensibly for the sake of combating disinflation and promoting full employment.

With any luck, you’ll collect a $1 million advance for a book in which you can blame the meltdown on your successor and tell everybody just how courageous you were.

Screen Shot 2016-02-23 at 2.36.13 PM

The ironic thing is that central bankers who made this manipulation possible in the first place.  By crashing oil [my personal tin foil hat theory, EXPLAINED HERE] they scared the crap out of banks, investors, oil companies, derivatives underwriters, etc. — exposing them to potential massive losses.

It got out of hand, and now those potential losses are becoming very real.  So, any rebound in CL is enough to get the algos all excited — which, of course, means the “market” gets and warm and giggly.

* As for the cost, consider that it took a 31.2% ramp in CL to produce a 6.7% rally in SPX.  And, lest you think these are isolated incidents, note that CL ramps featured in every single SPX rally or stabilization since Feb 11 — the day we called a bottom in CL [see: USDJPY Finally Relents.]

2016-02-23 CL 15 16002016-02-23 SPX 15 1600 *  *  *  *  *

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Manipulation Becoming Laughably Obvious — 4 Comments

  1. Pebblewriter, as popping up CL is all it takes to pop up stocks, then TPTB will not crash oil anymore? (Your next article is “Did TPTB Crash Oil?” Assuming they did. At this stage they would reverse the Move and want to pop up CL instead?)


    • I believe they never intended for it to collapse. That is, they were trying to find a balance between what would support a cheaper yen without all the negative repercussions (bank credit, shale destruction, etc.) In the end, there was too much momentum for them to stop it where they wanted — probably around 37 last September.