No matter where we look, we see it. The media lies, the politicians lie, the markets get rigged, and we’re left to try and navigate through this mess. It gets frustrating. You find a stock that should be trading considerably lower. Their balance sheet stinks like 5 day fish.
I’ve been doing this for a long time. The first letters went around to investment clubs back in 1995. So in those almost 23 years, I’ve covered a lot of ground. I’ve talked about so many topics, I certainly couldn’t name them all.
Probably the most consistent them over the years, is what Trump famously calls “fake news”. But it isn’t just the news that’s fake. It’s darned near everything you’re told. Lies, distortions, shell games, exaggerations and such, dominates us, especially in the world of economics. Nothing is as it appears.
For years we talked about the manipulations and the “rigging” of the gold and silver markets. People brought up on a diet of CNBC, or Bloomberg would roll their eyes and scoff. “There goes Bob on his conspiracy rants again” was a common thread.
But over the years, we’ve been vindicated. Major banks have been fined north of 40 billion dollars for rigging everything from the Silver quote, to the Libor rates. Not to mention that little situation during the housing bubble where it was proven that banks were taking toxic mortgages, packaging them as AAA paper and selling them as investments. No matter where you looked ( and still look) we see deception.
The stock, bond and currency markets are the biggest “business” on earth. It’s bigger than the top 100 companies combined. On any given day the NYSE will trade north of 170 BILLION dollars worth of stocks. On any given day the FX market will trade between 4 and 15 TRILLION worth of currencies. Tell me of any other sort of business that generates that much flow. You can’t.
So it stands to reason that those sorts of values are going to attract some genuinely “not so nice” people. Think about it. Willie Sutton was a famous “bank robber” who over the course of his career had gotten away with about 2 million dollars. While he didn’t actually say the verse that is attributed to him, the idea remains the same. When asked why he robs banks, he replied “because that’s where the money is” ( actually a reporter wrote those words after interviewing Willie)
It’s the same in the markets. It draws in criminals like mice to cheese. Why? Because that’s where the money is. So, it is NOT unusual that over the years we’ve exposed silver manipulation. It’s not hard to understand that gold’s been manipulated. It’s easy to see why stocks, and the market itself is chock full of things that either are, or should be illegal.
Almost like clockwork, word broke over the past few days that the volatility indexes were also being manipulated. “oh no, say it isn’t so!”. But alas, yes it is indeed true. This is from Bloomberg:
"A whistle-blower today told U.S. regulators that a scheme to manipulate the VIX, the volatility gauge thrust into the spotlight last week during a wild trading session, costs investors hundreds of millions of dollars a month.
A Washington-based lawyer told the Securities and Exchange Commission and Commodity Futures Trading Commission -- the nation's top markets regulators -- in a letter today that his client found a flaw that allows traders "with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital." Billions in purportedly ill-gotten profits have been scooped up by "unethical electronic option market makers," according to the letter.
The client wasn't identified by name. He has held "senior positions at some of the largest investment firms in the world," according to the letter written by Jason Zuckerman of Zuckerman Law, who has appeared on Washingtonian magazine's list of top whistle-blower lawyers in the nation's capital."
Now go figure. Someone was spoofing the market? Imagine that. Whether it’s high frequency traders posting bids and pulling them in a nano-second, or the gang of seven marking the silver quotes for the day, everything is rigged.
I guess there’s just certain levels of rigging however. For instance it’s my belief that gap up and gap down opens on the market should be illegal. What form of “free” market do you have when you can own a stock into the close at say 100.00 and the very next day it opens at 95.00 because of some news event? Did you have any way to protect yourself from that loss? Nope. Was there a way for you to digest the news and decide to sell at 2 am if you wanted? Nope. Yet that’s the way it goes, day after day.
Maybe because it’s been that way for so long people are just accustomed to it. They don’t question it. It just “is”. But other times the manipulation is fairly well hidden from public view. Consider the banks. After the melt down of 2008-09 they were all insolvent by virtually any count. So they simply “changed” the rules considering reporting.
Where previously they had to mark their assets to “market”, meaning what they’re worth in real time dollars on the open market, they were instead allowed to mark them to “model”. What’s that? They were simply allowed to mark their assets to what their economic forecast models “said” they were worth. So if you had an asset worth 10 cents on the open market, they could account for it at 1 dollar, because that’s what their models say it should be worth. How many people knew/know that?
We’ve shown you the “birth/death” model many times over the years. Each month when they announced the non farm payrolls, a portion of their computation comes from the Birth/death model. Jobs that don’t exist. Yet in many months over the past 8 years, if not for the injection of those fake jobs into the report, the report would have been negative. Is that not rigging?
Or what about the rather recent “invention” of Central banks printing money and buying stocks and corporate bonds. Is that not rigging? How can it not be rigging if the Swiss National bank can print 80 billion out of thin air, and then use that phony money to but up real stocks? Can you do that? Or consider the Japanese Central bank. In the last 6 years they’ve increased their balance sheet to 97% of the entire Japanese economy. Folks they’re still the 3rd/4th largest economy on earth, and their CB has 97% of it sitting on their books. Is that not rigging?
On and on it goes. I remember earlier on in my career tracking this sort of stuff how excited I’d get when I’d discover another rigging or manipulation. It would actually be fun and I couldn’t wait to write about it for the next issue. Yet now, some 25 years later, it’s no more fun. It’s a disgusting situation, that I get no pleasure reporting.
Right now, the biggest news concerning rigging is the unquestionable rigging that some in the FBI were doing to make sure Trump didn’t win the election, or if he did, how they’d rig the system against him and get him impeached. Some people tend to not believe what’s happening, thinking that the folks at the FBI are above all that. Well, some are. And some…aren’t. Just like the trillions in money at the markets attracts the con men, swindlers and riggers, the power of politics attracts its fine share of mutants too.
No matter where we look, we see it. The media lies, the politicians lie, the markets get rigged, and we’re left to try and navigate through this mess. It gets frustrating. You find a stock that should be trading considerably lower. Their balance sheet stinks like 5 day fish. Yet because the Central banks decide to buy the ETF your stock is in, the stock goes UP. Not because it’s a good stock, but because when they bought the ETF, money gets sent to every stock in that index. Isn’t that rigging?
I think I’m beyond the point of being surprised by anything.