Tags: Bianco | Fed | market | manipulation

Analyst Jim Bianco: Fed 'Definitely in the Market Manipulation Business'

By    |   Wednesday, 22 October 2014 11:52 AM

The Federal Reserve played a major role in helping the stock market recover from its correction that peaked last Wednesday, when the S&P 500 Index fell 10 percent below its Sept. 19 record high, says MarketWatch columnist Howard Gold.

"Like the cavalry in those classic John Ford westerns, the Fed rode to the rescue," he writes.

First, James Bullard, president of the St. Louis Fed, said the central bank might have to extend its quantitative easing that was expected to be ended at the Fed's meeting next week.

Then Boston Fed President Eric Rosengren said he could "easily imagine" the Fed refraining from an interest-rate increase until 2016. Until recently, most economists had expected the Fed to move around mid-2015.

"They [Fed policymakers] are afraid of the [stock] market going down and getting blamed," Jim Bianco, president of Bianco Research, tells Gold. "They are definitely in the market manipulation business, and nothing has changed."

If the stock market plunges, the Fed will revive its bond purchases, he explains.

“The put option is back," Bianco adds, referring to the "Greenspan/Bernanke put," in which the Fed reduces interest rates to fight stock market falls. "If the market sells off enough, they will give us QE4 [the fourth round of quantitative easing]."

Meanwhile, New York Post columnist John Crudele suggests the government may have had something to do with the stock market's bounce from last week's lows.

"Let me explain about the unknown forces in the market these days," he writes.

"Call it by a nickname — the Plunge Protection Team. Or call it the President's Working Group on Financial Markets, the official name given to the group when it was formed by President Ronald Reagan after the market turbulence of 198[7]."

"These forces may be working from a script in the 'Doomsday Book,' which the U.S. government recently fought to keep secret when it was brought up last week during the AIG trial in Washington."

So what's the deal with this team? "Someone tried to rescue the market last Wednesday. And it's becoming a regular occurrence," Crudele says.

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The Federal Reserve played a major role in helping the stock market recover from its correction that peaked last Wednesday, when the S&P 500 Index fell 10 percent below its Sept. 19 record high, says MarketWatch columnist Howard Gold.
Bianco, Fed, market, manipulation
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2014-52-22
Wednesday, 22 October 2014 11:52 AM
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