Central Banks Globally Manipulate Markets
Many, even the brightest and experienced investors, believe central banks and/or their agents, have been manipulating equity markets for the past nearly eight years.
Japan for example makes no bones about buying domestic shares on the open market. The Swiss Central Bank has also admitted doing likewise.
There are others including scattered European member ECB banks and the ECB indirectly.
Also central banks have been steady buyers of other central bank’s equity markets.
And, so it goes.
Today it was revealed by an article in Reuters that some state owned companies have recently purchased over $4 billion of stock in Chinese markets. They have been acting as agents on behalf of the government to support local stock markets.
Why should you care? This manipulation of markets renders them broken and illegitimate from a free market view. It also means investors just become shills in rigged game.
As for us we’re systematic, still long some and all the while raging at the machine. It’s a tough job mission these days.
Thursday bulls were able to manipulate markets to secure a positive quarter end no matter a minor close lower. This achieves for them a good headline and portfolio manager bonuses.
Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day green may mean leveraged inverse or red leveraged short.
Volume was light once again and breadth per the WSJ was mixed.
So you’d think I’m upset about current central bank policy experiments? Well, I am, yet I persevere.
The tape is all a technician needs to follow ultimately. Fundamentals make you nothing currently.
Friday offers us a lot of data starting with the Employment Report, PMI Manufacturing Index, ISM Mfg Index, Consumer Sentiment and Baker Hughes Rig Count. That should be enough to chew on.
Let’s see what happens.