Is Washington keeping the Dow meltdown from being a complete disaster?
by John Crudele / February 7, 2018

“Did Washington save the stock market this week? It’s hard to make the case that anyone helped Wall Street on Monday, given the fact that the Dow Jones industrial average ended with a 1,175- point loss, equal to 4.6 percent — on top of last Friday’s 666-point decline.

But the Dow and other indexes were in complete collapse right before the start of Monday’s final hour of trading. At one point, the Dow, which represents only 30 stocks but is still a widely followed indicator, tumbled to a loss of about 1,600 points. That’s more than twice as large as the biggest Dow point decline ever. But then something happened. Someone started arbitrarily and aggressively buying stocks and the decline was halved.

Monday will still go down as a Wall Street massacre, but that anonymous superhero buyer or buyers made it a lot less bloody. Stocks opened sharply lower on Tuesday and then again on Wednesday. But each time aggressive buying by a superhero or heroes changed the outcome, if maybe only temporarily. Who was the market’s superhero? I’m going to tell you a story and then you decide.

Toward the end of his time in office in 1989, Ronald Reagan created something called the President’s Working Group on Financial Markets. There had been a stock market crash in 1987 and a near-crash in 1989, so everyone was worried. The Working Group was ostensibly an advisory body that was meant to help regulators and the president understand the markets. The members would write papers, have coffee, confer and come up with solutions. But some of us thought it was something much more, and the Working Group unofficially became known as the Plunge Protection Team.

That notion was strengthened in late ’89, when a guy named Robert Heller, who had just left his position as governor of the Federal Reserve, gave a speech that was later published in the Wall Street Journal that proposed that the Fed should rig the stock market in times of emergency. Heller suggested that the Fed — through, I suspected, its favored brokerage houses — would purchase stock index futures contracts as a way to stop a market collapse in its tracks.

Heller said that since the Fed already rigs the bond market through securities purchases, the stock market would be easy to control. Nobody has ever proven that the Fed and its friends actually protect Wall Street against plunges. It is, you might say, the Loch Ness monster of the financial world — people get glimpses of something but never see a clear picture.

That’s what happened during the financial crisis of 2007 and 2008. Telephone records I obtained back then showed numerous calls between then-Treasury Secretary Hank Paulson and contacts on Wall Street on days when the stock market was tanking and the decline needed to be stopped. The action in stocks on those days looked a lot like what happened this week — sharp reversals that came out of nowhere.

“…the CSRC, which is also known as the ‘National Team‘…”

Since then other countries overtly rig their stock markets. Japan and China don’t even hide their actions. The US Plunge Protectors are going to have their work cut out for them. Rigging the stock market works for a while — but if the equities markets are overpriced, eventually the bubble bursts. And, you guessed it, people who are in the know tend to make out better than those who aren’t. Now you know.”





“An exchange-traded fund that could soon hit Wall Street will quite literally be out of this world. The ETF sponsor Procure ETF Trust earlier this week filed for two new funds, one of which is dedicated to outer space and the burgeoning economy related to the cosmos. The Procure Space ETF will hold companies that derive “substantial revenue from space-related activities,” including satellite-based companies, firms involved in rocket manufacturing and maintenance and space-based imagery and intelligence services. The fund’s construction, according to the filing, will divide companies into two categories: those that derive the majority of their revenue from space-related activities, and those that have involvement in the industry but other revenue streams outside of space. The first category will comprise 70% of the index’s weighting, the filing read.

The fund will charge an expense ratio of 0.75%, which is on the high end for a passively managed fund. The SPDR S&P Aerospace & Defense ETF XAR, -0.30%  , a fund that will likely have some overlap with the new space fund, charges 0.35% of assets.

The filing didn’t list a ticker symbol that the fund would trade under if approved, nor did it indicate what companies might be included. S-Network Global Indexes, which created the S-Network Space Index, which the ETF will track, could not immediately be reached for a comment. In October, Morgan Stanley released what it called the “Space 20,” a list of companies that it wrote were “best exposed to the growth of the Global Space Economy.” While Morgan Stanley doesn’t appear to be affiliated with the Space ETF, the list could provide some insight into the kinds of companies that might be held.

The “Space 20” includes aerospace giant Boeing Co. BA, +0.57%  , Northrop Grumman Corp NOC, -0.90%  , United Technologies UTX, +0.47% and Lockheed Martin Corp. LMT, +0.16% which recently invested $300 million refreshing its array of satellites. Facebook Inc. FB, -0.02%   and Alphabet Inc. GOOGL, -0.24% —the parent of Google—were also mentioned, as part of a broad play related to internet and space.

The global space industry is currently valued at about $350 billion, according to data from the Satellite Industry Association cited by Morgan Stanley researchers. The investment bank estimated that the industry could grow to $1.1 trillion by 2040, although it warned that due to “significant execution risk,” the range of potential outcomes was extremely wide. In the low end of its range, it sees the industry growing to $600 billion over the next 20 or so years, while the bull case suggested an industry value of $1.75 trillion.

Procure’s ETF filing listed “space industry risk” as one of the offering’s principal risks. “The exploration of space by private industry and the harvesting of space assets is a business based in future and is witnessing new entrants into the market,” the filing read. “This is a global event with a growing number of corporate participants looking to meet the future needs of a growing global population. Therefore, investments in the Fund will be riskier than traditional investments in established industry sectors and the growth of these companies may be slower and subject to setbacks as new technology advancements are made to expand into space.” Procure also filed for the Procure Advanced Global Warming ETF, which will hold companies “that support the reduction of global warming and the production of alternative energy and uses.”




Failure to deliver gold from Comex coming as U.S. institution has no metal to cover

“Two interesting articles out on Nov. 29 point towards the U.S. Commodities Exchange (Comex) soon running into a potential default on delivering physical gold in their futures contracts. According to long-time industry analyst Harvey Organ, the numbers being given by the Comex don’t add up, and he has now stated the belief that the Comex has no metal to back up the contracts they have sold.

“For the past eight years or so I have had a very good relationship with the U.S. Commodity Futures Trading Commission. My desire was always to keep the channels of communication open though I knew that the Comex was manipulated on a daily basis. Always the CFTC, through Mathew Hunter (Bart Chilton’s hand-picked protege), communicated with me on all issues. My deal was not to repeat anything said. I honored that. After learning about the exchange-for-physicals mechanism on the Comex, I raised with the CFTC some important issues about them and initially Hunter responded. However, my last two letters to him have not been acknowledged

I would like to point out the huge difference in deliveries between New York and London. November is a non-active delivery month in gold and we generally witness around 1.5 tonnes delivered upon. However, when you note the amount of contracts transferred it is a whole different story:  Last month we had approximately 8,000 contracts of gold open interest transferred to London per day or 180,000 contracts or 1.8 million ounces  (560 tonnes). This month it looks like we will have around 9,500 contracts transferred per day or 2 million ounces transferred (620 tonnes). It certainly shows that Comex has a lack of physical metal.”

Then on the same day this was asserted by long-time analyst and insider Jim Rickards:

Failure to deliver gold: This is almost definitely coming. So much of the gold market is “paper gold.” This paper gold market is so manipulated, we no longer have to speculate about it. It’s very well documented. But it all rests on a tiny base of physical gold. I describe the market as an inverted pyramid with a little bit of gold at the bottom and a big inverted pyramid of paper gold resting on top. So how does this end? Someday, probably sooner than later, somebody is going to show up and say, “I want my gold, please,” and the custodian won’t be able to give it to them. What if a major institution wants its gold but can’t get it? That would be a shock wave. It would set off panic buying in gold, and inflation expectations — now subdued — could spiral out of control.”

For gold holders it has always been a matter of patience over emotion.  It took a decade for gold to move from $240 in 2002 to a new all-time high of $1940 a decade later.  And since the Fed has had to depress the gold markets with the same amount of money it has used to prop up the stock markets, it is not hard to imagine what the outcome will be once either of these markets loses control, and prices spiral towards equilibrium of what they should have been without the manipulation.”