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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (67112)	8/2/2007 7:34:03 PM
From: Mike da bear	Read Replies (1) \| Respond to of 116555

"Seriously folks, I had a long conversation with Barry this afternoon. He believes as I do, the PPT exists but they seldom if ever act." What the hell... you claim PPT doesn't exist but they that sentence? Maybe the disagreements is just on how often the PPT acts. Maybe acting only once every 2 years is enough to prevent a correction of > 10% from happening???

To: mishedlo who wrote (67112)	8/2/2007 8:16:26 PM
From: Real Man	Read Replies (2) \| Respond to of 116555

Mish, PPT also used to be called Greenspan put. The action of the Fed amounts to 1) Injections of liquidity when needed In derivative markets the direct (automatic!) consequence is reduction of volativity and rising markets Thus, potential severe declines in free markets are averted at every "bottom", resulting in bubbles 2) Surprise rate cuts One example, remember the LTCM BK in 1998 due to Russian crisis, and how the Fed announced 0.5 surprise cut, then the DOW rallied 600 points in 1 hr.? I know a person who went down $1M after the announcement, since due to all the chaos it caused one of his orders did not get executed. He got broke due to it. Fair? Hardly Now, let me make the following prediction: Watch Fed's coupon passes. Once another series materializes, this correction is likely over. In fact, the start of every correction this year could be perfectly predicted by a manipulation model, which just takes into account the start date for a series of coupon passes -g- How's that for no PPT? Made some buck recently based on that. -g- Now, I would argue the mad bull market mania of 2006-2007 is a direct result of the Fed throwing more liquidity at rampant credit system. Yes, some day this will end badly and blow up, but the Fed put IMHO is directly responsible for how big all the bubbles have gotten.