Total G-3 Central Bank Control
Posted by Sprott Money on August 30, 2017 3:03 pm
Tags: Bank of Japan, Business, central bank, Central Banks, Economic history of the Netherlands, Economy, Equity Markets, European Central Bank, Finance, Financial market, HFT, Mathematical finance, MONEY, NASDAQ, S&P, Share trading, stock market, Technical Analysis, US Federal Reserve, VIX, Volatility
Categories: Bank of Japan Business central bank Central Banks Economic history of the Netherlands Economy Equity Markets European Central Bank Finance Financial market HFT Mathematical finance money NASDAQ S&P Share trading stock market Technical Analysis US Federal Reserve VIX Volatility
There’s a lot of amazement and wonder at how the “stock market” can be up today with the devastating news out of Texas and the latest North Korean missile launch. Longtime readers of TFMR know exactly how this market levitation is accomplished so this post is designed as a public service in order to better educate and inform everyone else.
Let’s just keep it simple…
In 2017…and, actually, since 2008…the “markets” don’t actually exist. Oh sure, there are trades and prices but in terms of what the markets were 20 years ago?…those days are long gone. Instead, what we have now is total HFT domination. Over 90% of all volume on the NYSE and NASDAQ is now done through HFT machines that swap positions back and forth. This is common knowledge and if you and I know this, then you can be assured that The Fed, The ECB and the BoJ (known henceforth as the G-3) know this, too.
To that end, since the G-3 are dedicated to market stability and the wealth effect, these central banks clearly seek to influence the direction of the equity markets by influencing the two key drivers of the HFT machines. And what are these drivers? The currency pair of USDJPY and the volatility index known as the VIX. Simply stated, if your wish is to drive “the stock market” higher, all you need to do is buy the USDJPY while at the same time selling the VIX. It truly is that simple.
To that end, daily observation of trading patterns allows us to observe a clear and obvious, algo-driven program in the all-important USDJPY. Because of the sheer size of the forex market (up to $7T/day), any algorithm put in place to manage this pair could only come from pockets deep enough to make it happen….namely, the G-3.
And what does this computer-based, G-3 buying program look like. Again, in the simplest terms, this program sets up a USDJPY floor at some pre-determined or even random level. Once a bounce is initiated, a buy program then follows after the pair have come back down to a newly-discovered double bottom. For yesterday (Tuesday, the 29th), it looked like this:
By driving a rebound in the USDJPY and selling off the VIX, the G-3 get the desired impact of a recovering “stock market”. These screenshots were taken earlier today as the equity bounce was in progress:
Now, lest you think this was some kind of one-off and that my tinfoil hat is on too tight, please check the charts below. Here’s a chart of the USDJPY from last evening after the Nork news hit:
Here are three charts from last week:
Here are just four from earlier this month:
And here are just a handful of occurrences where we caught the G-3 redhanded in July:
LOOK, YOU SIMPLY MUST UNDERSTAND THIS:
What you see is an illusion and a mirage. Since the financial crisis of 2008 and particularly since 2012, the global central banks have moved to assume nearly full control of the global markets. They do this through influencing the key inputs which drive the HFT machines that control nearly every “market”. So going forward, when you’re perplexed as to how the stock market could be up on a day when the news is all so bad, just simply check the all-important USDJPY and VIX and you’ll have your answer. And yes, we have now reached the point where the stock market won’t decline even in the face of a nuclear event or natural disaster. So long as the USDJPY and VIX are unchanged, the S&P will be unchanged too, regardless of a nuclear bomb in Times Square, an earthquake in Tokyo, a massive bank failure in Europe or any other type of “disaster”.
Lastly, what does this have to do with Comex Digital Gold? Well, as we first discovered and reported back in 2014, The Bullion Banks have their own algorithms which have tied the price of “gold” to the USDJPY , as well. Simply put, if you want the gold price to go higher, you need the USDJPY to fall. Period and end of story. All other technical and fundamental factors are largely meaningless. See the charts below where the inverse USDJPY is plotted in candles and Comex Digital Gold is a blue line.
One day (Today, Tuesday 8/29):
HFT now controls everything and the global central banks (but primarily the G-3) seek to control the HFT. Once you admit and understand this, the daily action of the “markets” will no longer confound you.
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