I've been digesting this article in The Telegraph. Not that the Plunge Protection Team is a shocker. We've spoken about the Unusual Suspects for a long time and have been monitoring the Invisible Hand since. It's out there and what was once conspiracy theory is now an accepted and acknowledged policy tool.
A few thoughts:
- Never underestimate the motivation of a corner and caged animal. We've been eying this for a long time and it remains very much in play.
- Ultimately and eventually, intervention won't work, it'll simply buy time.
- I will humbly offer that the Working Group didn't take a break after 9/11, as the article suggests. It's my belief that they were proactive into major political events, be them elections or invasions. This statement will raise eyebrows, I know, but the mere mention of this topic did the same when we first alluded to it six years ago.
- So, what to do? Be aware that it's there but don't blindly believe that it'll save the day. We've already seen massive intervention, central bank liquidity injections, discount window collateral shifts, adjustable-rate mortgage freezes and behind the scenes maneuvering. Expect to see more but keep it in perspective.
- And take a deep breath. We're navigating our way through the most interesting period in the history of the financial markets. It's far from easy and anything but sane but we'll find our way and get there together. That is the benefit of the Minyanville community and by reading this, you're already better prepared than most.
No positions in stocks mentioned.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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