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The Japanese Plunge Protection Team Exposed: The Boj's "1% Rule", Or The "shirakawa Put" In Practice

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http://www.zerohedge.com/article/japanese-plunge-protection-team-exposed-bojs-1-rule-or-shirakawa-put-practice

One of the most conspiratorial topics in all of fringe finance has been the existence of the plunge protection team, which while widely known to exist and intervene during major drops in the US capital markets, has never been actually seen in action (thank you Citadel trade ticket shredders). And while the US PPT has increasing grown irrelevant now that the Fed's open market intervention is no longer the source of folklore courtesy of Bernanke's self-professed third mandate vis-a-vis the Russell 2000, it does provide the tinfoil crowd with immense satisfaction to know that virtually always it ends up being proven in the long run not only when it comes to the big picture, but the nuances as well. Enter Nikkei's report (subscription required) on the BOJ's 1% Rule which is "propping up the Nikkei."

More: "Japan's stock investment community is buzzing with rumors about the Bank of Japan's "1% rule." These rumors suggest that the BOJ has been following a single guideline in its purchases of exchange-traded funds (ETFs) under a new, unorthodox program it launched last Dec. 15. The rule is that whenever the Topix index of all issues on the first section of the Tokyo Stock Exchange ends a morning session 1% or lower than the previous day's close, the central bank will try to prop up the stock market by purchasing ETFs in the afternoon session. The BOJ official in charge of such matters has refused to comment on the criteria the bank uses for its ETF purchases. But the numbers appear to confirm the chatter emerging from the rumor mill. Since Dec. 15, the BOJ has purchased ETFs through trust banks on all of the 18 days when the Topix index fell by 1% or more in the morning session." And since Vincent Reinhart has certainly noted in some of the recently unembargoed Fed minutes over the past decade precisely this simplistic (and last ditch) plan for market manipulation, we can't wait when the Fed, shortly after the failure of QE 7, announces publicly this time, that it will proceed to buy the SPY whenever the S&P drops more than 1%.

Yet more distortions to the "free market", the whole economy is "too big to fail". It would appear we are fast approaching the end game.

Has the BoE got it's own PPT? Maybe Merv has created one in secret?

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It makes sense for the central bank to buy assets besides its governments own securities. That way new liquidity added to the system is backed by actual real income earning private sector assets, and is easily unwound if need be.

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It makes sense for the central bank to buy assets besides its governments own securities. That way new liquidity added to the system is backed by actual real income earning private sector assets, and is easily unwound if need be.

Not if you want decent trading, free markets or an end to human slavery it doesn't.

:)

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It makes sense for the central bank to buy assets besides its governments own securities. That way new liquidity added to the system is backed by actual real income earning private sector assets, and is easily unwound if need be.

It just lowers the value of the assets in real terms and destroys price signals.

We already have zombie banks, this just leads to zombie markets.

All Govt price controls (for this is what this is) eventually lead to shortages.

The retail outflowings on the markets are already at a record high, it will be the institutional investors next.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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