– It’s Settled: Central Banks Trade S&P500 Futures (ZeroHedge, Aug 30, 2014):
Based on the unprecedented collapse in trading volumes of cash products over the past 6 years, one thing has become clear: retail, and increasingly, institutional investors and traders are gone, probably for ever and certainly until the Fed’s market-distorting central planning ends. However, one entity appears to have taken the place of conventional equity traders: central banks.
Courtesy of an observation by Nanex’s Eric Hunsader, we now know, with certainty and beyond merely speculation by tinfoil fringe blogs, that central banks around the world trade (and by “trade” we mean buy) S&P 500 futures such as the E-mini, in both futures and option form, as well as full size, and micro versions, in addition to the well-known central bank trading in Interest Rates, TSY and FX products.
In fact, central banks are such active traders, that the CME Globex has its own “Central Bank Incentive Program”, designed to “incentivize” central banks to provide market liquidity, i.e., limit orders, by paying them (!) tiny rebates on every trade. Because central banks can’t just print whatever money they need, apparently they need the CME to pay them to trade.
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One more clear sign the market is rigged.
This is one more out of order signal………it isn’t supposed to work this way. Really bad news for US investors.
When over 85% of all trades are high frequency, skim and sell, and only 15% or less are made by real investors……the picture is grim, indeed.
High Frequency trades are made by a few individuals controlling huge funds. Thanks to inside information (sometimes before the bell) they know when to dip in, buy and sell huge amounts of securities in less time than it takes one to blink an eye. They never buy and keep, just buy and sell.
Every time one of these occur, less money is in the market when it is completed. I call it skim and sell when not calling it something worse. It is skimming, and used to be illegal. It helps nobody but the greedy guts in the funds.
The US market has contracted sharply since 2007. Three exchanges, the NYSE, The American and the NASDAQ are all smaller thanks to these greedy gut transactions. The American stock exchange no longer exists, it was absorbed to make volume look higher.
Now, they are talking about merging the NASDEQ with the NYSE……what does that tell you?
When I was a young investor (bought my first block of stock at age 14……could not buy smaller amounts in those days), there were strong regulations in place to protect the investor, and invite the foreign investors. Thanks to Bill Clinton, and his signing away all those key regulations, it is now an obstacle course. Nobody with any sense is investing…….
Now, banks are in the market? That sounds like desperation to me.