The following is relatively self-explanatory, and maybe opens the door to lawsuits from anyone who lost money in stocks getting "blindsided" by Fed announcements the last few years. Emphasis and Editor's notes yours truly.
Fed official alleges Geithner may have alerted banks to rate cut
(Reuters) - In the summer of 2007, as storm
clouds gathered over the world's financial system, then-New York Federal Reserve President Timothy Geithner
allegedly informed the Bank of America and other banks about the possibility the U.S.
central bank would lower one of its critical interest rates, according to a
senior Fed official.
Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation
during a Fed conference call in August 2007.
"From conversations I had prior to the video conference call on August 16,
2007, I was aware of discussions among a few large banks about borrowing from
their discount windows to support the asset backed commercial paper market,"
Lacker said in the statement. "My understanding was that (New York Fed) President Geithner had discussed a
reduction in the discount rate with these banks in connection with these
initiatives."
Geithner at the time denied that banks knew the Fed was considering cutting the
discount rate. The Fed regularly releases transcripts of its policy meetings
with a five-year lag.
Private disclosure of confidential, market-sensitive information by the central
bank would be highly unusual, but it was not immediately clear if it would be
illegal.
The central bank delivered a surprise cut in the discount rate, which governs
direct loans it makes to banks, the day after the call. The action spurred a big
stock market rally, with the Standard & Poor's 500 Index enjoying its best
gain in 4-1/2 years.
Editor's Note: The rally started about 30 seconds after Geithner got off the phone with JPM, Citi, BofA, Goldman Sachs, etc. on Thursday and DID NOT, repeat DID NOT tell them any surprises were coming.
Editor's Note: The rally started about 30 seconds after Geithner got off the phone with JPM, Citi, BofA, Goldman Sachs, etc. on Thursday and DID NOT, repeat DID NOT tell them any surprises were coming.
Here's the headlines Thursday Night:
August 16 2007: 6:12 PM EDT
Dow makes stunning comeback
Major gauges erase most of the day's losses as investors
recover from mortgage, credit fears; Dow, Nasdaq, S&P 500 bounce back after
falling 10% from 2007 highs.
NEW YORK (CNNMoney.com) -- Stocks staged a big comeback Thursday, erasing
most of the session's losses by the close as investors worked through the panic
about the mortgage and credit markets which was sparked by Countrywide
Financial's latest financial problems.
The Dow Jones industrial average (Charts)
fell 15 points, erasing virtually all of the day's declines, after plunging as
much as 342 points earlier in the session.
Stocks have been shellacked for the last week on worries about tightening credit and the fallout from the subprime mortgage market. The declines added to losses over the last month, and by early Thursday afternoon, the three major gauges were off 10 percent from the 2007 highs hit in mid-July, the formal definition of a market correction.
Yet, after hitting those lows Thursday afternoon, stocks began to recover,
with the hard-hit financial sector leading the way.
"Equity markets went on another roller-coaster ride Thursday," wrote Michael
Sheldon, chief market strategist at Spencer Clarke, in a note to CNNMoney.
"However, stocks erased almost all of their losses and finished the session with
only minor losses as financial stocks rebounded late in the day."
Big bank stocks including Citigroup
(Charts,
Fortune
500), JP
Morgan (Charts,
Fortune
500) and Merrill
Lynch (Charts,
Fortune
500) all rallied back near the close after having been battered in recent
days.
NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis that's rocked financial markets in recent weeks, Friday cut its so-called discount rate half a percentage point, to 5.75 percent.
Editor's note: Geithner denied leaking insider info to the largest prop traders in the market, the TBTF banks on August 16th, the very day the market staged it's "stunning" turnaround and the day BEFORE the FED cut rates publicly. Anyone else think it's weird that the very financial firms that were NOT getting inside information led the charge? Strange indeed.
Here's the headline the next day, well after the party started.
August 17 2007: 4:11 PM EDT
August 17 2007: 4:11 PM EDT
Fed cuts discount rate
The central bank, citing tough market conditions, cuts the symbolic rate half a percentage point.NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis that's rocked financial markets in recent weeks, Friday cut its so-called discount rate half a percentage point, to 5.75 percent.
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The Dow would go on to post an all-time high of 14198 in October before collapsing 65% to 6469. At this point, the Fed announced they would start printing money with QE1. They have printed $2.8 Trillion and counting, and are currently printing $85 billion a month as of 01/22/2013.
As for any remaining "Investors" in this "Free" market, a word of advice. It is not what you know that allows you to succeed in equity trading, it's who. And if you don't know this guy, then...
Addendum 4/11/13
Market in Confirmed Uptrend!
The DJIA, S&P 500 and the NASDAQ closed at record highs today as overall volume rose and it was definitely on the upside. Investor's Business Daily changed its Market Call to "Market in Confirmed Uptrend."
So what drove the market higher? Perhaps, it was the release of the FOMC minutes which indicated that the punch bowl was nowhere near ready to be taken off the table. Most FOMC members saw the benefits of quantitative outweighing the risks, and that was at a time when economic data were coming in better than expected, not like Friday when nonfarm payroll growth couldn't even make 100,000.
And of course, it was just a mistake that the FOMC minutes were released yesterday to about 100 people early yesterday who were politicians and lobbyists. A Fed spokesman told CNNMoney the mistake was "entirely accidental," and it was a "human error," not a technological one. The roughly 100 individuals on the list mostly included Congressional employees and employees of trade organizations. They received the minutes shortly after 2 p.m. on Tuesday.
Here is a partial list of the people receiving the inside information according to the BBG and CNN:
- HSBC RECEIVED FED MINUTES EARLY YESTERDAY
- MOST OF THE BANK EMPLOYEES APPEAR TO WORK IN GOVERNMENTAL RELATIONS (Lobbies)
- ABA, SIFMA, SENATE STAFFERS RECEIVED FED MINUTES EARLY
- FED NAMES 154 RECIPIENTS OF EARLY RELEASE OF FOMC MINUTES
- FED MINUTES SENT EARLY TO BANKS, LAW FIRMS, PRIVATE EQUITY
- FED EARLIER SAID RELEEMPLOYEES AT GOLDMAN SACHS, BARCLAYS, JP MORGAN, CITI, NOMURA, UBS, ASE WENT MAINLY TO CONGRESS, TRADE GROUPS
The Wall Street Journal also supplied a more extensive list which clearly shows that many could have profited from the information.
As the day went along, it became obvious that the FED's initial comments were not correct.
And not a single one of them brought the early release to the attention of the Federal Reserve ... I wonder how long this has been going on. Is it just me or does the situation smell funny?
http://money.cnn.com/2007/08/17/news/economy/fed_rates/index.htm
fed cuts rates
Geithner feeds banks insider info
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