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Junior Mining Investors Robbed By Canadian Investment Banks



Junior Mining Investors Robbed By Canadian Investment Banks > Group's Default Discussion > More market manipulation View modes: 
  • More market manipulation

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    Speculators Redeemed

    By Christine Birkner
    02 Sep 2008 at 12:11 PM GMT-04:00

    After a cruel summer for speculators, the U.S. Congress rejected two bills that would have limited speculation in the commodity markets before it left for August recess.


    CHICAGO (FuturesMag) -- On July 25, the Stop Excessive Energy Speculation Act of 2008 failed to receive the required votes for continued consideration by the Senate. The bill came under fire from the Coalition to Protect Competitive Markets, an organization made up of exchanges and industry advocates. The coalition said that the bill would have “drive[n] commodity trading overseas, rather than providing long-term solutions to our energy needs.”

    On July 30, the Commodity Markets Transparency and Accountability Act, a bill that would have required foreign boards of trade to adopt speculative position limits, was rejected by the House of Representatives. That bill would have required the Commodity Futures Trading Commission (CFTC) to set trading limits for agricultural and energy commodities and would have limited eligibility for hedge exemptions to “bona-fide” hedgers, required more detailed reporting from index traders and swap dealers and increased staffing at the CFTC. Because it was brought up under suspension of House rules and was not amendable, the bill needed two-thirds of those present and voting to pass, and failed narrowly with a vote of 276-151.

    After the vote, the bill’s sponsor, House Agriculture Committee Chairman Collin Peterson (D-MN), said that the bill “was well on its way to being passed…then Republican leadership demanded that members change their votes in order to protect President Bush.” Before the vote, the White House released a statement saying the bill “offer[ed] poorly targeted short-term measures that [did] nothing to address the fundamentals of supply and demand that bear the primary responsibility for current high energy prices.”

    William Adams, managing director at JKV Global, says, “Any additional [government imposed] measures would probably increase risk because the open interest and liquidity would be pushed to other exchanges or markets.” John Hummel, president and CIO of AIS Futures Management LLC, agrees, saying, “I’m concerned about the trend [where lawmakers] keep piling on more regulation. It never really catches the crooks beforehand. Politicians don’t appreciate the importance of deep, liquid markets and anything you do to drive away certain potential participants thins the markets out and ultimately [makes them] more volatile and erratic.”

    The Intercontinental Exchange (ICE) is glad that many of the extreme proposals seen earlier in the debate that included increased margins and dual regulation of foreign markets have not gained traction in Congress. “It appears that the debate has now turned to more practical market proposals, combined with laws that will address underlying energy supply and demand fundamentals,” an ICE spokesperson says, adding that the two failed proposals were modest in terms of their direct impact on ICE’s markets, largely codifying previously announced regulatory changes that already were required by the CFTC for trading in ICE’s WTI futures contract. ICE expects little impact on the business model from legislation in its OTC markets. Adams says that new regulations could give foreign exchanges the opportunity to be considered as the first option for new products.

    The Futures Industry Association (FIA) cheered the rejection of the two bills in a statement, but the Congressional melee is not over, as Peterson said he would “continue to pursue meaningful steps to address the conditions that have thrown some futures markets into disorder.”

    The ICE representative is optimistic about Congress revisiting the speculation question, saying, “As a result of the lengthy debate that took place this summer, we anticipate that legislative efforts upon Congress’s return in September will be bipartisan in nature, and will seek to bring effective and real solutions to long-term supply and demand fundamentals.” Adams expects Congressional action to hinge on market conditions. “The consensus has been that if the market conditions become more favorable there probably will not be any new legislation,” he says.


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  • RE: More market manipulation

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    Two Dates That Stand
    Out On The Charts

    By Rick Pendergraft

    On August 18, my article for IDE readers talked about how the government had screwed up four different markets.  By announcing their directive to short sellers to keep their hands off the financial stocks, the Fed propped up the financial sector, the airlines sector, and the dollar.  At the same time they killed oil…I didn’t mention it in the article, but it also hurt gold.

    The date of that announcement by the Fed was on July 15.  That directive expired at midnight on August 11. With the big brother not there to protect its little siblings any longer, I expected the financials to get crushed immediately.

    While it didn’t quite happen like I thought it would, I want you to look at a few charts.  I have taken the liberty of marking July 15 and August 11 with arrows.

    Notice that the rallies in the financials, the S&P and the airlines all started on July 15. You should also note that the upside momentum for all three came to a halt on August 11. 

    The chart of oil that I showed in the article on August 18 showed how oil had peaked just before the July 15 SEC announcement, but the downswing really kicked in with the announcement.  Notice on the chart below that oil did stabilize around August 11, but the relief from Hurricane Gustav not being as damaging as projected caused oil to break below the $110 level.  I had been watching this level of support as it was the site of old support and also the site of the 200-day moving average.

    Looking at the way these dates jump out on the chart caused me to re-think an answer I gave in a recent interview.  I was asked how widespread I thought naked short selling was.  My answer was that I thought there were lots of institutions doing it, so it was widespread from that perspective.  On the other hand, I didn’t think the number of stocks being targeted by naked short sellers was all that widespread.  But looking at these charts, I am starting to think the problem is greater than I originally thought.

    There was an ancillary item that I gleaned from reviewing these charts.  If this market can’t live without the protection of the Feds, the market and the economy are bigger trouble than I thought.  I have been telling IDE readers to be cautious for about a year now, but now I am becoming even more worried about the current investing environment.

    Last week I wrote that the economy would not rebound until we saw a rebound in housing and growth in the labor market.  The August employment report released on Friday did little to change my view of the economy.  In case you missed it, the nonfarm payrolls for August showed another 84,000 jobs were lost, making it eight straight months of job losses.  We also downward revisions to the July and June numbers, bringing the total number of jobs lost so far in 2008 to over 600,000.  We also saw the unemployment rate jump from 5.7 percent to 6.1 percent.  This is the highest unemployment rate in five years.

    The politicians and economists can argue about whether we are in a recession, but from where I sit, we are in one right now and it isn’t looking good for the immediate future.

    Good luck and good trading,
    Rick

    P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.


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