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Plunge Protection Team hasn''t met, White House says

Section: Daily Dispatches

1:28a ET Wednesday, July 17, 2002

Dear Friend of GATA and Gold:

The Masters of the Universe may be getting a
little too obvious, for GATA is no longer alone
in complaining about manipulation of the

From the King Report for today:

quot;Several media stories stated Monday's miracle
stock rally might have been the work of the Treasury
or Fed. Most speculated, like us, that [Fed Chairman
Greenspan] Al didn't want to testify at the Senate
with stocks in deep descent. The idiots would've
looked even more foolish smooching Al's backside.
We got a call from a Wall Street Journal lead writer
seeking info as to whether the Plunge Protection
Team was active on Monday. There has never been
more smoke about intervention in the stock

The King Report refers to Don Bauder's column in
the business section of Tuesday's San Diego
Union-Tribune. That column may be the most
forthright speculation about market manipulation
that has yet appeared in a mainstream U.S.
publication, so it is appended here.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Market's late rebound
may revive manipulation rumors

By Don Bauder
San Diego Union-Tribune
a href=http://www.uniontrib.com
Tuesday, July 16, 2002

Yesterday's late-hour market snapback is
certain to rekindle rumors that the major
stock market indexes are manipulated at
crucial times -- possibly with the Treasury or
Federal Reserve as a conspirator. Whether
those rumors are true or not -- and I believe
they probably are -- there is no question that
yesterday's late recovery did not involve
small investors: It was an institutional

The reason that questions will be asked is
that market breadth was much worse than the
performance of the indexes. For example, on
the New York Stock Exchange, losers topped
gainers 3 to 1, although the Dow Jones
industrial average was down only 0.5 percent
and the Standard amp; Poor's 500 down only 0.4

The Dow was down 440 at one point; a steep
ascent in the last hour and a half trimmed
the loss to 45.34.

It was somewhat reminiscent of Oct. 20, 1987,
the day after the huge market crash, when
stocks were plunging a second day, but
suddenly recovered and closed up 100. But
losers topped gainers 3 to 1.

It was widely assumed at that time that index
futures were manipulated, perhaps with the
connivance of the Fed. It worked. Markets

Skeptics believe that when the market is
sinking too fast, the Fed and/or Treasury
call the big houses on Wall Street and tell
them to buy index futures and options. The
short sellers -- who bet the market will go
down -- immediately smell a manipulation, and
hurriedly cover their shorts by buying
stocks. Then buyers, believing there is a
rally afoot, jump in.

Down volume doubled up volume on the New York
Stock Exchange, says Kennedy Gammage of La
Jolla's Richland Report. Such statistics
quot;suggest the crisis-control team was at
work,quot; he says.

In response to a command from Washington,
D.C., the large Wall Street houses bought
call options on indexes and on the stocks
that have the most weight in the indexes, he
says. The houses also buy futures, he says.

European markets closed down 5 percent
yesterday, well before the U.S. exchanges
closed. The dollar was weak. Foreigners have
been pulling money out of U.S. stocks. quot;The
smart money in Europe is skeptical about our
markets,quot; says Gammage. Early in today's
session, market technicians will try to
determine whether overseas money is buying or

quot;Barring any kind of news that would
influence things one way or another, Europe
will recover (today),quot; says E. James Welsh of
Carlsbad's Welsh Money Management. He
believes yesterday's rally was rigged.
quot;Obviously, somebody came in and did
purchasing of Samp;P (Standard amp; Poor's)
futures,quot; says Welsh.

quot;It could have been the Fed or the Treasury
-- as surreptitiously as possible,quot; he says.
Then the shorts covered, buyers jumped
aboard, and stocks zoomed back. The rally
could continue, quot;But the ultimate low in this
bear market is quite a bit lower.quot;

Richard Russell of La Jolla's Dow Theory
Letters says, quot;Maybe you can't call it
manipulation,quot; but a lot of mutual funds,
some huge, jumped in and did buying.

He's skeptical of the rally gathering much
momentum. quot;When you get a big down day and a
recovery during the day, it has to go to a
plus day. Otherwise they are burning up
ammunition,quot; he says. quot;We just saw them
burning ammunition.quot;

He's not sure if there is a crisis-control
team. Other countries such as Japan openly
buy stocks to prop up the market. And many
countries try to drive their own currencies
up or down.

quot;Large institutional investors came into the
futures area. It spilled over into short
covering, and then there was bargain
hunting,quot; says Tom Clutinger of Clutinger
Williams amp; Verhoye.

But although it might have been a technical
move yesterday, he believes that stocks are
near a bottom and the long bear market -- one
of history's worst -- is near an end. quot;If
there is a summer rally, we will have
corporate news to support it,quot; he says.



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