PPT - Plunge Protection Team. AKA President’s Working Group on Financial Markets.
Do you believe in such an entity ?
Go to Google and type in Executive Order 12631. You will find the Executive Order, and even a 14 November 2003 statement from Secretary of the Treasury John Snow giving a brief history of the Working Group, describing its policy advisory activities.
Would such a group have an interest in the Dow at current levels ?
Todays action from the Fed and the Treasury suggests that they have a very strong interest.
The Treasury announced a
Term Investment Option auction of $1.5b today. Auction will take place tomorrow with a maturity of six days.
Temporary Open Market Operations placed $6.75b for a net drain of $2.0b.
Both of the above are temporary liquidity injections. The money will wash around the markets for up to 28 days (Six days in this case).
But of greater significance is the
Permanent Open Market Operation from the Fed today. This places $988m into the markets. No short term maturity. It goes in and stays in.
This article from 2003 gives some insight into the effect on the indices. According to the author, there is a multiplier effect to these permanent liquidity injections. x 9.
Edit:
Since the April 05, the Fed has conducted 8 coupon passes totalling $7.396b.
Raise interest rates with one hand and pump with the other.