Is There a Leak at the Fed?
Rumors were running rampant today that someone at the Fed leaked news of the upcoming rate cut that was announced on Friday. Normally I would chalk it up to just an unfounded rumor and market gossip, but I heard it from enough people today to actually believe it to be true. Even Jim Cramer commented on it today, saying that someone had "fabulous" insider information.
Could this be the reason why the markets suddenly had such an about-face on Thursday afternoon? I mean the turnaround was pretty remarkable; the Dow was down 340 points and suddenly, just like that, the Dow was even on the day. That is pretty remarkable, and leads me to believe that perhaps the news of the impending rate cut and leaked and the big boys jumped on it, buying index futures and loading up on equity positions (especially financials) driving the Dow higher.
In my opinion, someone at the SEC needs to look into this. Someone in the government needs to look into this. If this is true, then this was a major breach and just another blow to the image of the financial system and stock market in the US. If the rate cut was leaked (was it appears that it was), then heads should roll. In this day and age, it is imperative that both the big boys and the little guys receive information at the same time, or else it creates a majorly uneven playing field. Someone made a whole pile of money on Thursday and it needs to be looked into.
Filed under: Stock Market Scandals