Browsing: Commodities


The Canary in the Coal Stocks and Fossil Fuel Divestment: the Portfolio You Save May Be Your Own

Sep 14th, 2015 | Filed under: Climate change, Commodities, Energy

A Wall Street analyst recommends bottom fishing in fossil fuel stocks and does an excellent job in analyzing all the market forces EXCEPT the primary one, rapidly increasing climate change. If he is typical of Wall Street expert analysis on fossil fuel stocks, be afraid. Be very afraid. Read More

CFTC Exempts ASX Clear from DCO Registration

Aug 25th, 2015 | Filed under: Alpha Hunters, Alpha Seekers, Commodities, Hedge Fund Industry Trends

The CFTC has issued its first exemption from the CDO registration mandate under 5b (h). The successful petition for that exemption, from ASX Clear, has the additional merit of having inspired an idiosyncratic seeming, but concise, comment letter, quoted in full here. Read More

Eurekahedge: The Markets are Reading the Headlines

Aug 18th, 2015 | Filed under: Alpha Seekers, Alpha Strategies, Commodities, CTA, Currencies, Hedge Fund Strategies

In the three month period that ends with July, Eurekahedge’s Greater China Index (which has 85 constituents) is down 9.39%. That has come about for precisely the reasons that a reader of the pertinent headlines would guess. Read More

Commodities & Currencies From May to August: How Much Has Changed

Aug 12th, 2015 | Filed under: Commodities, Currencies, Insolvency

What a difference a summer makes! In May of this year it was still taken for granted that the "normalization" of Federal Reserve policy and so of U.S. interest rates approached. Now, that cannot even remotely be taken for granted.Read More

Overtrading and the Danger of Pro Rata

Jul 30th, 2015 | Filed under: Algorithmic and high-frequency trading, Commodities, Currencies, Derivatives, Forex

Guest columnist Ginger Szala looks at pro rata and what happens if...Read More

Vindication for Pirrong and Irwin: Why Are Trafigura’s Profits Up?

Jun 22nd, 2015 | Filed under: Commodities, Derivatives, Indexes, Media Coverage of Hedge Funds

Trafigura has done quite well from the decline in crude oil prices in recent months. So well, in fact, as to throw a harsh light on a story that appeared in The New York Times in December 2013. Read More

House of Saud Retains Plenty of Clout

Jun 11th, 2015 | Filed under: Commodities, Macroeconomics

A measured view of the underlying reality of the world market in crude oil suggests that the price may have gone as low as the Saudis want it to go. For traders there may be little if any further gain on the downside. Read More

Are CTAs mumbo jumbo or additive for a diversified hedge fund portfolio?

Jun 9th, 2015 | Filed under: Commodities, Hedge Fund Industry Trends, Hedge Fund Strategies

Guest columnist Don Steinbrugge looks at the value of trend-following CTAs in a portfolio.Read More

Copper Prices: Why the Downslope?

May 26th, 2015 | Filed under: Commodities, Hard metals, Risk management, Technology

How long will it take before the world again sees copper at around $10,000 a ton, the going price it touched (though briefly) in early 2011? Perhaps several more years and another full business cycle. There may be a lot of down before an upturn gets us there. Read More

Down Memory Lane: That WTI-Brent Divergence

Feb 18th, 2015 | Filed under: Commodities, Infrastructure, oil

For one professor, the surprising divergence in the prices of WTI/Brent crude in the period 2010-2012 was a case study in how commodity prices can teach us about supply chain conditions. Faille looks back at his article, and forward past today's calmer but still-fluctuating spread. Read More

ECB Beats SNB in race for the Bottom

Jan 19th, 2015 | Filed under: Algorithmic and high-frequency trading, Commodities, Currencies

An SNB announcement caused wild market moves Jan. 15th, not only in Forex but in commodity and equity prices as well. In the wake of the commotion, one key question has to be: why the announcement? Why this sudden change in the policy of Switzerland's central bankers? Read More

Top 5 Alpha Stories of 2014

Dec 30th, 2014 | Filed under: Alpha Hunters, Commodities, Emerging markets

In the middle of the year now ending, the U.S. Supreme Court delivered as complete a victory as it could manage to the hold-out bondholders in the Argentine-default dispute. Enforcement efforts plod on, and it seems likely a related story could make our top five list next year, too. Read More

Case study: Straits gives managed futures a facelift

Dec 18th, 2014 | Filed under: Commodities, Retail Investing

As alternative investments become more mainstream, managers who traditionally have operated in the alternatives arena face a number of questions, including what is the right offering, the proper structure and how do we market the new vehicle. Guest columnist Ginger Szala examines the thought processes of one group as they made the leap to retailization.Read More

Qatar and the QIA: When the SWF Is Also a Family Office

Dec 10th, 2014 | Filed under: Commodities, Institutional Investing, Technology

The royal family in Qatar, the House of Thani, just took direct control of the emirate's sovereign wealth fund. Also, that fund just invested big in Uber, confirming its reputation as perhaps the worlds most aggressive deal-hunting institution. Read More

Don’t Blame the Swiss: Results Discounted Days Before Vote

Dec 8th, 2014 | Filed under: Commodities, Currencies, Forex, Gold, Hard metals

The price of gold took a swan dive as November ended, just as Swiss voters formally nixed an initiative that would have required the central bank to buy a lot of the stuff. Faille argues that this is not a matter of cause and effect. It is, on the other hand, a fascinating case study in the discounting machinery that is a market. Read More

The Building of an Infrastructure for Renewables: A Report

Nov 5th, 2014 | Filed under: Alternative energy, Commodities, Infrastructure, Private Equity, Socially responsible investing

In 2012, [as the crude oil price was settling in to $110 and low vol,] the renewables’ infrastructure space for private funds reached an aggregate estimated deal value of $132 billion. In 2013, that fell to $95 billion. It now seems unlikely that 2014 will match last year. Read More

The Undead Enron Model Returns to the World above Ground

Nov 2nd, 2014 | Filed under: Commodities, Energy, Legislation/Court rulings, Regulatory

Enron was once the leader in a category of merchant traders that mediated in the world of energy commodities. Enron died, and banks largely took it over. Yet in spirit, at least, Enron is back. Read More

Central Clearing and the Bank of England

Oct 29th, 2014 | Filed under: Commodities, Risk management

A Bank of England paper discuses the "cover 2" standard for the adequacy of the default funds of central clearing houses, an issue of increasing importance as the push to centrally-clear everything picks up steam. One question it raises somewhat incidentally is the proper pronunciation of the acronym SLOIM, for "stressed losses over initial margins." Read More

The Bubble This Time: Oil & Gas Energy Stocks?

Oct 15th, 2014 | Filed under: Commodities, Energy, Indexes

If we look for the recent peak in Dow Jones U.S. oil & gas stocks we’ll look to the start of the summer. In June of this year the energy sector got above $850. The fall from that height puts the size of our correction in the neighborhood of 16%. It is possible these stocks are leading the rest of the market down. Read More

Exemptions and Pools: CFTC Harmonizes with the JOBS Act

Sep 17th, 2014 | Filed under: Commodities, Hedge Fund Regulation

Two rules within the CFTC rulebook that offer exemptions for certain CPOs from certain regulatory requirements mirrored the original pre-JOBS Act Reg D on the SEC side. But of course we are now in a post-JOBS Act world, and the CFTC staff has now acted, not through a rule change but by staff letter, to harmonize with its sister agency and with the JOBS Act mandate. Read More

Producing Energy: The Closest Thing to a Perfect Asset

Jul 7th, 2013 | Filed under: Alpha Seekers, Commodities, Energy

Guest columnist Paul Thomas looks at the energy markets.Read More

After You Go as Low as You Can Go

Jul 2nd, 2013 | Filed under: Commodities, CTA

Welton has modeled an investment approach, specifically a multi-asset class trend following approach, and has measured how it would have performed if back-fitted into certain periods of sustained and sharp interest rate increases in the decades since the death of Bretton Woods. Read More

Marc Rich: A Life, Not Just a Pardon

Jul 1st, 2013 | Filed under: Commodities, Currencies

We pause to mark the death of a man who, more than any other, was responsible for the creation of a spot market in crude oil in the hectic period after the Yom Kippur War. Read More

Rice Elucidates Views on Managed Futures, Retail Investors

Jun 24th, 2013 | Filed under: Commodities, CTA, Hedge Fund Industry Trends

To encourage further exchange and understanding, I went back to Mr. Rice, after reading a comment from our reader, and asked him to expand on managed funds and their noncorrelation with traditional (largely equity) investment strategies. Tags, Agriculture, Commodities, Derivatives Read More

The Wind and the Leaves: Causality in Commodity Prices

Jun 5th, 2013 | Filed under: Commodities, CTA, Derivatives, Hedge Fund Industry Trends

Three scholars find a very real possibility that there is a cause and effect relationship between index flows in the derivatives markets, at least the agricultural index markets, on the one hand and price moves in the underlying commodity on the other. Read More

A Plea to the Retail Investors

Jun 2nd, 2013 | Filed under: Alpha Strategies, Commodities, CTA, Hedge Fund Strategies, Retail Investing

This book, The Alternative Answer: The Nontraditional Investments that Drive the World's Best-Performing Portfolios is an appeal to the retail investor, to those author Bob Rice calls "typical investors," passing along the good news that they are no longer "stuck with the children's menu of investment options."Read More

NG Futures Traders: Who’s Your Regulator?

Mar 24th, 2013 | Filed under: Commodities, CTA, Energy, Regulatory

As a three-judge panel of the D.C. Appeals Court saw it, there were two questions in the Brian Hunter case. First, did the CEA’s language encompass manipulation of NG futures contracts as part of the exclusive jurisdiction of intervener CFTC? Second, if so, was that repealed or modified by the 2005 legislation? Read More

Survey: MF Global and Peregrine Have Left a Lasting Mark

Mar 20th, 2013 | Filed under: Commodities, CTA

Ninety-one percent of the respondents to a recent survey strongly believed there was a breakdown in audit procedures in the futures world. The comments section for that question displayed what the survey sponsor, Horizon Cash Management, calls “widespread frustration and anger.” Read More

Dollars and Nuggets Part II: Spain, Cyprus, and the Future

Mar 19th, 2013 | Filed under: Commodities, Currencies, Hard metals

The present global monetary situation, plainly, is not at equilibrium. Everybody else’s currencies depend upon the dollar, the dollar depends upon petroleum, and petroleum depends upon … whatever. Changes will continue (through a succession of crises if no other way can be developed) until a new equilibrium can be attained.Read More

Dollars and Nuggets Part I: Cycles and the Big Picture

Mar 18th, 2013 | Filed under: Commodities, Hard metals

Last summer the CME Group's European clearing house for derivative products announced that unallocated gold would serve as collateral for margin cover. Was that the sort of illusory good news that marks the top of a trend or was that a symptom of a secular trend toward the de facto monetization of gold that will re-assert itself once the present cyclical down move is done?Read More

Aroway’s Chris Cooper on the New Oil Frontier

Feb 25th, 2013 | Filed under: Commodities

The oil and gas game can be a tricky one for junior companies, but if played right the pay-off can be massive. At a time when juniors are risking a lot in volatile venues in the Middle East and Africa, Canada's Aroway Energy (ARW) is planting its feet firmly in homeland soil and in conventional plays. Why? Because for the smaller juniors this is not a long-term game and blowing all your capital to drill a single unconventional well in a risky frontier won't pay off. Canada still has plenty to offer for juniors, even though you have to kiss plenty of frogs to find the prince. The end game, after all, is merger and acquisition. James Stafford talks to Aroway CEO Chris Cooper.Read More

Can Leak Detection End the Pipeline Impasse? Interview with Adrian Banica

Feb 10th, 2013 | Filed under: Commodities

Guest columnist James Stafford,, interviews Synodon's Adrian Banica.Read More

The Political Implications of America’s Oil & Gas Boom

Jan 29th, 2013 | Filed under: Commodities

James Stafford of talks to economist James Kwak about the implications of the U.S. oil and gas boom.Read More

The Good, the Bad, and the Onions: Part Two

Dec 11th, 2012 | Filed under: Commodities

A speaker from the DG Internal Market and Services, EC, Jasper Jorritsma, knew that he was in the midst of a group, both on the panel and in the broader audience, that was largely skeptical of much of what is involved in MiFID II. Indeed, he seemed to relish a sort of Daniel-in-the-lion's-Den role.Read More

The Good, the Bad, and the Onions: Part One

Dec 10th, 2012 | Filed under: Commodities

As one of the participants in a conference in London last week said, running a traditional exchange was largely a matter of extracting rents, and with changes in technology and the economic environment it will be difficult going forward for exchanges to continue without changes in their model.Read More

US Power Grid Vulnerable to Just About Everything

Dec 5th, 2012 | Filed under: Commodities

In the wake of Superstorm Sandy, investors are looking at energy trading and the state of the U.S. power grid.Read More

A Look at the Dubai Mercantile Exchange with Christopher Fix

Nov 27th, 2012 | Filed under: Commodities, CTA

An interview with Christoper Fix, the CEO of Dubai Mercantile Exchange - home of the largest physically delivered crude oil futures contract in the world.Read More

MF Global Report: Full Recovery Still Iffy

Nov 19th, 2012 | Filed under: Commodities

If a trial set for April 2013 in the U.K. doesn't go the way trustee James Giddens wants, the U.S. customers of MFGI whose interests he represents may be out of luck with regard to some portion of their lost money, subordinated to the claims of other creditors.Read More

Waking Up to Volatility in Your Cup

Oct 23rd, 2012 | Filed under: Commodities

Coffee is an extremely volatile market. Uncertainties affect the whole chain of production, from the planter in Colombia to the local Dunkin' Donuts. Further, accusations (or the reality of) accounting chicanery are often added to the mix. Read More

Elites Took a Hit Last Year: Asian Elites Took the Biggest

Oct 15th, 2012 | Filed under: Commodities

Wealth-X, a Singapore-headquartered firm providing members with intelligence on ultra-high net worth individuals and on the privately held companies that they control, has made available its “World Ultra Wealth Report 2012-2013,” giving a glimpse of where the elite is growing, where it is shrinking, region by region and country byRead More

Registration Deadline for Formerly Exempt CPOs Looms

Oct 1st, 2012 | Filed under: Commodities, Regulatory

The great thing about the now-expiring exemption provided by regulation 4.13(a)(4) was that it didn't impose on the exempt CPO any limits on the number of participants or on the amount of futures trading the operator of the pool could conduct. The sad thing is that it is now expiring: tick-tock.Read More

The Gold Standard and the Sad State of Debate

Sep 4th, 2012 | Filed under: Commodities

Nothing quite so recommends a gold standard, or some alternative system of currency hardening, as the increasingly absurd arguments of those who would defend the current system of competing national fiats. The Atlantic this week presented us with Matthew O'Brien's ruminations on point. Read More

After Peregrine: Examining the Logical Space for SROs

Aug 21st, 2012 | Filed under: Commodities

The Senate committee's witnesses on August 1 included Gary Gensler, chairman of the Commodity Futures Trading Commission, Dan Roth, president and CEO of the National Futures Association, Ira Bodenstein, chapter 7 Trustee of Peregrine Financial, and Walt Lukken, president and CEO of the Futures Industry Association. Read More

Video: Introduction to commodities and alternative investing

Jul 29th, 2012 | Filed under: Commodities

Associate Director of Curriculum Keith Black, PhD, CFA, CAIA, delivers an introduction to commodities and alternative investing. Keith delves into the various types of commodities and their benefits in a brief and informative presentation.Read More

Citi: Systematic Component in CTAs Dominate over Discretionary Bits

Jul 24th, 2012 | Filed under: Algorithmic and high-frequency trading, Commodities, CTA

There has been a perhaps-unexpected consequence of the disappearance of the old-fashioned floor traders. Floor trading used to serve as a training regimen, "from which many of the industry's leading discretionary traders originated." Without the floors, the talent pool has dried up.Read More

Cotton and Tin: Spots and Futures

Jul 11th, 2012 | Filed under: Commodities

It is this backwardation, then, that is the normal situation on Keynes’ view, and the contrary situation (“contango” as it has come to be called), the one in which futures prices are higher than, and over the life of the contract decline toward, the spot price, is extraordinary. Nonetheless, contango happens. Indeed, it happens sufficiently often to have inspired a contrary theory, the theory of storage.Read More

CFTC Working Group Tries to Define High Frequency Trading

Jul 5th, 2012 | Filed under: Algorithmic and high-frequency trading, Commodities

Here is a draft definition of high frequency trading presented to the CFTC on June 20. HFT is a form of automated trading that employs: (a) algorithms for decision making, order initiation, generation, routing, or execution, for each individual transaction without human direction; (b) low-latency technology that is designed to minimize response times, including proximity and co-location services; (c) high-speed connections to markets for order entry; and (d) high message rates (orders, quotes, or cancellations).Read More

Was Managed Futures Tackled by Turbulence? When is Volatility a Friend or Foe?

May 3rd, 2012 | Filed under: Alpha Strategies, Commodities

Kathryn Kaminski tackles the tough question of volatility and how it affects managed futures.Read More

Of Falling Risks and Indexes

May 1st, 2012 | Filed under: Commodities, Indexes, Risk management

Any quantitative strategy is susceptible to being reduced to an index, and along with this, to transparency and routine. Once this happens, that "alpha" becomes "beta," and the 2 + 20 fees are no longer available. A manager in search of alpha will have to move beyond that strategy, peeling away that layer of the onion and going to a deeper, not-yet-indexable, strategy. Read More

A Paradox: Avoid Correlation by Following the Trends

Apr 2nd, 2012 | Filed under: Commodities, CTA, Institutional Investing

According to its advocates, trend following as a strategy works from the premise that price trends represent a process of consensus building. As a new idea takes hold, "the earliest adopters of this idea place their trades in accordance with it" and they get to watch in satisfaction as "a growing mass of market participants adopts the same thesis. Early adopters can surf the wave to the beach.Read More