In 1972 the Chicago Mercantile Exchange revolutionized the world of Futures with the creation of the International Monetary Market (IMM) and the first financial futures based on currency fluctuations. Later in that decade the CME launched three-month Eurodollar futures, which—after a slow start—grew to become the largest and most liquid futures contract in the world in terms of notional value. In 1982 the CME launched futures on the S&P 500 index, another breakthrough in the history of the industry.

Despite these impressive launches and the unheard of volumes produced by these products and this legacy of innovation, the CME arguably may still be more recognizable in some sectors as the place that trades pork bellies futures.

Tuesday CME Group announced that their frozen pork belly futures and options contracts will not find a home on the former Chicago Board of Trade trading floor but trade exclusively electronically on the Globex platform.

While not a surprise, as the belly contract in recent years had produced weaker volume figures and was even moved to make space for milk futures, it was arguably the first major success for the CME when launched in 1961. The pork belly contract matched the tough gritty reputation of the city of Chicago itself with its long affiliation with meat packing and the stockyards.

Chicago went from hog butcher to the world to hog trader to the world. And the rough and tumble atmosphere of Chicago’s trading pits where often compared to the legacy of previous Chicago generations. So much so that a few years ago Leo Melamed, CME chairman emeritus, updated the legendary Carl Sandburg poem, Chicago, to modern times: Chicago: Risk capital for the world.

For a long time now I have learned not to listen to all of the financial talking heads on the weekend business shows. Unfortunately these shows are popular so many people listen to the so called expertise offered there.

Following the market implosion due to the subprime mess and the subsequent recovery based on the Federal Reserve Board dropping the discount rate on Friday August 17, many so called experts lauded the Fed for its actions and concluded that a crisis was averted and the market had bottomed. But how so? Basically what the Fed did was infuse low cost loans into the system. Wasn’t that the cause of the problem in the first place?

A contributor to our Web page at the time compared what Federal Reserve Board Chairman Ben Bernanke did to rolling into a bar at closing time and offering a little hair of the dog instead of allowing everyone to face the consequences of a night of over-indulgence. As most of us know, this only puts off the inevitable hangover.

Today the Conference Board reported that the Consumer Confidence Index fell to 105.0 in August from 111.9 in July. Confidence is at its lowest level since last August. It also represented the sharpest decline since September 2005 following Hurricane Katrina.

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