Archive for September, 2008

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Rock you like a hurricane

Friday, September 12th, 2008

This Sunday, Sept. 14, CME Group will open trading early on energy futures and options on Globex and Clearport due to the potential impact of Hurricane Ike. Ike is nearing the Texas coast and could rock oil prices, which briefly dropped below $100 a barrel on Globex today for the first time since April. CME’s extended trading sessions for energy products, which begin on Sunday at 10 a.m. ET with a 9:30 a.m. ET pre-open on CME Globex, will help out those who need to manage their exposure in the energy markets. “We recognize the need for the global energy markets to manage their risk during this potentially volatile time,” said CME Group Chief Operating Officer Bryan Durkin in a statement. Hedgers may need to get a jump on next week’s trading as a result of Ike, but as was noted in this morning’s energy report on futuresmag.com, speculators should stay out of the energy markets because of increased volatility.

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Misery loves company

Friday, September 5th, 2008

Who knew all the market needed was a sharp increase in unemployment to get going. The Dow Jones and S&P 500 indexes both ended the day in positive territory despite the unexpected jump in the unemployment rate to 6.1% from 5.7%.

But all is not rosy. The liberal advocacy group Campaign for America’s Future put out a release Friday noting that “the misery index” has risen to 11.7%, it highest level since 1991. You may recall that the index came into vogue during the 1970s and 1980s political campaigns. The index is a composite of the unemployment rate and inflation using the annual Consumer Price Index.

The press release got us thinking. We have chronicled in this space recently how the various methodologies to calculate economic reports by the Federal government have been altered to produce more positive numbers. In the July issue of Futures, we interviewed economist John Williams who keeps up the government’s economic statistics using the original methodology at his firm Shadow Government Statistics (SGS).

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Indians Dominate Swiss Futures Meeting

Friday, September 5th, 2008

2008 may be the year emerging market exchanges ceased to be footnote participants at the annual Bürgenstock Meeting, sponsored by the Swiss Futures and Options Association (SFOA) and held this year in Interlaken as the Bürgenstock resort undergoes renovation.

As always, the host country – in this case, India – was the focus of Wednesday evening’s opening panel and Thursday’s entertainment; but representatives of the Multi-Commodity Exchange (MCX) and its parent, Financial Technologies (FT) did more than just put on a good show.

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CME Group offers convergence tips

Friday, September 5th, 2008

One of the major issues discussed in the CFTC’s April agriculture forum was the lack of convergence between futures and cash prices in the ag markets. In July, the agency’s Agricultural Advisory Committee held another meeting about convergence, where Acting Chairman Walt Lukken noted that “Some commercial participants have lost confidence in the ability to hedge in certain of these markets and it is critical that market participants work with the Commission to address this matter aggressively.” Today CME Group offered to the CFTC some recommendations to improve convergence in its wheat contract, including increasing storage rates during the period from July through November to 8 cents per bushel per month, adding delivery points and a recommendation that the vomitoxin level for par delivery be lowered from three parts per million (ppm) to two ppm.

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Competing forces: USD recovery and U.S. jobs

Friday, September 5th, 2008

Remember last month when the unemployment rate shot up to 5.7% from 5.1%? Well, in August, things continued to deteriorate in the jobs scene. Unemployment increased to 6.1% and nonfarm payrolls decreased by 84,000, with concentrated losses in manufacturing and employment services, interestingly enough. In the past 12 months, according to the Labor Department, the number of unemployed has increased by 2.2 million and the unemployment rate has risen by 1.4% in the past year.

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Unenjoyment day

Thursday, September 4th, 2008

Suspicion of government economic reports is at an all time high and given our government’s propensity towards happy news, and that we are in the midst of a political convention, traders must be looking at tomorrow’s unemployment report with a certain amount of trepidation.

That we are going into the number on the heels of a 344 point drop in the Dow Jones Industrial Average makes things more interesting. Did someone know something?

Initial unemployment claims for the week ending Aug. 30 jumped to 444,000, well above consensus estimates, contributed to negative sentiment. But tomorrow is the big one and given today’s move, a slightly better than expected report could cause quite a rally. As someone who followed these reports very closely, I can say that it is not that unusual for the unemployment report to come out completely counter to what initial claims showed. So it would not be proof of some conspiracy if tomorrow’s report is positive.

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