Archive for June, 2009

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Zombie economy

Tuesday, June 30th, 2009

Most of the experts we interviewed for our July Markets Story, “Economic Recovery: Running on Empty” painted the economic picture as bleak, but predicted a possible recovery, albeit closer to 2010. In the meantime, interest rates are set to go up, inflation is on the rise, and the jobs outlook for the rest of the year is, according to the analysts we spoke to, either “awful” or “lousy”…take your pick. While making the overarching case to add gold and silver to your portfolio, Louis James, senior editor at Casey Research, uses another colorful anecdote to describe the economy: a zombie wearing lipstick.

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Madoff gets maximum

Monday, June 29th, 2009

Monday morning Bernie Madoff received a 150-year sentence for operating an estimated $65 billion Ponzi scheme, the maximum sentence he could have received from the U.S District Court. Hundreds of scathing comments are flowing into blogs and other news venues spewing venom at Madoff for his incredible crime.

 

We would like to see some of this anger reserved for the agencies whose job it was to regulate Madoff.

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Gensler drops the “F” bomb

Wednesday, June 24th, 2009

In an address before the Managed Funds Association, Commodity Futures Trading Commission Chairman Gary Gensler laid out the basics of two key areas of the regulatory reform plan President Obama announced last week and brought back an issue sure to stir controversy.

 

Gensler focused on over-the-counter derivatives and hedge funds. He said “this new regime should govern 100% of OTC derivatives no matter who is trading them or what type of derivative is traded, standardized or customized. That includes interest rate swaps, currency swaps, commodity swaps, equity swaps, credit default swaps [and those that are unforeseen].”

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How did we get here?

Tuesday, June 23rd, 2009

How did the financial world descend into full meltdown mode last year? Among other things, two factors seem to be at fault: ignoring of history and lack of education, according to John Miller, executive director of the International Center for Futures and Derivatives at the University of Illinois at Chicago. At the Managed Funds Association‘s annual forum in Chicago today, Miller offered an insider’s look at understanding the financial crisis.

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Gensler talks OTC reform

Monday, June 22nd, 2009

In testimony before the Senate Banking Committee today, Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler laid out some objectives for the regulation of over the counter derivatives, including modification of the Commodity Exchange Act (CEA). OTC derivatives are still a hot topic in the industry, especially after President Obama’s regulatory reform proposal last week called for both the Securities and Exchange Commission (SEC) and CFTC to have a hand in regulating them. (more…)

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CFTC/SEC may not play well together

Friday, June 19th, 2009

The Obama Administration’s blue print for regulatory reform rolled out this week did not pick winners in the battle for regulatory jurisdiction over the vast over-the-counter derivatives market. Both the Commodity Futures Trading Commission and Securities and Exchange Commission, among others, have been lobbying for the job since it became clear these markets, particularly credit default swaps,  would face greater regulation. The blue print states that both regulators would have a hand in overseeing these markets with the Federal Reserve at the top to monitor systemic risk.

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A new ball game for regs

Thursday, June 18th, 2009

In what is being described as the most sweeping regulatory overhaul since the 1930s, President Obama on Wednesday introduced his blue print for a new regulatory environment in a Treasury document titled: Financial Regulatory Reform, A new Foundation: Rebuilding Financial Supervision and Regulation.  

 

The size and scope of the recommendations ensured that most of the initial responses by industry insiders were positive affirmations of the general principles. After all there will be plenty of time to tear it apart and given its enormous scope and the realities of the sausage making process of legislation, the likelihood of the recommendations becoming law anytime soon is pretty slim.  

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Proposal packs punch

Thursday, June 18th, 2009

Industry leaders wasted no time commenting on the Obama Administration’s new regulatory reform proposal, “Financial Regulatory Reform: A New Foundation,” released yesterday.

The proposal received mostly a chorus of praise from the industry. CME Group called it “a significant step towards restoring confidence in the integrity of financial markets.” International Swaps and Derivatives Association CEO Robert Pickel said in a statement that it “provide[s] an important framework for financial regulatory reform.” In his statement, Futures Industry AssociationPresident John Damgard “commend[ed] the administration for the thoughtfulness and comprehensiveness of its plan.” In a statement, Chicago Board Options Exchange ChairmanBill Brodsky said, “We are particularly pleased that the plan recognizes the need for greater coordination and harmonization of the SEC and CFTC,  including streamlining the approval of new products and rule filings.” But not everyone is singing the proposal’s praises. (more…)

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Take this job …

Tuesday, June 16th, 2009

Former Acting Commodity Futures Trading Commission Chairman Walt Lukken officially announced his resignation today after serving during a turbulent period for the regulator.

 

He came to the CFTC at a time when an innovative minimalist approach to regulation was generally seen as the way to go and left at a time where calls for a much heavier regulatory hand was being demanded by Congress.

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Oil up

Thursday, June 11th, 2009

Oil’s upward climb continued today, hitting above $73/barrel, on forecasts for higher world oil demand by the International Energy Agency, according to MarketWatch. The outlook for oil could affect the overall economic outlook. In our July Markets story, our experts will discuss the how the energy outlook will impact the broader economic picture and the forecast for interest rates through 2009. One economist said that the rise in oil prices was actually a positive sign, as rising commodity prices signal improvement in the U.S. and global economy. However, rising commodity prices also could be a reaction to a weakening dollar and expectations for an increase in inflation. 

For our full mid-year economic outlook, check out the July issue of Futures magazine, online June 25.

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