CME Group stock settled at $437.20 on Wednesday, a 21-month low close dating back to August 30, 2006. At first glance it would be easy to assume that the underperformance is due to recent reports that New York Mercantile Exchange (Nymex) members are threatening to reject the definitive agreement the Nymex board signed with CME for CME to purchase Nymex but another, perhaps more ominous, factor may be at play.
On May 20 the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing entitled “Financial Speculation in Commodity Markets: Are Institutional Investors and Hedge Funds Contributing to Food and Energy Price Inflation?”
The hearing included several speakers who felt that index funds are responsible in great part for the rise in commodity prices. The Commodity Futures Trading Commission (CFTC) maintains, however, that other factors related to traditional supply and demand are at play.
