News from The ROBERT|CHARLESGroup for investing in the futures and futures options markets. Futures trading is risky. Our goal is to take the risk out of a high risk business. Keep your comments clean and respect others' opinions. Profanity and insults are not acceptable. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD READ AND BE AWARE OF THE RISKS, DISCLOSURES, AND OTHER INFORMATION SET FORTH BELOW. *
LONDON—An 11-year-old Dutch boy has gone where many of the best economic minds in Europe have feared to tread and proposed a radical solution to the European single currency's problems -- using a pizza as his inspiration. Jurre Hermans' entry in the 250,000 pounds ($401,000) Wolfson Economics Prize, an international economics competition to find the "best contingency plan for a break-up of the euro" won special mention Tuesday from the judging panel. Hermans, of Breedenbroek in the Netherlands, was 10 at the time he entered. He has been given a (EURO)100 ($133) gift voucher for his efforts but failed to make the final short list of five proposals -- which included reversing the process in which the euro was created and exiting the system over a weekend.
April 3 (Bloomberg) -- Royal Bank of Canada was sued by U.S. regulators over claims the Toronto-based lender engaged in illegal futures trades worth hundreds of millions of dollars to garner tax benefits tied to equities. Canada's biggest bank made false and misleading statements about "wash trades" from 2007 to 2010 in which affiliates traded among themselves in a way that undermined competition and price discovery on the OneChicago LLC exchange, the Commodity Futures Trading Commission said yesterday in a complaint filed in Manhattan federal court.
While others were stockpiling water, flashlights, and board games in preparation for Hurricane Irene, the hedge fund Tudor Investment was crunching numbers. Paul Tudor Jones' investment firm employs a weather derivatives analyst. Weather derivatives are fairly new, the first one traded in 1997 and the CME introduced the first exchange-traded weather futures contracts in 1999.
Canadian natural gas rose, reversing earlier losses, as producers pledged to cut output to pare a glut of the fuel in storage. Alberta gas gained 1.2 percent after Encana Corp. (ECA), Canada’s biggest gas producer, said it’s looking for a partner to help fund drilling for oil and gas liquids. The Calgary-based company said in February it would shift the majority of this year’s spending to oil and liquids, joining U.S. producers including Chesapeake Energy Corp. in curtailing gas exploration.
Once again, Rep. Sandy Levin (D-MI), a senior member of the House Ways and Means Committee, working with President Obama, has proposed a bill to end the perceived tax benefits of carried interest. On Feb. 14, Levin introduced the “Carried Interest Fairness Act of 2012,” which would tax any carried interest received as ordinary income, subjecting it to self-employment taxes. This is the third direct attempt by Levin to restrict carried interest since he first introduced legislation on this topic in 2007, not to mention the multiple times this concept had been included in other pieces of legislation since his initial 2007 bill.
April 2 (Bloomberg) -- Markets for equities, bonds and currencies are the calmest they’ve been since 2007, and that’s making some investors nervous. Options that protect against Standard & Poor’s 500 Index losses plunged 64% in the last two quarters, the most ever, data compiled by Bloomberg show. Interest-rate volatility is near a five-year low, while demand for hedges against extreme moves in the dollar is close to the weakest since 2008. Bank of America Corp.’s Market Risk cross-asset volatility index reached a level not seen since November 2007.
The Commodity Customer Coalition delivered a memo to U.S. Attorney General Eric Holder as well as U.S. attorneys from New York and Chicago and members of Congress stating that there is clear evidence of an intent to commit fraud by MF Global in its closing days.
Corn: A follow-through Monday was fully expected. Just about anytime we see a limit move from a report, we can expect to see some continued buying on the following day. It will most likely be Tuesday before trade turns direct focus away from the report and asks “what now?”
Although the problems the euro faces seem severe, it is not at the top of the list in terms of implied volatility. “Forex option price curves” (below) shows that the options market on Nov. 4, 2011 put the March 2012 euro calls in second place following the Swiss franc, and slightly higher than the Japanese yen. The Swiss franc may have been temporarily in the top position because of its relatively steep 11.3% decline from Sept. 2 to Nov. 4. Higher price curves indicate predicted larger price spread variations between Nov. 4 and expiration in March.
HOLIDAY SCHEDULE: Please note on Friday all markets will be closed except the following: equities - they close at 8:15 am. Financials & interest rates - they close at 10:15.
All markets go back to their normal trading hours Sunday evening (except softs - they'll open around 6:00 am on Monday morning).
NEW YORK—Gold futures fell in after-market trading after the latest Federal Open Market Committee minutes showed few hints of imminent monetary stimulus. Gold for June delivery, the most actively traded contract, had settled down $7.70, or 0.5%, at $1,672 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold extended these losses after the FOMC release, recently trading down $34.10, or 2%, at $1,645.60 a troy ounce.
There is no doubt in anyone’s mind that the natural gas market has taken a beating. But is the rout almost over or has it just begun? In what could turn out to be a historic swoon, it is clear that at some point something has got to give. The natural gas market is running out of space to put supply and the system will soon get clogged so it is becoming more obvious that the only thing that can fix this market is perhaps an epic price collapse. We have to get gas out of the system and based upon current production rates, it is clear that producers are not getting the message. Some producers of course do not care as the price of oil makes it possible to get rid of the gas for nothing. Yet wondering where this market will be in a few weeks just boggles the imagination.
NEW YORK (Dow Jones)--The Treasury bond market Tuesday suffered the biggest selloff in nearly three weeks as a report from the Federal Reserve put a damper on the prospects of a new bond-buying program to stimulate the economy. The Federal Open Market Committee minutes for the Fed's policy-setting committee's March meeting showed no rush to add to its unconventional monetary stimulus that has been a key supporter of the Treasury bond market. As a result, bond prices tumbled across the board, led by the seven-year to 10-year maturities. The benchmark 10-year Treasury yield, which moves inversely to its price, shot up to as high as 2.299%, the highest in more than a week, from 2.18% right before the release.
Earlier Tuesday, most emerging market currencies had been slightly stronger in quiet trading. However, the minutes signaled that the Fed is in no rush to take on any additional bond-buying or other new programs to bolster the U.S. economy, analysts said. Such measures, which ultimately boost financial market liquidity, have been seen as supportive of higher-yielding assets like emerging market currencies in the past. The lack of additional liquidity could undercut emerging market currencies' 2012 rally.
China accelerated the opening of its capital markets by more than doubling the amount foreigners can invest in stocks, bonds and bank deposits as the government shifts its growth model to domestic consumption from exports. The China Securities Regulatory Commission increased the quotas for qualified foreign institutional investors to $80 billion from $30 billion, according to a statement on its website yesterday. Offshore investors will also be allowed to pump an extra 50 billion yuan ($7.95 billion) of local currency into the country, up from 20 billion yuan.
The vehicle he’s talking about is a production prototype for one of the first “roadable aircraft” approved by the U.S. Federal Aviation Authority: a flying car that’s capable of being driven legally to the local airport, unfolding its wings, and then taking off and cruising at 100 mph before landing on a runway and driving you to your final destination. That’s all while delivering 35 mpg on the highway and 20 mpg in the air.
April 2 (Bloomberg) -- Pier Carlo Padoan, chief economist at the Organization for Economic Cooperation and Development, talks about the outlook for global growth and the European sovereign-debt crisis. He spoke on March 31 with Bloomberg Television's David Tweed in Cernobbio, Italy. (Source: Bloomberg)
Today the sponsors of Britain’s $400,000 Wolfson Economics Prize announced the five finalists of a contest for the best contingency plan for a breakup of the euro zone. The most intriguing one is by a British private investor, Catherine Dobbs, who proposes to unscramble the euro currency, quite literally—replacing it with two brand-new currencies, which she calls a yolk euro and a white euro.
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