Using options to exploit anomalies in the grain complex

Using options to exploit anomalies in the grain complex

The grain complex -- wheat, corn, soybeans and oats -- is in some ways closely coordinated but at times widely different in the price movements of its futures contracts. “Cumulative percent price change” (below) shows how the futures performed from January through March 2012. Continuing their close correlation, wheat and corn played tag, with wheat being slightly more volatile. Meanwhile, soybeans increased at a relatively steady pace and oats slacked off in early March before catching up with soybeans by the end of the month.

MF Global trustee releases investigation findings

MF Global trustee releases investigation findings

James W. Giddens, the trustee for the liquidation of MF Global Inc., today filed a report on his independent investigation into the bankruptcy of MF Global and the events that led up to it. Although he has no law enforcement or regulatory authority, he finds that specific people and entities could and should be held liable for their part in segregated customer funds being used to fund margin calls in the broker-dealer’s last days.

Top CTAs March 2012

Top CTAs March 2012

How Bruno Iksil lost $2 billion

How Bruno Iksil lost $2 billion | Felix Salmon

In February 2009, Deutsche Bank announced that its Credit Trading desk had managed to lose €3.4 billion in the fourth quarter of 2008, with €1 billion of those losses directly attributable to the bank’s prop desk.

The losses in the Credit Proprietary Trading business were mainly driven by losses on long positions in the U.S. Automotive sector and by falling corporate and convertible bond prices and basis widening versus the Credit Default Swaps (CDS) established to hedge them.

In English, Deutsche Bank had put on a basis trade: it owned credit instruments, like bonds, and it also owned credit default swaps designed to hedge against those loans. And then the trade blew up.

How to value secret sauce

How to value secret sauce | Reuters


'Black box' hedge funds spend millions on code and top talent. Many try to operate so no single employee can learn enough to leave and compete.  The husband and wife co-founders of computer hedge fund IKOS are involved in a long and bitter battle centered on ownership of the firm's money-making software. London-based Aspect Capital turned to lawyers in 2009 after an employee tried to establish their own business using a code the firm believed it owned.

The algorithmic arms race

Special Report: The algorithmic arms race | Reuters

(Reuters) - It's the day after Cambridge physicist Stephen Hawking's 70th birthday party and David Harding, the head of one of the most successful hedge funds in the world, is bubbling with talk of black holes.

Hedge funds find ways to trade euro misery

Insight: Hedge funds find ways to trade euro misery | Reuters


(Reuters) - Two decades ago, George Soros rose to fame and fortune on his now-historic trade in which he took on the Bank of England and shrewdly wagered on a devaluation of the British pound.
But it's unlikely the current European monetary crisis and worries about Greece's potential exit from the euro zone will give rise to an investing legend like Soros, who made $1 billion in 1992 by betting on a decline in the price of the pound.

Ex-Lehman trader quits as Asia hedge funds falter

Ex-Lehman trader quits as Asia hedge funds falter | Reuters

(Reuters) - Smaller-sized hedge funds are increasingly throwing in the towel in Asia as they struggle to attract money from risk-wary institutional investors, casting a cloud over prospects of the $128 billion industry.

How Morgan Stanley sank to junk pricing

Analysis: How Morgan Stanley sank to junk pricing | Reuters

(Reuters) - The bond markets are treating Morgan Stanley like a junk-rated company, and the investment bank's higher borrowing costs could already be putting it at a disadvantage even before an expected ratings downgrade this month.

Global downturn puts investors, companies in retreat

Global downturn puts investors, companies in retreat | Reuters

(Reuters) - Gripped by fears that Europe's debt crisis is driving the world economy into a ditch, companies are delaying plans to raise capital and canceling deals, while investors are taking refuge in cash or any other place they think their money will be safe.

G7 to hold emergency euro zone talks, Spain top concern

G7 to hold emergency euro zone talks, Spain top concern | Reuters

(Reuters) - Finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks on the euro zone debt crisis on Tuesday in a sign of heightened global alarm about strains in the 17-nation European currency area.

Euro rises as investors pare bearish bets on euro zone hopes

Euro rises as investors pare bearish bets on euro zone hopes | Reuters

(Reuters) - The euro rebounded from last week's record lows against the dollar and yen on Monday as investors pared bearish bets on hopes that European authorities will seek greater fiscal integration within the euro zone.

Euro extends rebound as bears trim bets ahead of G7 call

FOREX-Euro extends rebound as bears trim bets ahead of G7 call | Reuters

(Reuters) - The euro edged up further from last week's two-year low on Tuesday as sellers were tempted to pare back their huge bets against the currency ahead of a conference call by the Group of Seven financial policy makers.  The move reflected caution in case policymakers took powerful steps to contain the debt crisis, although many market players are sceptical of a major breakthrough given a lack of consensus within Europe on how to save Spanish banks among other things.  "It will take a long time to resolve the debt crisis. I don't expect European policy makers to come to an agreement soon. I am ready to sell the euro around $1.2550," said a trader at a Japanese bank.  The euro rose about 0.3 percent in early Asian trade to $1.25429, its highest in a week, extending its rebound since it had hit a two-year low of $1.2288 last Friday.

Euro Gains on Dollar

The euro edged higher as upcoming talks between global finance ministers and a meeting of the European Central Bank later this week helped drive optimism for further measures to ease stresses in the euro zone.  In the short term, investors are looking ahead to a teleconference among Group of Seven finance ministers Tuesday. That call is expected to largely focus on the situation in Spain, where a banking and fiscal crisis has kept markets on edge.  Also lifting sentiment, later this week, the European Central Bank will hold its rate-setting meeting, where it is widely expected to cut its key ...

CFTC said to plan June vote on expanding reach to overseas swaps

The U.S. Commodity Futures Trading Commission may vote June 21 to propose guidelines for extending the reach of Dodd-Frank Act rules to overseas swaps trading, according to two people briefed on the matter.  The so-called interpretative guidance is under debate at the top U.S. derivatives regulator and may change before a vote, according to the people, who requested anonymity because the matter isn’t public. Dodd-Frank is designed to reduce risk and increase transparency in the global swaps market after largely unregulated trades helped fuel the 2008 credit crisis.

S&P 500 ends flat but Europe, U.S. data still drag

The S&P 500 ended flat on Monday after recent sharp losses, though worries about the European debt crisis and weaker U.S. data kept investors wary of equities.  Signs of economic weakness around the globe and Europe's intensifying debt crisis have rattled investors, who have been dumping riskier investments like commodities and equities for the safety of government bonds.  The flat session follows Friday's slide of more than 2 percent that erased the Dow industrial average's gains for the year. The S&P 500 is now up just 1.6 percent for 2012 and is approaching correction territory, which would be a decline of at least 10 percent from its most recent high in April.

Crop Progress: Corn Belt thirsts for rain

Corn is progressing quickly thanks to the dry and hot temperatures, and though many states are desperate for rain, crop conditions are remarkably positive and slightly improved from last week’s report. The USDA’s latest Crop Progress report showed progress in each of the 18 reporting states.  With corn planting a distant memory, emerged corn is quickly moving forward. With just three percentage points of corn remaining to emerge, next week’s report should show progress in corn silking. This week’s report puts the 2012 corn season 5 percentage points above last week’s report and 22 percentage points ahead of 2011’s pace.  Eleven of the 18 producing states are at or above the national average, while just three states – Colorado (89 percent), Pennsylvania (62 percent) and Wisconsin (87 percent) – below the 90 percent mark.

Argentina says farm strike will not slow exports

Trucks hauled their normal loads of corn and soybeans into Argentina's main grains hub of Rosario o n M onday, but a sales freeze called by farmers protesting a tax hike in the country's top farm province slowed business at No. 2 port Bahia Blanca.  Growers in Buenos Aires province called a nine-day strike on Saturday over a recently-approved property tax increase, raising concern among exporters eager to keep shipments flowing from Argentina, the world's No. 2 corn and No. 3 soybean supplier.  With most of this year's crops already collected, exporters have enough deals signed with farmers to see them through the sales strike without slowing exports, Oscar Solis, Argentina's sub-secretary of agriculture, told Reuters.

Corn prices jumped on weather concerns on Monday Markets

Corn futures settled 11 to 16 cents higher on Monday. Corn prices jumped on renewed weather concerns and the lower dollar index. Concerns that recent dryness across the U.S. Corn Belt potentially damaged the emerging crop due to heat stress underpinned the market. Traders are anticipating a bullish crop progress report for corn as ratings are expected to decline from the previous week...

Cameroon Robusta-Export Price Rises 3.8% to June 3

The export price for robusta coffee from Cameroon rose 3.8 percent to 1,075 CFA francs ($2.03) from in the week to yesterday, according to Bloomberg calculations made using daily export prices from the Cocoa and Coffee Board.  The price for arabica climbed by 1.7 percent to 1,974 francs, the figures, sent in a mobile-phone text message from the Douala-based board, indicated.  The Central African nation has exported 775 metric tons of arabica since the season started in October and 7,703 metric tons of robusta since December, the board said in its monthly report on May 18.

U.S. Stocks Reverse Losses as Valuations Overshadow Data

U.S. stocks reversed early losses as the two-month slump in equities dragged the Standard & Poor’s 500 Index to its cheapest price-to-earnings valuation in six months, overshadowing a drop in factory orders. The S&P 500 ended little changed at 1,277.98 at 4 p.m. New York time, after retreating as much as 0.9 percent.  “It’s a function of things having gotten oversold and due for a rally at some point,” saidMichael James, a managing director at Wedbush Securities Inc. in Los Angeles. “Sellers start seeing any kind of strength and just moving higher.”

Gold Sparkles After Dismal U.S. Employment Data, Fed Talk - Forbes

Gold regained much of its lost luster today. The yellow metal rallied more than 4%, the largest one-day rise in more than two years, as investors sought the metal’s perceived safety after disappointing U.S economic data.  Businesses added only 69,000 new jobs in May, while the unemployment rose to 8.2%, the Labor Department said this morning. The stalled growth increases the chances of further monetary easing, economists say, prompting investors to seek safe-haven investments. Buyers also see gold as a go-to move over worries about Europe and China.

Stocks, Commodities Drop as China Adds to Evidence of Slowdown

Global stocks and commodities fell, with Japanese and Chinese equity gauges tumbling into bear markets, after data from China added to evidence of a global economic slowdown. Italian 10-year bonds advanced.  The MSCI All-Country-World Index dropped 0.4 percent by 9:50 a.m. in London and the Stoxx Europe 600 Index fell 0.6 percent after entering a bear market on June 1. Japan's Topix Index declined 1.9 percent, the lowest since Dec. 13, 1983, and Hong Kong's Hang Seng China Enterprises Index retreated 2.8 percent. Futures on the Standard & Poor's 500 Index weakened 0.5 percent. Oil sank to the lowest in almost eight months and copper plunged to a five-month low. The Italian 10-year bond yield lost seven basis points to 5.80 percent...

Vanguarda Seeks First Profit in Shift to Soybeans

Vanguarda Agro SA (VAGR3), the Brazilian farm company that lost 97 percent of its value since going public in 2006, expects to make a profit for the first time this year by producing soybeans and corn after biodiesel projects folded. Chairman Salo Seibel said Chinese demand for the crops that Vanguarda has been growing since last year will help it turn around five years of losses. The Asian country, which buys about two thirds of the world’s soybean exports to feed poultry and swine, has helped boost prices 43 percent in two years.

Oil Falls a Fifth Day on Concern U.S., China Demand Will Falter

Oil fell for a fifth day in New York to the lowest price in almost eight months on signs of an economic slowdown in the U.S. and China. London-traded Brent crude dropped from the lowest close in more than a year.  Futures tumbled as much as 2.4 percent to the lowest intraday price since Oct. 6, extending last week’s 8.4 percent decline after U.S. unemployment rose and payrolls increased less than the most-pessimistic forecasts. China’s purchasing managers’ index for non-manufacturing industries fell to the lowest level in a year, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. European leaders remain divided on solutions for the region’s debt crisis.