OPEC split signals unchanged quota as compromise

OPEC split signals unchanged quota as compromise

June 13 (Bloomberg) -- Divisions within OPEC signal the group will probably keep its crude production ceiling unchanged tomorrow as falling prices limit Saudi Arabia’s ability to justify a higher quota.  Iran, facing a European Union embargo on its oil exports, and Venezuela have been joined by Iraq, Angola, Libya and Ecuador in saying that global crude supplies are already excessive. The group’s biggest producer, Saudi Arabia, is pumping near its highest level in three decades and said June 11 that there may be a need to boost the target.

Ex-UBS trader accused of mispricing assets sues over firing

Ex-UBS trader accused of mispricing assets sues over firing

May 11 (Bloomberg) -- A former UBS AG trader who was fired after the bank found he worked with a colleague to manipulate trading figures sued for unfair dismissal in London.  Ramon Braga, a trader on the bank’s corporate-credit desk in London, was fired for collusion in the alteration of “marked-to-market” values of assets by Denis Minayev, UBS staff said at an employment tribunal yesterday.
Minayev, a proprietary trader, “re-marked” Braga’s trading book on 66 occasions, even though he shouldn’t have had the authority to do so, UBS investigator Richard Kennedy said.

The Future of the Euro

The Future of the Euro | Resource Investor

As Spain is bailed out, with some mystery over who exactly is going to be footing the bill, we are forced to focus once again on the existential threat facing the euro: will the teenage currency make it through adolescence? Are these just growing pains or the “beginning of the end”?

TREASURIES-US bonds edge down slightly; 30-yr sale eyed

TREASURIES-US bonds edge down slightly; 30-yr sale eyed | Reuters

(Reuters) - Benchmark U.S. Treasury bonds edged down in Asia on Thursday ahead of a 30-year sale later in the session, but remained supported by deepening fears about the euro zone's debt crisis.

Futures industry ‘likes’ social media

Futures industry ‘likes’ social media

For an industry that is always trying to be on the cutting edge of technology, the financial world always has been a little slow to adopt new forms of communication. That was true when cell phones were introduced, when text messaging became popular and again is the case with social media.

Managing portfolio risk with Leverage Space

Managing portfolio risk with Leverage Space

Modern portfolio theory defines an investment strategy to meet a given investor’s needs. It is based on using simple statistics to design a mixture of low-correlated assets to minimize risk and maximize returns. However, things don’t always go as planned.  Different investment sectors become more correlated just at the time we need non-correlation the most. For example, utility, oil and technology stocks usually have a correlation between 0.2 and 0.4, but during market shocks and so-called “black swan” events, these correlations can reach 0.7, 0.8 or even higher.   So, just when you need the diversification most, classic portfolio theory can fail you. One reason is because its application methods are derived from theories that assume an infinite number of trials. In reality, we trade a particular size, method or mix of markets for a finite number of trials and move on. These techniques also assume the data have a normal distribution, which is not true. For example, events creating a standard deviation of 5 should happen once every 100 years with a true normal distribution, not every four to eight years as we have seen in practice.

Software Review: OptionStation Pro

Software Review: OptionStation Pro

OptionStation Pro, an option analysis and trading software program by TradeStation, is sophisticated and well-documented software. Although it includes the usual precautionary advice connected with the complexities and risks involved with options trading, in the hands of an experienced trader all of the analytical features and chart routines should yield outstanding results.  A central core of OptionStation Pro is the Theoretical Position Panel, where trading positions (hypothetical at first) are analyzed. Theoretical spreads may be selected from a list of 14 types of spreads, including: butterfly, iron butterfly, condor, iron condor, straddle, strangle, calendar and diagonal. Automated calculations start with your selection of the asset to be analyzed using the OSI (Option Symbology Initiative) listing that comprises the underlying asset, expiration date, order type (put or call) and strike.

Italy Holds First Bond Sale After Spain Rescue

Italy Holds First Bond Sale After Spain Rescue - Bloomberg

Italy holds its first bond auction since Spain’s 100 billion-euro ($126 billion) bank rescue request drove up yields, as the government seeks to convince investors the country won’t be the next to need aid.
The Treasury sells as much as 4.5 billion euros of three-, seven- and eight-year bonds today, one day after it was forced to pay 3.972 percent to sell one-year bills, 1.63 percentage points more than at the previous sale a month ago.

Osborne Allows Currency, Rate Hedging, Easing Vickers Bank Plan

Osborne Allows Currency, Rate Hedging, Easing Vickers Bank Plan - Bloomberg

Chancellor of the Exchequer George Osborne will allow the retail units of banks operating in the U.K. to hedge currencies and some simple derivatives on behalf of small and mid-sized companies, softening the recommendations of the Independent Commission on Banking.  In the government’s first detailed response to the recommendations made by former Bank of England Chief Economist John Vickers, Osborne will say retail banking units protected by a firewall will be able to hedge currencies and plain interest- rate derivatives so that business banking doesn’t suffer. More complex derivatives trades won’t be allowed. Vickers last year proposed all those functions remain outside the retail operations of a bank.

KeyQuant: Not your typical trend-follower

KeyQuant: Not your typical trend-follower

Paris-based commodity trading advisor (CTA) KeyQuant SAS has put up impressive numbers in the less than three years it has been trading and has grown assets at an impressive clip as well. The medium- to long-term trend-following CTA has produced a compound annual return of 24.87% with a worst drawdown of 11.55% since launching in January 2010.  Perhaps more impressively, it has garnered $60 million under management in the solid but hard to crack — for an emerging manager — diversified trend-following space. But if you are one of those allocators who automatically turn the page when confronted by another emerging trend-follower, you may want to take a closer look at KeyQuant, because it obviously is doing something right — and different — judging from its solid if unspectacular performance, 9.1%, in the difficult environment for trend-followers in 2011.

Mike Dever on "Taking Stock with Pimm Fox"

Mike Dever, author of "Jackass Investing," talks about the current market and investor mindsets on Bloomberg News' "Taking Stock with Pimm Fox."

Florida firm charged with $1.8M in commodity pool case

Florida firm charged with $1.8M in commodity pool case

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil enforcement action against Jose S. Rubio (Rubio) and Rubio Wealth Management, LLC (RWM) of Surfside and Coral Gables, Fla., respectively. The CFTC complaint charges Rubio and RWM with defrauding investors in connection with operating a commodity pool to trade commodity futures and off-exchange foreign currency (forex) contracts. The CFTC complaint also charges Rubio with making false statements to pool participants, misappropriating pool funds, commingling investor funds with those of RWM, failing to register as a commodity pool operator, and failing to produce documents to the CFTC.

Deutsche Bank may have funding gap for Italy, Spain

Deutsche Bank may have funding gap for Italy, Spain

June 13 (Bloomberg) -- Deutsche Bank AG has an imbalance between assets and external funding of as much as 14 billion euros ($17.6 billion) in its Italian and Spanish units, according to analysts at Espirito Santo Investment Bank.  Deutsche Bank’s loans amount to 205 percent of its deposits at the Italian unit and 314 percent in Spain, according to London-based analyst Andrew Lim, who cited the published accounts of the two units. A return to the lira and the peseta would cost Germany’s biggest lender as much as 4.2 billion euros, assuming a 30 percent depreciation of the replacement currencies, according to Lim.  The impact would be “quite significant for a bank which is already very weakly capitalized,” Lim wrote in a note today, reiterating his “sell” recommendation on the stock.

Gold futures extend advance to a fourth session

Gold futures extend advance to a fourth session - Metals Stocks - MarketWatch
Gold futures closed higher Wednesday, extending their advance to a fourth session, as traders gauged prospects for further quantitative easing by the Federal Reserve and other central banks.  Prices found support in data that showed U.S. retail sales fell and producer prices saw their biggest one-month drop in almost three years in May, which helped drive safe-haven demand for the metal.  Gold for August delivery GCQ2 -0.07%  rose $5.60, or 0.4%, to settle at $1,619.40 an ounce on the Comex division of the New York Stock Exchange. It’s scored a four-session gain of 2%.  Futures prices traded lower around $1,612 before the economic data were released, climbed immediately afterward only to briefly trade lower and recover again.

EIA lowers its crude oil price forecast in the June STEO

EIA lowers its crude oil price forecast in the June STEO Cattle News - Editorial, Grain & Cattle Markets, Current Stories
The U.S. Energy Information Administration (EIA) issued its June Short-Term Energy Outlook (STEO)  Tuesday, which included significant downward revisions to the crude oil and petroleum product price forecasts for the second half of 2012 (Figure 1). The changes come after a combination of concerns regarding economic growth and moderating supply-demand balance expectations contributed to a steep drop in global crude oil prices in May. As a result, EIA is now forecasting West Texas Intermediate (WTI) crude oil spot prices to average about $95 per barrel for the rest of 2012. Similarly, the average crude oil refiner acquisition cost (RAC) is now expected to be about $11 per barrel lower in the second half of 2012 compared with the May STEO. The lower forecast for crude oil prices has translated into a lower forecast for product prices.

New corn contracts under pressure on Wednesday Markets

New corn contracts under pressure on Wednesday Markets - Cattle & Grain Prices, Quotes, Charts
Corn futures settled mixed on Wednesday. Old crop contracts ended higher while new crop contracts were under pressure throughout the day. Forecasts for rain across the U.S. Corn Belt weighed on the market; however, if conditions remain dry as they are currently, prices will rise again. The market is still pressure from Tuesday’s bearish Supply/Demand report. Old crop ending stocks were reported higher than expected; there were no revisions to new crop estimates. Old crop exports were reported down 50 million bushels from the previous month. The dollar index was down but provided minimal support to prices.
Soybean futures settled 17 to 28 cents lower on Wednesday...

Corn turns up after two days of declines

Corn turns up after two days of declines | Reuters

U.S. spot July corn turned firm early on Wednesday on bull-spreading after slipping for two straight days as forecasts for increased rain in the Midwest eased concerns over the heat-stressed crop as it heads into its critical pollination stage.  Old-crop July turned up as players bought the July and sold new-crop December, but pressure lingered in the forward months from Tuesday's U.S. government report that kept U.S. corn ending stocks unchanged after analysts had forecast a decline. Continued concerns over the euro zone debt crisis also weighed on prices.

Hong Kong's Ex-Central Banker Drives Doubt Into Dollar Peg

Hong Kong's Ex-Central Banker Drives Doubt Into Dollar Peg - Forbes
Former central banker Joseph Yam Chi-kwong sent out waves of shock yesterday when he said it was time to reconsider the peg between Hong Kong and U.S. dollars. His statement comes as a surprise to all, as throughout his 16 years as chief executive of the Hong Kong Monetary Authority (HKMA), he defended and strongly upheld the peg between the two currencies.  In his paper titled, “The Future of the Monetary System of Hong Kong,” Yam said although the fixed exchange rate he helped foster served Hong Kong well for nearly 30 years and survived two of the most severe financial crises in world history, “it cannot be an end in itself.” At a press briefing, Yam said, “the circumstances have changed,” in that the U.S. dollar has continued to weaken, and monetary loosening in developed markets has sparked inflation in Hong Kong, The Standard reports.  The peg, which Yam introduced in 1983, is currently set at 7.8 Hong Kong dollars to $1. He had previously declared it necessary for Hong Kong’s stability and prosperity on multiple occasions for years.

OPEC split signals unchanged quota as compromise

OPEC split signals unchanged quota as compromise
Divisions within OPEC signal the group will probably keep its crude production ceiling unchanged tomorrow as falling prices limit Saudi Arabia’s ability to justify a higher quota.  Iran, facing a European Union embargo on its oil exports, and Venezuela have been joined by Iraq, Angola, Libya and Ecuador in saying that global crude supplies are already excessive. The group’s biggest producer, Saudi Arabia, is pumping near its highest level in three decades and said June 11 that there may be a need to boost the target.  Leaving the production quota unchanged may be the likeliest compromise because it allows smaller producers to protect revenue after Brent crude’s 23 percent decline since March, while preventing a price rally that would curb economic growth. The 12 members of the Organization of Petroleum Exporting Countries are meeting in Vienna a year on from a gathering that ended without consensus, prompting Saudi Oil Minister Ali al- Naimi to say that it was “the worst” he had ever attended.

Commodities- Mostly down despite weaker dollar; soybeans tumble

COMMODITIES-Mostly down despite weaker dollar; soybeans tumble | Reuters
Commodities were mostly lower on Wednesday with soybeans dropping the most in two weeks in reaction to favorable weather for the U.S. crop while crude oil was pressured by plentiful global supplies. The losses came despite the dollar's nearly half a percent drop against the euro on optimism that the winner of Sunday's Greek elections might keep Athens in the euro zone. A Financial Times report suggesting growing openness among European leaders to relax Greece's bailout terms also helped the single currency.

Gold futures extend advance to a fourth session

Gold futures extend advance to a fourth session - Metals Stocks - MarketWatch
Gold futures closed higher Wednesday, extending their advance to a fourth session, as traders gauged prospects for further quantitative easing by the Federal Reserve and other central banks.  Prices found support in data that showed U.S. retail sales fell and producer prices saw their biggest one-month drop in almost three years in May, which helped drive safe-haven demand for the metal.  Gold for August delivery GCQ2 +0.01%  rose $5.60, or 0.4%, to settle at $1,619.40 an ounce on the Comex division of the New York Stock Exchange. It’s scored a four-session gain of 2%. Futures prices traded lower around $1,612 before the economic data were released, climbed immediately afterward only to briefly trade lower and recover again. Gold closed at $1,613.80 an ounce Tuesday, building on a winning streak that began at the end of last week.

Oil Drops to Eight-Month Low on U.S. Retail Sales

Oil Drops to Eight-Month Low on U.S. Retail Sales - Bloomberg
Oil tumbled to an eight-month low after a report showed that U.S. retail sales weakened and as borrowing costs in Germany and Italy increased.  Futures fell 0.8 percent as Commerce Department figures showed that purchases decreased for a second month. The yield on German and Italian debt climbed in auctions before a Greek election on June 17. OPEC will probably leave its output target unchanged at a meeting tomorrow, two Middle East delegates said.  “The retail sales numbers today were disappointment,” said John Kilduff, a partner at Again Capital LLC, a New York- based energy hedge fund. “The markets continue to be battered by the latest headlines from Europe. We’re seeing crisis creep ahead of the Greek elections.”  Crude oil for July delivery dropped 70 cents to $82.62 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 6. Prices are down 16 percent this year.

U.S. Stock Futures Decline as Retail Sales Weigh

U.S. Stock Futures Decline as Retail Sales Weigh - WSJ.com
U.S. stock futures declined, pulling back from sharp gains in the previous session, as weak retail sales weighed on stocks.  About 50 minutes ahead of the open, the Dow Jones Industrial Average futures slipped 42 points, or 0.3%, to 12472. The Dow ran up 163 points, or 1.3%, on Tuesday to close at the highest level since May 29.  Standard & Poor's 500-stock index futures lost 6 points, or 0.5%, to 1314 and Nasdaq 100 futures gave up 10 points, or 0.4%, to 2537. Changes in stock futures do not always accurately predict ...

Gold, Copper, Rubber Gain; Corn Falls: Commodities at Close

Gold, Copper, Rubber Gain; Corn Falls: Commodities at Close - Businessweek
The Standard & Poor’s GSCI gauge of 24 commodities fell 0.1 percent to 580.33 at 4:47 p.m. Singapore time. The UBS Bloomberg CMCI index of 26 raw materials rose 0.04 percent to 1429.697.

CRUDE OIL

Oil fluctuated in New York amid speculation the Organization of Petroleum Exporting Countries will keep output quotas unchanged even after a slide in prices.  Futures were little changed after dropping as much as 0.8 percent. OPEC, which meets in Vienna tomorrow, said global oil markets remain well-supplied even after its output fell in May for the first time in eight months. A U.S. government report today will show crude stockpiles shrank last week, according to a Bloomberg News survey. The industry-funded American Petroleum Institute yesterday said inventories rose 1.6 million barrels...