Last August, political brinkmanship in Congress over the debt ceiling generated a great deal of uncertainty in the markets. This December has the potential to produce a much larger storm. We recently had the pleasure of listening to James Delaplane of Vanguard on how this situation could impact investors, and his insights are definitely worth considering.
Category: Macro Commentary
30
Apr
2012
30
Apr
2012
Trading Cocoa is Easy? Yeah, Right…
Whenever someone says that futures trading is easy, we just shake our heads. Not only are they wrong, but such advice can be downright dangerous. Take this morning’s move in cocoa prices for example: this isn’t something for the faint of heart or the ill-informed.
26
Apr
2012
Mining the Data on Miners and Metals
Owning a piece of the Gold (or Silver, or Copper) that actually gets pulled out of the ground has been a dream of investors dating back to the Gold Rush days, but does it make any sense to invest in mining company stocks to get exposure to the underlying metal? We decided to pit some mining ETFs against our favored strategy: buying the December futures contract and rolling it annually… Who will come out on top?
25
Apr
2012
Is Trend Following Back?
We feel like we spent the bulk of the first quarter writing about how managed futures was lusting after a solid trending environment, and how bad some of the trend reversals were in 2011. How delightful it is, then, to be able to change things up a little bit. Some of the trend following managers we track finally seem to be finding their groove again.
23
Apr
2012
A Greener Futures Contract?
As the global warming debate continues to heat up, our European counterparts have instituted a carbon permit system, where carbon producers will need to secure permits to cover the amount of carbon they produce each year. In an effort to allow the markets to determine pricing, it appears as though traders across the pond will have a chance to get in on the game. Does this mark the dawn of an emissions permit futures market?
20
Apr
2012
UNG- The Cautionary Tale
Every month, we publish a table that compares popular long-only commodity fund performance with the results of purchasing a December futures contract in the same commodity and rolling that contract annually. Typically, the futures contract outperforms- but this has always been most clear in Natural Gas and the UNG fund. As if you needed more convincing to stay away from those long-only funds….
19
Apr
2012
A Reversal in the Trend
We’ve never been timid with our criticism of hedge funds, which is why we’re so often frustrated by the association between hedge funds and managed futures (which we think is its own asset class). For instance, the merry-go-round of old hedge funds being liquidated and new ones being launched is a problem. Recently, however, there are signs that this trend may be slowing down – and we think this is great news.
18
Apr
2012
The (Mutual Fund) Empire Strikes Back
We’ve been longstanding critics of managed futures mutual funds, in no small part due to the mismatched regulatory structure – these funds were allowed trade futures without being subject to the rules set forth by the NFA and the CFTC. And we weren’t the only ones who saw this as a problem – the NFA caught wind of it and requested that the CFTC restore operating restrictions on registered investment companies doing futures trading. Now, the CFTC has announced it is rolling back the rule exclusion that allowed mutual funds which invest in futures to bypass registration, and the inevitable lawsuits have ensued…
13
Apr
2012
An Open Letter to Congressional Speculation Ban Proponents
Joe Kennedy recently published an article calling for a ban on all oil speculation. Senators Sanders, Blumenthal, Cardin, Franken, Klobuchar, and Bill Nelson have proposed legislation that would force the CFTC to take “emergency” action to stop “excessive speculation” in commodity markets with pressure to eliminate it altogether… within 14 days. Representative John Larsen took it a step further, publicly calling on the President to take action personally should the bill or CFTC fail. Then you have House Democrats holding a panel on the subject, where former CFTC official and law professor at the University of Maryland, Michael Greenberger, joined ranks with Gene Guilford, head of the Independent Connecticut Petroleum Marketers Association, to continue the crusade.
Blaming the speculators is back in full swing, but we’re done playing around. We’ve crafted an open letter to the folks advocating this ban in oil speculation, and while they may not like what we have to say, ignoring this is not an option.
04
Apr
2012
Asset Class Scoreboard- Q1
Well this isn’t the kind of table you like to put up on a Managed Futures Blog, but we bring you the facts, and nothing but the facts here… so even though managed futures are bringing up the rear, it’s time to update our asset class scoreboard through the end of the first Quarter.
