Browsing: Commodities

Commodities

The Return Characteristics of Gold Mining Stocks

Jan 3rd, 2017 | Filed under: Commodities, Commodities: Examples, Equity-linked Structured Products, Gold, Investing in Commodities, Newly Added, Structured Products

Two Maryland-based scholars have reviewed the evidence of the performance of gold mining stocks. The title of their article, which appears in the Alternative Investment Analyst Review, November 2016, puts the central question bluntly: are such stocks “more like gold or like stocks”? Let’s get the answer to that queryRead More


Commissioner Piwower and Alpha Seekers

Nov 15th, 2016 | Filed under: Commodities, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Operations, Risk Management & Operations

With a new administration in the making, thoughts in the world of asset management naturally turn to the issue of appointments to the Securities Exchange Commission and the Commodity Futures Trading Commission. Who is likely to get what position and what difference might it make? Recent practice has been thatRead More


Dakota Access and the Army Corps of Engineers: An Odd Mistake?

Nov 13th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Infrastructure, Newly Added, oil, Operationally Intensive Real Assets

On November 7, the U.S. Army Corps of Engineers put out a statement that said that the Dakota Access Pipeline (DAPL) had agreed to halt its controversial ongoing construction in North Dakota. The following day, which happens to have been Election Day, [so non-election news went largely uncovered], the ownersRead More


Massad: Where the U.S. and the World Stand on Margins & Cap Requirements

Oct 27th, 2016 | Filed under: Commodities, Finance & Economics, Forex, Investing in Commodities, Newly Added, The Global Economy & Currencies

The chair of the Commodity Futures Trading Commission, Timothy Massad, addressed the Outlook Conference of the Managed Funds Association on October 21, and spoke about the global implementation of uncleared margin rules, which he called a critical component of “the new regulatory framework for swaps trading that the leaders ofRead More


Eurekahedge: Exodus from the Event-Driven Funds YTD  

Oct 23rd, 2016 | Filed under: Allocating to A.I., Commodities, Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Relative Value Hedge Funds

The event-driven hedge fund space is the most troubled in a generally troubled time for the industry. According to the new Eurekahedge report, the event-driven strategy “has seen US$14 billion investor redemptions over the past nine months,” and $10.7 billion over just the past six months. The first nine monthsRead More


Venezuela: Thinking of Cromwell and Crude

Oct 13th, 2016 | Filed under: Commodities, Commodities: Examples, Emerging markets, Finance & Economics, Newly Added, oil, The Global Economy & Currencies

Hedge funds, among them some of those the unsympathetic call “vultures,” bought into the bonds of the Petróleo de Venezuela SA (PDVSA) early this year. PDVSA is Venezuela’s state-owned oil company, the consequence of nationalization forty years ago. Its fate turns on (a) the vagaries of post-Chavez politics in thatRead More


Eurekahedge on Outflows, Performance and Tail Risk

Sep 27th, 2016 | Filed under: Commodities, CTA, Equity Hedge Funds, Hedge Funds, Macro and Managed Futures Funds, Newly Added, Relative Value Hedge Funds

Eurekahedge, a provider of hedge fund industry news since 2001, has released its report about the state of the industry in August 2016. Among the key points: August was the fourth consecutive month of outflows. Although preliminary, the data for the month suggests a net asset outflow of $7.5 billion.Read More


Investors in Extractive Industries: Practice Your Forced Grin

Sep 15th, 2016 | Filed under: Commodities, Commodities: Examples, diamonds, Newly Added, oil

A new book comes to us this year from the Mapungubwe Institute for Strategic Reflection (MISTRA), a think tank founded in March 2011 “to create a platform for engagement around strategic issues facing South Africa.” Unsurprisingly, this report suffers from the generic weakness of books written by committee—it reads asRead More


On Aluminum and Other Metals: A Thought on Physicality 

Sep 13th, 2016 | Filed under: Business News, Commodities, Commodities: Examples, Finance & Economics, Hard metals, Investing in Commodities, Newly Added

Hong Kong Exchanges and Clearing (HKEx), the company that bought the London Metal Exchange four years ago, has further expansion plans. At a recent event on the commodity markets of East Asia, Charles Li, the CEO of HKEx, spoke on this point. Li wants to create a physical metals tradingRead More


Eurekahedge: Redemptions Exceeding New Investment for HFs Worldwide

Sep 5th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Energy, Hard metals, Hedge Funds, Newly Added, Relative Value Hedge Funds

Hedge funds have now seen three consecutive months in which redemptions have exceeded new investment, for a net outflow. The net outflow for July alone was $5.7 billion. Fortunately, July also saw performance based gains of $10.5 billion, so the total assets under management grew slightly. The table below adaptedRead More


The Shale/Fracking Revolution: 1998 to 2011

Aug 23rd, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Investing in Commodities, Newly Added, oil

A critical revolution in the crude oil and natural gas markets began 18 years ago. Gary Sernovitz, who has given the world his thoughts on this revolution in the new book The Green and the Black, has had some convenient seats whence to observe, most recently as a managing directorRead More


Headline vs. Core Inflation: We Shouldn’t Have Laughed

Aug 4th, 2016 | Filed under: Commodities, Hedge Funds, Investing in Commodities, Newly Added, Structure of the Hedge Funds Industry

I’m old enough to remember the 1970s, and to remember the economic debates in the United States at the time concerning the inflation of that era. The U.S. left the Bretton Woods system near the start of the decade, thus ushering the “free float” of currencies against one another inRead More


Volatility Spillover Effects: India, Korea, China

Jul 21st, 2016 | Filed under: Commodities, Currencies, Finance & Economics, Investing in Commodities, Newly Added, The Global Economy & Currencies

Last year, two scholars writing in the Journal of Alternative Investments looked at the volatility spillover effects in the Chinese stock index futures and spot markets.  The question for them was whether there is spillover from spot markets into futures markets and back. I propose to give you their answer,Read More


Crude Oil at Mid-Year: IEA Assessment

Jul 17th, 2016 | Filed under: Commodities, Commodities: Examples, Newly Added, oil

As this year began, crude oil prices were stuck at their lowest level in twelve years. The world seemed to be bulging with surplus of the stuff. In January, the International Energy Agency estimated that the excess of supply over demand through the first half of the year would beRead More


Factor-Based Asset Allocation

Jun 19th, 2016 | Filed under: Allocating to A.I., Alpha & Beta, Asset allocation, Asset Allocation Models, Commodities, Investing in Commodities, Newly Added, Other Topics in A.I., Smart Beta

A paper by Xiaowei Kang and Daniel Ung, published in June 2014, remains timely because risk parity and related approaches remain the center of controversy and some confusion. The Kang & Ung paper looked at three approaches to risk factor based portfolio construction, studying specifically the practical aspects of theRead More


The Case Against a Bearish Argument on Crude Oil

Jun 2nd, 2016 | Filed under: Commodities, Commodities: Examples, Newly Added, oil

  A recent Bloomberg story indicates that in a world  awash in cheap crude oil, traders are now storing the stuff at a loss, at sea, on board vessels in the Straits of Malacca. Further, they are going into debt so they can bear this loss. Citing Morgan Stanley analysts,Read More


A Review of the Commodity Index/Global Hunger Controversy

May 24th, 2016 | Filed under: CAPM / Alpha Theory, Commodities, Finance & Economics, Financial Economics Theory, Investing in Commodities, Newly Added

The consensus in market scholarship seems to be not only that “still waters run deep” but that deep waters run still. The greater the depth of volume in a commodity, the lesser the volatility of that commodity’s price. (This of course requires the usual “other things being equal” caveat.) ThisRead More


Platts Windows and Cash Settlements

May 19th, 2016 | Filed under: Commodities, Commodities: Examples, Newly Added, oil

The “Platts window,” a metaphorical structure named after the influential provider of benchmark price assessments in various energy markets, consists of the final few minutes of trading, the period in the operation of an exchange when an aggressive player can have a big effect on the closing price.  A recentRead More


Global Focus Capital: Market’s Inflationary Expectations Are Too Low

May 12th, 2016 | Filed under: Allocating to A.I., Benchmarking & Performance Attribution, Commodities, Currencies, Finance & Economics, Macroeconomics, Newly Added, The Global Economy & Currencies

Investors can get ahead of events by aligning their portfolios to “a world of lower expected capital market returns and higher forward volatility.” That, at any rate, is the upshot of a thoughtful analysis by Eric J. Wiegel of Global Focus Capital, a Boston based asset allocation advisor. Why doesRead More


Dry Bulk Shipping Recovery: Three Causes

May 5th, 2016 | Filed under: Commodities, Commodities: Examples, Equity Hedge Funds, Hard metals, Hedge Funds, Newly Added

The value of the equity of Star Bulk (SBLK) has risen since the start of the year from $0.616 to just above an even dollar per share.  This is part of a broader trend. The dry bulk shipping industry, long in free fall, may have found its bottom. This isRead More


Risk Management & the Trouble with Capacity-Driven Decisions

Apr 28th, 2016 | Filed under: Commodities, Investing in Commodities, Newly Added, Risk management, Risk Management & Operations, Risk Management Strategies & Processes

A recent CAIA member contribution by Kathryn Kaminski, director of investment strategies at Campbell & Co., discusses the quantification of CTA risk management.  It is worth a look, not least because it amounts to a warning about how underperformance can result for the re-jiggering of allocation for capacity constraints. KaminskiRead More


2016 Allocator Trends Report: Consensus and Dissension

Apr 7th, 2016 | Filed under: Commodities, Commodities, Investing in Commodities, Newly Added

Context Summits has published a detailed report on the views of those who allocate money into hedge funds. Almost everybody they talked to is in on the act. Ninety-six percent of investors expect to allocate to two or more hedge funds in 2016.  A majority (57%) were prepared to investRead More


Proposed Reg AT: Comments Pile Up at the CFTC

Mar 22nd, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Energy, Newly Added, oil, Regulatory Environment, The A.I. Industry

The CFTC received a last-minute pile-up of comments on proposed rule 80 FR 78824, on automated trading. The commenters generally are not in a mood to pat the agency on its intangible back and congratulate it on a job well done. Quite the contrary. The notice of proposed rule-making (NPRM)Read More


Wrestling with the Bifurcation of Crude Oil Pricing

Mar 13th, 2016 | Filed under: Commodities, Commodities: Examples, Newly Added, oil

Platts, the provider of physicals and futures markets prices affiliated with McGraw Hill Financial, says that it is going to launch a new price reference for Dated Brent CIF Rotterdam.  That’s not obviously a stop-the-presses moment, even for the oil markets, but it is worth a pause. The problem forRead More


FCStone Financial on Grains and Volatility

Mar 10th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Finance & Economics, Forex, Investing in Commodities, Newly Added, The Global Economy & Currencies

A new white paper written by Arlan Suderman, chief commodities economist for INTL FCStone Financial, discusses the consequence of the strong dollar of the last two years on the volatility of grain prices, focusing especially on corn. Before this period, there was the global financial crisis, and the “quantitative easing”Read More


When an allocator calls: Best Practices for a CTA’s back office

Mar 9th, 2016 | Filed under: Commodities, CTA, Hedge Funds, Investing in Commodities, Macro and Managed Futures Funds, Newly Added, The A.I. Industry

By Dana Comolli, president, DMAXX LLC Every trader who has tried to raise money knows the drill from investors: yes we want to know about your performance, but also, explain in detail your back office (infrastructure, organization). Most allocators come with pages of checklists and expect the manager to beRead More


Gold Markets Get a Leap Day Surprise from India

Mar 8th, 2016 | Filed under: Commodities, Commodities: Examples, Gold, Hard metals, Investing in Commodities, Newly Added

According to the Commodity Futures Trading Commission’s Commitment of Trader’s Report, released Friday, February 26, speculators in gold recently increased their long position by 30,350 contracts.Read More


Carry Strategies: Beyond Foreign Exchange

Feb 21st, 2016 | Filed under: Commodities, CTA, Currencies, Forex, Hedge Funds, Macro and Managed Futures Funds, Newly Added, The Global Economy & Currencies

International investors borrow money in countries where interest rates are relatively low, and then lend it out in countries where the rates are higher. All they do is “carry” the money, so to speak, from one country to the other.Read More


More about Arch Coal and the Dusty Trail Ahead

Jan 24th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Energy, Investing in Commodities, Newly Added, Other Topics in A.I., Socially responsible investing, SRI and Clean Energy

I wrote here last week about the demise of Arch Coal.  I was reminded of the incompleteness of my treatment there by the commenters on that piece, and I’ve been reminded again by subsequent developments. More then: in December 2013 Arch made a tender offer for its $600 million ofRead More


Arch Coal: Another One Bites the Coal Dust.

Jan 13th, 2016 | Filed under: Alternative energy, Commodities, Commodities, Commodities: Examples, Energy, Investing in Commodities, Newly Added, Other Topics in A.I., SRI and Clean Energy

Arch Coal, one of the biggest coal companies in The United States, entered Chapter 11 Monday morning, Jan 11. A prominent law firm, Davis Polk & Wardwell, will be taking it through the process, as will financial advisor PJT Partners. Arch (NYSE:ACI) hit its recent high stock price on AugustRead More


A Perennial Gale Hits the Coffee Industry

Jan 11th, 2016 | Filed under: Agriculture, Commodities, Commodities, Farmland, Investing in Commodities, Natural Resources and Land, Newly Added

The popularity of the drip coffee maker is in decline, or at least it has passed its peak.  In 2013. 58% of coffee drinkers had used such a coffee maker on the day before the day they were asked, that is, “yesterday.” That number was down to 54% in 2014,Read More


Commodities: Catching a Falling Knife on the High Seas

Jan 5th, 2016 | Filed under: Commodities, Commodities: Examples, Energy, Equity Hedge Funds, Hedge Funds, Newly Added, oil

The problem with a Star Bulk play or with analogous plays in the equity of dry bulk shippers is that the bottom of this bargain basement may not yet have been found. The problem behind the problem is China, which has fallen out of love with imported coal. Read More


Top Alpha Stories of 2015: Nerds Win Three, Lose Two

Dec 29th, 2015 | Filed under: Commodities, Industry Size & Managers, Investing in Commodities, Newly Added, Regulatory, Regulatory Environment, Structure of the Hedge Funds Industry, The A.I. Industry

We offer our annual review of the five top Alpha stories of the year ending, in the course of which we mention that these are exciting times in the world of basic biological/medical research. They’ve been exciting at least since the completion of the map of the human genome in 2003, when attention turned to what can be done with that map. Read More


The Hunts’ Silver Play, and Other Stories from the Recent Past

Nov 19th, 2015 | Filed under: Commodities: Examples, Hard metals, Newly Added

In January 21, 1980, the Comex board declared the Hunt silver corner an emergency, and the members voted to allow liquidation-only trading. This had its intended consequence of changing the direction of price moves, and a perhaps-unintended consequence of setting off a panic two months later. Read More


The End of the Oil Major?

Oct 21st, 2015 | Filed under: Business News, Commodities: Examples, oil

The latest industry reports indicate that oil majors’ spending on exploration and development projects will drop by at least half, casting doubt over near-term future discoveries.Read More


The Canary in the Coal Stocks and Fossil Fuel Divestment: the Portfolio You Save May Be Your Own

Sep 14th, 2015 | Filed under: Climate change, Commodities, Energy

A Wall Street analyst recommends bottom fishing in fossil fuel stocks and does an excellent job in analyzing all the market forces EXCEPT the primary one, rapidly increasing climate change. If he is typical of Wall Street expert analysis on fossil fuel stocks, be afraid. Be very afraid. Read More


CFTC Exempts ASX Clear from DCO Registration

Aug 25th, 2015 | Filed under: Alpha Hunters, Alpha Seekers, Commodities, Hedge Fund Industry Trends

The CFTC has issued its first exemption from the CDO registration mandate under 5b (h). The successful petition for that exemption, from ASX Clear, has the additional merit of having inspired an idiosyncratic seeming, but concise, comment letter, quoted in full here. Read More


Study Says The Gold Bugs are Right

Aug 23rd, 2015 | Filed under: Currencies, Forex, Gold, Hard metals, Risk management

Gold seems, to a larger extent than silver, and even more so to an extent larger than is true for palladium or platinum, to work as a true financial asset: decoupled from price developments in the commodity markets. It succeeds as a hedge against currency and stock-market trouble.Read More


Eurekahedge: The Markets are Reading the Headlines

Aug 18th, 2015 | Filed under: Alpha Seekers, Alpha Strategies, Commodities, CTA, Currencies, Hedge Fund Strategies

In the three month period that ends with July, Eurekahedge’s Greater China Index (which has 85 constituents) is down 9.39%. That has come about for precisely the reasons that a reader of the pertinent headlines would guess. Read More


Commodities & Currencies From May to August: How Much Has Changed

Aug 12th, 2015 | Filed under: Commodities, Currencies, Insolvency

What a difference a summer makes! In May of this year it was still taken for granted that the "normalization" of Federal Reserve policy and so of U.S. interest rates approached. Now, that cannot even remotely be taken for granted.Read More


Overtrading and the Danger of Pro Rata

Jul 30th, 2015 | Filed under: Algorithmic and high-frequency trading, Commodities, Currencies, Derivatives, Forex

Guest columnist Ginger Szala looks at pro rata and what happens if...Read More


Vindication for Pirrong and Irwin: Why Are Trafigura’s Profits Up?

Jun 22nd, 2015 | Filed under: Commodities, Derivatives, Indexes, Media Coverage of Hedge Funds

Trafigura has done quite well from the decline in crude oil prices in recent months. So well, in fact, as to throw a harsh light on a story that appeared in The New York Times in December 2013. Read More


House of Saud Retains Plenty of Clout

Jun 11th, 2015 | Filed under: Commodities, Macroeconomics

A measured view of the underlying reality of the world market in crude oil suggests that the price may have gone as low as the Saudis want it to go. For traders there may be little if any further gain on the downside. Read More


Are CTAs mumbo jumbo or additive for a diversified hedge fund portfolio?

Jun 9th, 2015 | Filed under: Commodities, Hedge Fund Industry Trends, Hedge Fund Strategies

Guest columnist Don Steinbrugge looks at the value of trend-following CTAs in a portfolio.Read More


Copper Prices: Why the Downslope?

May 26th, 2015 | Filed under: Commodities, Hard metals, Risk management, Technology

How long will it take before the world again sees copper at around $10,000 a ton, the going price it touched (though briefly) in early 2011? Perhaps several more years and another full business cycle. There may be a lot of down before an upturn gets us there. Read More


Some Assets are Hard to Ignore

Apr 23rd, 2015 | Filed under: Alpha Hunters, Alpha Strategies, Currencies, Gold, Hard metals, Infrastructure

Guest columnist Diane Harrison looks at the world of alternatives to alternatives, including stamps, cars, farmland and more...Read More


Down Memory Lane: That WTI-Brent Divergence

Feb 18th, 2015 | Filed under: Commodities, Infrastructure, oil

For one professor, the surprising divergence in the prices of WTI/Brent crude in the period 2010-2012 was a case study in how commodity prices can teach us about supply chain conditions. Faille looks back at his article, and forward past today's calmer but still-fluctuating spread. Read More


ECB Beats SNB in race for the Bottom

Jan 19th, 2015 | Filed under: Algorithmic and high-frequency trading, Commodities, Currencies

An SNB announcement caused wild market moves Jan. 15th, not only in Forex but in commodity and equity prices as well. In the wake of the commotion, one key question has to be: why the announcement? Why this sudden change in the policy of Switzerland's central bankers? Read More


Top 5 Alpha Stories of 2014

Dec 30th, 2014 | Filed under: Alpha Hunters, Commodities, Emerging markets

In the middle of the year now ending, the U.S. Supreme Court delivered as complete a victory as it could manage to the hold-out bondholders in the Argentine-default dispute. Enforcement efforts plod on, and it seems likely a related story could make our top five list next year, too. Read More


Case study: Straits gives managed futures a facelift

Dec 18th, 2014 | Filed under: Commodities, Retail Investing

As alternative investments become more mainstream, managers who traditionally have operated in the alternatives arena face a number of questions, including what is the right offering, the proper structure and how do we market the new vehicle. Guest columnist Ginger Szala examines the thought processes of one group as they made the leap to retailization.Read More