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"People need to study their facts" before criticizing speculators, CME chairman Terry Duffy says...

"People need to study their facts" before criticizing speculators, CME chairman Terry Duffy says in response to Pres. Obama's blaming traders for driving fuel prices higher. Speculators provide vital liquidity to markets: "When the Dow goes above 13,000, Google goes above $600/share and everybody celebrates, who do you think did that? The U.S. equity market is 100% speculators."
Comments (15)
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    heh

     

    So true.

     

    But let's not let that get in the way of Washington's bread-n-circus shall we?

     

    When Rome burns, Obama will be caught holding the gas can.
    2 May 2012, 02:29 PM Reply Like
  • westcoastinvests
    , contributor
    Comments (46) | Send Message
     
    Very true been saying it for years the governement encourages stock speculation while deeming all other speculation as evil. It makes no sense, but it's all they can do to try and fix things.
    2 May 2012, 02:33 PM Reply Like
  • LonW
    , contributor
    Comments (164) | Send Message
     
    I am voting for ABO. ABO= Anybody But Obama
    2 May 2012, 02:35 PM Reply Like
  • StockTrader7
    , contributor
    Comments (22) | Send Message
     
    LonW, I'm with you on the ABO. But if BO gets another term, short-sellers with a focused appetite & adequate time-horizon will make a fortune. I am starting my research now just in case.
    2 May 2012, 02:52 PM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    Sorry pal, but I wasn't celebrating when GOOG went to $600 or the DOW to 13,000. In fact, I was rather disgusted that it cost over $5 trillion of FED induced national debt pawned off on my children to juice the market. Now what do we have but another bubble, and no fix of the underlying structural problems.

     

    Anyone with half a brain understands the liquidity argument (HFT's anyone) is pure rubbish. Commodity prices are unstable (up or down) because the traders profit from the volatility- by design that's what they do. Take out the speculation and you will still have a market because commodities are a "must have" for both industrials and consumers, unlike Iphones and Androids.
    2 May 2012, 02:40 PM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
     
    Obama's Nobel Prize was definately not in economics. But as long as the media does not call him on it, he will continue to spew it.
    2 May 2012, 02:47 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    So, it's OK if FED speculation drives the market up, but not ok in commodities, because commodity speculation drives up the necessary consumer items needed to survive, as a direct result of the FED's speculation in the first place.

     

    Got it..

     

    There, verification one can literally screw one's self in the ass.
    2 May 2012, 02:48 PM Reply Like
  • zubikov
    , contributor
    Comments (99) | Send Message
     
    When crude hit $35 in the 08/09 financial markets collapse, who do you think did that? There wasn't a 75% fall in demand, nobody forecasted the demand to decline 75% in the future, why did crude prices drop 75% from the peak? It was all the fluff that was suddenly taken out of the futures market.

     

    Speculators make markets more liquid, so shorting and leverage are generally ok given adequate transparency and capital requirements, but to a point. GDP, consumer spending and almost every facet of our economy including to the goods and services we export are dramatically correlated to oil prices. So it is actually in everyone's best interest to restrict rampant speculation in crude oil (except for the speculators, energy firms and oil producers, of course)

     

    The real question isn't whether oil prices are higher due to speculation; they are. The question is, are artificial barriers in US commodity markets a viable way to fend off excessive speculation without suffering tremendous negative consequences? Negative consequences include: outside futures exchanges picking up the slack, pissing off energy/commodities firms world wide, threat of losing energy jobs in the US, etc.
    2 May 2012, 02:53 PM Reply Like
  • Snoball
    , contributor
    Comments (21) | Send Message
     
    I'd love a definition of excessive speculation. And...who's the speculator, the guy selling futures on the way up ( and losing money in the process) or the buyer?
    If it were so easy speculating to wealth, why would speculators ever let the prices come down? This is more an issue of human folly than excessive speculation and the obvious truth is reflected in no outcry when prices fall.
    2 May 2012, 03:08 PM Reply Like
  • WMARKW
    , contributor
    Comments (10447) | Send Message
     
    CME = Criminal Manipulating Enterprise

     

    There's some "facts" for you !
    2 May 2012, 04:11 PM Reply Like
  • Andrew Williams
    , contributor
    Comments (241) | Send Message
     
    Trillion $ deficits as far as one can see . . . $2.3 trillion in QE already and counting . . . and the president wants to blame rising commodity prices on speculators
    2 May 2012, 07:36 PM Reply Like
  • kmi
    , contributor
    Comments (4035) | Send Message
     
    Traders are not the right target that may be true but to claim speculators haven't unhinged commodity markets is more than slightly disingenuous.

     

    The energy markets have been messed up for a decade and the current price of a barrel of oil is completely obfuscated because supply-demand and price discovery aren't allowed to function normally.

     

    A good essay on the subject appeared recently on FT:

     

    http://on.ft.com/K4goHR

     

    But there's tons of places to get info if one cared to, instead of shooting cute soundbite comments:

     

    http://bit.ly/KwX4Ao

     

    http://aol.it/K4gqQ0

     

    http://onforb.es/KwX4Ar

     

    It goes on and on...

     

    "Investors" holding long-only positions in energy and permanently removing product from the market as a result are not 'providing liquidity.' Commodities are not like stocks: They are not capital creation tools. In the end, all commodities are a zero-sum game. Any money that traders make in the trading of commodities necessarily must come out of the pockets of someone else.

     

    This is likely why you now have banks/speculators getting into the refinery business. They take all that crude they hold for their client-investors, sell it at today's price to the refinery, and make money on borrowed oil. The Delta deal makes a lot of sense in this context.
    3 May 2012, 10:32 AM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    Bernanke is on record stating not allowing speculation in 1928 and 1929 was a "policy error".

     

    Might want to get used to it. This is a forward looking gambling casino, nothing more, nothing less.

     

    If you don't have a FED PUT, now is the time.
    3 May 2012, 11:13 AM Reply Like
  • kmi
    , contributor
    Comments (4035) | Send Message
     
    Knowing what it is doesn't stop me from making money in it. What offends me is folks who -don't- recognize it for what it is quipping that Obama is somehow wrong. He's not, and he can't fix things, those are both facts.

     

    Also, this commodities market is not the same one as 1928 and 1929s. Price discovery and hedging - the origin of the CFTC - has taken a back seat to speculation, long term investment, and rampant abuse.
    3 May 2012, 11:23 AM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    As long as the FED exists, there will be speculation. Always has and always will be until there is no more FED.
    3 May 2012, 12:06 PM Reply Like
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