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Senator Carl Levin calls for regulators to block JPMorgan's (JPM) plans for an ETF backed by...

Senator Carl Levin calls for regulators to block JPMorgan's (JPM) plans for an ETF backed by physical copper, warning the move would disrupt supply and inflate prices by removing a significant quantity of copper from the market. (previously)
Comments (27)
  • 7footMoose
    , contributor
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    Another government attempt to dictate how the free market should behave. Believe me, Levin and most of the other 534 morons on Capitol hill have no idea how the Free Markets work. They will just muck up another with this proposed legislation.
    18 Jul 2012, 05:10 AM Reply Like
  • Joe Eifrid
    , contributor
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    Another attempt by JPM to dictate how the free markets should behave. Believe me, JPM and the other primary banks know exactly how to manipulate the so called "free markets". They will again muck up true free market price discovery with this ETF.
    18 Jul 2012, 08:21 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Please tell me you are being sarcastic and do not really believe that there ever was a truly "free market". If you look at history there always has been some one, some family or some cartel fixing, setting, manipulating prices. Think De Beers, De Medici, Kennedy, Rockefeller just to mention a few. I just do not want to add the US Congress to that list.
    18 Jul 2012, 08:39 AM Reply Like
  • kmi
    , contributor
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    It's not Congress that will be impeding price discovery in this instance.
    18 Jul 2012, 08:53 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Price Discovery: A method of determining the price for a specific commodity or security through basic supply and demand factors related to the market.

     

    Price discovery is achieved when you pay what you have to pay to obtain or gain control over a commodity or security. Try buying it and you will have achieved price discovery. Like it or not that is all there is to it. If others are competing for the asset the price increases and if they are not it declines.

     

    Your comment has no bearing on the discussion.
    18 Jul 2012, 09:21 AM Reply Like
  • Joe Eifrid
    , contributor
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    I would say that in this case the US congress would be added to the list if they DO go along with JPM's scheme to manipulate the price of copper further.
    18 Jul 2012, 10:05 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Do you believe that all commodity based EFTs manipulate the price or are you just opposed the JPM? The very same issues arise from gold, silver, oil, wheat, corn etc.
    18 Jul 2012, 02:46 PM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    Yes.

     

    I'll add that a lot of us use copper as a metric reflecting the real economy, for several reasons, one of which notably is its small fund presence:

     

    http://bit.ly/NzASrR

     

    Some of the commodity markets are more easily manipulated for certain reasons (coffee, sugar, oil) than others (like NG and copper).

     

    And all of this originates in the CFTC deregulating markets some 12 years ago but took off for certain reasons in the middle of the last decade.

     

    JPM is particularly interesting in its control of oil tankers and storage facilities for commodities around the world, it's loans against commodities as collateral, and its ability to manipulate supply and demand by controlling both ends and being a 'market maker' (i.e. controlling price).
    18 Jul 2012, 03:08 PM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    Sounds like Levin wants to slow the process down so he can get his broker to buy more physical copper before the ETF goes online.
    18 Jul 2012, 05:38 AM Reply Like
  • TJ Schoenlein
    , contributor
    Comments (403) | Send Message
     
    Another incredible doltish comment ... let the market decide if this is good/bad financialy.
    18 Jul 2012, 07:13 AM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    What the comments above me show is that folks don't understand that this fund by its mere existence would impact the price of copper to the upside, which is what the Senator wishes to avoid.

     

    Commodity ETFs permanently remove large quantities of the physical from the market and impact price discovery by reducing supply due to permanent 'longs'.
    18 Jul 2012, 07:43 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Yeah, so what?
    18 Jul 2012, 08:00 AM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    So consumers are harmed. A permanent price premium is put in place which increases the costs of any item using the commodity, which reduces global productivity to the detriment of pretty much everyone. Including any 'investor' in said ETF.
    18 Jul 2012, 08:36 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    I suppose you are opposed to all forms of EFT's and others that hold or control physical commodities including individuals who take physical possession of precious metals because they have the very same effect on prices and by your comment harm the consumer. By the sound of your comments it would appear that you subscribe the Administration's "fairness doctrine". It's just not fair, whatever that means.
    18 Jul 2012, 04:36 PM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    Has nothing to do with fair, has to do with market transparency and price discovery.

     

    Has to do with whether I can hedge my pricing and predict my costs. When a market participant comes in who obscures the natural functioning of the market, whoever that may be, I am harmed, and so are you.

     

    Individuals taking physical possession has nothing at all to do with this discussion. The problem I am presenting to you is that permanent longs, as viewed in ETFs, who invest in certain futures and commodity markets, do so to the detriment of consumers.

     

    Your problem is likely that you don't like Levin and feel compelled to disagree with his position regardless of what logic or your own self-interest may dictate.
    18 Jul 2012, 04:49 PM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    You made some good arguments earlier...although somewhat sounding like a mouthpiece for the big banks. This statement is ridiculous though. You cannot possibly compare an individual holding a commodity to a massive entity like JPM. The GLD controls 1,120.6 tons of gold 6th largest holding in the world and growing. In the much smaller copper market the abilty for JPM to buy its way into the top 5 holdings in the world would be easy to do. Anyone saying a top 10 holder world wide in anything whether beans bullets or nukes cannot manipulate the market is at least naive and at most laughable.
    18 Jul 2012, 06:31 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    I am sorry but I disagree. If you think it harmful for JPM to take a position in a precious metal because its holdings could affect the market price you should be concerned about any other potential acquirer who is investing in the commodity rather than buying for consumption. After all that is in fact the rationale for investing in commodities is it not, buy low and sell high, make a profit.
    19 Jul 2012, 05:11 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    I have been attempting to educate you on the idea that the "market price", that price one must pay to acquire an item, any item, is in fact your vaunted "price discovery". Buy it, anything, and what you must pay to a willing seller will reveal price.
    As for transparency, what exactly do you mean? Transparency is an oft use term which has no real meaning in the financial world. It is used in the context that, I want to know all that I want to know about your business and if you do not reveal all of those things you are not being "transparent". Bunk,
    Coca Cola is not transparent because it has not revealed its formula. Google is not transparent because it does not publish all of its algorithms. This market transparency stuff is fodder of Socialists. It has never been and it will only come about when Socialism defeats Capitalism.If you were given access to all of the information necessary to determine the value you so desperately seek from market transparency you would not be able to digest it in a timely manner anyway. You would need IBM's Big Blue and an army of accountants and even then would have to make educated judgments on so many items that you would end up with nothing of value.
    19 Jul 2012, 05:22 AM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    "I have been attempting to educate you on the idea that the "market price", that price one must pay to acquire an item, any item, is in fact your vaunted "price discovery""

     

    You don't understand futures markets or how they've changed in the last 15 years, to the detriment of consumers.
    19 Jul 2012, 08:21 AM Reply Like
  • kmi
    , contributor
    Comments (3983) | Send Message
     
    " If you think it harmful for JPM to take a position in a precious metal because its holdings could affect the market price you should be concerned about any other potential acquirer who is investing in the commodity rather than buying for consumption."

     

    Again, you don't understand how JPM is taking its positions, controlling both sides of supply and demand, and thus affecting pricing.
    19 Jul 2012, 08:23 AM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    Then respectfully we agree to disagree
    19 Jul 2012, 09:59 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    I would suggest that you do not understand how JPM acts either nor do you or I fully understand how the cost/price of commodities are affected by any of the hoarders including the individuals, EFTs or nations.
    19 Jul 2012, 08:30 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    You then do not understand that we no longer live in the world of fifteen years ago. Get over the past after all it is the past and the future is in front of us but nor for long. Soon it will be the present.
    19 Jul 2012, 08:33 PM Reply Like
  • renojon
    , contributor
    Comments (4) | Send Message
     
    Can you say SLV ?
    18 Jul 2012, 10:57 AM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    I'd be interested to know JPMs book in terms of copper before I mske any call on whether this is good or bad. That will never happen so I have to assume bad for end market consumers good for JPM.
    18 Jul 2012, 03:19 PM Reply Like
  • TwistTie
    , contributor
    Comments (2477) | Send Message
     
    Congress is trading below book value.
    18 Jul 2012, 04:56 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Congress as it is working today has no value.
    19 Jul 2012, 05:23 AM Reply Like
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