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Reading the Term Structure
Natural gas prices have been rising recently. But I always like to look at the whole term structure of futures prices to get a better sense of what is really going on. My colleagues at CRA, Billy...
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With a hedge, could Conoco have it all?
Liam Denning’s Heard on the Street column in this morning’s Wall Street Journal is reliably hard-nosed about budget trade-offs: Investors want it all—but they should be careful about companies that...
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Is wholesale power trading as profitable a line of business as they say?
Gregory Meyer, in today’s Financial Times, reports that banks are scaling back their trading in U.S. wholesale electric power markets. In his companion article, he quotes me saying that The banks had...
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Futurization wheat and chaff
Finally, a journalist has located a real cost of futurization, as opposed to the many imagined ones.
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Crude oil basis risk is receding… for now.
Companies that hedge oil prices have been forced to reevaluate their strategies over the last couple of years. Many companies have used the NYMEX WTI contract, one of the oldest energy futures...
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Dynamic Hedging or Futile Speculation?
Chesapeake still thinks it can time the market. On Tuesday management held its Conference Call to update to investors and stock analysts. Steve Dixon, the acting CEO, said “We’ve also taken advantage...
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Gold’s Random Walk
A number of journalists are helping to broadcast Goldman Sachs’ latest prediction for gold prices. Goldman’s press agents planted the story in the Wall Street Journal, the Financial Times and the New...
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Smooth Talk About Gold
Bruce Bartlett used his New York Times Economix blog post today to argue that “Gold’s Declining Price Is a Reversion to the Mean”. He buttresses his argument by pointing out that, In a recent paper,...
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Backwardation in Gold Prices?
Izabella Kaminska at FT Alphaville clarifies what’s going on.
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Be careful how you swing that hatchet!
During last year’s debate about the Volcker Rule, Morgan Stanley commissioned a study by the consulting firm IHS that predicted dire consequences for the U.S. economy. I called the study a hatchet...
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Riddle or Ridicule? Reprise or Rehash?
One of my husband’s many incisive stories from his career as an educator reports on an incident in the teachers’ lounge at a high school after an exam. In comes one of the more senior teachers, griping...
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American Airlines Stops Hedging
On its quarterly earnings call earlier this week, the new American Airlines confirmed speculation that it would end the company’s legacy policy of hedging jet fuel prices. The hedges that are in place...
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Unhedged. …oooops.
What happens when you sell your customers power at a fixed price, and you buy your power at a floating price? A local DC green electricity marketer, Clean-Currents, found out as last month’s frigid...
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Never give information to the enemy.
Douwe Miedema of Reuters covered yesterday’s meeting of the CFTC’s Technology Advisory Committee and reports that: The U.S. derivatives watchdog on Monday chided the industry for providing gappy data...
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It takes 2 to tango, and 3 to intermediate.
The Wall Street Journal ran a story last week about Citigroup and Deutsche losing money on the oil hedge they sold to Mexico. The article talks of a loss totaling $5 million on a put sold for a premium...
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