Who's Afraid of French Socialists (Source: CME)
By CME Group - Mon Jun 11 17:00:00 CDT 2012 CT
Shifting Investor Attitudes toward Gold, Silver, and Regulation
On Sunday 6 May the French people elected Francois Hollande, a Socialist, as President of France. On that same day Greek voters marginalized the previous two largest political parties, giving more votes to two parties that previously were marginalized and sending a signal that they too were disgruntled with recent trends in governance, both in Greece and in Europe more broadly. There were those who saw this as a terrible blow against the austerity programs being imposed across the European Union, and thus as a major obstacle to economic reconstruction on the continent. Indeed it is. It is not, necessarily, a turning against real economic reform. It most likely reflects the strong, multi-generational concept toward a social contract between the governments of Europe and their populations, a contract that in fact has its roots in the centuries of feudal governance and social structure. However, it also may be nothing more than a very rational reaction to premature austerity in the midst of recession, a rejection in Europe of the very policies that turned a deep recession into the Great Depression in Europe and the United States in the early 1930s, which led inevitably to World War Two.
Hot Rolled Futures & Commodity Derivatives: Hedging vs. Speculating (Source: CME)
By Steel Market Update - Mon Jun 11 16:43:00 CDT 2012 CT
Ingrained Volatility Led to Development of Financial Derivative Instruments
Recently the trading of commodity derivatives has made news, particularly in regards to a how Chesapeake Energy used derivatives to both hedge and speculate in energy markets. As is often the case when discussion of derivatives comes up, many misconceptions arise. It must be noted that the use of commodities derivatives for both hedging and speculative purposes has been around for hundreds of years and is an ingrained tool of doing business in many commodities markets. The rise of derivatives markets originally gained footing in the US in the 1800s when farmers were looking for ways to protect themselves from the volatile swings in prices that weather related events had on their crops. This ingrained volatility in agricultural markets led to the development of financial derivative instruments that allowed users of the underlying market (farmers, consumers) to offset their risk onto speculators who took on the price risk. This symbiotic relationship between those who have natural exposure to price risk due to their underlying business and those who are looking to gain exposure to volatile price movement’s lead to the development of commodity futures exchanges such as the Chicago Board of trade, NY Board of trade etc…
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