Difference Between A Hedge

Extreme strain in the global economy has given way to something less hair-raising. So does the last investor in "safe-haven" gold, switch out the lights? After a storming start to 2012, bullion prices have lost some of their luster in recent weeks in line with a reassessment of global economic health. Jumbo-sized liquidity taps are off in Europe, while the jury is out on a further round of U.S. quantitative easing. U.S. data shows a slightly improved trajectory, with employment numbers and consumer credit growth highlighted in a key year for President Barack Obama. Treasury yields reflected that, breaking out of the doldrums and raising potential for tighter policy down the road. Given that backdrop it is no surprise that gold has retraced since touching a record $1,920.30 an ounce in ...

Blythe Masters, JPMorgan's global head of commodities, has steered the bank's expanded franchise to record revenues exceeding $2.8 billion in 2011, more than long-time industry leaders Goldman Sachs and Morgan Stanley, the three banks' data showed this week. The more than threefold surge in revenues marks a dramatic turnaround for British-born Masters, one of the top female executives on Wall Street, who came under pressure in 2010 as revenues fell following the acquisition of RBS Sempra's large metals and energy trading desks, according to sources and company data. By contrast, Wall Street's commodity trading pioneers have stumbled, with Morgan Stanley's revenues shrinking for a third consecutive year -- the worst streak since at least 1995 -- and Goldman Sachs commodity unit J. Aron is ...

(Reuters) - Blythe Masters, JPMorgan's global head of commodities, has steered the bank's expanded franchise to record revenues exceeding $2.8 billion in 2011, more than long-time industry leaders Goldman Sachs and Morgan Stanley, the three banks' data showed this week. The more than threefold surge in revenues marks a dramatic turnaround for British-born Masters, one of the top female executives on Wall Street, who came under pressure in 2010 as revenues fell following the acquisition of RBS Sempra's large metals and energy trading desks, according to sources and company data. By contrast, Wall Street's commodity trading pioneers have stumbled, with Morgan Stanley's revenues shrinking for a third consecutive year -- the worst streak since at least 1995 -- and Goldman Sachs commodity ...

(Reuters) - Gold prices fell on Thursday, as technical selling and nagging worries about euro zone debt extinguished a rally that began after Greece agreed to fiscal austerity measures. Losses accelerated after bullion failed to breach 1,750 an ounce, its early December highs and an area of technical resistance in each of the last three sessions. Analysts said a lack of concrete steps to avert a ruinous Greek default and economic uncertainty in major euro zone economies could keep pressure on bullion prices. "We remain somewhat cautious on the precious metals group here, as we could see a 'buy the rumor, sell the news' type of reaction in the wake of the culmination of the Greek talks," said Edward Meir, metals analyst at INTL FCStone. Spot gold was down 0.3 percent at $1,728.84 an ...

New York Times writer, Steven M. Davidoff, recently dubbed the Federal Reserve, “the most successful hedge fund around.” After reading the article, we concluded that Mr. Davidoff is the most creative financial writer around. As such, Mr. Davidoff may be the perfect apologist for today’s dysfunctional monetary “system.” Certainly, he possesses the cerebral alacrity to dodge whatever cold, hard facts may be standing in the way of a good story. “I call the Fed a hedge fund,” Davidoff cheerily explains, “because it is operating like one, leveraging its balance sheet to earn huge profits.” We might have been able to embrace Davidoff’s analysis were it not for one nettlesome fact: the Fed is absolutely nothing like a hedge fund. The Fed is, instead, more like a crime syndicate — a racketeer ...

(Reuters) - Brent crude's premium to U.S. oil could be poised for another record run after jumping 50 percent over the past week, as an expected build in Midwest inventories again exerts pressure on the U.S. benchmark. The Brent-WTI spread, which measures the difference between London-based Brent and the U.S. benchmark West Texas Intermediate (WTI), has jumped past $19, up sharply from near $12 at the start of last week. With U.S. refiners starting seasonal maintenance just as a major pipeline starts carrying more crude, traders said the oil glut in the U.S. Midwest that helped drive last year's record spread was back on their radar. That should widen the discount between what refiners pay for oil around the WTI delivery point of Cushing, Oklahoma, compared with the price paid by ...

(Reuters) - Clearing houses -- the plumbers of high finance -- could become the next casualties of the crisis as regulators insist that banks run their riskiest and private trades through them. At the moment banks conduct over-the-counter trades between themselves: one to one dealings often involving multimillion-euro bets on differences in interest or other rates, the scale and complexity of which can be difficult to track. But with the financial crisis still raging and banks, hedge funds and governments alike faced with unforeseen levels of debt, regulators are now forcing this shadowy, $600-trillion industry into the light. The question being asked by industry insiders is whether the clearing houses, also known as central counterparties (CCPs), are any more secure. "What happens if ...

(Reuters) - Risk-averse investors stuck to a high level of cash holdings in December as they prepare for slow growth next year and a potential euro zone breakup, a closely watched Bank of America Merrill Lynch survey showed on Tuesday. A break-up of the euro zone involving a country possibly leaving the single-currency bloc and a U.S. sovereign debt downgrade remained the top concerns for investors going into 2012. The monthly global fund managers' survey from Bank of America-Merrill Lynch showed a net 35 percent of fund managers were overweight cash, down from 38 percent in November but still a high reading. The index reading shows the difference between overweight and underweight positions. "It's pretty grim. We end the year with investors holding lots of cash, expecting low growth ...

(Reuters) - A euro zone breakup would be a once-in-a-lifetime shock sowing unprecedented financial chaos but investors seeking to protect against the threat are acting in prosaic fashion, looking to the traditional havens of gold or U.S. Treasuries. Buying equity volatility or derivatives on non-euro currencies may look like tempting strategies to protect portfolios from the whirlwind that would surround any fracturing of the 12-year-old single currency. But concern about liquidity, which determines the ability to get in and out of securities quickly, counterparty risks in a period where financial firms would be under great stress, and the sky-high cost of insurance mean many asset managers are keen to stick to more orthodox hedging products. "You can imagine the effect of an EMU ...