Thursday, November 16, 2006

A Few Insights From the Futures Trading Summit

It's been a great Futures Trading Summit so far. I'm writing from Las Vegas after day one of the two-day event. Here are a few tidbits of interest:

* From Yra Harris, currency trader and analyst: We didn't see an antiwar election; we saw an anti-globalization election. This dynamic greatly affected races in Ohio, Michigan, and Pennsylvania--areas in which the electorate perceives a loss of jobs due to globalization. This could easily lead to a greater push for protectionism, which would be fatal to global markets.

* Also from Yra: Europe is suffering from the Yen carry trade, which exploits low Japanese rates and high European rates by borrowing Yen and buying the Euro. Watch for a shift in reserves, whereby Europe decides to add Yen in greater proportion to its mix. That would boost the Yen and wipe out the carry trade, carrying many markets with it.

* Dominic Chirichella, energy trader/analyst: China now accounts for 12% of energy consumption, second only to the U.S. If per capita energy consumption in China reached U.S. levels, China would require all the world's oil production for its needs. This will keep a bid under energy for as long as China is expanding.

* Braden Janowski, automated systems developer and trader: The goal of most automated trading systems is to place a "tax" on all your trades. When you enter positions at the market, you get a price that is out of line vis a vis correlated markets, providing a spreading opportunity for the black boxes. Over many trades, this tax adds up.

* Philip Klapwijk, metals analyst: Silver has followed gold, supported by the great success of the silver ETF. But the fundamentals for silver are worse than for gold, due to lower industrial demand. Fundamentally, silver is a $6-7 metal.

Of course, there have been many trading ideas/patterns provided as well, and more will come today. Good people, good show. I'll post some highlights from today late in the day tomorrow.