Month: March 2014

Mt. Gox, the struggling Japanese bitcoin exchange, has filed for bankruptcy protection in a U.S. court to stop customers from freezing any of the company’s assets that are located on U.S. soil. Lawyers put MtGox into Chapter 15 protection in Texas on Sunday, stating that a potential class-action lawsuit in Illinois could get in the way of reorganization efforts that are taking place in the company’s home country.

The yen typically strengthens in times of crisis, but with Japan’s finances looking more strained and authorities bent on yen weakness, have the usual patterns broken down? Yonggi Kang reports.

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Large Speculator bullish bets decline to $11.60 billion on March 4th

The latest data for the weekly Commitments of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and futures speculators decreased their bullish position of the US dollar for a fourth straight week and to a new lowest level since November 2013.

Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, had an overall US dollar long position totaling $11.60 billion as of Tuesday March 4th, according to data from Reuters. This was a weekly change of -$2.17 billion from the $13.77 billion total bullish position that was registered on February 25th, according to the calculations by Reuters that totals the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

The US dollar aggregate position is now at the lowest level since November 5th 2013 when the overall bullish position totaled $7.02 billion.

Net Contract Standings for the week:

Individual Currencies – Large Speculator Weekly changes:

The non-commercial net positions for each of the individual currencies directly against the US dollar showed weekly gains for the euro, British pound sterling, Japanese yen, Swiss franc, New Zealand dollar and the Mexican peso while there were weekly declines for the Canadian dollar and the Australian dollar. See charts & data below.

Individual Currency Charts: Large & Small Speculator Positions vs Spot Price

EuroFX:

Last Six Weeks data for EuroFX futures

British Pound Sterling:

Last Six Weeks data for Pound Sterling futures

Japanese Yen:

Last Six Weeks data for Yen Futures

Swiss Franc:

Last Six Weeks data for Franc futures

Canadian Dollar:

Last Six Weeks data for Canadian dollar futures

Australian Dollar:

Last Six Weeks data for Australian dollar futures

New Zealand Dollar:

Last Six Weeks data for New Zealand dollar futures

Mexican Peso:

Last Six Weeks data for Mexican Peso futures

*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.

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Weekly CFTC Net Speculator Report

Large Speculators bearish positions increased sharply last week

10 Year Treasuries: Large futures market traders sharply increased their overall bearish bets in the 10-year treasury note futures last week after two weeks of declining bearish positions, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of the 10-year treasury notes, traded by large speculators and hedge funds, totaled a net position of -101,370 contracts in the data reported for March 4th. This was a change of -88,403 contracts from the previous week’s total of -12,967 net contracts that was registered on February 25th.

This latest jump in bearish positions brings net contracts of the 10-year note to the highest level since February 11th when contracts were at -142,533 positions. Declines in bearish positions the previous two weeks had brought net contracts to their lowest level since July 2013 before last week’s turnaround.

Over the same reporting time-frame, from Tuesday February 25th to Tuesday March 4th, the yield on the 10-Year treasury note notched the same level at a yield of 2.70, according to data from the United States Treasury Department.

Last 6 Weeks of Large Trader Non-Commercial Positions

*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

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Weekly CFTC Net Speculator Report

VIX Futures Contracts: Large traders and speculators raised their bearish bets in the VIX futures market last week for a second consecutive week, according to the latest data from the Commodity Futures Trading Commission (CFTC) released on Friday.

The VIX non-commercial futures contracts, reflecting large speculator and hedge fund positions, totaled a net position of -20,446 contracts in the data reported for March 4th. This was a change of -4,408 contracts from the previous week’s total of -16,038 net contracts that was registered on February 25th.

Net non-commercial positions, on March 4th, registered their highest bearish level since February 11th when positions equaled -41,108 contracts.

The VIX index, meanwhile, edged slightly higher from 13.67 on Tuesday February 25th to a 14.10 reading on Tuesday March 4th, according to the Chicago Board Options Exchange (CBOE) Volatility Index.

Last 6 Weeks of Large Trader Positions

*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

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Last Week’s Recap & Notable Data Points:

Last week, the market saw a busy week topped off by the better than expected US jobs report following two disappointing jobs numbers in a row. The US nonfarm payrolls report recorded a gain of 175,000 jobs in February while the unemployment rate ticked up to 6.7% from 6.6% for the month. The jobs report beat expectations of a 150,000 jobs gain that was forecasted.

The US dollar had a  mixed week in trading with gains against the Japanese yen and Canadian dollar while declines were seen against the euro, Swiss franc, Australian dollar and the New Zealand dollar. The USD was virtually unchanged against the British pound sterling. See last week’s economic results below.

Here are the major economic results from last week:

• US ISM manufacturing rose to 53.2 score
• China non-manufacturing PMI advanced to a 55.0 score
• Australia maintained interest rate at 2.50%
• Australian GDP beat expectations with a 2.8% annual gain
• Eurozone GDP fourth quarter showed 0.5% gain
• Canada maintained interest rate at 1.0%
• US ISM nonmanufacturing fell to 51.6 reading
• United Kingdom interest rate stayed at 0.5%
• Euro zone interest rate maintained a 0.25%
• Canada employment fell by 7,000 workers in February, unemployment rate stayed at 7.0%
• US employment rose by 175,000 workers
• US unemployment rate rose to 6.7%

This Week’s Outlook: Australian Jobs Growth, NZD Interest Rate Decision, US Retail Sales Data

This week is a much less busy week on the economic data front than last week although any new developments in the Ukraine/Russia crisis will likely have a bearing on the markets. Early in the week, we have Chinese data in the form of the consumer price index and producer price index while the Japanese GDP data for the fourth quarter is to be released.

Tuesday we will see the United Kingdom manufacturing production data while from the Eurozone, we will see Germany’s trade balance. On Wednesday, the Eurozone industrial production data and the United Kingdom trade balance will be released as well as New Zealand announcing their latest interest rate decision.

Thursday will have the Australian employment data, China’s industrial production in the United States advanced retail sales for February. Friday’s important it will be the United States University of Michigan consumer confidence survey.

Here’s a quick rundown of this week’s major economic highlights:

Monday, March 10
Japan — GDP report fourth-quarter
China — new yuan loans
Switzerland — retail sales
Canada — housing starts

Tuesday, March 11
United Kingdom — manufacturing production
Eurozone — Germany trade balance

Wednesday, March 12
Eurozone — industrial production
United Kingdom — trade balance
New Zealand — interest rate bank decision

Thursday, March 13
Australia — employment change/unemployment rate
China — industrial production
United States — advance retail sales
United States — weekly jobless claims

Friday, March 14
Japan — BOJ meeting minutes
United States — University of Michigan confidence survey

Please see our full calendar for a complete listing of economic events.

With IRS examinations of captive insurance arrangements on the rise, the time is now for people to revisit their captive insurance arrangement or ask targeted questions to your provider about past and proposed captive insurance transactions. Captive insurance is a very powerful tool in insuring against business risks. In a successful captive scenario, an IRC §162 deduction is available for insurance premiums paid by the insuring business and up to $1.2 million of the captive insurance company’s earnings may escape taxation.

Steve Jobs was once asked at an Apple shareholder meeting by a shareholder who wanted get some insights into his deepest thinking: “What keeps you awake at night?” Mr. Jobs replied, “Shareholder meetings.” The wisdom of this insight was borne out last week when Mr. Jobs’s successor at Apple, Tim Cook, was asked at the annual shareholder meeting by the NCPPR, the conservative finance group, to disclose the costs of Apple’s energy sustainability programs, and make a commitment to doing only those things that were profitable. Cook replied “When we work on making our devices accessible by the blind, I don’t consider the bloody ROI. We want to leave the world better than we found it.”

Bank of England Gov. Mark Carney goes before U.K. members of parliament at a treasury select committee next week and can expect questions on both the bank’s latest inflation report and the current forex probe. Euro-zone finance ministers also meet to agree a way forward on the region’s bank-failure mechanisms.

Federal Bank of New York President William Dudley tells WSJ Chief Economics Correspondent John Hilsenrath what he calls a “fundamental problem” with macroeconomists’ lack of incorporating the financial sector into their economic outlook.