Before You Invest Your Money

Crude Palm Oil Futures

Before You Invest — Thu, 18 Mar 2010 04:14:00 +0000

CRUDE PALM OIL FUTURES
Coming in May 2010 to CME Group

Palm oil is the world’s most consumed edible oil. The main producers of the oil are Malaysia and Indonesia. The main consumers are India and China. Palm oil serves as a cooking oil but is also used to make soap, washing powders and biodiesel. Soon, CME will offer a cash-settled, US dollar-denominated futures contract on Globex.

Final cash settlement will be based on the Bursa Malaysia Derivatives Berhad Crude Palm Oil futures contract (the global benchmark for crude palm oil).

In addition to outright long and short positions, this new contract will offer new spread trading opportunities againt the CBOT’s soybean oil futures contract. Here’s a chart of the historic price relationship between Soybean Oil futures and Palm Oil futures.

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VIX Doesn’t Work as Signal for Stocks

Before You Invest — Thu, 18 Mar 2010 02:08:00 +0000

(Bloomberg) — Investors looking for clues about the U.S. stock market should probably ignore the Chicago Board Options Exchange Volatility Index, according to a study of the VIX by Birinyi Associates Inc.

Speculation that equity returns will be positive after the volatility gauge decreases and negative when it climbs has little basis in fact, Birinyi said. The VIX provides a summary of historical price swings and tends to move in lockstep with equities instead of forecasting their direction, the firm found.

“The VIX is alleged to be an indicative indicator and has become a staple of analysts and journalists alike,” Laszlo Birinyi and analyst Kevin Pleines wrote in a report to clients yesterday. “We respectfully disagree and ultimately conclude it is a measure of current volatility with little or no predictive or indicative value regarding the course of the market.”

The Standard & Poor’s 500 Index gained an average 0.1 percent in the month after the VIX slipped 20 percent below its 50-day mean on 12 occasions since 2003, according to data compiled by Birinyi. Stocks were 0.5 percent lower after two months and 3.3 percent higher after three, the data showed. When the VIX climbed 20 percent above its 50-day average on 18 occasions, equities increased after one, two and three months, then dropped after six, the study found.

Coincidental Indicator

“The VIX is a coincidental indicator,” Birinyi wrote. “It details, perhaps better than other measures, the volatility of the market today but not tomorrow or the day after.”

Traders use the VIX as a gauge of investor fear because it’s derived from the cost of options that insure against losses in the S&P 500. The research by Birinyi Associates in Westport, Connecticut, shows the VIX may work as a contrarian indicator, signaling investors should buy shares when it rises, though the correlation breaks down after three months.

Using the index to show when surging levels of concern may give way to rallies is a conventional tactic in securities markets, according to David Darst, the New York-based chief investment strategist at Morgan Stanley Smith Barney, which has $1.6 trillion in client assets.

“There’s this famous phrase on the floor of the CBOE: When the VIX is high it’s time to buy, and when the VIX is low it’s time to go slow,” Darst said in a telephone interview. “That’s been a famous trader’s rallying cry for years and years.”

Two-Year Low

The VIX fell 18 percent this year to 17.69 through yesterday, and slipped 5.3 percent to 16.75 as of 11:14 a.m. in New York today, the lowest level since May 2008. That’s below the average reading of 20.3 during the measure’s two-decade history. Options are derivatives that give the right to buy or sell assets at a set price by a specific date.

The S&P 500 has increased 4.5 percent in 2010 and is up 72 percent since declining to a 12-year low on March 9, 2009. The VIX has retreated 66 percent during the rally, according to data compiled by Bloomberg.

The index is supposed to gauge investor expectations for market swings over the next 30 days using a formula that incorporates implied volatility, a key measure of options prices, for S&P 500 Index puts and calls that are one or two months from expiration. Puts give owners the right to sell an underlying security, and calls convey the right to buy.

“I wouldn’t use it as a prospective forward-looking tool simply because the market is inherently unpredictable,” said John Carey, a Boston-based money manager at Pioneer Investment Management, which oversees more than $200 billion. “I look at the VIX and some of those other charts from time to time. It’s certainly one of a number of measures of market mentality and market emotion.”

Birinyi, a research and money-management firm that oversees about $300 million, analyzed the VIX’s performance since September 2003, including six periods of “extreme” volatility. The following is a table of the S&P 500’s average gain or loss during periods after implied volatility climbed above or fell below the 50-day average:

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Cotton ‘Too Cheap’ to Draw Significant New Acreage

Before You Invest — Thu, 18 Mar 2010 02:05:00 +0000

(Bloomberg) — The global cotton market will remain tight through the next crop season as futures prices are too low to induce farmers to significantly boost the area that they devote to the fiber, Olam International Ltd. said.

The December contract needs to rise to about 85 cents a pound to attract the planting needed to produce a surplus big enough to replenish stockpiles, said Cliff White, senior vice president at Olam, one the world’s three biggest cotton traders. December cotton ended at 75.07 cents in New York yesterday.

The global cotton market has been in deficit since 2006, according to the Department of Agriculture in the United States, the world’s biggest exporter. Prices may remain “high” from May to June as the next U.S. crop is planted, said White.

“The December price is too cheap for the new crop to attract significant acreage,” he said in a phone interview from Richardson, Texas. White is also the president of the International Cotton Association, which groups more than 300 producers, buyers and traders.

The most-actively traded contract on ICE Futures U.S. has surged 90 percent over the past year as the global economy moved out of recession, and the May contract traded today at 81.45 cents a pound. Futures touched a two-year high of 84.6 cents on March 1 on growing demand from mills.

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Miami lawyer who orchestrated a $1.2 billion Ponzi scheme helped federal agents nab a reputed Italian mafia figure living in Florida

Before You Invest — Wed, 17 Mar 2010 11:32:00 +0000

Miami lawyer who orchestrated a $1.2 billion Ponzi scheme helped federal agents nab a reputed Italian mafia figure living in Florida, authorities said.Scott Rothstein, 47, set up Roberto Settineri, who is wanted on organized crime charges in Palermo, Italy, The Miami Herald reported Tuesday.Settineri, 41, was arrested last week at his home in Miami Beach.Wearing a wire that linked him to federal agents, Rothstein allegedly talked Settineri into destroying two boxes of documents and laundering $79,000 from Rothstein’s investment scheme, a source close to the case told the Herald.”He knew Settineri. He was able to chat up Settineri,” the source said, speaking on the condition of anonymity.Settineri allegedly has ties to the Palermo crime family and the Gambino mob family in New York.Rothstein’s cooperation could enable him to receive special protection inside a federal prison when he is sentenced May 6 for fraud and money launderingMarc Nurik, Rothstein’s lawyer, could not be reached for comment and Settineri’s lawyer, Jeffrey Weiner, declined to comment.

Miami lawyer who orchestrated a $1.2 billion Ponzi scheme helped federal agents nab a reputed Italian mafia figure living in Florida is a post from: Before You Invest Your Money

This Day in Wall Street History 1915: FTC is founded

Before You Invest — Wed, 17 Mar 2010 01:32:00 +0000

President Woodrow Wilson’s first two years in the Oval Office were marked by a whirlwind of activity: the reform-minded former governor of New Jersey pushed an armload of programs through the legislative chain. One such initiative was the Federal Trade Commission (FTC), which, after being devised in 1914, officially began its operations on this day in 1915. Officially charged with curbing corporate actions that blocked competition and the free flow of international trade, the FTC also served to strengthen the ties between business and government. Not only did the agency aid exporters by keeping tabs on tariffs, it also threw its weight behind legislation that would sanction monopolies and trusts in the field of foreign trade. As some historians have noted, the FTC fulfilled Wilson’s vision of a global fiscal order led by the United States and facilitated by “open” trade channels. Along with its far-reaching economic impact, the FTC also marked the further consolidation of power in the executive branch of the government, a trend that had been initiated earlier in the century by Theodore Roosevelt.

-Source: www.history.com

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Northern Trust CEO Waddell paid $11.9M, a 42% hike

Before You Invest — Tue, 16 Mar 2010 02:55:00 +0000

(Crain’s) — Northern Trust Corp. CEO Frederick “Rick” Waddell saw his total compensation for 2009 rise 42% to $11.9 million, including a $2-million cash incentive plan payment.

His 2009 salary increased to $900,000 from $856,250 in 2008, when that salary was the only cash payment Mr. Waddell received. Total compensation for the CEO in 2008 was $8.4 million.

Northern Trust has remained profitable throughout the financial crisis with the exception of the third quarter of 2008, and it reported record net income of $864.2 million last year.

In June it repaid $1.58 billion in preferred shares sold to the Treasury Department under the Troubled Asset Relief Program. Most banks that remain subject to the TARP program have interpreted federal compensation restrictions tied to it as precluding them from paying cash awards to senior executives beyond salary.

In addition to the cash payments, Mr. Waddell received restricted stock in 2009 worth $2.6 million and options worth nearly $5 million.

Northern Trust was founded in 1889 by Byron Laflin Smith and was run by his descendants until 1979. The Smith family continues to hold a substantial equity stake.

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Bank Chief Accused of TARP Fraud

Before You Invest — Tue, 16 Mar 2010 01:49:00 +0000

The former president of New York’s small Park Avenue Bank was arrested on fraud charges, one of the first such cases involving a TARP recipient. The bank was shut Friday.

Charles J. Antonucci Sr., the former president and chief executive of the Park Avenue Bank of New York, made false statements to regulators in an effort to obtain about $11 million from the U.S. government’s Troubled Asset Relief Program, prosecutors said. He is the first person to be charged criminally with attempting to defraud TARP, the bank bailout program passed as the nation teetered on the verge of an economic meltdown in 2008, prosecutors said.

http://online.wsj.com/article/SB10001424052748703909804575123672347495854.html?mod=WSJ_hps_LEFTWhatsNews

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Toyota casts doubt on man’s speeding Prius claim

Before You Invest — Mon, 15 Mar 2010 20:41:00 +0000

Toyota cited “inconsistencies” Monday in the story of a man who called police for help saying his Prius vehicle was speeding uncontrollably down a California highway.

The story made national headlines last week after a local television station capture images of the blue 2008 Prius being towed away and the car’s owner spoke to reporters about his harrowing experience.

The case added fuel to criticism that Toyota has failed to address potential electronic problems with its vehicles and that the mechanical fixes it is installing on more than eight million vehicles recalled worldwide due to problems with sudden acceleration.

“While our analysis is not finalized, Toyota believes there are significant inconsistencies between the account of the event of March 8 and the findings of this investigation,” Toyota spokesman Mike Michaels told reporters.

“We’re not calling him a liar and we’re not judging what he did or did not do,” Michaels said.

However, an analysis of the vehicle found that there were no problems with the car’s brake override system which should have shut the engine throttle down if James Sikes had applied sufficient pressure to the brakes.

An analysis of the vehicle also found that the brakes became overheated after they were repeatedly tapped lightly while the accelerator was also depressed, Toyota said.

Federal safety regulators said earlier Monday that their analysis of the vehicle had failed to find any problems which could have caused the Prius to speed out of control.

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Arrelano Felix Organization (AFO) also known as the Arrelano Felix Family is a criminal enterprise based in Tijuana, Baja California, Mexico

Before You Invest — Mon, 15 Mar 2010 18:55:00 +0000

Arrelano Felix Organization (AFO) also known as the Arrelano Felix Family is a criminal enterprise based in Tijuana, Baja California, Mexico. For more than 20 years, the AFO has shipped hundreds of tons of cocaine and marijuana to the United States; laundered hundreds of millions of dollars in drug proceeds; kidnapped, tortured, and murdered numerous persons, including informants and law enforcement personnel; and paid millions of dollars in bribes to government officials. The cartel nearly collapsed in 2002, after Ramon Arrelano Felix was killed by the police, and Brother Benjamin was taken into custody. However, the cartel has since seen resurgence in strength, power, and violence. And, with the recruiting of U.S. Government agents and others, the cartel continues to be a major player in all organized crime in Baja California.The remarkable thing about this case is one of the defendants is a high ranking current or former United States Government agent with ICE, little known fact that has not been brought to the attention of the public by U.S. Authorities. One high ranking Mexican official pointed out that they (the U.S. Government) may not realize it themselves.
Duarte was close to, and worked with, another corrupt U.S. ICE official Richard Padilla Cramer. ICE officials conspired as they murdered, or caused others to be murdered, as they invested cash in global drug deals endangering the lives of U.S. and Mexican law enforcement. Furthering the danger, they sold secret U.S. Government information to Mexican Drug Cartels (MDC’s) and to the Mexican Government and ran huge cocaine trafficking operations. Feds reported Cramer joined the cartels full time after he retired from ICE. A former U.S. Government internal affairs agent who wants to remain anonymous told the U.S. Border Fire Report that defendant Armando Martinez-Duarte, was Cramer’s boss at ICE, may still be an employee of ICE and has been for years. The internal affairs agent claims that it is possible Duarte is acting covertly as a double agent.

Richard Padilla Cramer, a 26-year veteran of the U.S. anti-drug complex was arrested by DEA agents last month and is behind bars in Florida awaiting the results of a Federal Grand Jury investigation. Cramer was arrested and jailed after U.S. Government officials accused him of directing a massive cocaine shipment to Spain via the United States, and selling important information in law enforcement databases to a vicious Mexican Drug Cartel.
Cramer, as a high-ranking U.S. anti-drug official, held front-line posts both in the United States and in Mexico in the War on Drugs. Cramer, sometime later, was investing in drugs and trafficking as a full partner in Mexico’s murderous drug cartels. According to records made available to this reporter, he led an office of two dozen agents in Arizona and others as the attaché officer for Immigration and Customs Enforcement in Guadalajara, Mexico. Both Duarte and he, worked with the U.S. Mexican Embassy in Mexico City and U.S. Consulate offices in Guadalajara and other Mexican cities.

United States Attorney, Karen P. Hewitt, announced today that, within the last week, Jesus “Chuy” Labra-Aviles, Efrain Perez, Jorge Arrelano Felix, and Armando Martinez-Duarte pled guilty in United States District Court to charges arising from their leadership of the Arellano-Felix drug trafficking organization (AFO).
The defendants entered their guilty pleas before United States Magistrate Judge Cathy Ann Bencivengo, subject to final acceptance of the plea by United States District Court Judge Larry A. Burns, at the time of sentencing. The details of the defendants’ pleas are not known but here is what we do know:

Jesus “Chuy” Labra-Aviles: On October 15, 2009, Labra-Aviles pleaded guilty to conspiracy to distribute cocaine and marijuana and agreed to forfeit $1 million. Under the plea agreement, the United States will recommend 40 years of imprisonment. As part of the plea, Labra-Aviles admitted that from the 1980s to 2000, he was a senior partner in the AFO who frequently joined with Benjamin Arellano-Felix and Manuel Aguirre-Galindo to invest in and distribute large shipments of cocaine and marijuana. Labra-Aviles also admitted that he served as an organizer and leader of the AFO and that AFO members paid millions of dollars in bribes to law enforcement officers, government officials, and military officials. Sentencing for Labra- Aviles is set for January 4, 2010, 9:30 a.m., before United States District Judge Larry A. Burns.Armando Martinez-Duarte: On October 16, 2009, Martinez-Duarte pleaded guilty to conspiring to conduct the affairs of an enterprise through a pattern of racketeering activity. As part of his plea, Martinez- Duarte admitted that from the 1990s to April 2002, he was a federal law enforcement officer in Mexico who was paid by AFO leaders to leak information about AFO investigations, intervene with other law enforcement officers on the AFO’s behalf, escort and protect AFO members and drug shipments, and help place certain individuals in ranking law enforcement positions in areas under AFO control. Sentencing for Martinez- Duarte is set for January 11, 2010, 9:30 a.m., before Judge Burns.Efrain Perez: On October 19, 2009, Perez pleaded guilty to conducting the affairs of an enterprise through a pattern of racketeering activity and conspiring to invest illicit drug profits. Perez also agreed to forfeit $1 million. Under the plea agreement, the United States will recommend 30 years of imprisonment. Perez admitted that from the 1990s to June 2004, he and Ismael Higuera-Guerrero, the top lieutenant to the Arellano-Felix brothers, were responsible for receiving large drug shipments in Mexico and smuggling them into the United States, coordinating the distribution of drug shipments within the United States, collecting drug proceeds, and policing Tijuana for enemies, suspected informants, and uncooperative government personnel. Perez also admitted AFO members killed numerous persons in furtherance of the enterprise. Sentencing for Perez is February 8, 2010, 9:30 a.m., before Judge Burns.
Jorge Aureliano Felix: On October 21, 2009, Felix pleaded guilty to conducting the affairs of an enterprise through a pattern of racketeering activity and conspiring to invest illicit drug profits. Felix also agreed to forfeit $1 million. Under the plea agreement, the United States will recommend 30 years of imprisonment. Felix admitted that, like Perez, from the 1990s to June 2004, he ranked as a top AFO lieutenant. Sentencing for Felix is set for January 11, 2010, 9:30 a.m., before Judge Burns.
According to federal officials the guilty pleas by Labra-Aviles, Perez, Felix, and Martinez-Duarte bring to eight the number of high-ranking AFO leaders who have been convicted since 2006 in the Southern District of California of federal drug trafficking and racketeering charges.
“These four guilty pleas of top leadership figures in the Arellano-Felix Organization are the product of outstanding investigative and prosecutorial work over more than a decade. In achieving this success, we appreciate the cooperation provided by the Government of Mexico during the extradition process. But our work does not end here. The U.S. Attorney’s Office remains committed to seeking justice against all drug traffickers attempting to exploit the southwest border,” said United States Attorney Karen P. Hewitt.

“With this guilty plea today, all agencies involved in this investigation have dealt a significant blow to the leadership of the Arellano Felix Organization,” said Special Agent in Charge Ralph W. Partridge of the DEA San Diego. “This should send a message to the traffickers that with the outstanding cooperation of the Mexican government, there is no place to hide, they will be brought to justice.”
FBI Special Agent in Charge Keith Slotter commented, “Today’s guilty pleas are a result of thoughtful investigative work and cooperation between law enforcement agencies and we are pleased with the efforts of the prosecutors to see justice brought to these individuals.”

Arrelano Felix Organization (AFO) also known as the Arrelano Felix Family is a criminal enterprise based in Tijuana, Baja California, Mexico is a post from: Before You Invest Your Money

First Chicago Bank ordered to raise capital

Before You Invest — Mon, 15 Mar 2010 17:47:00 +0000

(Crain’s) — The Federal Reserve Bank of Chicago has entered into a written agreement with First Chicago Bank & Trust requiring the commercial lender to boost capital, only months after the California private-equity firm that owns the bank injected $43 million into it.

The March 8 agreement, which was reached jointly with the Fed and the Illinois Division of Banking and released Monday, also bars the bank or holding company from paying dividends or interest on subordinated debt or trust-preferred securities without prior approval from the regulators.

The $1.2-billion-asset Chicago bank also is ordered to reduce its concentrations of commercial real estate loans and stop accepting brokered deposits.
The agreement is the latest setback for First Chicago Bank & Trust, which is run by well-known Chicago banker J. Mikesell “Mike” Thomas and owned by Castle Creek Capital LLC, a California private-equity firm managed by First Chicago vets John Eggemeyer and William Ruh.

The bank posted a net loss of $93 million in 2009, $44 million of which was due to the writeoff of goodwill associated with Castle Creek’s purchase in 2006 of Chicago’s Labe Bank and Bloomingdale Bank & Trust to form what was later named First Chicago.

Following Castle Creek’s $43-million capital injection last fall, the bank has enough to qualify as well-capitalized. But the bank’s holding company, First Chicago Bancorp, was undercapitalized as of Dec. 31, signaling the need for Castle Creek to raise more equity.

The written agreement orders the holding company to submit a plan within 60 days “to maintain sufficient capital at Bancorp.” Among the items the plan must address is “the source and timing of additional funds to fulfill the consolidated organization’s and the bank’s future capital requirements.”

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