Magazine article Modern Trader

Did You Hear the One About.?

Magazine article Modern Trader

Did You Hear the One About.?

Article excerpt

EDITOR'S NOTE

A few months ago in a roundup of political cartoons, one made me especially laugh. It went something like this: a teacher speaking to an elementary school class says: "Give me a sentence using the word 'sacks,' meaning pillage or plunder." A student in the class responds, "Goldman Sachs."

As I write this, the Wall Street titans, including Goldman's Lloyd Blankfein, have just testified in front of the Congress' bipartisan panel investigating the financial crisis. Once again, they were taken to task as its cause. At one point when Blankfein equated the crisis to an earthquake or other "acts of God," a panel member responded "these were acts of men and women." The other titans, including J. P. Morgan's Jamie Dimon and Morgan Stanley's John Mack, were contrite and sometimes admitted failure. Dimon, who typically has been defiant at these hearings, admitted they had no idea home prices would drop by 40%. And yet, it seems the actions they take, or at least what the public sees, are more of the same. Huge bonuses are being passed out to many of the investment bank firms, while some government loans haven't been paid back. You would think they would learn.

There is no doubt that 2009 was a wild year and the past decade even wilder. Market volatility soared and came down. The stock market collapsed and came back. The dollar continued down and then rallied. Commodities markets mostly soated. Gold, the poster child commodity, went over $1,000 per oz. In all this drama, and almost ironically, one of the most rangebound products was crude oil, holding roughly between $60 and $80 per barrel. One reason might be the cooling economies and slowing demand. Another might be the weakness of the dollar, on which oil is highly negatively correlated. Another could be oil speculators weren't running the matket, at least that's what some regulators might say. …

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