Archive for January, 2012
My memo to the CME Board from yesterday.
January 27, 2012
To: CME Board of Directors & Mr. Terry Duffy
As you may know, it was about two months ago that I spoke with Mr. Bryan Durkin, asking both him and the CME Group Board to step to the plate in what many of us called a “Tylenol” moment. Specifically, history has clearly told us that like the Tylenol fiasco many years ago – where the company undertook immediate & swift action to remove all products from shelves at some initial expense to fully restore industry credibility – thus turning a very bad short-term event into a positive for the customers, industry, and in-turn, the company and its shareholders – that a similarly swift and FULL move by the CME to immediately restore market credibility was the obvious right answer for its customers, industry, and yes – its shareholders.
And while it remains unfortunate for the industry that the CME did not follow through its small initial steps by shifting the $550M Trustee guarantee to instead help fill the customer shortfall, it’s still not too late to take such action, and we again plead with the CME to take such rightful action which would provide the credibility we require to re-enter the futures markets.
Until recently, I was among MF Global’s largest traders providing market liquidity via the CME. Yet, like thousands of others, I’m now left on the sidelines until full credibility and capital restoration has been ensured. The unfortunate result is the plummeting of exchange volumes (I sit in front of an unfunded screen day after day and see futures volumes barely budge), as well as a highly disturbing 15% divergence between the CME Group’s stock price and industry indices which continues without abatement (see attached chart) that reflects the dwindling volumes and continued erosion of confidence.
When a restaurant customer receives a bad meal, the firm immediately “comps” the dinner knowing full well if it didn’t, that the customer and his/her future revenues would vanish. For the small initial cost is far outweighed by the sustained revenue stream.
This situation is no different, and we once again implore the CME Group to complete its initial baby steps with a full and swift restoration of capital – for the sake of the industry and its shareholders. Had such action been taken in November, there is little doubt that the continued erosion of market participation, confidence, and CME market capitalization would be long forgotten and far away in the rear view mirror.
Please help us help you restore the integrity of the markets and reverse the trend.
We – your customers and shareholders – deserve the obvious and rightful response.
Help us return to work in an industry that once made us so very proud.
Yes, despite limited blogging lately, I’m still alive and very active on many fronts, including PivotPoint Advisors – where our target zone has been reached and we’ve initiated the selling of positions established in last December and early January (see this week’s Briefing), and the ongoing MF Global saga.
On the PivotPoint front, our expected price targets were hit as the result of late December’s technical breakout, and we’ve begun to lock in 4%-5% portfolio gains.
As it relates to MF Global, the Motley Fool again quoted me, this time as the lead to today’s piece entitled, “The Astonishing Lack of Progress at MF Global“. The quote refers to an extract of my recent letter to the CME, CFTC and Congress entitled, “The Continued & Unnecessary Stranding of MF Global Customers” which continues to circulate around the industry.
I will continue to fight EVERY day and on EVERY front for the immediate and 100% return of capital to customers who trusted the industry’s touted safeguards until full restoration has occurred.
From the second this happened on 10-31-11, my first thought was, “They’d better not mess with futures customers … for they don’t realize the depths of our strength and resolve.”
Don’t mess with traders or futures customers folks.
We won’t go away.
Subject: The Continued & Unnecessary Stranding of MF Global Customers
Yes, you can.
And you should.
50 days ago, I posted the plea below to leaders of the U.S. Futures Industry, Members of U.S. Congress, MF Global Trustee, and Court.
And while the simple solution to what is now 11 weeks of nonsense remains so very clear to those of us who have been violated, the so-called “leaders” of the industry and protectors of our funds appear so very disjointed that not only are they missing the forest for the trees, they’re apparently staring at the veins on the leaf. THEIR leaf.
Some have suggested we be “patient”, and let the “process” play out over months and years.
That’s complete B.S. in light of the simple interim solution that would end the continuing sleepless night for thousands of farmers, customers, and small businesses who remain stranded.
At a time when the industry and our country can and should show its true character, customers remain the victims not only of the initial theft, but now by vested interests and highly conflicting motives that merely result in, well … piles of leaves.
We bail out company after company after company in this country. We see so many corporate and user fees on my telephone bill, that the total fees are approaching the cost of the service itself. Yet, when Joe farmer and customer gets completely screwed, we implement the “duck and cover” approach. And in an election year nonetheless … go figure.
As time has unnecessarily passed, the carnage has only become greater. Exchange volumes have plummeted, trader & customer boycotts of the exchanges and industry are growing, industry confidence has been shot, and affected businesses are shutting down.
As noted below, some hope time will help still our voices. Yet time will merely increase our volumes until we are finally heard.
So I am republishing the following, updated for events (in red) that have unfortunately only solidified the problem since then. Note how little has changed in 50 days … that is a screaming statement by itself.
Please stop this George Jetson treadmill.
You can flip that switch.
An Industry Plea to the CME, CFTC, and All Members of Congress
Initially Published by MF Global Customer Donald Miller 11-26-11 & Updated 1-14-12
The time has come to fully restore our stolen capital and, in turn, our faith in America.
We have been patient, but our patience has run out.
We have listened to totals of our stolen money that change more frequently than the New England weather.
We are told the world’s best forensic accountants are at work, yet four weeks later (now 11 weeks!) it seems as if they’re still choosing pawns in a game of Clue.
We have listened to what a wonderful job the Trustee has done in acting quickly to “free up” a small amount of capital, even though many of us have still not seen a penny.
We have listened to a CME “Guarantee” of $550 Million, even though only $50 Million is designed to replace our stolen funds.
We appreciate the CME’s support of the Commodity Customer Coalition and support of our rightful place as #1 priority in the bankruptcy, yet continue to hear touts about how great a job they did safeguarding monies at their end, even though their role as primary regulator & auditor of our monies at MF Global failed.
We have listened to the CFTC fail to be the strong advocate of the customers for which they were charged, through a not-so-merry-go-round of recusals, congressional hearing tap-dancing, hollow press appearances, lack of transparency (“we know where the money is, but won’t tell you”) which is fueling growing cover-up rumors, December vacations, and zero assurances that they’ll be able to fulfill their obligation of returning every penny taken under their watch to customers.
We are told we live in the greatest country in the world that protects its citizens, yet are seeing customers in foreign countries being made whole as we speak while we await our rations. Oh Canada!
We are supposed to live in a land of fairness and integrity, yet have seen behemoth J.P. Morgan cut in line in front of us to claim corporate self-interest ahead of our stolen monies.
We have seen JP Morgan try to silence the voices of the very customers whose monies were stolen under their custodial watch, rather than joining in the obvious solution. The Twitter #boycottJPM continues.
We have been told for decades by the exchanges and industry that the segregation of customer futures accounts was sacred and that multiple fail-safe firewalls were at work, yet the vault was opened, ransacked, and burned beyond recognition without anyone knowing.
We are supposed to live in a land where our leaders take responsibility, yet have seen more fingers pointed at others than a Family Circus “Not Me” cartoon.
We are supposed to live in a country of opportunity, yet have seen the retirements and lives of families, farmers, and small businesses ruined.
Our country is supposed to exude trust and confidence, yet we’ve begun to see a crisis of industry confidence as people withdraw funds in mass.
And yet … this excruciating four-week (yes, now 11-week) treadmill of events can be switched off by one simple and swift move by the leaders of our industry and the Court.
A promise by Christmas Eve (how about now!) to cut through all of the red tape and corporate interests to restore 100% of our stolen funds.
Not $50 Million. Not 60% or 75%.
Any penny less will forever compromise our faith in this industry and country.
The time has come for someone to step up and act swiftly and decisively.
As far as the hollow industry argument that making customers whole will open up billions of dollars in industry segregated fund “risk” … that’s what going-forward improved controls are designed to address.
The time has come to fully restore our capital … and our faith.
Yes you can.
And you know you should.
One of the Thousands of Stranded MF Global Customers Waiting for the Life Preserver
A great Reuters piece today on James Koutoulas today, who continues to lead our Commodity Customer Coalition team.
I’m still working the presses and members of Congress at every turn, and am constantly reminding the CFTC that unless they speak openly, Commissioner incompetence is reinforced, and the growing rumors of an industry cover-up will only fuel.
The CME also continues to advocate their responsibility … last I checked from my days as an auditor, just because someone hands you a report (bogus or otherwise), you never trust it and always tie to bank accounts and beyond. Please stop chanting about the great job you’re doing … customers remain sleepless by the loss of $1.2 Billion and the tremendous decline in Exchange volume is speaking for us.
Right now, Twitter is the best way to follow me to stay current.
Key meeting with the Trustee today as the critical January 31 claim date approaches.
My weekly Chief Investment Officer Briefing for the week ending 1/6 has been posted in the Briefing Room tab of the PivotPoint site.
This week’s Briefing continues following the theme discussed in recent issues related to short- to moderate-term expectations for the market and how we’ve structured client portfolios of varying risk profiles.
To those new to the Briefing, we use similar techniques to those used by intraday traders, and many of the intraday “Jellie” concepts can be seen amidst the current Briefing.
The only difference is the use of 4-Hour, Daily, and Weekly cycles, versus 5-, 15- and 60-minute.
Happy New Year all!
I’ll get back to posting more regularly shortly, but let’s take care of a few housekeeping items as we start the year.
First, my PivotPoint Advisors Chief Investment Officer Briefing for the last week has been posted in the Briefing Room tab of the PP site. As noted in the Briefing, we anticpated an initial upward break of the S&P 500 based on how the final week of 2011 ended, positioining Moderately Aggressive profiles accordingly on last week’s retracement to the lower end of the upward daily channel, which is playing out this morning with an approximate 2% gain from last week’s entry.
Second, with much of the recent focus on the continuing MF Global situation, it’s time to return to our educational roots as we begin the new year.
I was reminded of this via the following email from a recent Jellie webinar student over the holiday week:
Don, I just completed the Jellie training and wanted to share with you how pleased I am for making this investment in my trading education. After more than five years trading almost every day and spending tens of thousands of dollars on my education, this course was very powerful and helpful.
By far the most complete course on the many pieces of the trading puzzle. I purchased this course because I had decided to move from equities to the e-minis at a time when my equity trading was consistent and profitable. Must admit I had some second guessing on this decision.
Having completed your course and before I begin to retake it, I feel confident and committed to my decision. Should your heart ever lead you in that direction, I would be honored to be a part of such an in depth training program.
Thank God for your gift and your willingness to share it with others. May you and your family continued to be blessed this next year!
It is in the light of his last comment – ”share it” — that I’ll be reducing the industry acclaimed 16-Hour Jellie Webinar series by $250 (17%) to kick off the new year. If you’re interested, simply email me at firstname.lastname@example.org and I’ll email a special discounted invoice.
Life is short.
Let’s make the most of it while we’re here.