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As Expected, CME Hikes Nat Gas Margins. Again
This market is becoming far too predictable. From five hours ago:
Another Natgas margin hike by the CME is almost guaranteed
— zerohedge (@zerohedge) February 19, 2014
And from five minutes ago:
And as a reminder, this is the fourth margin hike in the past month. So far, they have done exactly nothing, considering the price of nattie is the highest in over five years.
Source: CME
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Only stawks are supposed to rise. Not essentials or PMs.
you get your first green uppie from me. never thought I'd see the day. oh yeah: FUK BITCOIN!
Bitcoin is going to five, six and seven figures. Gold will be priced in Bitcoin under the BWO.
bitcoin! shit yeah. i'm a buyer at 5 cents!
would you point me to your seller?
Period
It's a Flow problem not a Stock problem. (remember the last time we heard this one?)
The next time you see that heating/cooling bill just take a look at those paragons of corporate governance, your local leveraged utility co. Now look at their FCF to CapEx ratios (last 10 year trailing). The winter gas squeeze could have been avoided if people had learned from the 2007 gas squeeze by building enough east-west line capacity plus plant-gate storage. Instead we had 5 years of mutual fund managers cheering on the Corp. buybacks and LBO/yield debt issues. Funny how that comes to bite you in the ass, kind of like subprime. Be sure to ask your local state backed power company how their capital plans 2015/16 are being adjusted for this 'black swan' winter. For bonus points, feel free to ask their board of directors to post on their company webpage their donor tax receipts and those of the union backed power co.
Fun fact:
Chasing speculators out of commods and the effect of rapid exit on program traded index funds was one of the key triggers to the 1987 crash when programs went limit-down to match market exit orders.
Of course that would mean the CME studied economic history. And has a big bucket of popcorn handy.
And while infrastructure is the problem for some areas, it is nothing like you imply...
There is a mismatch between where it is produced and where it is demanded...
In 2007, the Marcellus was nowhere on the radar screen, now it is now 5% of total production....
Hell, they had to reverse pipelines into Cushing...
And by the time the new infrastructure is built many of the tight plays will be well past their peak flows...
Wake me up when the price gets to the dry NG production cost....
In case you are wondering, that is north of 7....
Shit, I started pyramiding into DGAZ pretty heavy over the past 36 hrs...still have 40 pct of my powder...someone please tell me I didnt fuck up
Planned on playing the last chunk if price went N of 6.50... Im in at 3.23 right now
What a coincidence! The Bakken reports December production down 48,000 bpd, an all time record decline for the state of North Dakota, and oil goes to $103.
Analyst comment: Well, I guess the economy must be stronger than we thought. Lots of demand.
Believe it or not, US demand has upticked...
From last week, a top shelf presentation
http://energypolicy.columbia.edu/events-calendar/global-oil-market-forec...
At least check out the slides....
Once unemployment takes demand to its minimum, the population continues to rise and even those on govt benefits have to burn oil to live.
You know what they say: "People with full stomachs have lots of problems. People with empty stomachs only have one."
Now sing along: "People with warm houses..."
Loving this winter of discontent. Looking forward to a summer of rage when the price of food continues to spike. The pain has been postponed too long. We've proven that we need misery to shake us out of our apathy.
As spring approaches, CNBS will bullhorn the losses based on logistic weather related delivery contract commitments. Mark my words. For the spooks reading my post. Jack off now to please yourself. Watch the narrowing begin.
When will you stop fucking people over? You’re the one who will find oneself laughing and seeking shelter? Have a good year with 2014 snow. The NAT gas car and bus market will never materialize. Heads up, the taxpayers know you are subsidizing NAT gas operations. What makes you think you’ll get the next taxpayer monies?
Will it become another Executive Order? That’s when you need to begin to worry..
No surprise on the margin hike - looks like another blow off - we hit 6.09 today
http://bullandbearmash.com/chart/natural-gas-daily-blows-expect-longer-t...
Maybe the CME can check the warehouses beside the Goldman Sachs aluminum warehouses in Detroit - and look for the tanks that say LNG on them
Raise margins on PMs and the prices go down.
Raise margins in nat gas and the price goes up.
LOL
Not really; it wil have the intended effect. God bless the right thinking CME; (I'm short).
Someone needs to call Brian Hunter and ask what's going on. Anyone have his number?
its unfortunate that the owner/operator of this generally fine and informative web site does not understand how futures margining works and what it is for.
to suggest that margins are meant to control prices, is just hysterical media hype -- suggesting that because there are many who are gaming the system and screwing the outsiders and 99%ers - therefore this is just is more of the same
margins are a function of risk to the clearing house
since a very small percentage of the full contract value is put up in 'initial' margin, and because accounts are settled every 24 hours, a sudden change in price can quickly eat up the entire margin deposit.
therefore, when prices accelerate (up or down), and/or volatility increases, the chance of that initital margin evaporating within the 24 hour period has increased.
thus -- an increase in eachange minimum margins should ALWAYS be expected under these circumstances.
exchange clearinghouses have rules and formulae for this
is it possible that the exchange clearinghouse may have an ulterior motive to 'screw' speculators in some way?
is it possible that other govt agencies (the treasury, the fed...) could influence the clearinghouse to break its own rules?
hard to believe -- but, perhaps
the cornerstone of any futures contract -- and therefore the exchange itself -- is that the market is fair, equitable, transparent, and that the rules apply equally to all --
this is why there has only been one futures contract default in the history of futures markets -- and that default nearly put that exchange out of business
cant imagine that any exchange would commit hari kari by breaking these tenets
if the operator of this web site was thorough -- do a study of all margin changes over a period of time - and then disprove the correlation between them and market risk
So how many times have they changed margin on contracts based on the S&P 500 since it has tripled in price? But I guess you're right -- with the plunge protection team on the job, what risk is there in this "market".