TPS

The Bills were competitive against most teams, and 3 out of 4 non-competitive losses came against the elite teams of the NFL (Pats, Jets, and Packers). While the Bills' record should improve significantly next year, it's unrealistic to expect that they can jump to elite level and compete with the Pats and Jets. The only possible way to make the playoffs is if they are one of two AFC east teams to make the wildcard slots. That's extremely unlikely. On a related note, using the Bills as a barometer suggests that the Packers and Jets will meet in the SuperBowl, since the Bills nearly beat both Pitt and Chicago.

Hey, we're football fans; it's always fun to speculate. Of course you need a dance partner. A trade down will only happen if 1) there is no one the Bills covet at #3; and 2) someone else does (covet a player). A speculative scenario: Fairley and Bowers go 1 and 2, and Bills prefer a front 7 D player; Cleveland covets Green; teams swap picks and Bills get Cleveland's 2nd + a later round pick (whatever adds up). Bills get Dareus or Quinn. Who knows? It's snowing outside, the Bills are done, and I'm procrastinating...

The debate is coming to a climax: CFTC

This is a new place downtown that has had some decent reviews. http://www.avantbuffalo.com/ You can also walk to most of the restaurants and bars. Highly recommend Seabar resaurant for dinner. Seabar There are all kinds of great places for dinner though, depending on your tastes. If you like Belgian beers, hit the Blue Monk on Elmwood (old Merlins). Food is good too.

If you look at the CFTC data, they provide the long, short and spread positions for each category. Index traders and other "investors" at net long holders; commercial traders are net short. They are simply saying that at least half of the money that comes in from index funds are in net long positions. Yes, the CFTC is now trying to determine what the position limits should be, which is what the report's recommendation was. They aren't arguing to end speculation/investing in futures, rather the argument is about putting position limits on these traders and treating them for what they are--speculators, not commercial traders. Also, they want to force OTC trades to exchanges. Personally, I would eliminate this type of passive investment strategy in futures. Real speculators bet on movements up or down; these guys are one-way buyers. As I've said, if one wants to bet on commodities, then buy stocks of the companies that mine, drill, etc. So I should get rid of my bumper sticker that says "Economists Rock"?

Letter in today's FT from the guys who critcized the OECD article: FT

The Senate report covers Irwins' articles starting on p. 148 (see especially note 261). They even quote points where Irwin et al support the view that index trading has influenced demand and price. Anyone who contends that participants who are long-only (buyers) don't influence price ignores the basic theory of supply and demand. All buyers influence demand, not just index traders, but commercial traders, hedge funds, banks, etc. When you guys argue that there are sellers for every buyer, yes, but as demand increases causing prices to rise, that induces more sellers. With contango in the markets, commercials will sell more futures contract at higher prices and buy and hold more commodity. Here's a good explanation of what happened in the oil market: Verleger by the way, Irwin quotes Verleger's explanation as a possible counter to their anaylysis. Irwin also admits his recommended solution (increasing delivery points) for the problems (non-price convergence) have not met with the expected results--the results have been what Verleger describes, the index buying will maintain contango which increases profits for storage.

He was the first interview in George Wilson's weekly video on BB.com. That interview ends with Moats playing. I believe he mentioned that he started in college. I trust he exemplifies the type of character that Nix/Gailey look for.

Here's a chart of the IMF's commodity index in US$, SDR and one deflated for the CPI. Can you see the spike before the global crisis (in nominal and real values)? IMF chart Here's a link to the senate investigation. Read it. Check the testimony by commercial traders beginning on p. 139. link to the senate investigation. The EU was moving on speculation before Sarkozy took it up as a cause.

No impact No impact?

WTF? How has my position changed? You seem to be the one squirming here. I've said all along that the money flowing in from ETFs and other investments related to the indexes take long positions, which puts upward pressure on prices. And that money has constantly increased, so how do you think that's impacted futures prices? Geez, a shocker! You finally admit that increased demand can influence price. And what I said was that smart money takes advantage of the fact that managers of ETFs are required to maintain a specific quantity of long positions in the commodities that make up the index. The example I posted from the B-Week article didn't even mention Goldman, nor did I. And it's not taking advantage of Cargill's guys; it's taking advantage of ETFs which are required to maintain the contracts. Do you even read what's posted? Final point: how many times do I have to say that no one has to take delivery of the commodity as long as you offset the contract before the delivery date, which is usually a few days before expiration? No financial player gets "busted." Hell, even most owners of commodities don't deliver; they use the futures contract as a financial hedge, then sell in the spot market. Last final points: Yes, I do believe that speculation was the driving force in pushing up the price of oil before the global crisis in 2008. Yes, I do believe that investment funds are influencing commodity prices as much if not more than the fundamentals. More players and more investment, means more bubble.

It is amazing that people declare someone a bust based on their performance in the first year. Troup is learning behind a pro bowl player. He admittedly said he needs to get stronger next year. Given his work ethic, I expect him to be a solid player for years to come. I think if you look at most late 1st rounders and 2nd rounders, they are all learning in the first couple of years. Carrington looks to be a beast. Judge these guys next year.

What I have tried to describe is NOT manipulation, rather "influence" on price. What I have argued is that speculators, specifically indexed commodity fund trading, have siginificantly influenced price over the recent past. I've never said speculators are bad, because they do provide the liquidity function. I won't quote Keynes again, but there is a reason speculators always had position limits. Do you believe in the forces of supply and demand? It's pretty straightforward. If the flow of money into commodity futures is steadily increasing, and these represent new long positions so open interest is rising, does this NOT influence price? Maybe you can tell me how futures prices actually change? If it's not supply and demand, what is it? If for every buyer there is a seller, are you saying prices never change? Do me a favor: read the Senate's 2009 investigation on wheat prices and the impact from index traders. Last point--less than 3% of all futures transactions are delivered. Almost all transactions are offset before delivery is required.

It would be interesting to see if you can adjust for poor conditions--the Detroit and Cleveland games were pretty miserable for throwing the ball.

I guess you didn't read the Business Week article. Here's a snippet: It's apparent you don't understand the futures market when you state "they would simply stick them with the delivery obligation at the end of the contract." The 100s of billions of of dollars in contracts held by the ETFs never take delivery, they offset near expiration, then buy new-dated contracts (see above). As for Options vs Futures: option values are mainly related to the difference between the current price and the specific strike price, which is fixed; and, since it gives the right to buy or sell at that strike price without the obligation, an investor can simply let it expire at the end of the contract. Buying "out of the money" options only increases the option premium, not the underlying price of the asset because you are contracted (have the right) to buy/sell at the stike price. Futures contracts differ significantly in two ways. First, owning a contract requires an action at expiration--either delivering or taking delivery, or--WHAT THE MAJORITY OF TRADERS DO, offset their positions at expiration. If one is long, then one must sell the same contract at expiration to close your position. NO DELIVERY TAKES PLACE. The other significant difference is that since the futures contract represents an obligation to deliver (receive) at some future date, its price IS directly related to the spot, because it becomes a spot contract at expiration--the price of the futures contract converges to the spot price at expiration. Example: If a June wheat contract today is priced at $8/bushel and the spot price is $7.50 today, the $0.50 difference is known as the basis; the futures price higher than the spot today is known as a contango market. As time goes by and we approach expiration in June, the June contract price converges (the basis goes to 0) with the spot becuase it's now a spot transaction. If the spot price in June turns out to be higher (say $8.50) than what I bought the contract for today (january), then I made money when I offset and sell it in June. In reality, as the price rises (falls) over time my account is marked-to-market and profits (losses) are automatically added (subtracted) to (from) my account. A baker who is hedging his purchase of wheat in June will do exactly this. He has to pay $8.50 in June, but he made $0.50 profit on his futures contract, so his actual price is the price of $8 he paid for the contract today (january). Rapidly increasing prices causes problems for the sellers (e.g. farmers) of the contracts as they are taking marked-to-market losses and have provide more collateral to their exchange account. Bottom line: it's very easy to manipulate prices by pouring money into futures contracts which bids up their prices--it's supply and demand. This is why there have always been contract limits on speculators. Things changed in 2000 with the Commodity Futures Modernization Act which "deregulated" the futures markets making it easier for speculators to bypass the limits. you guys don't seem very objective about this.

If you don't know the difference between an option and futures contract, and why the analogy doesn't work, I'd be happy to explain it to you.

I understand. Btw, here's the link to the B-Week article--it's a good read. Contango!

I'll try this again, the quantity/level of demand matters for any market. If the amount of money flowing into commodity futures (via ETFs) doubles relative to the # of existing contracts, will that not have an impact on prices? It's simple supply and demand. Futures prices are pushed up as new money continuously flows into the markets. The amount of money flowing in has increased by over 2500% in that last 7 years! Net inflows have constantly increased (with the exception of the middle of the crisis as $ fled to safety). ETFs take "long" positions and only "sell" when they need to rollover to new contracts as existing contracts expire. Because of this fixed behavior "smart money" takes advantage by buying during the rollover, as it causes prices to fall; then selling back to the ETFs as they are required to purchase new contracts. I think Business Week had a headline story last summer warning "dumb" investors about the pitfalls of speculating in commodities through ETFs--how you could lose money even as commodity prices were increasing... Add to this that Wall Street banks like Morgan are feeding the flows by becoming "owners" of the underlying commodity, so it allows them to be qualified as hedgers rather than speculators and eliminates their contract limits. It's amazing that some people will argue to their death that doubling the money supply will double prices, but apparently a 2000%-plus increase in demand in a market won't affect prices....

While injuries are a part of football, I thought I'd take a quick look at Fitz's stats and see if there was any difference as some key WRs went down--Parrish and Evans. Obviously I am ignoring all other factors. Parrish went down toward the end of the Chicago game, so I inlcude him up to that point; Evans went down early in the Cleveland game, so I exclude him from that game; the results: 6 games with Parrish and Evans: total average O=348; gross pass yds=250 4 games w/out Parrish: total O=326; gross pass=221 3 games w/out Parrish and Evans: total O=325; gross pass=205 With Parrish gone, the average total offense fell 22 yards/game and Fitz's pass yards fell 29yds/game. After Evans went out, the total offense average was unchanged, but Fitz's pass yards fell another 16yds/game. If I were to draw any conclusion from these data, I would say Parrish was a key contributor to Fitz's success. My overall belief is, if you keep the same WR group (along w/ Easely), add a TE and RT, then the Bills' have a playoff caliber offense with Fitzpatrick at the helm.

It's a bit ironic that, on the one hand, someone will spout the power of the market to support a particular POV, but then, on the other, dismiss the impact from increased demand by speculators/investors as not really significant. I wonder what would happen to prices if the current $350 billion "invested" in commodity futures indexes was forced back to the level of 7 years ago ($15 billion)?

With Nix's age, I always wondered if there was a deal made to attract Whaley, letting him take over when Nix retires.

Well...that's just your opinion man... Given your argument about depth of D talent, all the more reason to go with a stud D player in R1. Take 3 of first 4 picks on D and get the talent this team needs on that side of the ball. Personally, I'd go with Bowers. Belichek said his strategy was to neutralize Kyle Williams in that last game. I think if you have Carrington and Bowers sandwiched around Williams that will free him up to continue to be the playmaker he is. While not the prototypical NT, two ends that require double-teams can be just as effective. That means you still need a run-stuffing MLB stud, which I'd pick in R2 (unless you can pick up a FA). On offense, I think most people totally underestimate Fitz's capabilities. The right side of the O-line and the WR corps were musical chairs, and there was no TE end threat. Look what he did with the tools he had! Add a solid RT and TE, and bring back the same group of WRs (with Easely), and you have one dangerous offense. So my opinion, man, is that you add 2 playmakers to the front 7 of the D, a RT and TE, and this team competes for a playoff spot in the next football season!

Given Fitz's numbers, I thought this year he ascended. Then again, ascending/descending, it's all relative.

I like it, but what's your backup plan if Merriman doesn't recover?

My impression was that he'd like to have him, but not at the price Whitner thinks he's worth.