Can trading gains offset pain at the pump?

With Crude Oil up $2 more dollars today, it seems like just a matter of time until we see $5 per gallon gas in the US. (here in Chicago we’re already seeing $4.50 at some stations).

Those of us in the managed futures industry usually have an odd take on price increases such as this, sometimes actually ‘cheering’ prices higher despite the pain it will do to our budgets and credit card bills.

This is because our clients are usually benefitting from such trends higher, thanks to most managed futures programs being designed to try and capture trends in one manner or another. Indeed, one of the main reasons for getting involved with managed futures for many is the desire to participate in trends such as the one we’ve seen in crude (see our past post on Crude’s breakout signaling a new trend up).

Crude Over 5 Years

But it seems a little bit different this time. For one, most managed futures program which are long Crude just got long recently (around $100), so while profitable – it’s not that profitable that you can ignore what’s happening at the pump.  Secondly, do we really want $5 gasoline throughout the summer? Will managed futures participants really offset the extra real costs they will incur via their long exposure in a managed futures program (whose gains could be offset by losses elsewhere).

And finally, participation in managed futures doesn’t guarantee you will participate in trends such as the move higher in Crude Oil. Of the CTAs we track, there are only a handful of programs with long energy exposure.

Short term systematic programs Futures Truth SAM 101 and systematic multimarket programs APA Strategic Diversification, Auctos Capital Global, Covenant Capital Aggressive, James River Navigator, Futures Truth MS4, and Robinson Langley Capital are all long crude, while short term systematic Accela Global Short Term is long JPE Gas and Bouchard Capital is long heating oil.

While these programs will likely be cheering Crude higher yet, the higher costs for gas, plane tickets, food, and everything else is likely to dampen the enthusiasm somewhat.  The bottom line – sometimes you have to be careful what you wish for…

Write a Comment

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

logo