Wisdom in fragments

The second big change I foresee is the continued convergence of the complex OTC derivatives market and the exchange traded futures and equity options market. Those lines will continue to blur due to regulation, legislation, increased capital and margin requirements, increased requirements for trade reporting, and increased pre and post trade price transparency in OTC markets.

Former CEO of CME Group, global derivatives exchange leader.

If you look at the notional value of trading on our exchanges in any given year, they range from $600-700 trillion to a quadrillion (1000 trillion) dollars in total value. People can use these markets very effectively, not just for bona-fide risk hedging and transfer and risk management but also for asset allocation, portfolio management and trading strategies as well.

Former CEO of CME Group, global derivatives exchange leader.

One of the things which is a really distinguishing factor about our markets in contrast to the OTC derivative market is that we're completely open, competitive and transparent with a very high degree of participation, a very high turnover, and a high degree of pre and post trade price transparency. That refers back to that old phrase of 'liquidity begets liquidity'.

Former CEO of CME Group, global derivatives exchange leader.

We clearly have more risk around the sovereign debt of mature and developed economies. Certainly that's an issue in the US- both at the federal and state level. We're seeing that right now in very dramatic fashion in the EU also. You also see the knock-on effects of aggressive monetary policy and weak fiscal policy driving activity in precious metals, commodities and also even in equities!

Former CEO of CME Group, global derivatives exchange leader.

We do show that there is a predictive effect which is quite consistent over time! In our paper we report an 86% accuracy in predicting the up and down movements in the Dow Jones three or four days out. The question is how you turn that into a money making strategy. It could be- for example- that you lose ALL your money in that other 14%!

Unknown.

The measurement that we have is not derived from market or economic data. It is derived from the twitterverse- from all these individual users acting as social sensors. When I have a bad day, that has nothing to do with the market! But how I respond to that bad day may be a reflection of a general level of discomfort about how the economy is doing and so forth.

Unknown.

In science, one never shows causality. Causality is something philosophers are concerned with, not scientists. I cannot stress this in strong enough words- we have not shown a causal link between the public's mood state as we measured it from twitter data feeds, and the market.

Unknown.

Twitter as a service is very oriented towards people providing short, succinct and relatively immediate 'in the moment' updates on what they're interested in and how they feel- and at a very large scale. At the moment we have around 250 million twitter users! We felt it was the ideal environment for us to test our hypotheses that we could, in fact, gauge the public's mood state from this type of data- and use that to study and even predict socioeconomic phenomenon of which the market is just one.

Unknown.

I think behavioural economics has now become an accepted part of the thinking on markets- it's generally accepted that people's decision making is heavily influenced by emotional state and various other behavioural biases in comparison to previous models that assumed rational decision making in the markets. The markets and individual investors are driven by what you could call 'irrational considerations' and emotions play an important role in that.

Unknown.

There's a huge amount of corruption in some of these countries, but when you have traceability and transparency that's been pushed through consumer and shareholder pressure into global value-chains, it can act as an antidote to the corruption which may exist in the market.

Unknown.

We manage risk by lending into the value-chain where we are able to leverage the non-financial-assets of the corporation that's buying from these communities and agricultural businesses. By having off-take agreements, we have guaranteed demand for the underlying product and, therefore, bankable cash-flows.

Unknown.

We are unapologetically at the high-risk, low-return sweet-spot of agricultural finance. We choose to address geographies and sectors where there are real market failures or at least deep market imperfections.

Unknown.

If you look for the next Steve Jobs or Richard Branson in developing economies, however, their businesses rarely make it out of the garage as they are missing three critical factors. They lack financial capital, qualified employees plus the knowledge and access to financial markets- those three things stop those businesses enjoying the kinds of prosperity we do in the northern hemisphere.

Unknown.

We're working at the nexus of two pretty powerful forces which, when combined, can have a profound impact on reducing global poverty. First, agriculture.... You've got around 2.6 billion people in the world who survive on less than $2 per day, 75% of them are rural and agriculture is their primary economic activity.

Unknown.

They are opening seventeen distribution centres. I've never seen a company open more than two or three at a time and this company is opening seventeen! The valuation is very stretched, but the business advantages are, in my opinion, mind-boggling.

Unknown.

I've been doing this a long time and have very rarely seen a company with sustainable competitive advantage like Amazon has. They have a very low cost of capital, they are very efficient, and the government provide an additional advantage in that the transactions are not tax.

Unknown.