With these credit expansion figures that Heinz has quoted,
I guess we can see why Tom Baldwin is getting back in the
10 Year note pit.
since 1998:
money market fund assets have DOUBLED to $2.1 trillion,financial sector commercial paper borrowings have increased by 60% to 1.23 trillion, GSE assets have increased by 87%, or $960
billion to $2.06 trillion, asset backed securities have increased by 76% to nearly $1.9 trillion, broker/dealer assets have increased 53% to $1.2 trillion, total financial sector borrowings have
jumped by 58% or $3.2 trillion, and broad money supply has increased by 40% or $2.1 trillion.
not bad for three years of credit expansion
-------------------------
Saturday July 14 6:10 PM ET
Famed Trader Missed Pit Trading Thrill
By Meredith Grossman Dubner
dailynews.yahoo.com
CHICAGO (Reuters) - Tom Baldwin knows a good risk when he sees one.
It is that instinct that led the legendary bond futures trader back to the rough-and-tumble trading pits at the Chicago Board of Trade this week after leaving a year ago to see if he could get his fix somewhere off the trading floor.
But investing in a technology company and trying his hand at computerized trading did not give him the same thrill, the same challenge, the same adrenaline rush.
``The electronic part is just not fun,'' said Baldwin, who was known on the floor for placing huge trades that could rock the bond futures market. ``It's just, well, OK. It's all about money -- making money or losing money. That gets boring. This is more of a sport,'' he said, pointing toward the bustling clerks and traders on the edge of the Treasury 10-year note pit on Tuesday, his second day back on the floor.
In his purple jacket with blue collar, Baldwin was greeted by warm handshakes and welcoming hugs and smiles in the trading pit Monday. His appearance this week, and his decision to trade 10-years instead of bonds now, has left market players abuzz about what the 18-year veteran's renewed presence in the pit could mean for the future of the trading floor.
Just last year, some of those same traders had predicted the demise of open outcry trading, a 153-year-old tradition at the Chicago Board of Trade, as participants shifted their focus to electronic trading.
ELECTRONIC, PIT TRADING BOTH HAVE APPEAL
When Baldwin left the trading floor a year ago, he had planned to return after a few months even though the outlook for the CBOT Treasury futures complex was bleak. The Federal Reserve had just finished its 1999-2000 campaign of raising U.S. interest rates, and the U.S. Treasury was issuing fewer 30-year bonds and had even started using the nation's budget surplus to buy back old 30-year debt.
It seemed that there was ``no need to hedge,'' Baldwin said. ''It got really dead in the 30-year bond pit, so I figured I'd just take some time off.''
Baldwin said he has traded stock index futures and Treasury futures products electronically for a while -- at home in Winnetka, a suburb of Chicago, and from the road on his laptop computer. But he said he never viewed electronic trading as taking the place of open outcry.
``It has its pluses and it has its minuses,'' he said of electronic trading. ``There's a definite group of people that don't like the personal, physical atmosphere of the floor. And there's a group of people that don't like the mathematical, impersonal part of electronic trading,'' he said, noting that the information flow on a computer screen doesn't have the same urgency or speed that is critical to placing successful trades.
``So I think there's a need for both,'' he said. ``I don't think one will ever do away with the other.''
TIME IS RIPE FOR RETURN
But now, with the Fed back in the picture cutting U.S. interest rates and the possibility of inflation lending volatility to credit futures, Baldwin said it was time for him to come back. He also said he has a new attitude and a different mental preparation after being off the floor.
Baldwin said he consistently traded 10,000 contracts at a time before he left the bond pit. With a face value of $100,000 per contract, a trade of that size would have a notional value of $1 billion.
In his first few days back at the CBOT, though, the famed trader said he had traded on a slightly smaller scale -- only several thousand contracts at a time.
In his year absence from the floor, Baldwin invested in California-based software development company Appiant Technologies Inc. (NasdaqSC:APPS - news). He described his experience as a major shareholder and director of the company as ``a great education in small-cap technology companies.''
In March, Appiant cut 20 percent of its workforce, or about 48 people, as part of a consolidation of operations. The company employed about 240 people prior to the consolidation.
Appiant's shares traded at about $13 a year ago and peaked at more than $25 by the end of 2000 before sinking beneath the $2 mark on Wednesday.
Baldwin acknowledged that he paid more than the current price for most of his Appiant shares but added, ``It's never a loss until you get out.''
HOMESICK FOR THE TRADING FLOOR
Baldwin moved to Chicago from Cincinnati nearly two decades ago after working in the meatpacking business. Although he took a class on trading commodities in college, he never realized trading would suit his personality and skills until a friend suggested he would be good at it.
``This light bulb went on -- that's what I'd like to do,'' he said. ``So I just moved here and tried it.''
While he shouts for a living on the trading floor, outside the pit Baldwin is more soft-spoken. The 45-year-old trader, who went to college in Rome and speaks French and Italian, says he is ''too young to retire.''
But the gleam in his eye as he glances toward the trading pit reveals that Baldwin's true home is among the brightly colored jackets and wild gesticulations of the trading floor where he has spent most of his career, rather than in a room staring at a computer screen.
``The thrill is more in self-accomplishment and really being disciplined to do what I set out to do,'' he said. ``It's a challenge that every day is survival. And I must say, I did miss it.'' |
