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This study seeks to explain the major drivers of trading activity in commodity futures markets and gage the effect of trading activity on commodity prices. Rather than concentrating on a specific commodity subgroup or a particular type of commodity traders, we provide an extensive overview of the behavior across all market participants and their influence on commodity prices by using a broad set of commodity futures contracts. Although commodity futures returns show co-movement with financial fundamentals (U.S. dollar index, equity, and bond markets), based on the Disaggregated Commitment of Traders Report (DCOT), this relationship cannot be attributed to trading activity. Pricing in commodity markets can be predominantly attributed to hedgers and influential speculators (money managers), whereas small speculators (nonreportable traders) are crucial to some soft commodity futures similar to dealers in metals commodity futures. Furthermore, we find limited cases where inventory changes exert a sizable influence on position changes of DCOT traders.
World market governance
(2014)
Democratic capitalism or liberal democracy, as the successful marriage of convenience between market liberalism and democracy sometimes is called, is in trouble. The market economy system has become global and there is a growing mismatch with the territoriality of the nation-states. The functional global networks and inter-governmental order can no longer keep pace with the rapid development of the global market economy and regulatory capture is all too common. Concepts like de-globalization, self-regulation, and global government are floated in the debate. The alternatives are analysed and found to be improper, inadequate or plainly impossible. The proposed route is instead to accept that the global market economy has developed into an independent fundamental societal system that needs its own governance. The suggestion is World Market Governance based on the Rule of Law in order to shape the fitness environment for the global market economy and strengthen the nation-states so that they can regain the sovereignty to decide upon the social and cultural conditions in each country. Elements in the proposed Rule of Law are international legislation decided by an Assembly supported by a Council, and an independent Judiciary. Existing international organisations would function as executors. The need for broad sustained demand for regulations in the common interest is identified.