Commitments of Traders Report - COT
Categories: Metrics, Derivatives, Trading
The Commitments of Traders Report (COT) is a weekly update on contract open interest published by the U.S. Commodity Futures Trading Commission (CFTC). It is one of Wall Street’s finest examples of availability bias, as it is one of the few pieces of information that provides any level of data on speculation and hedging by funds in the futures markets, and by how many contracts they are “long” or “short” on specific commodities.
Many believe that it offers a correlation between managed money positions and commodity prices. However, it’s highly inconsistent, offers readers a sense of false confidence, and might as well as well be written by mole people, since their heads are also underground, like CFTC regulators.
Like all things on Wall Street, the COT is easily rigged, and has been manipulated by large investment firms, because no independent audits of the numbers typically take place. In 2014, J.P. Morgan paid a fine to the CFTC for falsely reporting “large trader” data. You probably didn’t notice, because banks are constantly paying fines for market manipulation or fraud. Or...because you were at the movies, or something.
Many large investment banks and smaller advisories with commodity desks publish a weekly analysis of COT data for clients for two reasons. 1) The raw report from the CFTC is almost impossible to understand, and 2) the banks need to make it look like they’re actually doing work so that their clients don’t pull their money from their funds.
These client reports include tables and charts that are recreations of government charts in the banks’ color schemes and logos, again to justify the existence of a junior analyst’s job and to keep him at work long enough so that he can take a car home on behalf of the investment bank’s account.
The COT report dates back to 1924, when the USDA began publishing hedging data. It became a monthly report in 1962, bi-monthly report in 1990, fortnightly report in 1992, and weekly report in 2000. Reports for the previous week’s data are completed on Tuesday, and released to the public on Fridays, which makes little sense given the fact that we can get instant trading data 24 hours a day from a satellite in the sky. But...that’s our government at work.
Related or Semi-related Video
Finance: What is a Commitment Letter?5 Views
Finance a la shmoop what is a commitment letter? dear Rebecca it's been fun and
all but asking me to move in with you was a real turnoff so uh have a nice [Rebecca reading letter]
life yeah that would be a fear of commitment letter I know that one well
well so what's a commitment letter then all right well you need dough but you
don't need it today you need it in six months when construction is finished on
your cabin by the lake at that point you'll convert your very expensive
building loan into a normal mortgage well you can go to the bank and for a [Man walks into bank]
small ish fee get a commitment letter from them which stipulates that assuming
nothing material changes between now and then you will in fact then get a loan
for one hundred fifty two thousand dollars at 5 percent fixed interest rate
for 30 years the bank is then committed to giving you that loan when you know [Contract stamped with committed]
eventually you need it that way you don't have to worry about your bank you
know breaking up with you which is nice because it's tough getting
the It's not you it's me speech from a guy in a bowtie [Man wearing bow tie talking to a man in the bank]