Summit Notebook

Exclusive outtakes from industry leaders

CME Chairman Duffy on being a political football

duffy.jpgTerry Duffy, the chairman of CME Group, which owns the world’s largest derivatives exchange, says he realizes the Merc can be an easy scapegoat at a time when food prices are soaring. When politicians start to talk about the evils of “speculators”, criticism of the main venue where they make their bets on wheat and other crops can’t be far behind.

But Duffy, a long-time livestock futures trader, told the Reuters Exchanges and Trading Summit that he’s used to the exchange being a “political football” and that this is far from the worst case of that happening.

“I remember seeing tractors on LaSalle Street,” which runs through the heart of Chicago’s financial district, when farmers were protesting against excessively low prices in other years, he says. ”I mean, that’s a bad day. That’s when you know people are upset because that gets everybody’s attention.”

The mistake, Duffy says, is to say that the speculator, or the hedge fund, are the root of the problem of the run-up in food prices.  Investors want exposure to agricultural commodities and they are intent on getting it, whether through the CME or elsewhere, he says.

Mass pension fund exec warns banks may repeat mistakes

travaglini1.jpgMassachussets State Pension Fund Executive Director Michael Travaglini says the Bay State’s pension fund, one of the nation’s largest, won’t be following the lead of New Jersey’s anytime soon — at least not in terms of direct investments in banks. He thinks that New Jersey — like some prominent sovereign wealth funds — viewed its recent investments in Citigroup and Merrill Lynch “almost as a necessity” to help prop up the financial system.
But even if he understands their motives, Travaglini isn’t sure rescuing troubled investment banks from Merrill Lynch to Bear Stearns is the right thing to do.
“If there’s always a net, whether it’s the Fed, whether it’s New Jersey, whether it’s Abu Dhabi, to me there’s a risk that there’s nothing learned,” he said. “I don’t want people to repeat the same mistakes. I think reasonably people could argue this whole subprime mess is a mistake that has been repeated two or three times throughout history.”
To Travaglini, the danger of lessons not getting learned reminds him of his own kids and why they must learn the consequences of mistakes.
“Why would they avoid getting in the same predicament if they had known they were going to get taken off the hook,” he said, speaking at the New York segment of the Reuters Hedge Funds and Private Equity Summit.

Video – Tough times for hedge funds and private equity

2008 is shaping up to be a challenging year for hedge funds and private equity but there are opportunities if you know where to look.

From London to Tokyo to New York the turbulence in the stock market is driving hedge funds and private equity firms to look beyond equities.

Audio – Mexico may need new tax reform over long term

finmin.jpgAs Mexico’s oil production gradually declines from peaks in 2004, future governments may need to come up with new ways to tax more products, like food or medicine, to keep healthy coffers, Deputy Finance Minister Jose Antonio Meade told the Reuters Latin America Investment Summit.
   Revenues from state oil firm Pemex currently bring government revenue to 20 percent of gross domestic product.

Audio – The Whole, Wide World!

powell1.jpgGeneral Mills says it doesn’t always think of itself as a big company — but one look at its fancy company brochure and you remember just how many products they manufacture.

General Mills, of course, makes cereals like Cheerios, Wheaties and Trix (yes, yes — Silly Rabbit!). But the company also makes such yummy treats as Pillsbury baked products, Chex, Bisquik pancake mixes, Hamburger Helper (I loved this in college … OK, I still love it) and Haagen-Dazs ice creams (Ohhhhh yeah….).

Audio – P.F. Chang’s faces economic pressures; and a visit from the Queen of Temperance!

federico1.jpgDifferent companies are using different methods to deal with the withering U.S. economy and still draw in customers.

Richard Federico, chief executive of P.F. Chang’s China Bistro, said his restaurant company is trying to implement a mix of all available lures to keep crowds coming to its Bistros and Pei Wei Asian Diner concepts.

Audio – Chicken and oil

sanderson1.jpgNo, it’s not a new recipe (although fried chicken is always a welcome addition to almost any event we’ve ever attended).

As prices for commodities and other ingredients have been much on the minds of most of the guests this week at the Reuters Food Summit, chicken and prepared foods producer Sanderson Farms said pricing of chicken was something that was very clear for investors and suppliers alike.

Audio – Nuts about nuts

mendes1.jpgWell, he seemed pretty calm, actually!

Michael Mendes, chief executive of Diamond Foods, maker of Emerald Nuts, said at the Reuters Food Summit on Monday that demand for the company’s many different nut products remain strong and gave an optimistic outlook on the future.

But Mendes also warned that commodity costs remain high and companies are looking to keep costs in check across their offering.

Audio – Re-establishing Starbucks’ cool

goldin.jpgIt’s been some time since Starbucks was considered cool.

There was a time, to be sure, when the coffee retailer’s cool, new shops were actually cool and new. It was Seattle — and all things Northwest — were hot. Coffee was being consumed by the gallon. Nirvana and Pearl Jam were just building their angst-ridden, flannel-clad fan bases.

But now, a lot of that has changed and Bob Goldin, executive vice president at food industry consultant Technomic Inc, said at the Reuters Food Summit that the company needs to get some of that cool back in order to right its ship.

Audio – Pricing power key for ConAgra

rodkin1.jpgIf ConAgra Foods Inc is planning on making its numbers for the rest of this fiscal year, it’s going to have to do it by passing on cost increases to its customes.

ConAgra makes a slew of products — everything from Chef Boyardee prepared foods to Jiffy Pop popcorn  to Pam cooking spray – and most of the stuff that goes into the products they make cost more now than they did a year ago.

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