The Secret Club That Runs the World

April 28, 2014
CNBC reporter Kelly (Street Fighters) offers brief portraits of successful traders from the lightly regulated world of commodity trading, where deals for oil, copper, and livestock are engineered for billions in profits. Much of the action described took place during a post-2001 boom that prompted major investment banks to get in on the action, and spurred regulators to try curbing the potential fallout from wild market swings that “created kings in the trading world’s empowered class and drove other people and companies into financial ruin.” Kelly presents mostly admiring portraits of obscure but rich financiers. There’s a false familiarity with these elites, as seen in details of extravagant wedding costs, and efforts to provide balance through sketches of would-be reformers such as Gary Gensler, former head of the Commodity Futures Trading Commission, fail to round out the choppy narrative. Apart from references to $4 per gallon gasoline during speculation-fueled price spikes and rising costs to Coca-Cola after a bottleneck in aluminum supplies, Kelly does not fully demonstrate the practical costs to the rest of the world. The need for access to her subjects forces her, like much of the rest of the financial press, to pull her punches. Agent: Bob Barnett, Williams & Connolly.

May 15, 2014
CNBC business reporter Kelly (Street Fighters: The Last 72 Hours of Bear Sterns, the Toughest Firm on Wall Street, 2009) takes on the world of commodity traders and the controversies swirling around it.The author profiles a world in which large-scale bets on market volatility and careful calculation of hedged positions are often upset by unexpected developments: geopolitical or other kinds of crisis, human overconfidence, bad luck, etc. Kelly introduces many world-class market movers, including Marc Rich, the longtime fugitive and former owner of trading company Glencore, and Gary Cohn, the president and COO of Goldman Sachs, which was investigated for manipulating supplies of aluminum. The dizzying rise of oil prices in the late 2000s and their equally precipitous slide provides a frame in which Kelly takes up the question of whether commodity trading is speculative and/or beneficial. Traders like London hedge fund operator Pierre Andurand move billions of dollars with their intuitive bets and lead excessively lavish lifestyles. The author provides insight into the various levels of the world of commodities, from raw materials production to futures contracts and the derivatives based on them. Kelly chronicles efforts to regulate these markets-especially during Gary Gensler's tenure at the Commodity Futures Trade Commission-and she also details the depths of continuing opposition. Especially intriguing is the underlying narrative regarding the persistence of the chaotic feedback from the combined effects of disparate individuals, markets and events. "A true knack for wagering on the price vicissitudes of crude, copper, or cotton remain[s] a profitable skill in almost any environment-especially when only a handful of individuals in the world [can] really do it well and on a large scale."A lively contribution to an ongoing debate that features the unforeseen as much as the deliberate.

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June 1, 2014
Hedging the risk of investing in commodities used to be the fairly dull province of a few brokers and traders on one side of a transaction and farmers and end users of crude oil, copper, and pork bellies on the other. But the great commodities boom of the early 2000s attracted flamboyant risk-takers, whose transactions ultimately produced wild swings in prices on gasoline, food, and other essentials and prompted regulators to try to crack down. CNBC market reporter Kelly (Street Fighters, 2009) unveils the secretive world of unregulated hedge funds, of banks and brokers who trade for their own accounts often against the interests of their customers. With exclusive access to the major players in the commodities market, Kelly offers fascinating portraits of huge egos and details of byzantine deals, including a massive merger aided by former UK prime minister Tony Blair. Among her subjects are a fuel trader whose trades saved a sagging Delta Air Lines and a trader at a Swiss commodities firm founded by American fugitive Marc Rich. This is an absorbing inside look at the shady world of multinational brokers.(Reprinted with permission of Booklist, copyright 2014, American Library Association.)