Imagine a profession that allows you to wear colorful, patterned jackets, shout at your colleagues, and wave seemingly obscene hand gestures across a room...welcome to the commodities trading floor. The UM group kicked off the day with a visit to the Kansas Board of Trade, where the order of the day is simple: buy low/sell high. Upon entering into the wheat pit, we were exposed to the inner workings of grain trade or the stuff that wraps your burger or your PB&J. And what a day to be in the pit; with oil prices dropping, the USDA releasing critical stats, and weather patterns dictating near-term crops, there was plenty of action to be heard and seen. The adrenaline was palpable. As a profession, it must be rewarding, to an extent, knowing where you stand at the end of the day: did your trades work in your favor...or not?
Next stop: Federal Reserve Bank (FRB) of Kansas City. There are 12 branches of the FRB, whose primary task is to increase GDP while decreasing unemployment, or so we were told. An initial tour of the FRB provided us a peek into the highly automated process of money transfer (or what makes money "fluid"): three robots moved "mucho diniero" in and out of the FRB's vaults, making sure that those who needed, got it, and those who had it, distributed it. We also learned that Kansas City is geographically optimal for an FRB: between the confluence of train/road systems, the prominence of cattle/grain companies, and its central location for inbound/outbound transportation, it truly offers a central "node" for trade.
The highlight was undoubtedly our meeting with FRB-KC President Tom Hoenig, who made time for the group to provide insights into the organization's regional and national role. Mr. Hoenig delivered a short overview of the FRB's function, and then answered multiple questions from UM students concerning the 2008 economic turmoil, the future market outlook, and the FRB's ongoing participation in the recovery. There's nothing like hearing it first-hand from people in the know...
In three seperate vans, once again, the group trekked back to Omaha (on a sunny, clear-skied day). Some of us swung by Mr. Buffett's humble abode, just to sneek a peek, since we are all very excited about tomorrow's rendez-vouz with the Oracle himself.
I loved the trip to the Federal Reserve Bank, this was a really unexpected treat. I was impressed that Tom Hoenig took so much time out of his day to meet with us, and I was super proud that he repeatedly told us what great questions we asked!
ReplyDeleteI really enjoyed the Board of Trade. What a lively place! I can only imagine how it looked before trading started to move online!
ReplyDeleteI was really impressed that Tom Hoenig spent an hour of his time sharing his thoughts and experiences with us. I do not think he expected as many questions as we had for him. His explanations were so interesting that I would have been happy to keep him there for another two or three hours!
The FRB was a real "wild card" for me going into this trip. I was not sure what they did nor did I have any expectations other than to learn something...and learn something we did!
ReplyDeleteTalk about a humbling experience! I got to sit in a building where 1/12th (or more) of the nations money moves daily and where one man influences the monetary and fiscal policy for seven states! The FRB was a beautiful place, made from Marble and cherry wood, that I instantly discounted because of the extravagance. It wasn't until shortly after our tour through the vault and money museum I was able to appreciate our tax dollars at work. The building was truly state of the art, and I am pretty sure impenetrable.
The presentation by the young economists of the FRB was very interesting an very well prepared. We were given a great lunch (may I say, best sandwich bar ever?) and ushered up to the 14th floor of the building to meet in the Executive Board room with the president. An honor and a privileged that I didn't appreciate until some of my classmates explained how influential Mr. Hoenig has been over the past 20 years. As I looked out the window of that Kansas City board room, I got a glimpse into the troubles of a man of his stature and influence. I pictured myself someday looking out a window pondering difficult decisions that would affect many people (if I am so lucky!).
This was one of my favorite parts of the trip, seeing first hand the expertise and energy that is put toward keeping our monetary and fiscal policies in line was truly awe inspiring. The presentation by the young economist was very helpful in laying out the issues and underlying forces that caused the recent recession that were bent and twisted by the media. President Hoenig was the highlight of the day and the way he broke down the policies that are being discussed in D.C. today was very insightful and useful in looking at all of the options the country is faced with and what the effects the different options could be. Overall an amazing experience that gives a guy a sense of pride in the forward thinking of our nations leaders!
ReplyDeletePresident Hoenig was the highlight of the trip for me as well. It was a real treat to see a high level executive in action. You could really see the way he thinks and boils down countless macro factors to create his responses.
ReplyDeleteThe building was also incredible - though it may have been our tax dollars at work, it was pretty incredible.
This was one of my favorite parts of the trip. I enjoyed listening to Mr. Hoenig's honest answers to our questions, as it seemed others somewhat dodged them.
ReplyDeleteAlso, It was fun to see those entrusted with the millions of dollars housed in the Fed's Vault: Huey, Louie, and Dewey the money moving robots!