Kevin Powers recently joined FastMarkets as its director of sales, North America. FastMarkets provides reporting and analysis of the metals markets and broadcasts from the floor of the London Metal Exchange every day. Their web site is www.fastmarkets.com. He recently spoke with JLN Metals editor Sarah Rudolph about the company’s offerings, his new role, and the road he took to end up there.
Q: Tell us about your background. You were with DTN, which was bought by Telvent, which was bought by Schneider Electric, the parent for FastMarkets?
A: Yes, there were several takeovers. We had to keep changing shirts, pens and cards.
I was at DTN selling ProphetX, a market data workstation with charting and a news service – similar in some ways to FastMarkets, but the ProphetX platform was geared toward traders and brokers, and FastMarkets is geared toward people on the physical side of the metals market.
Telvent came in pretty quickly after I started at DTN and did their merger, which lasted about two years. Telvent is a Spanish company, so when they came in we were worried there would be big changes, but year after year to our surprise and relief no changes took place. Then Schneider Electric, a large global company, bought Telvent. It will be interesting to watch how that unfolds.
FastMarkets came calling while I was at Schneider, and as happy as I was selling the ProphetX platform and enhanced charting to traders and brokers, the FastMarkets side was of interest to me because it dealt more with the industrial side and manufacturing, and people were dealing with the physical commodity itself rather than making a couple of quick trades in and out of a spread.
They had some great growth when they started about 12 years ago. Then when 2008 hit, their board of directors decided to hunker down and wait out the storm and then make their big jump to do more growth globally. Since then Tim Dennis has come on as our global sales director; he has tripled the sales staff in last few months and we’ve added journalists to the staff for a total of 15. The staff has grown from 20 a year ago to more than 40 last year.
We had had quite a few customers in the US and they started really liking the product. We were gaining traction against our big competitors such as Metals Prices, a major force to be reckoned with in the US. Another one is American Metal Markets. Those are our competitors more than Bloomberg or Reuters.
Q: Did you start out in commodities?
A: Actually, I went into sales right out of college because my dad and my brothers were in sales and I always thought I’d go into sales. I was here in Chicago selling copiers and fax machines and riding elevators up and down. After about eight months of that I got a phone call from my brother in law — as all exchange stories seem to go — who said he was looking to bring on traders and turned to me first. I was very happy to say goodbye to riding elevators all day trying to sell copiers.
I worked for him for about a year and a half, and then I walked into the office one morning and he was sitting there at his desk with his head in his hands saying, “I’m out of business. I’m out of business. I’m out of business.” So I sat down and put my head in my hands and said, “I’m out of business. I’m out of business.”
He was short a bunch of calls in Yahoo and earnings came out and it was up $100 before the market opened, and it wiped him out. So he said, “Hey, as soon as the market opens, run down and liquidate all your positions, and I need all your trading money.”
I had heard all these stories, but I never thought it would happen to my boss. Me, maybe, but not my boss. So I went down to the floor and started liquidating everything, and all the guys standing next to me asked what’s going on and I explained the situation. One of the guys I had stood next to for a couple of years said, you know what? My boss is looking to hire a bunch of traders. So if you want to go up at lunchtime I’ll introduce you. I met a guy named Boris Fuhrman, and he hired me that day.
I went from being the single trader for one person to working for a large trading firm. I was the No. 1 trader for about two years, and then we went from 20 traders to two of us again, and that was the end of the dotcom bubble. Then decimalization and multiple listings came around, and stocks went from $200 to $2. The stock became an option – it was hard to trade options on a $2 stock.
That’s when I decided to jump off on my own. I had a lot of friends trading bond futures. I had a good time at Hagerty Grain for a couple of years. Then things started happening in the bond world that I had no idea about – they were over my head. I had some horrific afternoons after Alan Greenspan would make some comments. That was during the dawn of my relationship with my now-wife. She didn’t think she could handle the swings of being married to a trader, because I was the happiest guy in the world when things went well, and I was absolutely miserable when things went badly. She said if this is the way we’re going to be for the rest of our lives, she couldn’t handle that.
Q: What got you interested in physical metals?
A: I think what really interested me – I had to leave the trading world and I had a short stint at Caterpillar where I was in sales, but after about five years at Caterpillar I realized I just wanted to get back to the markets. That’s when I discovered DTN and ProphetX, and thought, this is great, I can still be near the markets and talk about the markets and see what’s going on every day, but I don’t have to lose money with a bad trade. I wanted to work for a small company that was starting from the ground up. Even though FastMarkets has a big presence in Asia, the North American office was just a startup. Being in on the ground floor is quite exciting.
Q: How much of your product offering is focused on data versus news?
A: It’s about 50-50. One of the interesting facts I’ve learned from being in the UK for my training and talking to Dominic Hall, the company’s CEO, is that we’re one of the few vendors that disseminates all of the data that comes out of the LME (London Metal Exchange). That’s something we hang our hat on. Other vendors might not go that in-depth into some of the history, the price structures, the forward curves. In the US, on Nymex-Comex or the CME, they have a September contract and a December contract, whereas with the prompt dates for the LME there is a brand new 3-month contract every single day. Most people don’t realize that about the LME. There is so much data there, that some of our LME advanced areas can allow you to really take a look at that in more detail.
Q: In addition to data, you offer proprietary journalism. Is that mostly price analysis?
A: It is really any story related to the metals markets. It could have to do with regulations, tax implications, the physical world, not just a focus on prices. For example, there could be a story on how Xstrata is starting to warehouse more of their copper and why they are putting it in certain locations.
Q: Do you deal only with industrial metals?
A: Most of our data is on the base metals, but we do cover fundamental analysis of all precious metals. Our research staff also has daily reports on technical analysis.
Q: What do you think will be the impact of the HKEx takeover of LME? Will they continue to keep the floor open for a long time?
A: There is a hard line commitment, and then they are going to explore opportunities after that. There is a lot of feeling in the UK that they will continue to keep the floor open if only because of that prompt date structure that’s inherent in the LME. Similar to how, although the grain futures pits are drying up, the options pits are still very active because there are many complicated trades that need to take place that don’t work well on an electronic platform. So it is still important to have that face to face action, for a broker to come down and he can throw out a complicated six-way trade dealing with prompt dates all the way out to 2023. There’s an element to the LME floor that will lend itself to staying open longer than most.
Q: What is unique about Fast Markets’ proposition?
A: We’re one of the only vendors that are down in the floor of the LME every single day. You can get your electronic data from all the exchanges, but what you get with FastMarkets is the insight and the research that takes place on the metals side. We are one of the only news vendors that are specifically only focused on metals; we live and breathe metals. So we’re going to pick up the stories that aren’t seen by most of the other news organizations out there. Our physicals assessment has a really big impact on the futures market, which most people don’t realize on a day to day basis. So because of our analysis of the physical side, and all the different warehouses throughout the world, we’re really giving you the full picture of what’s happening outside of exchange structure.
Q: You mentioned you get the prices at the non-LME warehouses, and they don’t put out the prices.
A: Yes, there is actually no electronic mechanism for a warehouse to put out their prices. So we actually pick up the phone and talk to someone at that warehouse and we report what has been happening that past week – the lows of those prices and the highs of the prices of that specific metal – and we put that in a report and offer it to our subscribers.
Q: How long has the Chicago office been open?
A: We moved in Oct. 1. There are four of us in Chicago. I’m the sales director and we have two business development managers and an account manager. We are looking at new business development in the North American zone.