Betty Jo Gigot, Editor and Publisher

Memphis, Tenn., certainly has its share of attractions – Graceland, Beale Street, the Peabody Hotel and its parade of ducks, and St. Jude Children’s Research Hospital. Known as the home of FedEx, Memphis also is also home to a number of the top trading companies in the nation, following in the tradition of the “old time” cotton traders who founded downtown Memphis in the early days. “Memphis was originally the center of the cotton trading business,” said Charlie McVean, chairman and CEO of McVean Trading. “My father-in-law owned a cotton exporting company with offices in the penthouse of the old cotton exchange building.”

Thinking man
A conversation with Charlie McVean is kind of like driving in a race car. If you don’t pay very close attention, you get lost in the dust, but if you stay with him, it is well worth the ride. McVean switches from world to national to local economics and politics with the turn of a word, offering the listener a window into a complex mind in a complex world.

It shouldn’t be any surprise that Charlie McVean ended up in the trading business. A Memphis native, McVean spent his summers in Missouri working on the family livestock operation. After graduating from Vanderbilt University with honors, he worked for a soybean crushing company in Mississippi before joining Cook Industries in grain trading. Eventually he worked for the Louis Dreyfus Corporation and was an early partner in REFCO before starting his own firm in 1986.

Today, in addition to being company chairman and CEO, McVean is one of seven senior traders at the company headquarters in Memphis. The company employs 75 people, the majority of whom are in Memphis, offering research and support staff to the major players. Other investment offices are in Birmingham, Ala., Houston and Fort Worth, Texas, and Des Moines, Iowa.

Global view
“We at McVean Trading focus on four interrelated sectors,” McVean said. The four are livestock and meats, grains and oilseeds, global macroeconomics and, interestingly enough, China.

“We have concentrated on China for the past ten years,” McVean said. “We see the growth rate of the global economy as very important to overall demand for commodities, and feel that China is the connection between the growth rate of the global economy and strength in demand for commodities in general. The growth rate of China’s economy right now is eight to nine percent a year and is heavily based on export of manufactured goods and investment in manufacturing capacity and building.

“Policy makers in China will ultimately have to put much greater emphasis on personal consumption expenditure growth relative to investment spending. When they do, there will be a true boom in world demand for grains and oil seeds. We have a major investment in understanding China and hope to be on board when this train leaves the station.”

National view
McVean quoted Bill Gross of PIMCO, a California investment group, as saying that in 15 short years, the U.S. economy transitioned from a traditional industrial base to and through a period of time wherein it was a service-based economy to its current status as a financial-based economy.

“Specifically, over 50 percent of the earnings of Fortune 500 companies are derived from financial operations,” McVean said. “In my opinion, a financial-based economy is an oxymoron that puts the tail ahead of the dog.

“Our current economic path is unsustainable and a lot of smart people know it. The next presidential election will be a slugfest over geopolitical and macroeconomic strategies going forward. Among other things there will be a broadly based reappraisal over the wholesale offloading of our capacity to produce real tangible products. Individual trade issues such as the wholesale importation of huge quantities of beef will come to be considered in this broader perspective.

McVean Trading and Investments has fulltime people in China and its chief economist, Michael Drury, spends two weeks a quarter there. It also has a very knowledgeable partner in Japan, and well-connected agents in India and South America.

With those perspectives in mind, McVean concludes, “The U.S. must act now to improve its public schools or it will inevitably jeopardize its future as a great nation.”

Putting his money where his mouth is McVean created “The Greater East High School Foundation,” committed to improving a major public school he attended for twelve years. The school, which was once one of the finest public schools in the U.S., has since, like so many others, fallen on hard times. McVean’s foundation is developing a promising program where outstanding senior and junior students are paid ten dollars per hour to tutor in the middle school.

McVean says, “Here, we reduce the critical student to teacher ratio from 24:1 to 2:1. With this kind of teaching power, we can really help these kids, who are two to three years behind in their skill levels, get back to par. (For more information please go to www.EastHighFoundation.org.)