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Bloomberg Markets Magazine

Bloomberg Markets Magazine April/May 2017

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United States
Bloomberg Finance LP
Back issues only

in this issue

2 min

The balance of power on Wall Street has shifted since the financial crisis, turning asset managers into the new titans of global finance. Nobody dominates quite like BlackRock Inc., with its $5.1 trillion in investments. Erik Schatzker was with BlackRock CEO Larry Fink the day in 2009 he bought Barclays Global Investors, transforming the company into the juggernaut it remains today. They’ve since done almost two dozen interviews— including their latest, for our cover story (“I Don’t Identify as Powerful,” page 64)—and discovered a shared passion for fly-fishing. “Whether he’s talking about his management team or his favorite river,” says the Bloomberg TV editor-atlarge, “if Larry is one thing, it’s passionate.” (And who photographed the BlackRock CEO? Larry Fink—same name, different person.) Thomas Labbe is a fixedincome market specialist in Singapore.…

2 min

David Lebovitz GLOBAL MARKET STRATEGIST, J.P. MORGAN ASSET MANAGEMENT “Part of being an investor is separating the signal from the noise and the feelings from the facts.”“We’re major overweight in airlines. It takes a long time for markets to be convinced a heretofore terrible industry is not terrible anymore.”Bill Miller FOUNDER, CHAIRMAN, AND CHIEF INVESTMENT OFFICER, LMM INVESTMENTS LLC “We’ve had a very good run in the markets since the elections. There is a general perception that this is about potential policy changes. It is not. It’s really been about a recovery and a rebound in U.S. growth.”Binky Chadha CHIEF GLOBAL STRATEGIST, DEUTSCHE BANK SECURITIES INC.John Manley CHIEF EQUITY STRATEGIST, WELLS FARGO FUNDS MANAGEMENT LLC “It’s hard to judge what sentiment really is. You have a lot of very bullish…

7 min
another reason for active’s decline

J.B. HEATON IS an unlikely stock market revolutionary. He doesn’t work in investing, his academic research focuses on legal aspects of insolvency, and most of his holdings are index funds. Yet thanks to his intellectual wanderings, Heaton today finds himself championing a slightly different take on active management’s decline—and, as it turns out, one that three professors advanced almost 20 years ago to scant recognition. Not only can’t humans outdo benchmarks, they all say, we can’t even fight them to a draw. Let’s begin with the simple coin flip. You’ll call it correctly about half the time, right? Well, the collective efforts of active fund managers around the world come nowhere near even that, with the proportion besting benchmarks lately hovering around 19 percent, according to Bank of America. “How are…

1 min
pulp affliction

NEGLECTED ORANGE GROVES such as this one aren’t exactly a pretty picture. A citrus-greening bacterium— transmitted by a tiny winged insect called the Asian psyllid—has wiped out vast swaths of Florida’s signature crop since the disease’s discovery in 2005. The scourge, which is present in every county that produces the fruit, as well as in Brazil, the world’s largest grower, makes oranges shrivel and drop prematurely, and it often renders juice unfit for consumption. Therapies can only slow the disease’s progression; there is no cure. Already facing lower demand for juice, Florida growers have been abandoning more and more groves. Last year the state had 130,000 such acres, an area almost nine times bigger than Manhattan. Once neglected, the land invites insect proliferation and possible further devastation, according to the U.S. Department…

3 min
uncover trade ideas hiding in your benchmark

WHAT’S DRIVING the returns of your bond benchmark? For indexes that include thousands of securities, getting your arms around that question can be a bit of a challenge. For instance, which of the 5,971 securities in the Bloomberg Barclays US Corporate Bond Index contribute the most to its return? You can find out by loading the index into Bloomberg’s Portfolio & Risk Analytics function at {PORT }. To segment the index for this particular analysis, let’s use the most granular level of the Bloomberg Barclays classification system. From the dropdown menu to the right of “by,” select Bloomberg Barclays Level 4 and press . To track returns, click on the Performance tab and the Main View subtab, then sort the list by total return year-to-date. You’ll immediately notice that metals and mining bonds…

3 min
is india rated too low? use this model to find out

MANY INVESTORS HAVE explored alternatives to ratings since the global financial crisis. Because raters tend to focus on long-term trends, their verdicts on creditworthiness may lag behind developments. Markets, meanwhile, are typically sensitive to short-term data. To bridge those two perspectives, an independent risk model can help you fill in the picture on an issuer’s creditworthiness. Independent models can be especially useful when marketpriced credit risk differs from ratings. The market, of course, prices risk in two main forms: bond spreads and credit default swap spreads. To see sovereign CDS spreads alongside ratings, run {WCDM } for the World Countries Debt Monitor. CONSIDER INDIA, for example. It turns out that there isn’t much of a market for Indian CDS, so let’s take a look at bond spreads instead. A 10-year Indian government…