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Bloomberg Markets Magazine

Bloomberg Markets Magazine December/January 2019

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United States
Bloomberg Finance LP
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in this issue

2 min.

Margaret Collins, Bloomberg News’s U.S. investing team leader, and Charles Stein, a Boston-based reporter, have long sought an interview with Fidelity Investments’ Abby Johnson, who runs the fund management giant founded by her grandfather in 1946. They finally got their chance when Johnson, who seldom talks to the media, agreed to a Q&A (page 50) after her company introduced the industry’s first zero-fee index funds. Johnson was joined by Kathy Murphy, who runs the personal investing division responsible for the funds. “In a business still dominated by men, these two executives are proving to be disruptors in more ways than one,” Collins says. “Financial analysis is now more and more being done via coding,” says Francesco Tonin. “The lingua franca of finance is shifting from Excel to Python.” That observation is…

5 min.
what problems come with alternative data?

IT’S SIMPLE, REALLY: To beat the market, just have insights before everyone else. Some try to stay a step ahead using brute force. Hedge funds across the globe have spent billions on super-highspeed internet connections and prime real estate to place their servers within spitting distance of an exchange. ¶ Others go for guile. Hire the biggest brains and let them (or their algorithms) slice and dice, correlate, and sample widely disseminated data to identify trends and relationships the competition can’t. ¶ Then there are those who’ve tried to go to the frontiers. Let everyone else scour the well-trodden ground of sales or earnings figures; they’ll look at alternative data such as satellite imagery of parking lots to track sales before they’re reported. ¶ Problem is, the alternative data space…

7 min.
a data-driven case for american capitalism

THE FOUNDER OF modern capitalism, Adam Smith, published The Wealth of Nations in 1776, the same year 13 colonies declared their independence from Great Britain. It remains the most referenced guide to prosperity because of its moral force: Smith said the freest markets are led by an invisible hand benefiting everyone, not just the individuals and companies motivated by their own profit. So where is capitalism succeeding in a world roiled by kleptocrats, simmering trade wars, and the xenophobia that inspired Brexit? That would be the U.S. American free enterprise is achieving the greatest growth in the developed world, posting annual gross domestic product gains since 2009. Within just eight years of the global financial crisis, the U.S. was the only non-emerging-market economy with record GDP. The nation’s growth has exceeded the…

1 min.
keeping cool

DATA CENTERS contribute about the same amount of greenhouse gas emissions as the aviation sector, according to the United Nations. Climate change activists have been pushing providers of digital services to reduce electricity use, especially as the sector booms in an era of Big Data. Portugal’s Covilhã Data Center, one of the largest in Europe, doesn’t just look cool. It was designed to stay cool—even if deadly heat waves like the one that hit Europe this summer become more frequent. The brutalist facility is spread over 75,500 square meters, an area equivalent to about 10 soccer fields; it’s big enough to house as many as 56,000 servers. The owner, Altice Portugal, the biggest telecommunications services provider in the country and a subsidiary of Altice Europe NV, says the five-year-old center was…

5 min.
sonia is too complex: q&a with a creator of the libor replacement

AS BANKS PREPARE to move away from the scandal-tainted London interbank offered rate, few in the city of London will be watching more closely than William Porter. Now head of European credit strategy at Credit Suisse Group AG, Porter was working on J.P. Morgan’s short-term interest rate and strategy team in the mid-1990s as it searched for a way to hedge short-term floating-rate risks against European currencies. Their solution was the sterling overnight index average, or Sonia. Earlier this year, the benchmark, which is considered impossible to manipulate because it’s based on actual transactions, was designated Libor’s heir apparent by the Bank of England. Here, Porter describes how Sonia came to life and why it still isn’t the perfect solution to measuring overnight lending rates. EMMA HASLETT: Set the scene: It’s 1996,…

3 min.
these tools can turn tweets and headlines into trading ideas

AMONG THE MOST complex and actionable data sets for trading strategies is an old one: news. Rising computing power and emerging technologies that can turn words into signals are allowing investors to sift quickly through the realm of reporting, press releases, and social media posts. Consider, for example, Tesla Inc. One of the most volatile U.S. stocks in 2018, Tesla shares have been very much driven by news—including, of course, tweets by Chief Executive Officer Elon Musk. So how do you quantify all of this sentiment on Tesla? You can track it with the {GN } and {GT } functions: GN charts the news, and GT graphs the tweets. To load shares of the electric vehicle maker in a GT chart, run {TSLA US Equity GT }. Change the chart setting to…