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Bloomberg Markets Magazine

Bloomberg Markets Magazine June - July 2020

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Bloomberg Finance LP
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in this issue

1 min.
the fear issue

Fear defeated greed in the first few months of 2020. And for good reason: Covid-19 had claimed roughly 290,000 lives worldwide by the middle of May, and efforts to combat the spread of the coronavirus were driving the global economy into its worst decline since the 1930s. In “A Shocked Economy” (page 50) we present the scope of that economic fallout, as well as the bizarre gyrations in energy markets, in graphics. To gain additional perspective, Bloomberg Economics’ Simon Kennedy spoke with professors Carmen Reinhart and Kenneth Rogoff, authors of the 2009 book This Time Is Different: Eight Centuries of Financial Folly. In “This Time Really Is Different” (page 62), they explain what they’re looking out for now. London-based wealth reporter Edward Robinson tried to get a sense of what’s next. His…

3 min.
the vocabulary of fear

Force majeure Force majeure, French for “superior force,” refers to clauses in many contracts that let a party off the hook in the event of an act of God—an unexpected, external event that makes it impossible for a party to fulfill its obligations. After much of the world’s economy temporarily shut down, companies began invoking force majeure to reject unneeded supplies or get out of leases. Such moves, though, often end up in court. Many U.S. states offer similar relief even for contracts without such a clause. —Bob Van Voris Term premium A term premium is the difference between what you’re paid for locking up your money for an extended period and what you’d get for simply rolling over short-term instruments. Traditionally, it was a bonus for investors willing to accept the risk…

6 min.
what will the virus change forever?

“We’re relatively quickly going to come to a point where we have more patients and not enough doctors. We’re going to have to shift to where the first point of care is artificial intelligence. If you have a symptom, you go online to an AI program. Everybody will have a home kit of a thermometer and a scale and a blood pressure cuff and a few other simple things. You’ll put in your symptoms and your readings from home, and you’ll get a differential diagnosis. If you just have to stay home and have chicken soup and liquids and rest, the AI will tell you that. If you need to be escalated, the AI will refer you to a telemedicine general consult, and then perhaps to a specialist telemedicine consult,…

3 min.
a fractured world ushers in the end of dollar dominance

BACK IN AUGUST, Bank of England Governor Mark Carney gave a speech in Jackson Hole, Wyo., about the problem of the U.S. dollar. The issue, as he identified it, was not that the dollar’s fundamentals are weak, but that they’re too strong. Even as the U.S.’s share of worldwide gross domestic product steadily shrinks, the dollar’s share of global transactions has only grown. This mismatch proves dangerous when, in the process of fulfilling its domestic mandate, the Federal Reserve makes moves that have huge ripple effects around the world. Why is the dollar so popular? For years people have been crying about how U.S. policymakers have abused its strength and unique global position. They point to the burgeoning Fed balance sheet, the massive national debt, or the huge trade deficit that…

4 min.
a crisis only reinforces the dollar’s dominance

THERE IS SOMETHING about America that tends to shed fear. Its citizens occasionally tremble, but America as a whole exploits fear. It may do anger or retribution, or internal divisions built on personal fears. It doesn’t suffer from collective angst—or never for long. America is too big and brash. It does strength. It does hope and revival. That’s a cliché, of course. But it’s why—when the global economy started its pandemic-driven collapse—the world’s investors flocked into dollars. America is that confident neighbor with the basketball court and pool out back as well as the high fence and well-stocked wine cellar/bunker. In a crisis, you want to know that neighbor. It’s safe at his place. Even if you don’t particularly like him. Every economic crisis brings a new belief that foundational change is…

1 min.
london awakens

AS LONDON emerged from lockdown and took its first steps toward an uncertain future, a pale glimmer of hope competed with frustration and confusion—frustration that the U.K. had racked up the highest death toll in Europe, confusion over what a return to work would look like. The bells of St. Paul’s mingled again with the din of construction machinery in the City. The one constant was the occasional doleful wail of ambulances heading to hospitals across the metropolis. As the government’s instruction shifted in mid-May from “Stay at Home” to “Stay Alert,” little changed at first. Trundling into the financial district from affluent boroughs to the east and west, the District Line remained almost empty. With time, the ranks of lower-paid workers would swell as more of them returned to work—part…