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Bloomberg Markets Magazine

Bloomberg Markets Magazine December 2014

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United States
Bloomberg Finance LP
Back issues only

in this issue

16 min
the currency casino

It’s a Saturday afternoon in March, and more than 500 people have tuned in for a two-hour webinar that tells them they can become rich trading foreign currencies. “Success in trading is not a fantasy; it’s a formula,” Jared Martinez, founder of Market Traders Institute Inc., the oldest and largest such school in the U.S., tells his audience. “We have that formula.” The Lake Mary, Florida, company that Martinez founded in 1994 says it has educated 30,000 amateur foreign-exchange investors. “How many people would like to learn a skill where, within two days, they could make a thousand dollars?” Martinez asks that afternoon. “I’m here to tell you I can teach you how to trade consistently.” He introduces Jose Tormos, his sonin-law, who echoes Martinez’s advice. “It is the easiest, most predictable…

5 min
stress testing a convertible-bond strategy

INTEREST RATES LOOK likely to rise, and stock benchmarks, including the Standard & Poor’s 500 Index, hit record highs this year before the market took a sharp downturn in October. For most of the year, the environment made convertible bonds attractive to both issuers and investors. Convertibles are corporate debt that can be exchanged for a company’s stock when shares rise above a certain price. They can enable a growing technology company, for example, to issue debt at a low coupon rate and with a conversion price well above the current share price. For investors, the securities offer equitylike performance on the upside with bond-floor protection on the downside. A total of $80 billion of convertible bonds were issued globally in the first three quarters of 2014. By comparison, $65 billion were…

8 min
the youngest oil tycoon

When he left Midland, Texas, in 1997, Bryan Sheffield didn’t plan on returning. His father and grandfather both had earned their fortunes drilling wells in this flat, dusty landscape, living through oil industry booms and busts. Sheffield aimed for a career in finance. After earning an undergraduate business degree, he moved to Chicago and traded futures. By his late 20s, he was trading German bonds at an office in Gibraltar and living in a beach town on Spain’s Costa del Sol. “I never dreamed of becoming an oilman,” Sheffield says. He’s sitting in his black GMC Denali, parked beside a nodding donkey pump a few miles west of Midland that’s been pulling two or three barrels of oil a day out of the ground since Joe Parsley, his grandfather, drilled the…

2 min
pop quiz: it’s good to be the king

ECONOMICS “I am Kobe. You are LeBron James.” –Bill Gross to Jeffrey Gundlach, CEO of Doubleline Capital LP 1. In 1966, after graduating from Duke University with a degree in psychology, Gross headed to Las Vegas with $200. How much money did he have after four months of playing blackjack? A $0 B $1,000 C $10,000 D $100,000 2. In his first Pimco Investment Outlook, published in September 1981, Gross wrote that “the economy and financial markets are making an extended visit to the”... A Woodshed B Dentist’s office C Dark side of the moon D Ninth circle of hell 3. Why did Gross shave his trademark mustache? A His wife said it made him look old B He lost a bet on Treasury yields C His barber dared him 4. In an October 2013 Pimco Investment Outlook article titled “Survival of the Fittest,” Gross revealed his…

3 min
japan inc. changes the way it does business

Japanese Prime Minister Shinzo Abe’s government has come up with a number of initiatives designed to jump-start the nation’s businesses, summarized as the Japan Revitalization Strategy. Though the economy has suffered recent setbacks as a result of the recent consumption tax increase (from 5 to 8 percent, which hit domestic spending) and a weakened yen (which recently hit the ¥110/$1 mark for the first time in six years), Abe believes that the growth strategy outlined will revive Japan’s economic strength. Indeed, there are already some positive signs of recovery. Starting up is now easier Legislation to assist new ventures has been adopted as part of the Industrial Competitiveness Enhancement Act, whereby tax incentives promote corporate investment in venture business. Changes in legislation also promote crowdfunding of startups, which until recently was impossible…

8 min
bank notes and bribes

One day in December 2005, a few hours before dawn, employees of the Austrian central bank, dressed in blue overalls, began stacking about 30 million bank notes onto wooden pallets. They loaded the manat bills, the currency of Azerbaijan, into 38-ton trucks, according to people familiar with the shipment. Escorted by police in unmarked BMWs, the convoy rumbled past Vienna’s centuries-old churches and Habsburg palaces, crossed the Slovakian border and arrived at Bratislava Airport. There, the shrink-wrapped pallets were loaded onto a plane destined for Baku, Azerbaijan’s capital on the shores of the Caspian Sea. ¶ It looked like any other transaction in the international money-printing market, where bills are bought and sold amid tight security. In fact, Austrian prosecutors say, the sale was part of a corrupt bargain between…