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Bloomberg Markets Magazine

Bloomberg Markets Magazine January 2015

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United States
Bloomberg Finance LP
Back issues only

in this issue

2 min
a message from tom secunda

Dear Friends and Customers: We are excited to provide you with the fourth annual edition of Bloomberg Markets dedicated to the strategies, tips and tools to help you use the Bloomberg Professional service more successfully. This issue is inspired by your feedback as well as contributions from the Bloomberg Product team, whose members are driven to continually enhance the usability and value of the Bloomberg terminal. In the past year, our industry has experienced tremendous regulatory change as Dodd-Frank rules have become reality and Europe has begun its review and implementation of EMIR and ESMA. Not only have we helped our customers adjust to this new regulatory climate through our swap execution facility (Bloomberg SEF) and our trade and information management services, such as Bloomberg AIM and Bloomberg Vault, but we have…

5 min
using european natural gas to diversify your portfolio

NATURAL GAS TENDS to be uncorrelated with other assets, so some money managers buy securities pegged to the fuel to diversify their portfolios. Prices of natural gas can be volatile. The fuel is prone to spikes caused by the need to match supply and demand each day. Sudden cuts in available supply— or jumps in demand—can cause prices to soar. In addition, the frequency and magnitude of such jumps are greater than those commonly found in other markets. So if you’re looking to diversify your portfolio with the fuel, you can use a number of tools on the Bloomberg Professional service to analyze the fundamentals underpinning natural gas markets and better navigate the commodity. LET’S START WITH some background on demand and supply. The four main uses of gas are heating, cooking, industrial…

1 min
don’t bet the farm on china

Frances Hudson’s investment horizon stretches to decades. One reason, says the global thematic strategist at Edinburgh-based Standard Life Investments Ltd., is that demographics and other long-term drivers of securities markets are easier to predict with accuracy than factors that aff ect markets during shorter periods. For example, many market watchers expect that China’s growth will lead to an increase in global demand for food commodities, Hudson says. The thesis is that the world “needs more food to satisfy growing middle-class appetites for meat—which I think is wrong,” she says. Why? Consider a population pyramid for China, Hudson says. The biggest slice in the graph represents people born around 1985. That bulge in the population is forecast to remain the largest segment until 2065, meaning that China will become an increasingly elderly society. Put…

1 min
monitoring gas flows

EU Utility Spot Markets is a function that lets you track and analyze pricing, production and demand data relating to European utility markets. Type SEUM . The information displayed on SEUM continues to expand and now includes data required under the European Union’s Regulation on Wholesale Energy Market Integrity and Transparency. Remit requires market participants to report transactions involving wholesale energy products, including contracts for the supply or transportation of electricity or natural gas and related derivatives. SEUM lets you access day-ahead and within-day price curves, flows, generation, capacities and related operational data to get insight into gas and power markets. To locate natural gas data for Ukraine, for example, click on the arrow to the right of Market and select Ukraine. The table shows the daily gas flows at…

1 min
staying ahead of the weather

The EU Utility Market Models tool now provides high-speed weather forecasts from Andover, Massachusetts–based forecaster WSI. Type EUMM . The function was recently enhanced to include weather maps and commentary from WSI meteorologists. To display maps, click on the Maps button on the red tool bar and select Temperature, for example. For commentary, click on the Commentary button. EUMM’s charts, tables and maps are optimized for gas and power traders, letting you quickly compare models and previous forecasts for multiple countries. Compiled by Jenny Hermelin jhermelin@bloomberg.net…

6 min
calculating fair value for your derivatives

COMPANIES THAT PREPARE their annual accounts under International Financial Reporting Standards have been required since Jan. 1, 2013, to adhere to new rules. One of them is IFRS 13, which focuses on fair-value measurement and particularly affects accounting for over-thecounter derivatives. IFRS 13 requires a full consideration of nonperformance risk—the risk that counterparties may not be able to fulfil their contractual obligations. Auditors now expect clients to consider whether a fair-value adjustment for credit risk is required on their OTC derivatives transactions and whether they need to invest in systems and processes to estimate the risk. You can use the Multi Asset Risk System (MARS) function to help meet this requirement. The market value of derivatives contracts varies over time because of changes in variables such as interest rates and foreign-exchange rates.…