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Bloomberg Markets Magazine

Bloomberg Markets Magazine November 2015

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Bloomberg Finance LP
Back issues only

in this issue

2 min
it’s all in the preparation

JANET YELLEN IS ready, as she always is. The U.S. Federal Reserve chair is famous for the studious way she prepares for everything, whether it’s testimony in Congress, an academic lecture, a meeting, or an interest rate increase. There’s no single definition of influence, but having the power to sway the entire global economy and usher in a new era with a single quarter-point decision—it didn’t happen in September, but Yellen strongly hinted she expects it to come this year—is a good place to start. In this issue, our fifth annual list of the world’s 50 Most Influential people in finance, you’ll find bankers, CEOs, heads of state, entrepreneurs, money managers, thinkers, and activists. These folks weren’t born influential. Through a combination of intelligence, persistence, and circumstance, they made themselves that…

1 min

“Selling the Blockchain to Wall Street” OCTOBER 2015 I would like to commend Bloomberg Markets for an excellent article on Blythe Masters and the blockchain. The writing offered valuable insights on what is turning out to be an exciting frontier space, while the involvement of Blythe Masters always lends much-needed gravitas. WILIAM THAM Assistant vice president, Bank of Tokyo-Mitsubishi UFJ Singapore Considering the trillions of dollars that appear as memorandum items in financial statements, the bailout, and now a bright idea to use underlying technology for secure transactions on distributed servers that clearly aren’t secure, I am a bit surprised and disappointed this article hit paper and ink. This sounds like buzz and another bad idea that will either die or be used—with the institutions involved hiding losses from public view until a bailout is…

6 min
ubs’s puerto rico wipeout

UBS HAD A GOOD thing going in Puerto Rico. The Swiss bank served as an adviser to the commonwealth’s Employees Retirement System, led the underwriting of a $2.9 billion bond issue for the pension agency in 2008, and then stuffed half of those bonds into a family of closed-end mutual funds it sold exclusively to customers on the island. It collected fees at every step. Now, with the U.S. territory in the downward spiral of a government debt crisis, it’s all coming apart for UBS, long the biggest retail brokerage on the island. After UBS helped the government dig itself into a deeper hole and put island customers on the hook for the losses that followed, its Puerto Rico saga has become a cautionary tale of how risks can multiply. Angry customers…

1 min
argentina surprise

BRICSA? Everybody’s favorite economic acronym (Brazil, Russia, India, China, and South Africa) should incorporate an “A” for Argentina, according to President Cristina Fernández de Kirchner. IS THE ARGENTINE stock market a safe haven? That might sound ludicrous, especially in light of the cruel summer investors endured as China’s devaluation triggered a worldwide selloff in equities. But Argentina’s Merval Index isn’t making anybody cry about its performance. Through Sept. 8, the Merval, which comprises energy players YPF and Pampa Energía and nine other stocks, is up an impressive 30 percent compared with -15 percent for the benchmark MSCI Emerging Markets Index. Zoom out a few years— see the chart below—and the Merval has consistently trounced not just the MSCI but also the Ibovespa Index in neighboring Brazil as well as the S&P 500 Index. What’s going…

2 min
the amazon puzzle

WHICH COMPANY IS a better investment, Google or Amazon.com? Conventional wisdom suggests Google, which turns huge profits, enjoys better gross margins, and has a far lower price-to-earnings ratio. Yet Amazon’s stock has returned 51 percent in the past year, compared with 7 percent for Google. That’s a phenomenon Steve Hanke, an economics professor at Johns Hopkins University, and Ryan Guttridge, a fellow there, have named the “Amazon puzzle,” and one they say they’ve figured out. The key is hidden in asset turns, or how effective companies are at getting revenue out of their investments. Asset turnover is defined as sales divided by total assets; the higher the number, the better. “Google is just abysmal, and Amazon is really good,” says Guttridge, who once worked for legendary stock picker Bill Miller at…

2 min
the netflix of india

‘In India, what are the three big things?Cricket, religion—and movies.’Eros Executive Chairman Kishore Lulla Source: Bloomberg EROS INTERNATIONAL is looking a lot like a surprise Bollywood hit for investors, including BlackRock and Temasek Holdings, Singapore’s sovereign wealth fund. Shares of Eros, an Indian film company that listed on the New York Stock Exchange in 2013, soared 100 percent from May 12 to Sept. 8 on optimism about the company’s Internet streaming service, ErosNow . (Think of the service as the Netflix of India, backed by the largest producer and distributer of Bollywood films.) Launched in 2012, ErosNow had 26.5 million registered users as of July—39 percent higher than the previous quarter. Netflix isn’t even slated to enter India until next year. Users pay nothing for advertising-supported content on ErosNow; if they don’t want…