Tag Archives: bloomberg


BlockTech Bid Repeats via Bloomberg: Its About Blockchain, NOT Bitcoin

(MarketsMuse fintech and blocktech curators extend our thanks to Prospectus.com LLC for the following contribution)-Bloomberg Intelligence reporter Jonathan Tyce wins the Valentine’s Day Award for Very Good Framing courtesy of his latest piece “Blockchain is Coming Everywhere, Ready or Not” –one of a series of articles by Tyce that puts the blockchain value proposition into proper perspective. Without suggesting there is any IP underlying the thesis advanced by Tyce,  the opening sentence speaks volumes to those who are crypto challenged and have the misinformed view that blockchain = bitcoin=all kinds of bad things, including but not limited to ‘investment bubble”, Ponzi scheme, “pump and dump” ICOs where the Issuer is now hiding in the ‘dark web’ or sun-tanning in Belize, and lastly, ‘one of the things that lets people create crazy currency that isn’t even fungible’. Bid repeats: Its all about the blockchain, blockhead. Not bitcoin. Welcome to BlockTech.

Without intending to invite the BloombergLP copyright cops to castigate this blog for infringement violations, this blog has posted a series of original articles themed with the same title of this post. With that disclaimer, we’ve responsibly stayed within the goal posts and merely excerpted select portions of Tyce’s piece to advance smart thinking and give credit where due…

The applications of blockchain technology will spread in 2018 far beyond bitcoin and, perhaps more surprisingly, way beyond financial services. Significant disruption and new business opportunities are on the menu. Four of the most-critical benefits from distributed-ledger technology can be encapsulated within trust, transparency, cost and speed. Where will the disruption occur?

Blockchain is now a familiar term to many, though in most cases, its meaning will be inextricably linked to bitcoin after a 10-fold price surge in 2017 valued the cryptocurrency at more than $180 billion.

This is only one strand of the story for Europe and globally. The applications of blockchain technology will spread in 2018 far beyond bitcoin and, perhaps more surprisingly, way beyond financial services.

For starters, huge improvements in efficiency and transaction speeds, cost savings and enhanced security are on the menu, with significant disruption and new business opportunities likely to follow.

Distributed-ledger technology

Putting the semantics to bed early, blockchain is the name designated to a string or chain of transaction records (blocks), cryptographically signed with “hashes,” or digital signatures. Though undoubtedly the most high-profile application of blockchain, the bitcoin network is just one example of how cryptocurrencies and other transactions can use this technology.

Blockchain is effectively the means to create tamper-proof records of data and transactions — whether that is a money transfer, vote cast, medical record or change of property ownership. It is just one of a variety of decentralized database technologies that exist across multiple locations. These are known as distributed ledgers, and it is within these so-called DLT technologies that great opportunity exists.

To continue reading, please visit Prospectus.com LLC blog

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Looking to Hit That Pot ETF? Here’s What It Could Look Like

Pot has been generating lots of buzz both in the public and private sectors.

Twenty-three states and the District of Columbia have legalized marijuana, either for medicinal or personal use, while an additional 13 have planned votes by 2016. If the trend toward legalization continues, there’s big profit potential, considering $2.5 billion in legal sales last year—and the estimated $60 billion in illegal sales.

There is an ETF for just about any investing theme you can think of. Still, marijuana is a relatively new legal industry regionally, with very few legitimate public companies in the sector that have generated revenues and that have been run by officers who know what it takes to be a public company.

Companies that would be included in any serious ETF would likely be limited to legitimate reporting companies. Some of these companies included in an ETF would almost certainly be companies that service the marijuana industry but that are much larger and focus on farming and cultivating throughout the broader agricultural sector.

One ETF inclusion would be a so-called hemp-friendly bank, which is yet to be determined. Federal laws and regulations still make the business of marijuana almost impossible to bank on. It is currently a high-cash business. You know that one bank will be the first to embrace the industry, and marijuana entrepreneurs and store owners almost certainly will flock to that bank. Again, this bank is a draft to be announced at a later date

However, if we look on the other hand, pot may be a perfect example of when an exchange-traded note (ETN) makes more sense than an ETF. ETNs don’t have to hold any of the stocks. The notes are unsecured debt obligations that are basically, promises to pay the returns of an index. So it doesn’t matter if the stocks are illiquid or not. What matters most is the creditworthiness of the ETN issuer.

ETNs were first introduced 10 years ago for this very purpose—to get into places that were particularly tough for ETFs to track. For example, the iPath India ETN (INP) was launched in 2006 to get around the strict foreign ownership restrictions that made an ETF impossible. It accumulated more than $1 billion within two years.

An ETN issuer could do the same thing, using a self-made pot index or something like the MJIC Marijuana Global Composite Index. The downside to ETNs is there is always risk that the issuer will default, just as with a bond. For investors “jonesing” hard enough for a pot ETF, this may not matter.

If you are interested in reading more on this subject, read this Bloomberg Business article.



Rumor Mill: Diageo Shares Surge After Brazilian Report

Diageo Plc, the maker of Guinness stout and Johnnie Walker whisky, surged in London trading on a report that a billionaire backer of Anheuser-Busch InBev NV is considering a takeover bid.

Jorge Paulo Lemann and other executives are in early stages of mulling an acquisition, according to a column on Friday by Lauro Jardim, an influential writer for Veja, Brazil’s biggest-selling news magazine. A spokeswoman in Brazil for Lemann declined to comment, as did a representative for London-based Diageo.

World media outlets have yet to confirm the rumor, but it has definitely affected the market: sending the shares up 9 percent.

If the deal goes through, it would be the largest private equity buyout in history. To put it simply, this would be a huge takeover.

Obviously, Warren Buffet has backed 3G companies in the past, so the rumor could possibly be true. For more in depth information, click here. 

New Normal: Big Institutions Looking To ETFs Over Bonds

MarketsMuse ETF and Fixed Income departments merge to profile trend on part of fixed-income focused hedge funds and institutional fund managers to use ETFs to express their bets on corporate bonds. This MarketsMuse blog update is courtesy of Bloomberg’s Lisa Abramowicz and her article, “A $200 Million Hedge-Fund Trade in Your Bond ETF Is Normal Now”. An excerpt from this article is below. 

Don’t be surprised if you see a huge chunk of cash simply evaporate one day from your exchange-traded bond fund. There’s a good chance it’s just a hedge fund cashing in on a bet.

An example of this can be found in BlackRock Inc.’s $5.1 billion long-term U.S. Treasuries ETF, which saw the greatest volume of withdrawals this year among similar funds. Among investors yanking cash was Passport Capital, the $4 billion hedge-fund firm run by John Burbank.

The firm sold its entire $217 million stake in the ETF in the period ended March 31, about three months after purchasing the shares, according to data compiled by Bloomberg.

On one hand, this is a remarkable amount of money, equal to about 4 percent of the fund at its current size. It’s also notable because ETFs have traditionally been marketed to individuals as a quick, easy way to invest in debt.

But that’s changing. These funds are increasingly being used by and advertised to big institutions, which are looking for the same efficiency as smaller investors at a time when it’s getting more difficult to execute big trades.

To continue reading about this new normal for both small and big investors, click here, for the article from Bloomberg’s Lisa Abramowicz and her article, “A $200 Million Hedge-Fund Trade in Your Bond ETF Is Normal Now”.

e-Bond Trading Chapter 15: Bloomberg & State Street Join in Eurobond Push

MarketsMuse blog update profiles yet another bond trading system. Bloomberg has introduced new bond trading platform, Bloomberg Bond Cross (BBX), which allows market participants to access European bond market liquidity. Participants now have access to the European bond market liquidity thanks to a new partnership between Bloomberg and State Street. This MarketsMuse blog update is courtesy of WatersTechnology’s article by Marina Daras, “Bloomberg, State Street Launch European Bond Trading System“, with an excerpt below.  

Bloomberg Bond Cross will use Bloomberg’s Trading System Order Execution (TSOX) technology to capture clients’ orders. State Street then finds the opposite side of the trade and participants can work towards negotiating and executing a trade with State Street acting as an impartial counterparty for each trade.

“Despite constraints on dealers’ ability to make-markets in corporate credit, large orders still need to be executed each day,” says George Harrington, global head of FICC trading at Bloomberg. “Bloomberg Bond Cross brings together our existing large network of Bloomberg Professional service subscribers, providing the ability for order staging, negotiation and transacting in one place, attracting volume and building liquidity to help investors identify trade opportunities with State Street.”

To continue reading about this new bond trading platform from Bloomberg, click here.

Homebuilding ETF Is Falling Down

MarketsMuse blog update profiles speculation surrounding SPDR S&P Homebuilders exchange-traded fund. This ETF reach an eight-year high in February but since then has fallen dramatically. Now investors are taking notice and are trying to make a quick exit. This MarketsMuse blog update is courtesy of Callie Bost and Jennifer Kaplan of Bloomberg Business and their article, “Investors In This Homebuilder ETF Are Heading for the Exits“, with an excerpt below. 

Investors in homebuilding shares are heading for the door.

Speculators in the SPDR S&P Homebuilders exchange-traded fund have pulled a record amount of cash in April, abandoning the ETF known by its ticker XHB after it reached an eight-year high in February. The fund has retreated 4.8 percent since then.

Traders are doubting equity gains have room for improvement as mixed economic reports muddy the outlook for further growth in the industry. The Federal Reserve is moving closer to raising interest rates, adding to concerns just as homebuilders enter the busiest time of the year.

“Housing stocks are in an interesting position right now,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees $3 billion, said by phone. “We’re in a bit of a logjam for multiple factors. Until this logjam breaks, it’s going to be hard for national homebuilders to have sustained outperformance.”

In April, traders removed $376 million from the fund, the largest monthly outflow since the ETF started trading in 2006. The SPDR S&P Homebuilders fund tracks stocks like Toll Brothers Inc. and D.R. Horton Inc. as well as home-improvement companies including Aaron’s Inc., Tempur Sealy International Inc., and A.O. Smith Corp.

To continue reading about the fall of the homebuilder ETF, SPDR S&P Homebuilders exchange-traded fund, click here

China Stock Craze Will Go A Step Further With First Leveraged ETF

In the past year alone, investors have invested more than $2 billion into ETFs that invest in China’s stocks. MarketsMuse update profiles the new ETF, The Direxion Daily CSI 300 China A Sharell 2X Shares (CHAU), this ETF is the first in China-focused ETF of its kind in the US. This MarketsMuse blog update is courtesy of Bloomberg Business’s Elena Popina and Boris Korby’s article “China Stock Frenzy Gets More Manic With First Leveraged ETF“, with an excerpt below. 

Want to double down on China’s world-beating stock rally? Now there’s an exchange-traded fund for that.

Direxion Investments is starting the first ETF that seeks to provide twice the daily return of mainland Chinese stocks using leverage, according to Andy O’Rourke, chief marketing officer for the New York-based fund provider.

The CSI 300 Index, which the ETF will track, has climbed to a seven-year high amid a frenzy of stock purchases by Chinese retail investors as the government eased monetary policy to counter a slowdown in the world’s second-largest economy. The ETF will be the first in the U.S. to use derivatives to amplify the return of mainland Chinese stocks, or so-called A shares, a market to which foreign investors until recently only had limited access.

“It was only a matter of time before a leveraged China A-share ETF came out trying to capitalize on the increased interest and flows into the area,” Eric Balchunas, a Bloomberg Intelligence analyst, wrote in an e-mail on Tuesday.

To continue reading about this new ETF for China’s stocks, click here.

LSE Scores Listing of China’s First ETF

MarketMuse blog update profiles the London Stock Exchange’s (LSE) Wednesday announcement that it had welcomed their first China ETF, Commerzbank CCBI RQFII Money Market UCITS ETF. This is an exciting new step as China hopes to have more offshore trading in the very near future. This ETF offers the abiltiy for those in the LSE to invest in China’s inter-bank market. This MarketMuse update is courtesy of BloombergBusiness’s Will Hadfield. An excerpt of the article, “The Yuan Comes to Europe as LSE Hosts ETF Tracking Chinese Money” is below.

A Chinese bank has launched the first money-market fund denominated in yuan that’s based in Europe, a milestone in the currency’s emergence as a major force in world markets.

China Construction Bank Corp.’s new exchange-traded fund, which is listed on the London Stock Exchange and available to investors throughout the European Union, is the first product to give Western investors access to securities in China’s interbank bond market. The fund, called the Commerzbank CCBI RQFII Money Market UCITS ETF, started trading Wednesday.

The ETF could be the first of many Chinese-currency funds to launch in developed markets as the country’s banks seek to attract investors with higher returns than they could get from dollar-, euro- or pound-denominated accounts.

To read the rest of the article from BloombergBusiness, click here

Take A Drag Or Sip Out Of These Industries: Smoke and Alcohol ETFs Are Hot

MarketMuse update is courtesy of Bloomberg’s Justin Fox. It is very difficult to invest stocks for long term, humans’ interests are always changing and that affects the stock market. Bloomberg’s Justin Fox suggests that people should invest in human behaviors such as the tobacco and alcohol industries, such as the tobacco sector big name, Philip Morris International Inc., PM or popular alcohol ETF,  Constellation Brands Inc., STZ. He explains that unless these products are banned, humans will always have an interest.

It would be really cool to know which industries are going to thrive and grow and create jobs in the future. It’s also really hard to figure that out ahead of time. If you’re just interested in which industries will deliver the best stock-market returns, though, history seems to point to an easy shortcut — invest in companies that sell addictive stuff.

I learned this dubious lesson by reading, in quick succession, two big new reports: the Brookings Institution’s analysis of the 50 “Advanced Industries” that are supposed to drive job and income growth in the U.S., and Credit Suisse’s annual “Global Investment Returns Yearbook.” The Brookings report tries to look into the future by measuring investment in technological progress by industry — and although most of the 50 advanced industries it identifies are what you would expect, there are some surprises. In the 2015 Credit Suisse yearbook, meanwhile, Elroy Dimson, Paul Marsh and Mike Staunton of London Business School examine 115 years of stock-market returns by industry, and while they document a lot of technological upheaval, the two biggest winners for investors turn out to be decidedly low tech.

An advanced industry, by Brookings’ accounting, is one “in which R&D spending per worker reaches the top 20 percent of all industries and the share of workers with significant STEM knowledge exceeds the national average.” (STEM = science, technology, engineering and math. And R&D = research and development. But you probably knew that.) There’s lots of research showing that technological change drives economic growth, and R&D spending and STEM knowledge are supposed to be proxies for future technological change.

I don’t know of any obviously better proxies, but the results show the difficulty of any such accounting. The list of the very biggest R&D spenders isn’t particularly surprising:-1x-1

Dig deeper into the advanced industries list, though, and you soon come across industries that don’t seem all that advanced: railroad rolling stock, foundries, petroleum and coal products, metal-ore mining. Are these secret hotbeds of technological change that should command more attention? Probably not. One old-school industry, motor-vehicle manufacturing, does spend a ton on R&D ($48,461 per worker), but those others made the list mainly because there just aren’t that many industries in the U.S. that invest in R&D at all. To get to 50, you have to include a bunch of industries with per-worker spending of less than $5,000 a year. (No. 50, in case you’re wondering, is wireless-telecommunication carriers — which spent just $455 per worker in 2009.)

This isn’t necessarily a problem for the U.S. economy. One thing you’ll notice if you spend any time with the North American Industry Classification System is that it’s backward-looking. Older parts of the economy are divided into lots and lots of industries; newer ones aren’t. So you get railroad rolling-stock manufacturing, which employed 25,200 people in 2013 and generated $3.6 billion in output, counted as an industry on the same level as computer-systems design, which employed 1.7 million people and generated $246 billion.

Yet it’s these newer industries that generate the growth — at least, they have over the past 115 years. In 1900, according to the Credit Suisse yearbook, railroads accounted for 63 percent of stock-market value in the U.S. Now they’re less than 1 percent, and 62 percent of U.S. stock-market value is in industries that were small or nonexistent in 1900. The largest industries by market cap now are technology, oil and gas, banking and health care.

We’re all supposed to believe that past performance is no guarantee of future results. But given human nature, it seems reasonable to expect tobacco and alcohol to continue to do well — unless tobacco is completely banned, of course. Picking the next hot industry is a much harder task, yet it is a much more important one.

For the entire article, click here.




Record Amounts Flow Into Energy-Related ETFs

MarketMuse update courtesy of extract from Bloomberg’s Jim Polson

Bargain-seeking investors have turned bullish on embattled energy stocks, plowing record amounts into the industry.

More than $3.13 billion went into exchange-traded funds holding stakes in Exxon Mobil Corp. (XOM)Schlumberger Ltd. (SLB)and other energy stocks this month, even as the price of oil fell 22 percent, according to data compiled by Bloomberg. That’s four times the average for the year and more than the prior record in December 2007, when oil was trading near $91 a barrel.

“There definitely seems to be evidence of investors seeking to bottom-fish this market and pre-position for 2015,” David Mazza, head of ETF research at State Street Corp., said in a phone interview. “Some investors we’ve spoken with don’t believe the negative picture on energy that’s become consensus.”

Investors are betting on a higher long-term price for crude oil. Brent, the global benchmark, has traded around $60 a barrel since mid-month, after dropping by half from its June high. A stabilization in futures prices since Dec. 15 has helped energy stocks rebound for the past two weeks.

Oil slipped to a five-year low of $56.74 in London. Brent futures have plunged 51 percent from their June high.

“Longer-term investors, two to three years from now, will look back on this and say, ‘God, that was a good buying opportunity,’” said Fadel Gheit, a New York-based energy analyst for Oppenheimer & Co. For short-term investors, “it’s not going to be very pretty for the next few months.”

ETFs are increasingly seen as a bellwether of investor sentiment because they allow broad bets across a sector with lower transaction costs than buying individual stocks. Year-to-date, energy ETFs have attracted $9.25 billion of new money, the most of any sector behind real estate funds and more than triple the same period in 2013.

For Jim Polson’s entire article from Bloomberg, click here

New Year Brings Review of 2014’s Best and Worst ETFs

Bloomberg’s Eric Balchunas reviewed the best and worst of ETFs in 2014. Below are excerpts from Balchunas’s article. The pace of new ETF launches has also picked up, and the 196 new offerings in 2014 is a 29 percent jump over 2013. There are now ETFs for about everything you can think of — and 1,000 more in registration with the Securities and Exchange Commission. The ETFs that did best in 2014 were tied to lower interest rates, sinking oil prices and a surging U.S. dollar. To come up with this year’s ETF Awards, Bloomberg senior ETF analyst Eric Balchunas considered performance, how much cash a fund attracted and how well an ETF was able to capitalize on trends.

Best/Worst U.S. Equity ETF

Best: The First Trust NYSE Arca Biotechnology ETF (FBT)

Biotech ETFs led a booming health care sector, and FBT led them all. It returned 47 percent, capping a five-year run that has it up 264 percent. FBT showed the upside of ETFs that give every stock an equal weight, rather than letting the biggest stocks dominate the portfolio. Such egalitarianism means the ETF can tilt toward smaller, more volatile stocks — stocks that typically lead a rally. FBT beat its rivals by five percentage points, and brought in $570 million in new cash.

Worst: The SPDR S&P Oil & Gas Exploration (XOP)

Okay, so there’s also a downside to weighting all of your portfolio stocks equally — the same stocks that lead a rally often fall the hardest when the music stops. The sharp drop in oil prices slammed the SPDR S&P Oil & Gas Exploration ETF — it lost 36 percent.

Best/Worst U.S. Fixed-Income ETF

Best: iShares 20+ Year Treasury Bond ETF (TLT)

TLT was a total pariah in 2014. A slew of pundits predicted that interest rates would rise and crush returns on long-term bond ETFs such as TLT. Instead, rates fell and TLT returned 27 percent. It became a cash magnet, attracting $3 billion. It was the only fixed-income ETF to return more than 20 percent in 2014, and to rake in more than $2 billion in cash.

Worst: AdvisorShares Peritus High Yield ETF (HYLD)

Bond ETFs joined equity ETFs like XOP in suffering a painful oilbath. The worst of them all: Energy-heavy AdvisorShares Peritus High Yield ETF lost 9 percent. HYLD’s freedom to pick whatever junk bonds and high-yielding equities it wants worked like a charm in 2013, when it was up 12 percent. This year? Not so much.

To see the complete list of the best and worst ETFs in 2014 click here.

Consolidated Tape Moves Step Closer In European ETF Space



iShares, the exchange-traded fund provider, and data vendor Bloomberg have joined forces to offer a consolidated tape for ETFs in a bid to increase post-trade transparency and limit the effects of market fragmentation in Europe.

As part of the joint venture, the first of its kind in the European ETF market, Bloomberg will utilize its European Composite tickers, which aggregate volume and trading data for reported over-the-counter and exchange-traded iShares ETFs, to allow investors to see the best prices and liquidity. This includes data from 22 venues in Europe where ETFs are traded. Under upcoming European financial regulation in the form of the Markets in Financial Instruments Directive (MiFID II), it is expected that consolidated tapes will become mandatory for both equities and ETFs.

“Industry players have long called for the creation of a consolidated tape,” said Jean-Paul Zammitt, Bloomberg’s global head of core product. “We’re pleased to work with iShares to create the first composite view of the European ETF marketplace.” Continue reading

Bogle Boggles and Balks re: ETFs

In the category of  “He who speaks with forked tongue…” Index Icon and Vanguard Group founder John Bogle once again threw a curve ball while speaking at today’s Bloomberg Portfolio Manager Mash-Up.

John Bogle, Vanguard Group founder

Stating “ETFs are the greatest trading innovation of the 21st century,” what the Midas of Mutual Funds added with a big (*) was : “But the question is,  ‘Are they the greatest investment innovation?’ and the answer is ‘no.”

According to coverage of the event, fully credited to InvestmentNews, Bogle pulled no punches by calling out BlackRock for “just making a muddy pool muddier” in reference to BlackRock’s aggressive product launches. Bogle, who is also known as the “Midas of  Mutual Funds”, reminded the Bloomberg conference attendees “There’s something like 2000 ETFs now. That’s almost as many stocks as there are.”

One attendee then asked Mr. Bogle, “How many mutual funds are there?” In lieu of replying, he headed to the loo, where the self-proclaimed Buffet-like Market Bull took a bio break.