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Class2
1. Fundamentals of
Business & Financial Journalism
Week 2: Covering financial markets
Jeffrey Timmermans
Monday, 24 September, 12
2. Using Twitter for news
✤ Bloomberg Top Stories
✤ @BloombergNow
✤ Reuters Top Stories
✤ @Reuters
✤ Wall Street Journal Top Stories
✤ @WSJ
Monday, 24 September, 12
3. Reporting on markets: what you
need
✤ Understanding of how markets work
✤ Market data
✤ Up-to-date news/info on other markets/countries
✤ Market sources
✤ Ability to explain this stuff to readers
Monday, 24 September, 12
4. Characteristics of markets
✤ Bring together buyers (demand) & sellers (supply)
✤ Anyone (usually) can participate
✤ Products traded are standardized and units of each product are
interchangeable (fungible)
✤ Doesn’t matter who you trade with
✤ Trades are all (usually) processed by a central authority
✤ Information on all trades is public
Monday, 24 September, 12
5. Markets: Some numbers
Prices Turnover
Volume
Index levels
Bids
Offers
Monday, 24 September, 12
6. Markets: Some numbers
Prices are the most often cited
Prices Turnover
numbers in markets. They can
be prices of shares, bonds,
futures, or the price of a currency
as measured in another currency
Volume
Index levels
Bids
Offers
Monday, 24 September, 12
7. Markets: Some numbers
Prices Turnover
Volume is the number of
individual units of an asset
Volume traded (usually in one day), for
Index levels
example units of shares or bonds
Bids
Offers
Monday, 24 September, 12
8. Markets: Some numbers
Turnover is the monetary value
of a day’s trading in an asset;
Prices
basically just volume multiplied
Turnover
by the prevailing price
Volume
Index levels
Bids
Offers
Monday, 24 September, 12
9. Markets: Some numbers
Prices Turnover
Volume
Bids are the prices that would-be
Index levels
buyers are willing to pay for an
Bids asset; these bids are shown to all
market participants
Offers
Monday, 24 September, 12
10. Markets: Some numbers
Prices Turnover
Volume
Index levels
Bids
Offers are the prices that would-
be sellers are willing to accept
for an asset they own; offers are Offers
shown to all market participants
Monday, 24 September, 12
11. Markets: Some numbers
Prices Turnover
Volume
Indexes measure the overall
performance of individual assets Index levels
on a market
Bids
Offers
Monday, 24 September, 12
12. Market prices
✤ Prices in markets are news: they contain information
✤ The sum of all market participants’ – people’s – expectations of
future performance of that asset
✤ BUT, just because an asset has a low price in real terms doesn’t mean
it’s “cheap” or a bargain – or vice versa
✤ Berkshire Hathaway’s current price: US$134,584 per share
✤ PCCW Ltd.’s current price: HK$3.16 (40 US cents) per share
Monday, 24 September, 12
17. Types of participants
Investment
Information Leverage
size
Retail investors Small Public Small
Institutional Public &
Large Large
investors Private
Public &
Governments Huge Unlimited
Private
Monday, 24 September, 12
18. Why do they participate?
✤ To gain access to capital (funds) for new or existing ventures
✤ To put excess funds to use and earn money
✤ To hedge (insure) against risks
✤ To speculate (bet)
Monday, 24 September, 12
19. Price formation in markets
✤ People wanting to buy make a “bid” at a certain price for a certain
amount of an asset
✤ Those wanting to sell announce an “offer” (or “ask”) price and
amount
✤ People revise their bids or offers until they find a matching offer or
bid
✤ All participants can see this information
Monday, 24 September, 12
20. Market data
Screenshot of a Reuters 3000 terminal
Monday, 24 September, 12
21. Market data (free!)
Screenshot of Google Finance page (finance.google.com)
Monday, 24 September, 12
26. U.S. Stocks Advance, Erasing Earlier Loss,
Following European Bank Rally
By Rita Nazareth - Sep 13, 2011
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as French banks
eased concerns over their access to funding and investors watched for signs of progress in taming
Change
Europe’s debt crisis.
All 10 main industries in the S&P 500 advanced as gains were led by industrial, raw material and Cause
technology companies. The Dow Jones Transportation Average, a proxy for the U.S. economy, jumped
3.4 percent as airlines rose. Wells Fargo & Co. (WFC) and Fifth Third Bancorp (FITB) added more than 1
percent, following a rally in European lenders. Aetna Inc. (AET) jumped 5.4 percent as the health insurer
said profit will probably beat its forecast.
Expectations?
The S&P 500 increased 0.9 percent to 1,172.87 at 4 p.m. in New York, after falling as much as 0.4
percent. The gauge has risen 1.6 percent in two days. The Dow Jones Industrial Average advanced 44.73
points, or 0.4 percent, to 11,105.85 today.
“Stocks are trading on the news of the day and the news was moderately favorable,” Michael Cuggino,
who oversees $15 billion at Permanent Portfolio Funds in San Francisco, said in a telephone interview. Comment
“While the issues of liquidity and health of the European banking system and the long-term viability of
the euro are still out there, today is a day where people are looking beyond that. We’ve had a big
correction. Levels really haven’t gotten back to where they were.”
The S&P 500 fell as much as 18 percent from a three-year high on April 29 through Aug. 8 on growing
concern over Europe’s debt crisis and an economic slowdown. Since then, the index has risen 4.8
percent.
Context
The S&P 500 may drop below a one-year low reached last month because too few stocks have declined
rapidly enough, according to MF Global Inc.
Future
Monday, 24 September, 12
27. Where to find...
✤ Change: market data
✤ Cause: world/local events, market sources
✤ Expectations: news database, market sources
✤ Comment: market sources
✤ Context: market data, news database, professional experience
✤ Future: market sources, professional experience
Monday, 24 September, 12
28. Finding “cause”
✤ Any big economic news?
✤ Any major local news?
✤ What’s happening in other markets?
✤ Look for sector-wide moves, then individual share moves
✤ Don’t always believe traders’ explanations
Monday, 24 September, 12
29. Finding “context”
✤ Biggest advance/decline since ✤ Who’s making money and
when? who’s losing money?
✤ How many days in a row up/ ✤ Is the event cited as a cause
down? typical or atypical?
✤ How much have prices/yields ✤ Is today’s event the beginning
changed in that time? or end of a trend?
✤ Highest/lowest level since ✤ What’s at stake?
when?
✤ What happens next?
Source: The Bloomberg Way: A Guide for Reporters & Editors, 10th Edition
Monday, 24 September, 12
