The Arc of Markets

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My first job as a journalist was to cover a market I couldn’t see.

It was 1991 and I was a reporter working for Bloomberg. I wrote a daily story about the fluctuations in debt issued by developing countries.

I would call bond traders and ask them which assets moved and why. I relied on the banks for the prices and commentary.

I was flying blind, unlike colleagues writing about Treasuries or equities. Those markets could be followed on Bloomberg, Telerate and other screens.

How I solved the problem illustrates a lot about how markets develop, the extraordinary value of data, and how media and marketing can be harnessed.

At the time, emerging markets were in their infancy. Many people still called the assets LDC debt, a politically incorrect acronym for “lesser developed countries”

I started reaching out to market makers to ask if they would fax me prices and yields for major assets at the end of each day.

Most banks had no interest in giving the prices to a reporter because it brought transparency which would reduce their leverage over customers.

But Chemical Bank saw an opportunity. They realized that they could gain valuable PR by attaching the bank’s name to the data.

I published the data in a table, bringing visibility to an exotic asset class of securities known by colorful monikers such as Argentine Pars, Mexican Discounts and Venezuelan FLIRBs.

In the 1990s, newspapers ran pages of stock prices called “agate.” That information wasn’t yet available to retail investors. I produced the equivalent of agate for emerging market debt.

This was ridiculously time consuming because I received the prices via fax and I had to retype them all into a word processing document to publish.

But I knew it was something of interest and valuable to the market, particularly the buy side, which didn’t have as much access to the information.

I’ll never forget the first days we published. You could almost hear a gasp. What was Chemical Bank doing giving prices to a reporter at Bloomberg?

Some brokers and market makers were critical. They complained that Chemical’s prices weren’t as timely or accurate as the broker pages.

But the arc of markets bends toward price transparency.

I got the prices. Chemical Bank got PR. Clients got valuable information.

Eventually that fax would be replaced with a live feed.

Along the way, the bid offer spread collapsed from points to a quarter point and then an eighth. Price transparency spurred larger trading volumes.

This is how every market works. You start with obscure secondary market prices for something like Mexican pars and then move to static indications and eventually live feeds.

In recent years we’ve seen it happen with everything from crypto to alternative assets like sneakers.

There are so many more data sets waiting to be gathered and leveraged.

So many markets that have yet to emerge.

(Part of a series of lessons learned from three decades at Bloomberg.)

BRIEF OBSERVATIONS

WRITING ONLINE: It’s not worth writing online unless you are saying something.

PR NATION: Increasingly we live in a world with fewer reporters writing and more PR folks promoting. That makes original content increasingly valuable.

BETTING MARKETS: Online markets like Kalshi increasingly let you bet on anything.

SOCIAL MEDIA: Who blocks who?

ENGINEERING: My friend Gergely Orosz who publishes the Practical Engineer published this insight chart showing the huge surge in engineering jobs. Notably, it leveled off for the first time in the past year.