The Bloomberg Terminal, Explained
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The bit that really amazed me was the way the front end is implemented. The front-end is fully rendered server side (meaning every click requires a full round trip to Bloombergs servers) in Javascript using spidermonkey. This caused a lot of difficulties since any real time elements needed to be rendered in a totally different way. As well the version of Javascript was restricted from using things like timers or callbacks since that could make rendering stall. In some ways it's impressive that they were doing server side Javascript at least 5 years before nodeJS but whole approach seems like a byproduct of age of mainframes.
> The front-end is fully rendered server side (meaning every click requires a full round trip to Bloombergs servers)
O_o
Ok ok I guess that’s not the area where they care about low latency?
[0] https://www.bloomberg.com/professional/product/launchpad/
Bloomberg is one of the biggest users of JavaScript in the world, many millions line of code, but most of it used in a desktop app.
https://github.com/bloomberg/chromium.bb
So it is like Electron in that you are literally interacting with a web-browser, but one made too look like a desktop app.
It's a pain to set up, but it's authentication is unbelievable. It has something like triple factor authentication plus biometrics.
To get him logged in to test it so I could make sure it spread across his 5 monitors correctly, I had to use his RSA key + password to log in to the website, then use a physical device that reads flashes on the screen to generate another code with another password, before he finally put in another password and scanned his fingerprint on the keyboard.
It was mind-boggling, but not unexpected given this dude was moving millions every day.
To hedge or not to hedge basically comes down to US versus EU accounting rules.
In the case of airlines, they are effectively 'short' oil, in that they profit if the price of oil falls, and lose if the price rises. So the usual story is that it makes sense to hedge their oil costs. They can do this in three main ways:
1) Buy oil forward. They get to lock in the price of oil at a future time. If oil prices rise, they win. But if oil prices fall, they lose out, since competitors can now buy oil more cheaply.
2) Buy a call option on oil. They get the right to buy oil at a fixed price at a future time. If oil prices rise, they can exercise the option, and win. If oil prices fall, they can just take the cheaper price => another win. But the option itself has a cost, so if oil prices don't change much, they lose out since they had to eat the cost of buying the option.
3) Sell a put option on oil. This is the airline being paid by someone for the option to sell them oil at a fixed price at a future time. In this case, the airline wins if oil prices don't move too much in any direction (since they get paid for the put option). If oil falls in price, they will have to buy it at the higher price => they lose. If the oil price rises, they also lose since the costs have risen.
Yet, in all cases, after hedging, the airline will still either win or lose depending upon the change in oil price. No certainty has been gained.
The choice whether to hedge or not is really down to game theory. What matters is not just whether/how your airline hedges, but what your competitors do.
That’s not really true. You’re locking in the price that you’re going to pay - that’s the certainty. You might however not be getting the best price at that point in time. From a financial forecasting perspective it probably worthwhile trade off though as you’re fixing one of your costs for that time period and that’s useful even when sub optimal.
In all situations, hedging and non hedging, the oil price will determine whether you win or lose. There is no magical combination of derivatives that will ensure success. In fact, for every financial product you buy, you're paying a cost due to the margin that the bank/market charged you.
Hedging might make sense for some accounting/tax situations, but that's another issue entirely.
No. Your fares will remain competitive. It's just a hit to your profits.
edit: I see this was mentioned already in the thread.
A huge chunk of airline tickets are sold in advance. The oil futures can literally lock in the prices for only sold airfare if you're that paranoid.
Also (probably more important), the cost of oil on a given ticket is quite low and it would take a drastic change in oil prices for it to be obvious to customers comparison shopping.
Actually, yours is a rather odd take on the term 'certainity' itself! To clarify, I'll lay out the layman take & the quant take.
The layman explanation is - life is a gamble but I wear seatbelt. Because that's the certainity I won't die by being thrown off the seat. Yes, that might mean I might die in other ways. Like maybe the car dives into a lake & I couldn't get out because the seatbelt is stuck so I drown to death. But the car in lake probability is smaller than car collision probability. So I have purchased certainity in my mortal affairs by wearing the seatbelt. Atleast if my car collides with another car, I don't get thrown off for certain.
The quant problem is the same. My quant professor at UChicago always insisted "only losers buy stocks". He repeated that in so many ways that lesson stuck to all of us. Like, stocks are for losers. Quants don't buy stock, losers do. Now why did he take such a radical stand ? Stocks are a random variable so there is no certainity. That's the very definition of positive rv y(t), it can do anything on the positive y axis, because it is random. But you are not completely helpless. You can buy certainity on both the x & the y axis! And on functions of those if you are clever. So if you pay put premium on a 1 month expiry with say strike at 1 sigma, you are saying I am only willing to lose 1 sigma from my present mu within next month. If my stock falls below mu-1sigma, then some other loser better pay up. Who is that other loser ? The guy who sold me the put option. Because he holds the opposite belief, which is why he sold me the put. So I am certain I won't lose below 1 sigma. I have literally purchased my certainity by paying that put premium. The loser why sold me the put is also certain it won't go below 1 sigma, which is why he gets to collect my premium. Now, what will really happen ? Well, who the fuck knows. The stock is a random variable, so anything can happen. But neither of us have bought the stock. I have bought 1 certainity, the seller has sold another certainity. So its a win-win on the certainity axis. Because my max loss is capped at mu minus one sigma, I am certain of that. So even though underlying is random I am certain!
> No certainty has been gained. is really down to game theory.
This is simply not true. A lot of certainity has been gained, which is literally why money has been exchanged. Price of certainity is by definition the premium.
Yes, if gas prices doubled, Walmart could increase the price of their products, but consumers would likely buy a lot less, and Walmart sales would suffer.
Walmart’s focus is on “low, everyday prices”, and future can help maintain those.
Your marginal cost goes up in both cases. If you're optimising profits, you should make the same decision in both cases regardless of if you bought futures.
If you have futures to buy diesel at $2.50/gal and the diesel price skyrockets to $4.00/gal, you can keep your prices the same.
If you didn't have futures you couldn't without taking a loss.
If you have futures, your marginal cost is still $4, since now you're using an additional gallon instead of selling it at market price at $4.
Most likely the futures in question aren't being physically settled.
Regardless, the economic cost is what determines incentives to raise price for a rational actor. For my claim above to be wrong, Walmart and co would have to be irrational.
In San Francisco, depending on where you go right now, tomatoes might be $20 a case or they might be $40 a case. Why is any place selling them for $40 a case? I honestly couldn’t tell you other than there was probably a problem somewhere with the tomato crop. But if you’re able to get them for $20 a case right now, it’s because that store was able to get them for a good price, and that means somewhere upstream in the supply chain, a futures contract was exchanged which made that possible by locking in the purchase price in advance for this batch of tomatoes.
This is often the case with avocados which might sell for $0.50 a piece in one place or up to $3 a piece in another. Anything can affect the price, up to and including cartels in Mexico demanding protection money from Avocado farmers recently, but pests, weather, soil problems, or whatever might limit the supply and lead to price increases.
Walmart, being Walmart which isn’t unlike being Costco or any other major supermarket of sorts where people buy food, would want to limit their exposure to shocks in the market regardless of what’s causing the shocks. So they would need to employ futures traders in order to accomplish this. Even if they lose money on some contracts, they’re probably making money on enough of them to keep their prices low when you go there to buy tomatoes, avocados, lettuce, spinach, meat, poultry, or whatever. Nobody is happy when the price of tomatoes suddenly doubles almost overnight, and especially not the customer.
On the other hand, the supplier gets money now, not some time in the future (like after harvest) and this provides a different kind of cash flow that doesn't invoke debt (usually).
And then there's trading on the contracts all around, trying to get best prices :)
During the mid-2000s, Southwest got so good at hedging and futures trading--plus was one of the only airlines that hadn't gone bankrupt so had the cash and credit and good reputation to trade on--that it was routinely called "a commodity desk that happens to fly airplanes."
With futures you can buy the tomatoes today, to be delivered later, the farmer can get his money now and you van lock in your price now, insulated against increases in prices (with the farmer insulated against decreases).
You are a corn grower and want to lock in a price 6 months from now. You are someone who buys a lot of corn and want to lock in the price 6 months from now. Futures allow you in essence to meet up in a highly liquid exchange where you can lock in those prices for the buyer/seller. Win-win for both, because they get the price security they desired.
Of course the vast majority of futures is speculative, which provides liquidity for the hedgers..
Bloomberg support is amazing. Whenever I had to call them as an IT guy for a trading firm, the calls were over in about 3-5 minutes.
And this is not just once- I used it repeatedly over many years.
Windows backs up the registry. Just boot from a WindowsPE or live Linux USB and delete the live versions and replace with the backups. Reboot and lock is gone.
It still to this day boggles my mind that he fell for it in the first place, when he handles such sensitive information.
I've found that the mental model of focus is the epitome of unintuitivity (why does googling this this word only return 72 results?!).
Kind of skirts at the edges of the uncanny valley, almost....
The reader does not need to plug into your computer. Instead, it reads data from your monitor optically (flashing) and your fingerprint to give you a one-time code.
What I mean is, what would a cheating company with a “fingerprint guy“ do when a legitimate user needs to log in remotely? (What if the fingerprint guy got sick, or quit?)
There are some shared infrastructure dependencies that aren't redundant, but generally speaking the system can survive loss of multiple nodes and/or an entire site.
It's not uncommon to hear stories about small trading shops or asset managers having a shared terminals which they run over to do specific actions, or a substantial amount of effort being put into automated data extraction which avoids Bloomberg's controls.
I agree the terminals are disdained, but I never understood this. The rest of your comment justifies the value. They provide great data (which they spend a boatload of money to get/clean) and they sell it. Customers don't have to buy it, they can try to get the data themselves.
I used a BB terminal extensively for over a decade. It saved me orders of magnitude in work, there is no way I could have obtained all this data myself on an ongoing basis and had it available easily via API. They make a lot of money, and they deserve it.
I had colleagues try to switch to Reuters terminals and they came ashamedly back to Bloomberg, hat in hand.
Back in the day you could make an argument for the value of locking services to a proprietary terminal, since most people didn't have a computer on their desk and all and there were no common standards for those that did. But these days there is a ubiquitously accessible common standard for desktop information systems: the x86-based PC running Microsoft Windows. Having to use a proprietary terminal means not being able to use all the knowledge of that standard platform the user has built up over the years, and having to build up a new stock of knowledge about the baroque weirdnesses of that proprietary terminal. So I can totally see how someone would wish they could just access that highly valuable data and software on the machine they already know how to use.
As for the individual software being available on different machines, they have a solution for some of that (Bloomberg BVAL Pricing Service, or the name du jour).
Ultimately, they want a vertically integrated UX where the models and screens have a very intuitive correlate on their proprietary keyboard (oh, and DRM.) It is a choice, you cant fault them for choosing that route.
There are plenty of competitors who have come along (and died) trying to offer something else. Everyone is free to choose those.
It is a bit like Apple and iOS. I once went to Android for 2yrs, and then came back to iOS because I saw the value of things just working well together.
Ok your comment is mindboggling to me. Having used Bloomberg for nearly 10 years, not only for the front-end but the back-end API I can tell you it is the most stable piece of software I've ever seen. Not once, not one single time has it crashed in those 10+ years for us. The API is even more impressive- to my knowledge we never even experience a single missed query or randomly dead data stream over all those years.
The terminal is expensive as hell, but they deliver on the cost.
Also just by the fact of how it's used, saying it constantly crashes and assuming it's just like that and traders are ok with that all day long? Whatever experience you seem to have must be an extreme outlier.
>It’s basically a giant piece of legacy code.
Eh I think that's silly. You even say it's designed for the power users, which is absolutly right. That's the only reason you think it's legacy. Are you telling me everything behind and their back-end is not extremely advanced? It has to be to support the amount of data that is flowing through them at every second in data that HAS to be fast & accurate.
Maybe you know the answer to a question I’ve been asking for years: is there any way to authenticate the data you receive over the API? Bloomberg requires credentials to prove you have a subscription but I’ve long wondered about the security/integrity of the data flowing the other direction. What mechanism stops a bad actor from slightly altering or delaying Bloomberg API data as a way to manipulate the markets?
They do, they just don't know it, yet. If you showed them two versions of Facebook, one which was their normal latent mess, and one which had half the latency, they'll take the less-latent version every single time.
Don't assume that people don't care - they definitely do, they just don't have a choice.
Consider what you could do if you had a cloud-only multiplayer game engine with all players just receiving a low-latency video stream of their interface and local events being piped back up the same connection, but with some business application built on top. The ability to say that you no longer have a client-server contract and it's all just one big server implementation drops a massive number of design constraints and immediately makes the security and client interface to the system a trivial affair.
Obviously, the downsides with the above are the latency, bandwidth, and additional load seen at the server in order to render client views. But, these are really the only downsides, and none of them are extraordinarily complex in terms of technical resolution. Latency is probably the only hard constraint that cannot be resolved by simply increasing an existing resource. The other 2 can be resolved with More Money™. Everything else is upside from here.
"a Bloomberg reporter asked a Goldman executive if a partner at the bank had recently left the firm — noting casually that he hadn’t logged into his Bloomberg terminal in some time"
This is basically access to analytics. From a now-missing huffpo piece: "reporters were able to access a few different kinds of data that are not available to other terminal users. These included the ability to see how often customers had logged onto terminals and the ability to track some of their activities. They could see how many times in a month a client had entered specific commands on a terminal to, for example, look at information about foreign currencies or pull up economic indicators."
And why: "With these tools, Bloomberg reporters could keep loose tabs on terminal users, which include government officials and high-profile investors and traders. Though the tools were limited, they were potentially useful enough to give reporters leads to news scoops — the ultimate goal at an organization that prides itself on its news-breaking abilities."
> There’s also a discomfort about just how much information and data Bloomberg has through the terminals. In 2013, Bloomberg News reporters were caught using the terminal to get subscribers’ information and monitor when they logged in and what they were using it for. Bloomberg admitted that it was commonplace for reporters to have access to “limited client information,” apologized, and said it had changed its system.
That's not inaccurate, but it minimizes the impact of this scandal. It's not as if this was just a couple of bad apples who got caught. The reality is more ethically questionable.
Follow-up by the Atlantic: "reporters at the company were for years not only permitted, but frequently and forcefully encouraged, to monitor Blomberg's terminal customers for news" ; "... he used the function to surreptitiously track the movements of the CEO of Fiat as he traveled across the United States."
https://www.theatlantic.com/national/archive/2013/06/bloombe...
Terminal customers also included news agencies, their competitors.
There tutorials on youtube, but without having one to learn on it's exactly like reading about emacs.
Best way to see what the terminal looks like to look up help and documentation for it. Google things like "Bloomberg SWPM tutorial"
[1] https://data.bloomberglp.com/bat/sites/3/2016/10/WhitePaper_...
[1] http://businesslibrary.uflib.ufl.edu/c.php?g=114612&p=746563 [2] https://business.sdsu.edu/_resources/files/wffmlab/guides/la... [3] https://www.youtube.com/watch?v=anOUEiraEtg
If you really want to use it, I enjoyed the book Paul Wilmott on Quantitative Finance which uses the Bloomberg Terminal quite a bit for interactive learning.
Is this a real thing?
and while on-campus, from: https://johnson.library.cornell.edu/database/bloomberg/
as a junior-to-mid level person in finance, most of us are doing some form of coding anyway. i was forced to progress from vba to python to haskell based on the shops i was at. i realized that i was both good at this, enjoyed it, and didnt enjoy the trading part. so i decided to switch into dev despite having no qualifications for it. doing a js bootcamp helped fill in the holes.
i'd say finance careers have a much higher ceiling for comp, my boss was pulling in 2m/yr at age 33ish, but he was both lucky and exceptional. i wasn't gonna be him. at my career trajectory (the vast majority of us in finance) i'd probably be more like 200-500k/yr. just kinda not worth it if i could go to tech and make somewhat less but with far better quality of life.
but otherwise.. yeah most of the time technical analysis is extreme backfit tea leaf reading mixed up with poor understanding of value vs momentum factors.
What about when traders IM each other? How does that actually become a trade? Does someone at the bank read their chat history looking for agreements to buy/sell and do the actual paperwork later?
good question! often its a standardized interface to other firms, a "middle office" that is usually at your broker (if you're a fledgling shop) or in your own offices (if you're a bank or a bigger more established fund). yes, this means you use bloomberg as a standardized interface to your own firm. This still makes sense because its such an industry standard, and has good compliance recordkeeping. I'm sure Bloomberg could execute your trades, I've just personally never come across or met anyone that has needed that so I'd probably say that is a minority of situations. Come to think of it, I'm not sure why Bloomberg doesn't also own this market. its very standard, boring stuff.
making margin is a whole nother ball game. that's more of broker-dealer territory. again Bloomberg is so big probably some part of it does that kind of thing, but far more common you're getting that sort of thing from a broker-dealer.
> What about when traders IM each other? How does that actually become a trade? Does someone at the bank read their chat history looking for agreements to buy/sell and do the actual paperwork later?
often, yes actually. someone in the middle office looks thru your chat transcript to confirm the trades (sending paperwork over to their counterparts, making sure it's within appropriate limits and placed in the right risk accounts etc). for more standard deals you might have a STP (straight through processing system) automatically pick it up from chat (with ofc a confirmation step). i have no idea when this started, it was before my time, but this definitely predates bloomberg itself. As a currency trader at a bank we had these old ass machines (i forget their name, oops, i loved them) where you had a direct line to all other banks and could "call out" to them to deal over chat. because of the sensitive nature of these transactions (you could be dealing in billions of notional amounts), one unique nature of these chats was that they were immutable: no backspace, no edit button. this means we needed a convention to recover from typos. this often worked out as spamming EEEEE after a mistake, e.g. "Hi I buy 200 EUR at 45EEEEEE43 pls thx". Sometimes flagrant mistakes aren't caught either, so there's a sort of gentleman's agreement thing if you spot your counterpart making a mistake in your favor, you ask them if they're sure or to double check, and if they're sure then you take the deal.
kinda rickety, but it worked. this is how much of institutional block trading is still done today* , but ofc more and more is taken over by bots.
*caveat that i'm about 4 years out of the business now
I'm guessing the RHEL boxes were for VPN gateways?
Remember it's like a 30 yr old platform. The more times they try to kill it and fail the stronger it becomes.
"The terminal — a software officially named Bloomberg Professional — is still a major part of Bloomberg’s overall business [...]"
I know languages grow and change, but this really grinds on my ears. Not so long ago, the author would have written "a program", or "a software program", or "an application". I see no value in the change.
Its distribution is such that any new startup hedge fund for example has to have one to be taken seriously by its investors and to deal effectively with brokers.
Other firms continue to try to beat it and in some sectors for certain functions they have but no one really has hurt it in its entirety... Thompson Reuters now Refinitiv has had best shot but honestly it's barley left a dent.
if you aren't institutional, you dont need bloomberg.
[1]: https://news.ycombinator.com/item?id=21847130
[2]: https://www.nypl.org/locations/sibl
This might be unique to NYC. I’d be curious if other public libraries or institutions offer similar access.
- It's quite convenient for business side people. I used it to trade all sorts of things (FI, credit, equities, fx, derivs on all those) and there was always some convenient function you could type in to give you a calculator for whatever it was. Whatever derivatives model you found in a textbook, you could find it in the terminal. With relevant data loaded in.
- Data is convenient too. Once you know how to work the API, you can pull a huge amount of data. A lot of it is available elsewhere, but nowhere has so much in one place, in one API.
- They are very serious about you not sharing the terminal or the data. Obviously once you have the data in a text file, they can't do much about that, but they do limit the amount you can download, and then they phone you once you trigger something. Sounds like a warning, but also a sales call at the same time.
- It's not so easy to share the terminal itself. The standard tricks like installing it on a VM, or installing remote desktop / VNC won't work. I'm sure someone has figured it out, but it's not as easy as sharing most other software services. They'd be fine with a small business sharing a terminal though, as long as it stayed on one machine that different staff would take turns on. And in case you thought a Bloomberg Anywhere would solve it for your distributed team, that used to use a special biometric device. Not sure if it's still there.
- Chats I'm guessing are not nearly as interesting as a few years ago, before the revelations about what was being said. I never got much gossip, but it really depends on where you're sitting in the market. You can use them as a replacement for voice trading, and everything is recorded. And it warns you if you're about to send a swear word, heh.
- A lot of small firms use the terminal to trade directly with counterparties, there's a whole OTC infrastructure in there. I never used it much but all the banks had their own Bloomberg pages for doing trades in all sorts of things with them.
- In terms of infrastructure, you can get a dedicated line for your bbg, they come and stick some stuff into your rack. This can fail over to internet if you want, simply a matter of changing the config on the app and phoning them. Also IIRC you can get a special data server, depending on whether the guy above scared you into buying one.
- The help function is for users, not coders. You'll wait for ages while the agent on the helpdesk figures out that he doesn't understand your problem if you're a coder. If not he'll find the business function you're after quite fast. Every time I got through to a dev about something that needed to be changed, it went into a suggestions queue and stayed there.
If the price moves against you since you last quoted, you typically say something like "off" and ring the bell so that the other guy knows that price is not good anymore. Fairly relevant when you're talking to a salesguy who is not looking at the chat, cause he's talking with his trader
where do u see 5y5y
size?
20k
2.4456/2.4511
txLots of other people have ideas about the same thing, so there is a product you can buy or sell to bet on it.
She asks her broker what price they can buy or sell it. The broker asks how much she wants and gives a price.
This conversation is so common that there is an agreed upon structure for it. Bloomberg parses all your conversations and provides you with an aggregated view of all quotes brokers have offered you. You can then chart/do whatever you want with this data.
I appreciate when a human interaction becomes so formalized that it becomes a de-facto API that computers can use. It would be funny to imagine a future where that interaction is happening between 2 chatbots and report results back to their humans.
B: size? = how much do you want to buy or sell?
A: 20k = $20,000
B: 2.4456/2.4511 = bid/offer = price/rate that A can sell/buy at
A: tx
Also, if you tried to trade 20k dollars notional, dealers would tell you to get lost, because an amount that tiny isn't worth their time.
traded like this because it is a meaningful measure of risk regardless of tenor. also its the same whether you're doing bonds or interest rate swaps (or, rarer, options)
So TLDR: it's vi for traders!
"Half" is almost certainly an exaggeration, but there's probably a few places on Wall Street that serve $200 steaks or whatever for lunch regularly that have one. And it probably gets used only a few times a month, if at all, and they consider it an advertising expense.
Disclaimer: I was a programmer for Bloomberg, but I never saw one in a restaurant.