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US CPI, Fed.

US inflation accelerated at the end of 2023, fueled by stubborn services costs, while a protracted decline in goods prices petered out. Federal Reserve Bank of Cleveland President Loretta Mester said it was premature to consider cutting rates as soon as March, emphasizing that the fresh inflation data suggests policymakers have more work to do. Her Richmond counterpart, Thomas Barkin, reiterated that he’s still looking for more evidence that inflation is headed to the central bank’s 2% goal following the latest report on prices.

Bitcoin ETF boom | The first US ETFs that directly hold Bitcoin are off to a strong start, with billions of dollars changing hands in the first day of trading for the long-sought investment vehicles. Wall Street is now on standby for the next stage of evolution in digital assets: options. Cboe Global Markets Inc. has already filed for approval to offer options tied to exchange-traded products holding Bitcoin. The derivatives are favored by investment pros as a way to make wagers on future gains or to hedge against losses. 

Up & coming | Wall Street saw a volatile session, with stocks and bonds whipsawing after the hotter-than-anticipated inflation data tempered bets on a Federal Reserve rate cut in March. The report came a day ahead of the US producer price index data. Traders will also be on the lookout for figures on Chinese inflation and UK industrial production, Both Minneapolis Fed President Neel Kashkari and the European Central Bank chief economist Philip Lane are due to speak Friday.

Illustration: María Jesús Contreras | Bloomberg

Bitcoin ETF trades top $4.6 billion in 'ground-breaking' day

The first US ETFs that directly hold Bitcoin got off to a strong start, with billions of dollars changing hands in a historical first day of trading for the long-sought investment vehicles. More than $4.6 billion worth of shares traded between the almost a dozen US spot Bitcoin exchange-traded funds on Thursday. The Grayscale Bitcoin Trust, which converted into an ETF, saw about $2.3 billion in volume, according to data compiled by Bloomberg. Meantime, BlackRock’s iShares Bitcoin Trust — IBIT — saw more than $1 billion change hands. (Bloomberg Crypto | Jan 11)

A $570 billion gap creates hope for commercial real estate thaw

Soaring borrowing costs and plunging prices walloped the global commercial property market last year. Now, more clarity around values and an urgent need to address looming debt maturities are expected to spark more deals. And the opportunity may be vast: The brokerage estimates that property owners with loans maturing through the end of 2025 will need as much as $570 billion in new equity given how sharply values have fallen. (Bloomberg Wealth | Jan 11)

The bond market rally is overlooking a soaring $2 trillion debt problem

Right around the start of November, two words suddenly disappeared from the chatter in the bond market: debt supply. As bond prices surged across the developed world day after day, sending yields tumbling and handing investors some much-needed profits, the angst about soaring budget deficits melted away. But for how long? (Bloomberg Markets | Jan 10)

The Fed launched a bank rescue program last year. Now, banks are gaming it.

An emergency lending program the Federal Reserve created during the 2023 banking crisis has turned into easy money. Borrowing from the Fed’s bank term funding program has increased to new highs in recent weeks, a strange consequence of the market’s flip to forecasting multiple Fed rate cuts over the coming 12 months. (The Wall Street Journal | Jan 10)

Fed considering changes to Basel proposal: Top bank cop

Officials at the US Federal Reserve are carefully considering possible adjustments to key parts of the pending "Basel III endgame" overhaul for bank capital regulations, including operational risk calculations and potential offsets for mortgage servicing. Fed Vice Chair for Supervision Michael Barr's remarks suggested for the first time that the Fed is mulling significant changes to a policy that has drawn stiff opposition from the banking industry, which says it needlessly risks causing banks to curtail lending. (Reuters | Jan 9)

The Financial Industry Regulatory Authority has seen member firms take a careful approach to using artificial intelligence so far. Photo: Andrew Kelly | Reuters

Finra calls AI 'emerging risk' in annual regulatory report

The Financial Industry Regulatory Authority, Wall Street’s self-regulator, has classified artificial intelligence as an “emerging risk.” Firms looking to deploy AI should focus on the regulatory implications of doing so, particularly in areas such as anti-money-laundering, public communication, and cybersecurity, among others, and on model risk management, including testing and data integrity and governance, Finra said.

— The Wall Street Journal

SEC had a fraught cyber record long before X account was hacked

The hack of the US Securities and Exchange Commission’s X account earlier this week is shining a light on an uncomfortable truth: Cybersecurity measures at Wall Street’s chief regulator have repeatedly been found to be lacking. The agency wasn’t fully adhering to federal cybersecurity standards, including a requirement that public-facing systems support multifactor-authentication, as of a review by its internal watchdog last year. A separate, independent evaluation performed a year earlier identified weaknesses in security measures at the commission, such as protocols for preventing unauthorized access to networks. 

— Bloomberg Markets | Cybersecurity

Ivanti releases security update for Connect Secure, Policy Secure gateways

(Jan 10) — Ivanti released a security update to address an authentication bypass vulnerability (CVE-2023-46805) and a command injection vulnerability (CVE-2024-21887) in all supported versions (9.x and 22.x) of Connect Secure and Policy Secure gateways. A cyber threat actor could exploit these vulnerabilities to take control of an affected system. Ivanti reports active exploitation of both CVE-2023-46805 and CVE-2024-21887.

CISA urges users and administrators to immediately apply the current workaround in Ivanti's security update and review Volexity's blog on these vulnerabilities. Note: CISA has added CVE-2023-46805 and CVE-2024-21887 to its Known Exploited Vulnerabilities Catalog, which, per Binding Operational Directive (BOD) 22-01: Reducing the Significant Risk of Known Exploited Vulnerabilities, requires Federal Civilian Executive Branch (FCEB) agencies to remediate identified vulnerabilities by the specified due date to protect FCEB networks against active threats.

CISA will update this alert as Ivanti releases patches.

Source: Vendors. Background | Getty Images

The year's 50 best wines under $50, from expert who tasted 3,243

For the past two years, the top country for value in almost every category is Italy. France is a close second. Look to the Languedoc in the south, as well as the Touraine region of the Loire Valley, and in Macon. Be sure to add in Bordeaux from smaller chateaux. According to the French Ministry of Agriculture, prices of reds in this world-famous region dropped 21% in the second half of 2022 compared with the five-year average.

— Bloomberg Pursuits

The top 10 global risks for 2024

In 2023, the big stories centered on two wars in Europe (Russia vs Ukraine) and the Middle East (Israel vs Hamas). Those conflicts will expand in 2024, but it’s a third “war” — the United States versus itself — that poses the greatest global risk. And, as always, there will be new stories that deserve more attention than they’re getting.

— Time

Fake news danger becomes top Davos worry in year of elections

False or wrong information poses the biggest danger to the world in the next two years amid a confluence of elections and economic drudgery, according to a survey by the World Economic Forum. Hours after a fake post on the US Securities and Exchange Commission’s X account fueled a brief surge in Bitcoin, the Geneva-based organization that will next week host the global elite in the Swiss Alpine resort of Davos highlighted how worries about the potential manipulation of voters are mounting.

— Bloomberg Politics | WEF24