Week InReview
Friday | Feb 18, 2022
Tightening.
Photo: AFP via Getty Images
WEDNESDAY'S MINUTES of the January Federal Reserve meeting provided few new details for investors who are now pricing at least six rate hikes this year. Analysts are becoming increasingly concerned that the central bank may not be able to slow inflation without inflicting damage to the economy. Fed officials will have another round of inflation and employment data before making their decision next month. What is less clear is whether the rate-setting committee will be returned to full strength as the confirmation of five nominees to the board is being held up by political wrangling in Washington. 
let's recap...
Photo: Krisztian Bocsi/Bloomberg
The crypto world continues to be in the spotlight this week, with the Federal Reserve reiterating a warning of potential economic risks just days after digital-asset firms dominated the advertisements during the Super Bowl. (Bloomberg Technology - Crypto | Feb 16) see also Yellen-White House split slows arrival of crypto strategy (Bloomberg Politics - Crypto | Feb 16)

Federal prosecutors are investigating whether short sellers conspired to drive down stock prices by sharing damaging research reports ahead of time and engaging in illegal trading tactics, people familiar with the matter said. The U.S. Justice Department has seized hardware, trading records and private communications in an effort to prove a wide-ranging conspiracy among investors who bet against corporate shares. One tactic under investigation is “spoofing,” an illegal ploy that involves flooding the market with fake orders in an effort to push a stock price up or down, they said. Another is “scalping,” where activist short sellers cash out their positions without disclosing it. (The Wall Street Journal | Feb 16)

Investors are building their cash stockpiles in a sign that many money managers are bracing themselves for turbulence across global markets. Average cash holdings among investors jumped to 5.3 percent this month, up from 5 percent in January, according to a closely watched survey by Bank of America of fund managers with a combined $1tn in assets. That marks the highest level since the early days of the coronavirus crisis in May 2020. (Financial Times | Feb 15)

The New York Stock Exchange is stepping into the nonfungible tokens market with plans to do for digital assets what it does for stocks. The NYSE said in a regulatory filing with the U.S. Patent and Trademark Office that it wants to be a financial exchange for cryptocurrencies and NFTs that would compete with the likes of OpenSea and Rarible Inc. The filing, dated Feb. 10, indicated plans for a NYSE-branded cryptocurrency and a marketplace to buy, sell and trade NFTs. (Bloomberg Markets - Crypto | Feb 15)

Risks associated with the leveraged loan market are still “high” despite marginal improvements in corporate creditworthiness in 2021, top U.S. banking regulators have warned. In a report released on Monday, the Federal Reserve Board, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency flagged mounting vulnerabilities across a number of sectors hardest hit by the coronavirus pandemic, including commercial real estate. Most of the riskiest loans, they warn, are held by non-bank financial entities. (Financial Times | Feb 14)
the cyber cafe
The SEC’s new proposals would require investment funds and advisers to have written policies and procedures to address cyberattacks. Photo: Richard Drew/Associated Press
SEC proposes cyber rules for investment funds and advisers
Financial regulators proposed long-awaited cybersecurity rules for investment funds and advisers last week that would require thousands of companies to report cyberattacks within 48 hours. Under the proposals made public Wednesday, the U.S. Securities and Exchange Commission said funds and registered investment advisers must develop written policies and procedures for dealing with cybersecurity incidents, and keep detailed records on them. Significant events should be disclosed to investors and reported to regulators, the agency said.

Why cyber threats are a C-suite issue
Many lessons were relevant in the “before times” but have been amplified by the pandemic. Most notable among these is cyber security, and that it is not only a task for IT departments but must be understood as a problem for every employee, from the chief executive down. Fraud and scams are one of the greatest threats to companies.

FBI calls crypto 'only game in town' as ransomware flourishes
Cryptocurrencies and deep-fake technology are sending chills throughout the U.S. government, with cyber crooks embracing digital innovations so rapidly that law enforcement can barely keep up, according to the Federal Bureau of Investigation. 
binge reading disorder
Photo: Michael Studinger/NASA
Serious, salty trouble is brewing under antarctic glaciers
Antarctica's glaciers are under threat, but not in the way you’re thinking: The problem isn’t so much that the sun’s beating down on them, but that the warming sea is uppercutting them. The bit of a glacier that’s resting on land is known as an ice sheet, and the bit floating on the ocean is the ice shelf. The exact divider between them, where the ice lifts off, is called the grounding line. As the world rapidly warms, that line is falling back. And as a result, Antarctica’s glaciers may be degrading far faster than scientists anticipated.
— Wired

Walt Disney is building its own neighborhoods across America. Seriously.
With a new range of residential communities, Walt Disney Co. says it is moving beyond “storytelling” and into “storyliving,” a string of such real estate projects around the country. The new residential development business will be called “Storyliving by Disney.” Plans are underway for the first project in the desert community near where company founder Walt Disney once owned a home.

The rise of asset manager capitalism and the financial crisis of 2008
Financial capital has become abundant in the global economy. The logic of supply and demand would suggest that wealth owners and their financial intermediaries should see their structural power decline. Paradoxically, the ultimate gauge of rentier power – the gap between the rate of return on capital (r) and the rate of economic growth (g) – has proven remarkably resilient since the 1980s. Why did this gap not shrink?
— Adam Tooze
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