Week InReview
Friday | May 27, 2022
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The World Economic Forum, a gathering of the global elite now synonymous with the quaint Swiss town of Davos where it’s held, isn’t the usual place you’d expect to find a shaman, do breathwork or get rooted in your body.
But this year’s gathering of government leaders and corporate executives had access to a “Medical Psychedelics House of Davos” program with almost 40 sessions and speakers, including researchers, entrepreneurs, investors — and some who consider themselves shamans. While not part of the core Davos agenda, which doesn’t permit commercial activity, the program has a space on the town’s main promenade, which traditionally showcases Fortune 500 companies to the conference’s attendees.
The program, a first for Davos, shows how far the psychedelics industry has come, organizers said.
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Federal Reserve Chair Jerome Powell has said the jobless rate might need to rise as the central bank slows demand. Photo: Al Drago | Bloomberg News |
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Federal Reserve officials thought they would need to raise interest rates by a half-percentage point at each of their next two meetings when they approved an increase at their gathering earlier this month. Minutes from the Fed’s May 3-4 meeting, released Wednesday, show that officials discussed the possibility that they would raise interest rates to levels high enough to slow economic growth deliberately as the central bank races to combat high inflation. Officials “noted that a restrictive stance of policy may well become appropriate,” the minutes said. (The Wall Street Journal | May 25)
Wall Street exchanges and other firms zeroed in on their objection to a proposal US regulators are considering that would allow retail investors to trade crypto derivatives directly on a popular digital asset platform. The plan – from crypto firm FTX – would take banks and other financial intermediaries out of Bitcoin and Ether futures trades that use margin. At a roundtable on Wednesday hosted by the Commodity Futures Trading Commission, which is reviewing the proposal, executives from firms including CME Group Inc. and Intercontinental Exchange Inc. said the change could add risks to the market. (Bloomberg Law | May 25)
Nasdaq and the New York Stock Exchange were dealt a blow in their bids to block the Securities and Exchange Commission from implementing new rules for stock-trading data. A decision by the US Court of Appeals for the District of Columbia Circuit on Tuesday not to review regulations the SEC passed in December 2020 allows the agency to move ahead with a push to make trading data more readily available. The changes could negatively impact exchange operators’ lucrative market-data businesses. The SEC and Nasdaq declined to comment. NYSE didn’t respond to a request. (Bloomberg Markets | May 25)
Treasuries have been given some respite from the deepest selloff in recent history as concern about slowing economic growth has mounted. Haven demand however has done little to prevent liquidity in the $22 trillion market from worsening even further. The Bloomberg US Government Securities Liquidity Index – a gauge of deviations in yields from a fair-value model – rose on Wednesday to the highest since March 2020, when the early stages of the Covid pandemic wreaked havoc on the economy. (Bloomberg Markets | May 24)
The Federal Reserve has broken one of the main barometers that mortgage bond investors use to judge valuations in their market, and as a result some money managers may be missing the potential for many securities to weaken more. (Bloomberg Law | May 23)
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Fed discussed concerns over commodities risks, minutes show |
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(May 26) — Federal Reserve officials voiced concerns about volatility and liquidity risks in commodities markets, a record of this month’s Open Market Committee meeting showed.
Chaired by Fed Chair Jerome Powell, the May 3-4 gathering focused on the case for raising interest rates. But some participants highlighted “increased risks in financial markets linked to commodities following Russia’s invasion of Ukraine,” that led to higher prices and volatility in energy, agricultural, and metal products, according to the minutes released Wednesday.
Policymakers around the world are wrestling with surging inflation, stoked in part by raw materials prices, as well as extreme volatility that has heightened concerns over the ability of market-makers to manage a liquidity shortage in the event of big margin calls, the collateral needed to back transactions.
In Europe, exchanges and clearing houses have joined traders in calling on governments to provide funding to back energy deals and allow for products other than cash to be posted as initial margin.
Meeting participants noted that “central counterparties needed to remain capable of managing risks associated with heightened volatility or that margin requirements at CCPs could give rise to significant liquidity demands for large banks, broker-dealers, and their clients,” according to the minutes.
They also cautioned that trading and risk-management practices of some key market participants were “not fully visible” to regulatory authorities.
Source: Archie Hunter | Bloomberg Government
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Fed's minutes reveal risk of hit to Treasury market liquidity |
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(May 25) — The Federal Reserve revealed in its latest meeting minutes that some officials flagged a potential hit to Treasury market liquidity as the central bank moves to shrink its bond portfolio.
- “Regarding risks related to the balance-sheet reduction, several participants noted the potential for unanticipated effects on financial market conditions,” according to the minutes
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Usage of the Fed’s overnight RRP lingered below a recent record; Earlier this week, demand for the facility topped $2 trillion, marking an all-time high, as investors struggled to find places to invest their cash in the short term
- For Scott Skyrm at Curvature Securities, “there’s nothing to worry about” when it comes to RRP volume because the Monday spike was tied to an influx of GSE cash. He says demand will keep declining in the coming weeks as the balance-sheet runoff starts in June
- Earlier, BMO Capital Markets said it expected the Fed to defer from moving the rate on its overnight reverse repurchase agreement facility, even as the monetary authority embarks on balance-sheet normalization
- Elsewhere, overnight GC repo closed at 0.70% after trading as low as 0.68% and as high as 0.79%, which is where it opened, according to Curvature Securities
Source: Sydney Maki | Bloomberg Government
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Turbulence in the cyber insurance market kicked into high gear after the May 2021 hack of Colonial Pipeline Co. Photo: Jim Lo Scalzo | EPA |
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Cyber insurers raise rates amid a surge in costly hacks
Insurers significantly increased premiums for cyber coverage over the course of 2021, as a string of high-profile attacks and government action helped boost demand for products, data collected by industry bodies shows.
CISA ‘strongly urges’ you to patch these 75 actively exploited flaws
The U.S. Cybersecurity & Infrastructure Security Agency has added a total of 75 security vulnerabilities, all known to be actively exploited, to its 'significant risk' listing in just three days this week. This is not just a warning for federal agencies but for all organizations.
DDoS extortion attack flagged as possible REvil resurgence
Concern has been raised that a coordinated distributed denial-of-service (DDoS) attack from a malicious actor could be associated with the notorious ransomware-as-a-service (RaaS) group REvil.
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Photo illustration: 731; Photos: Getty Images |
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Future of humanity in peril if we ignore mesage of the microbes
A single microbe has destabilized health-care systems, unbalanced economies, and confounded government leaders worldwide. Even as we cope with the Covid crisis, nature keeps throwing new challenges at us, ranging from an outbreak of rare viral monkeypox to an unexplained run of child hepatitis. It’s a humbling moment for Homo sapiens, accustomed as we are to doling out crushing blows to other life forms rather than having them rock our own.
How to care less about your eMail
So many of us spend our days ruled by email: constantly refreshing, wading through detritus, paralyzed by the pressure of crafting a reply to the one note that actually matters. The moment we reach inbox zero, and few of us ever do, the ding sounds again. Maybe we need to take a page from the defectors. You know the ones — those co-workers who are good at their jobs, but don’t seem to care all that much about your note.
Rich people’s problems: Is the business lunch off the menu?
Good business lunching is an art, not a science. Over the years I’ve eaten a lot of lunch and become quite the artiste. However, as the cost of living crisis begins to bite deeper, should I be curtailing my activities and cutting back? After all, whenever businesses face economic headwinds, the first things to go are biscuits in meetings and a clampdown on expenses.
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