Week InReview Friday | Jul 22, 2022

Market jitters.

Outside the New York Stock Exchange. Photo: Jonathan Alpeyrie/Bloomberg

Economic risks continue to dog global markets, sending oil further below $100. Ground zero for much of the growth worry is Europe, where Russian gas is flowing again but at reduced capacity amid ongoing risks of a shut off that could damage the euro-area outlook. Meanwhile, a powerful rally in the Treasuries market Thursday also highlighted fears of a recession as monetary policy tightens. Disappointing earnings from Snap Inc. on slowing advertising have also dented some of the optimism from a stock rally this week that pared this year’s rout in global shares to 18%. At least one fund manager is looking to Asia for solace: US-based GQG Partners LLC has more than $7 billion invested in India, betting its best positioned among emerging nations to withstand a global recession.

let's recap...

Fund managers this month reduced their net overweight position in stocks to the lowest level since October 2008. Photo: Angela Weiss | Agence France-Presse via Getty Images

Investors cut equity allocations to lowest level since Lehman collapse Big investors have cut their allocations to equities to the lowest level since the collapse of Lehman Brothers at the height of the global financial crisis as rising recession fears spark worries about corporate profits. Fund managers this month reduced their net overweight position in stocks to the lowest level since October 2008, while also boosting cash holdings to a 21-year high of 6.1 per cent of assets under management, a survey by Bank of America of 259 investment managers with combined assets of $722bn published on Tuesday showed. (Financial Times | Jul 19) Trading 'gamification' concern for SEC, enforcement chief says The US Securities and Exchange Commission’s top enforcement attorney says that Wall Street’s main regulator is very concerned about digital engagement practices that brokerages may use to encourage more buying and selling of stocks, the latest signal from the regulator that a crackdown is coming for practices that critics refer to as the gamification of investing. (Bloomberg Politics | Jul 19) ‘The return of cash’: money market fund sector perks up on rising rates Rising interest rates are turning the $4.6tn money market fund sector from a drag on profits into a source of earnings in a rare piece of good news for asset managers whose fees have been hit hard by falling equity and debt markets. Average fees for money market funds shrank by three quarters over the past 25 years and fell to 12 basis points in 2021, their lowest level in decades, according to the Investment Company Institute. That left asset managers covering day-to-day costs to keep returns for customers in positive territory. (Financial Times | Jul 19) The crypto crash has important lessons for asset managers Bitcoin’s price collapse will raise satisfied smiles from skeptics. They can congratulate themselves for being right on the valuations, at least for now. They are right that over-exuberance is a danger — history has made that point several times. But the birth and growth in popularity of cryptocurrencies raise a further point to consider: is the investment industry failing to make the case for traditional investments? Are we missing a trick? (Financial Times - Opinion | Jul 19) Strong dollar fuels pullback in commodity markets The bull run in commodity prices is meeting stiff resistance from a surging U.S. dollar. Prices of oil, metals and agricultural products have tumbled since early June after shooting up in the wake of Russia’s invasion of Ukraine. In part, the recent fall reflects investors’ fears that a demand-busting recession is around the corner. But it is also because most commodities are priced in dollars. That means a rallying dollar makes them more expensive for buyers around the world and drags on demand. (The Wall Street Journal | Jul 19)

the cyber cafe

DOJ report warns of escalating cybercrime, 'blended' threats The Department of Justice is stepping up its efforts to prevent foreign nations from attacking U.S. networks and supporting cybercrime groups within their borders. So said Lisa Monaco, deputy attorney general and one of the heads of the U.S. government's efforts to crack down on both nation-state advanced persistent threat (APT) groups and cybercriminal gangs. Speaking at the International Conference on Cyber Security (ICCS) 2022 in New York on Monday, Monaco discussed efforts to engage private technology and cybersecurity companies in its efforts to address a myriad of evolving threats. Her appearance coincided with the release of the DOJ's Comprehensive Cyber Review report, which analyzed how the department is combating cybercrime. — TechTarget Russian hackers behind SolarWinds are now hiding malware in Google Drive The Russia-linked hacking group behind the infamous SolarWinds espionage campaign is now using Google Drive to stealthily deliver malware to its latest victims. That’s according to researchers at Palo Alto Networks’ Unit 42 threat intelligence team, who said on Tuesday that the Russian Foreign Intelligence Service (SVR) hacking unit — tracked as “Cloaked Ursa” by Unit 42 but more commonly known as APT29 or Cozy Bear — has incorporated Google’s cloud storage service into its hacking campaigns to hide their malware and their activities. — TechCrunch Cyber companies and universities are building ‘Cyber Talent Hub’ Cybersecurity firms will make practical training on their technology available to students in an attempt to address a skills shortage. The effort comes as fears mount that global competitors like China are outpacing the West on talent. These firms, along with investors and universities, are collaborating to build a platform that would connect students with private-sector employers in hands-on training on the companies’ own technologies. — The Wall Street Journal

binge reading disorder

Illustration: Elena Scotti | WSJ / iStock / Apple

More airlines are losing luggage. AirTags and tile trackers can help. A summer of flight delays, packed airports and cancellations is giving way to another growing problem: missing luggage. Hoping to keep lost bags from ruining their trip, many people are turning to discreet, lightweight Bluetooth trackers from companies such as Apple and Tile. The technology is designed to help owners locate keys, handbags and other easy-to-misplace belongings—including luggage. When your stuff isn’t where it should be, you can fire up an app to show you its last known location. — The Wall Street Journal Active managers are proving their worth right now. Will it last? Active managers, who have long argued that they do their best work during volatile and declining markets, seem to be making good on that promise this year — at least in domestic equity markets. According to an analysis done by Morningstar for Institutional Investor, 62.9 percent of U.S. equity funds succeeded in beating their benchmarks through the end of May. The average excess return for the category was 1.36 percent. — Institutional Investor Unleash your organization’s overlooked talent In this era of high anxiety and scarce talent, many leaders and organizations ask too much of people. But, do leaders and organizations also ask too little of people, overlooking skills and experiences that don’t conform to official job descriptions or traditional business relationships, and thus missing out on the passions and talents of colleagues and customers who would be eager to share what they know, if only they were asked. — Harvard Business Review