Week InReview
Fri Dec 22, 2017
Let's recap
In case you missed it . . .
Central bankers and industry participants made their strongest statement yet against the use of last look, the controversial practice in currency trading that allows dealers to back out of losing trades (Dec 19)

Blue chips drive borrowing binge to record $6.8tn in 2017
Corporate and sovereign debt climbs despite rate tightening ahead (Dec 19)

Court rules for lawsuit against stock exchanges to proceed
Class-action suit alleges that Nasdaq, NYSE and others favor high-frequency trading over slow-moving investors (Dec 19)

Yield curve inversions and stocks are a toxic mix
Every time since the mid-1970s that long rates have fallen below short rates, the S&P 500 has experienced a double-digit drawdown.

Stay on close watch for potential political shocks
Markets can misprice elections and as monetary policy tightens, the impact could grow (Dec 18)
The Cyber Cafe
Cybersecurity news every Friday
The cyber whodunit & the international blame game
It's too easy for nations to accuse their adversaries, and technical data are poorly systematized.

91% of cybersecurity pros fear hackers will use AI to attack their company
Some 87% of companies use artificial intelligence in their cybersecurity strategy, according to Webroot.

FSOC sees cybersecurity as top financial industry risk
In report, Financial Stability Oversight Council also says cryptocurrencies should be monitored closely.
Biggest U.S. banks' living wills
No 'deficiencies'; some 'shortcomings'
(Dec 19) -- None of the eight biggest U.S. banks - including Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co. - had "deficiencies" in their latest resolution plans, the Federal Reserve and the Federal Deposit Insurance Corp. said in a statement. Some highlights:
  • No specific shortcomings were identified in living wills submitted by Bank of New York Mellon Corp., Citigroup Inc., JPMorgan and State Street Corp.
  • However, Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo & Co. did have "shortcomings" in their living wills, which are less-severe weaknesses that require additional work in their next plans.
  • All eight biggest U.S. banks must submit their next resolution plans by July 1, 2019.
Fed benchmark rate under review
Would replace LIBOR for hedging
(Dec 20) -- U.S. companies will get a new benchmark to replace the problematic LIBOR when they acquire derivatives to cut risks of interest rate changes if U.S. accounting rulemakers proceed with their plans. The Financial Accounting Standards Board agreed to a Federal Reserve Board request to add to market benchmark rates for hedge accounting. FASB chose a barometer that a special panel of the U.S. central bank had picked in June to eventually supplant the U.S. dollar London Interbank Offered Rate. A failure by FASB to adopt the new Fed-devised benchmark rate, called the Secured Overnight Financing Rate, or SOFR, so companies may qualify for beneficial hedge accounting could potentially hurt the marketplace in derivative instruments, said accountants interviewed by Bloomberg Tax.
Binge reading disorder
Hand-curated, chosen with love.
Money markets are going haywire, blame the government
Rules on bank capital were supposed to make markets safer and more transparent; that is not what has happened.

ESG: The X-Ray of Finance
Rising interest rates will make environmental, social, and governance (ESG) factors one of the most important sources of alpha for investment managers.

Why we all need more philosophy in our lives
A new prize recognizes the importance of philosophical ideas.