Week InReview
Friday | Oct 16, 2020
When your team is deflated.
Illustration: Dan Page/The Wall Street Journal
It could be a project gone wrong, a key colleague’s departure, or just life these days. With many teams still operating remotely, it’s hard for managers to catch signs of morale issues and fix them. Rethinking meetings, giving employees a challenge, and simply listening and offering perspective are among the ways managers are recharging their teams.

— The Wall Street Journal
let's recap...
Benjamin Franklin's head on the hundred dollar bill
It’s being called the “big bang,” and it has derivatives traders on high alert. In a critical development in the global shift away from old benchmarks that was triggered by Libor's shortcomings, interest-rate swaps on more than $80 trillion in notional debt will transition this weekend to a new rate for determining their value. While the switch to the secured overnight financing rate, or Sofr, is expected to boost longer-term liquidity in the new benchmark, it also is fueling concerns about unruly price action because it is expected to trigger the sale of swaps on tens of billions of dollars of debt. (Bloomberg Markets | Oct 15)

The Commodity Futures Trading Commission voted Thursday to establish limits on the size of speculators’ bets in markets for commodities including gold, cattle, and crude oil, completing a long-delayed effort to enact a provision of the 2010 Dodd-Frank Act. The CFTC established so-called position limits for the first time on 16 agricultural, metal, and energy commodities, while updating federal caps on nine agricultural products that were already subject to them. (The Wall Street Journal | Oct 15)

The Treasury market is now so large that the U.S. central bank may have to continue to be involved to keep it functioning properly, according to Federal Reserve Vice Chair for Supervision Randal Quarles. The U.S. rates market has faced several significant dislocations in the past couple of years, most notably in March, when the pandemic roiled global assets. In response, the Fed has expanded the toolkit it uses to help ensure market stability, including the implementation of new repurchase-operation facilities and swap lines. It also restarted direct purchases in the bond market, and is still buying about $80 billion of Treasuries a month (Bloomberg Markets | Oct 14)

The accelerating climate crisis is increasing pressure on regulators and corporate executives to set universal standards for the burgeoning sustainable finance industry. Sustainable finance has quickly become a core business for most banks and fund managers, but there’s a problem: the absence of consistent guidelines and definitions with which players can examine markets — including carbon credits, ESG funds, and green bonds. (Bloomberg Green Finance | Oct 14)

While the frenetic pace of speculation in derivatives has eased a bit recently, it hasn’t stopped, and a chorus of analysts warns the trading remains capable of exacerbating swings. Monday brought the biggest rally for the Nasdaq 100 Index since April, with options-derived measures of volatility climbing in tandem. (Bloomberg Markets | Oct 12)
Relaxed Fed leverage rules may not be permanent
(Oct 15) — To the chagrin of major banks, the Federal Reserve may not permanently ease some of the regulatory constraints it relaxed amid the pandemic.

As part of a host of measures the Fed took after the pandemic roiled markets, the central bank allowed Wall Street banks to take on more leverage amid a severe lack of liquidity for Treasuries. The Fed’s adjustment to the so-called supplementary leverage ratio (SLR), exempting holdings of U.S. Treasuries and cash from banks’ calculations, ends in 2021.

“Our change to the supplemental leverage ratio is temporary,” Fed Vice Chair for Supervison Randal Quarles said on a virtual panel discussion Wednesday. “There’s not currently a discussion for making it other than temporary.”

It’s clear the SLR “was a significant disincentive for banks to respond to the pressures on the Treasury market in March, and when we made that exemption, they were able to respond much more fully,” he said. “So I understand the desire to give thought to it, but I would think it’d be premature to say that we ought to make that permanent currently.”

Most analysts view the SLR tweak as something that has helped bolster market functioning and drive repurchase agreement rates lower.

Source: Liz Capo McCormick & Catarina Saraiva, Bloomberg Government
the cyber cafe
Illustration: Kevin Hand/The Wall Street Journal
Hackers eye everyday objects as life moves further online
Security experts expect cyberattacks to increase in frequency and severity in the coming years, as more consumer goods are sold with internet connectivity embedded by default. To get a sense of future threats, The Wall Street Journal compiled a list of common devices, equipment and infrastructure vulnerable to attacks in the coming years, based on the assessment of cybersecurity researchers, national-security experts and white-hat hackers.

How to improve the cybersecurity of your remote workers
A survey by security provider Keeper Security elicited thoughts and concerns as to how the shift to remote working has impacted cybersecurity defenses. Many of the threats have been able to sneak past traditional security protection. Some 51% of the respondents said that malware and other exploits were able to evade their intrusion detection systems, while 49% said that such threats got past their antivirus tools. As such, only 44% of those surveyed rated their security measures as effective, down from the 71% who offered the same opinion prior to the pandemic.

Visa, JPMorgan already preparing for potential quantum cyberattacks
Financial services companies are preparing for a time when a powerful quantum computer could break some of the most widespread cryptographic methods currently used in cybersecurity. Experts say quantum-computing cyberattacks could be more than a decade away, based on the technology’s rate of progress, but the consequences could be so severe that companies and cryptographers world-wide are preparing now.
binge reading disorder
Lessons for the next pandemic — act very, very quickly.
Public-health leaders and scientists are mining the lessons of Covid-19 for strategies to avert the next pandemic. Smarter lung scans and screening blood samples are two of their ideas. They are also working on new tools and approaches to find infections before they spread and choke off budding outbreaks, as well as ways to respond quickly with better public-health systems, drugs and vaccines, and improve global cooperation.

7 looming questions about the rollout of a Covid-19 vaccine
The design, testing, and mass production of multiple vaccines has never been attempted on such an accelerated timeline. But the complexity of that work may pale in comparison to what comes next — the rollout of hundreds of millions of doses of never-before-used vaccines across the United States and, eventually, around the world. 
— Stat

‘Too complex to break up' is the new 'too big to fail'
Lawmakers this week proposed breaking up Big Tech by reviving aggressive, turn-of-the-last-century-style antitrust laws and enforcement measures. Amazon, Facebook, Google, and Apple, they argued, all have developed monopoly power that they use to stamp out competition and stifle innovation.
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