Week InReview

Caveat Investor? The "Fiduciary Rule" and Unintended Consequences

"In what instances might we now hold an advisor liable for 'not acting in a client's best interest' but wouldn't have under the old suitability standards? More important to my argument, in what ways might upping and broadening the standard instead create other problems for investors? I can think of four prominent possibilities. First, judging investments too much by ex post performance. Second, not judging investments in a portfolio context. Third, over-emphasizing low fees as always being in the client's best interest. Fourth, judging innovative investing approaches more harshly than conventional ones.

Fri Jan 20, 2017
Let's recap
In case you missed it . . .
Goatherd who made it at Goldman uses AI as surveillance tool; behavox challenge is getting banks to share information (Jan 18)

The year-old commodities boom is drawing the attention of some pension and mutual funds that got burned when the last rally fizzled more than five years ago. They want back in. (Jan 18)

Trump picks rattle housing industry by questioning loan backstop
Carson says 30-year mortgage doesn't need government guarantee; realtors warn rates would rise, mortgages could become scarce (Jan 18)

U.S. top court rejects banks over Libor antitrust lawsuits
The U.S. Supreme Court allowed private antitrust lawsuits brought by investors including big U.S. cities accusing major banks of conspiring to manipulate the pivotal Libor benchmark interest rate to move forward (Jan 17)

Cryptocurreny offers fragmented market, zero transaction fees; risks include hacking thefts, Chinese government crackdown (Jan 16)
FSOC publishes meeting minutes
Jan 11th, 2017
(Jan 19) The Financial Stability Oversight Council published the minutes from their most recent council meeting. When possible, open session council meetings are made available to the public via live webcast, which can also be viewed after they occur  here . Among the topics discussed in the closed session:
  • An update on market developments
  • FSOC's 2017 annual report
  • Nonbank financial company designations Stage 1 thresholds
  • Money market mutual fund developments
Risks in climate stress tests ignored by big banks
Companies collect data but fail to act
(Jan 16) The world's biggest banks are increasingly testing how climate change stress could affect their future profits, but they aren't applying the results to investment decisions. During climate risk discussions this week at the World Economic Forum in Davos, Boston Common Asset Management LLC shared a report, which will be published next week, on how executives can do more to link performance with environmental risk. Boston Common, which has more than $2 billion under management, analyzed how the management at 28 of the world's biggest banks are dealing with the risk of rising seas, droughts and population displacements predicted from climate change. 
Investing in sustainable development
At least $12 trillion in returns by 2030
(Jan 16) Investments in global sustainable development goals will create at least $12 trillion in returns by 2030, according to research conducted by the Business and Sustainable Development Commission, a group of businesses, civil society groups and labor organizations, set up last year at the World Economic Forum's annual meeting in Davos. The group includes Unilever NV's Paul Polman and Jack Ma, founder of Alibaba Group Holding Ltd. The opportunities, spread across four areas include:
  • Sustainable solutions to global energy challenges could be valued at as much as $4.3 trillion
  • Addressing housing needs and urban infrastructure challenges in cities could be valued at $3.7 trillion
  • Sustainable solutions to eradicate hunger, curb food waste and improve yields for small-holder farmers could up $2.3 trillion in new value by 2030
  • New health solutions valued at $1.8 trillion could include innovations to support rural communities and provide health education through mobile phones.
Binge reading disorder
Hand-curated, chosen with love
'Love Actually' director Richard Curtis is using Pokémon Go at Davos to tackle poverty - and Jamie Oliver is playing
Richard Curtis, writer of "Four Weddings and a Funeral" and "Love Actually," is promoting a campaign to tackle world poverty by creating a series of Pokémon Go "Pokéstops" at Davos

Bad explanations for financial crisis won't die
Sometimes, when you lose a debate, you have to just let it go. That seems to be a problem for those who are unwilling to accept the complex realities of what actually caused the financial crisis.

A rare corner of finance where women dominate
Once a year, a small group of executives who control trillions of dollars in American companies meet for lunch in Manhattan. Among the things they discuss: pushing for greater say in how companies are run

Steve Jobs saved Apple - and Nike - with the same piece of advice
Jobs didn't just give advice - he lived it.
- Quartz