Week InReview
Friday | Feb 21, 2020
The language of finance.
in case you missed it...
Fannie Mae and Freddie Mac are expected to retain “limited and tailored government support” after they are freed from U.S. control, Treasury Secretary Steven Mnuchin said in a letter to lawmakers seeking information on the administration’s plans for the mortgage giants. (Bloomberg Markets | Feb 20)

A push to delay reporting of transactions in the $640 trillion global swaps market is gaining steam in Washington, signaling a possible win for Wall Street banks as regulators move to overhaul how they keep tabs on trading. A CFTC plan that would allow block trades to stay secret for 48 hours is part of a sweeping plan to improve derivatives' data. (Bloomberg Politics | Feb 18)

The Federal Reserve has doled out tens of billions to calm the short-term lending markets after they went haywire in September. But initiatives by the U.S. Treasury Department  –  to ensure it always has enough cash to pay its bills as the deficit soars to a trillion dollars  –  could make it harder for the Fed to prevent a repeat. (Bloomberg Politics | Feb 18)

The slide of so many bond yields below zero may cost pension funds and other institutional investors a trillion dollars this year. Around the world, traders must pay to lend on $13 trillion of debt as the coronavirus and heightened economic uncertainty help to underpin demand for the safest assets. Retirement funds are particularly exposed because they have few other secure places to store their assets, but need to generate returns to support pension holders into old age. (Bloomberg Markets | Feb 14)

Federal regulators launched a new effort to overhaul the plumbing of the U.S. equity markets with a measure to improve stock-price data available to the public and reduce the informational advantage enjoyed by some professional traders. (The Wall Street Journal | Feb 14)
Fed considers financial stability 'escape clauses'
(Feb 19)  —  Minutes  of the FOMC’s Jan. 28-29 meeting show policy makers discussed the idea of using “financial instability escape clauses” to help explain any future policy actions that might be taken when there’s a buildup of risks.
  • Discussion was part of review of Fed’s strategy, tools and communications; review noted there may be times when persistently easy policy that’s consistent with Fed’s goals may be contributing to increasing vulnerabilities in financial system
  • Staff briefing, which included a review of how other central banks have approached the issue of monetary policy and financial stability, mentioned using “financial instability escape clauses to provide leeway” for the central bank to deviate from its usual policy strategy if vulnerabilities become great
  • Participants discussed how financial-stability considerations should be incorporated into conduct of monetary policy
  • Though many said FOMC shouldn’t rule out possibility of adjusting policy to mitigate financial-stability risks, minutes said “monetary policy should be guided primarily by the outlook for employment and inflation,” and should respond to such risks only if they significantly threaten the Fed’s mandate
  • “At the end of the day, they came to the same conclusion as they always have before, which is that using monetary policy to prevent asset price bubbles is too difficult,” and such bubbles are best left to supervisors or regulators to address ahead of time, said Paul Ashworth, chief U.S. economist for capital economics

Source: Bloomberg Government
FOMC discusses overvaluation, excessive debt
(Feb 19)  —  Minutes  of Federal Open Market Committee’s Jan. 28-29 meeting show that some policy makers’ financial stability concerns included imbalances that “could amplify an adverse shock to the economy.”
  • Those imbalances included overvaluation and excessive indebtedness
  • Other concerns were that low rates and tight labor market could increase risks
  • Participants acknowledged staff report suggesting overall financial vulnerabilities remained moderate and financial system was resilient
  • Coronavirus was seen as one of uncertainties about the outlook; threat from virus “warranted close watching”
  • Several on FOMC saw recent U.S. trade agreement with China as having relatively limited impact
  • Few on FOMC expressed less confidence in inflation outlook
  • NOTE: Before the release of minutes at 2pm ET, Fed-dated OIS priced in full 25bp rate cut by September

Source: Bloomberg Government
the cyber cafe
U.S. government confirms 'malicious' new malware threat: beware —  this is the WannaCry hackers again
Multiple U.S. government agencies have warned of a newly intensifying threat from North Korea. Some of the malware is new and some of it is updated. And this particular state-sponsored threat group has pretty terrifying form — remember WannaCry? As almost always these days, the hackers have mounted a phishing campaign to exploit weaknesses in non-hardened, non-governmental sectors.
—  Forbes

To bolster cybersecurity, the U.S. should look to Estonia
United States policymakers have long sought ways to boost federal agencies’ capacity to implement cybersecurity and plan for significant cyber incidents. This tiny European nation has come a long way after crippling cyberattacks in 2007. Now it offers key lessons in attracting tech talent and educating citizens.
—  Wired

This app lets you see IoT devices around you and what data they're taking
With the app, you'll be able to see devices like public cameras with facial recognition technology, Bluetooth beacons tracking your location at the mall, and your neighbor's smart doorbell or smart speaker, according to a story published by  Carnegie Mellon's Security and Privacy Institute . You can see what data these devices collect, and access privacy choices like opting in and out of data collection when available. 
—  CNET
binge reading disorder
These are the bottles to buy before new spirits tariffs hit. 
The U.S. Trade Representative's  new round of tariffs  on wines and spirits imported from the European Union could affix as much as a 100% increase to the import price. It’s the latest escalation in the trade war with the EU, which saw  a 25% tax levied  this past October and has united distillers on both sides of the Atlantic as it  rattles the global whiskey business .

Asset Managers’ BS — Decoded: A translation guide to asset manager-speak
A handy translation guide to the sales jargon and IR excuses that one family office chief is sick of hearing.

Airlines say Wi-Fi that actually works up there is coming soon.
There may be some good news on the horizon — a new era of ground-quality internet connectivity that could save carriers billions of dollars. The Seamless Air Alliance , a nonprofit group of 30 companies, says its new tech architecture will make in-flight connectivity systems modular, with open interfaces and components that can easily be swapped out.
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