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Loan market liquidity concerns
Financial Times Alphaville's Alexandra Scaggs is concerned that "there are currently five ETFs that invest in leveraged loans," and that these exchange-traded funds with intraday liquidity have a mismatch with the illiquid underlying loans:
"The problem with using liquid open-ended vehicles (like ETFs and mutual funds) to invest in illiquid assets is not as dry as settlement time. Instead, it is the chance that a negative feedback loop will occur if this currently booming market turns sour. If poor performance in these funds leads to withdrawals, that could lead to even worse performance, and more withdrawals, and so on.
In short, they create the risk of a fire sale...."
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Shadow rate shows Fed may be nearing the end of hiking cycle
Investors take heed: while many economists - and the Federal Reserve itself - see the U.S. interest-rate hiking cycle at only about half-done, it may instead be closer to the end. (Bloomberg Markets | May 24)
Fannie-Freddie overhaul plan is dead for this year, Senators say
Two U.S. senators who have played key roles in trying to advance housing-finance reform are acknowledging the legislative efforts to end government control of Fannie Mae and Freddie Mac foundered after failing to win support from progressives (Bloomberg Economics | May 23)
Groundhog Day at Fannie-Freddie where the fix is always tomorrow
Latest talks on resolving companies are stuck on old problems; Mnuchin pushed solution to 2019; some think it'll take longer (Bloomberg Quint | May 22)
Legislate. Repeal. Fail. Repeat.
The U.S. Congress might have just set a record for shortness of memory: Just 10 years after a crisis that nearly brought down the global financial system, it's loosening the safeguards designed to prevent a repeat. Now it's up to regulators - and specifically the Federal Reserve - to ensure that the backsliding doesn't go too far. (Bloomberg Editorial | May 22)
FINRA would monitor SEC broker conduct rule compliance: Cook
Robert Cook, president and CEO of the Financial Industry Regulatory Authority, said that the broker-dealer self-regulator expects to have exam oversight of the Securities and Exchange Commission's proposed Regulation Best Interest for brokers, if adopted (Think Advisor | May 21)
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Cybersecurity news every Friday
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The Cybersecurity 202: These hackers warned Congress the internet was not secure. 20 years later, their message is the same.
Twenty years ago this week, a collective of young hackers went to Washington with a warning for Congress: Software and computer networks everywhere were woefully insecure. During that now-infamous hearing in May 1998, one told senators that "any of the seven individuals seated before you" could take down the internet in just half an hour. In a return trip to Capitol Hill on Tuesday, the same hackers offered a similarly bleak assessment: Digital security is hardly any better.
Banks adopt military-style tactics to fight cybercrime
A story about how banks are reckoning with the growing threat of cyberattacks by setting up fancy man-caves, giving them cool names ("fusion centers"), filling them with former spies and Special Forces operators, and stocking them with high-tech electronics.
Cybersecurity experts: Data breaches are a matter of when, not if
So you better be prepared.
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Investment fund research reports
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SEC proposes fair act rules
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(May 23) -- The Securities and Exchange Commission proposed rules and amendments that would promote research on mutual funds, exchange-traded funds, registered closed-end funds, business development companies, and similar covered investment funds. Proposed changes are intended to provide investors with greater access to research to aid them in making investment decisions, the SEC chair said in a statement.
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New capital rule for Fannie-Freddie
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(May 23) -- The Federal Housing Finance Agency will develop a new capital rule for Fannie Mae and Freddie Mac, FHFA Director Mel Watt said in statement for a Senate hearing. Some highlights:
- Watt, who oversees Fannie and Freddie as FHFA chief, said the new rule will be suspended during the U.S. conservatorship, which has been in place since the mortgage-finance companies were brought under government control in 2008
- The purpose of the rule, which will replace an existing one, is to set prudent business practices and provide transparency, Watt said
- "I emphasize this rule-making is not connected in any way to any efforts or ideas others may have about recapitalizing and releasing" the companies
- Watt reiterateed his view that Congress rather than FHFA should determine the companies' futures
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Hand-curated, chosen with love
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Here's how much money you need for bankers to think you're rich
In rich-tropolises such as New York and London, 1 percenters moan that living on $500,000 a year feels Dickensian. With a pot of $40 million - and private schools, a Hamptons retreat, a horse and a charity to feed - a hedge funder on the Showtime drama "Billions" exclaims: "F---! I'm broke!"
Does the enlightenment end with a bang or a whimper?
Philosophically, intellectually - in every way - human society is unprepared for the rise of artificial intelligence.
How the Math Men overthrew the Mad Men
Once, Mad Men ruled advertising. They've now been eclipsed by Math Men - the engineers and data scientists whose province is machines, algorithms, pureed data, and artificial intelligence.
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