Week InReview
Friday | Mar 6, 2020
Chart of the week.
The Bloomberg
U.S. Financial Conditions Index
is back to levels last seen
in December 2018
in case you missed it...
The Federal Reserve issued a landmark overhaul of Wall Street capital rules Wednesday, drawing a rebuke from one of the board’s governors who warned that the change could let banks dial back buffers meant to protect them from losses. (Bloomberg Law | Mar 4) See also: Federal Reserve retools capital rules for largest U.S. banks

Already among the worst performers in the market’s swoon over the past week, banks took a direct hit Tuesday from  the Federal Reserve’s emergency rate cut . The KBW Nasdaq Bank Index dropped 4.6% after the announcement and has fallen 8.4% during the past week, while the S&P 500 financials sector, which includes insurers, has declined 6.6% during the past week. (The Wall Street Journal | Mar 3)

You only learn who has been swimming naked when the tide goes out, Warren Buffett famously wrote in a shareholder letter. As  volatility has soared  during the past two weeks, some asset classes have started to show a little more skin, and interesting wrinkles. (The Wall Street Journal | Mar 3) See also: Fed cuts rates to blunt coronavirus impact, markets drop (Reuters | Mar 3)

U.S. Supreme Court justices appeared ready to limit the Securities and Exchange Commission’s ability to recoup ill-gotten profits from wrongdoers, hearing arguments on a legal tool the commission has used to collect billions of dollars. (Bloomberg Law | Mar 3)

As the director of the U.S. Federal Housing Finance Agency, Mark Calabria has a relatively low-profile job. He’s the designated watchdog for a small group of financial institutions, most notably the mortgage giants Fannie Mae and Freddie Mac, which have been under government control since the financial crisis. But as the administration moves to take both companies out of conservatorship, Calabria is for the moment one of Wall Street’s most powerful and closely watched regulators. (Bloomberg Law | Mar 2)
Five takeaways from Powell briefing after Fed rate cut
(Mar 3)–- Here are the key takeaways from the Federal Reserve’s emergency rate cut and Chair Jerome Powell’s news conference.
  1. The FOMC delivered an emergency half-percentage point interest rate cut in a bid to protect the longest-ever economic expansion from the spreading coronavirus. The first such inter-meeting reduction since October 2008 during the financial crisis is an attempt to head off risks that had changed materially, Powell tells reporters in a hastily called briefing. While Fed officials last week weren’t calling for action, Powell didn’t fully explain what had changed to prompt the unscheduled meeting.
  2. While much of Wall Street expects follow-up rate cuts in the weeks ahead, Powell doesn’t signal any further moves –- or intention to take back the cuts once the crisis is over. Instead, he says the Fed is closely monitoring developments and will act as appropriate to ensure full employment and stable prices as part of its congressional dual mandate. The Fed meets in mid-March, but Powell said once the decision to cut was made, it needed to be announced.
  3. The U.S. economy remains solid, Powell stressed, though it could weaken somewhat amid spread of the virus with the travel industry, one area that is especially vulnerable. The chairman didn’t cite any financial stability concerns, but said the Fed would have bank supervisors advise banks to work with borrowers as appropriate if they face stresses.
  4. Powell said the Fed was a part of a concerted global response, citing the G7 high-level statement in which other countries are expected to take action as well. The chairman said the lead to handling the crisis in the U.S. is with health authorities, and fiscal policy makers may also play a role. He didn’t comment on President Trump’s criticism, other than to say the Fed is doing what is best for Americans.
  5. Markets weren’t too impressed with what they heard from the Fed chair. The 10-year yield dipped as low as 1.028% during the press conference, which indicates skepticism that this dose of medicine will be sufficient to shield the economy from the risks of the coronavirus. The S&P 500 Index, which was up roughly 0.5% when the presser began, slumped to session lows thereafter, off about 1.8%.

Source: Bloomberg Government
the cyber cafe
Iran's 'Fox Kitten' still targeting VPNs
According to a recent study by ClearSky , more nation-state actors such as Iran’s “Fox Kitten” hacking group and other Advanced Persistent Threats (APTs), are focusing on VPNs as a way to establish a foothold in a network in the first stage of their attacks. See also: State-backed hackers growing more skilled

Mobile hacks outpace desktop assaults
Although criminals showed a marked preference for mobile in terms of the volume of attacks, the attack rates targeting transactions were virtually identical. While researchers noted a 56% rise in the mobile attack rate year on year and a 23% decline in the desktop attack rate, the rate of attacks targeting transactions was 2.7% and 2.5% for desktops and mobile devices, respectively.  

5G and IoT security: Why cybersecurity experts are sounding an alarm
Without regulation and strong proactive measures, 5G networks remain vulnerable to cyberattacks, and the responsibility falls on businesses and governments.
—  TechRepublic
binge reading disorder
The cognitive bias that creates COVID19 panic
At this stage, no one can specify the magnitude of the threat from the coronavirus. But one thing is clear: A lot of people are more scared than they have any reason to be. They have an exaggerated sense of their own personal risk. How come? The best answer goes by an unlovely name : “ probability neglect .” 

Can we get a vaccine early? How the rich are preparing for an outbreak.
Like everyone across the U.S., the rich are bracing for a deadly coronavirus outbreak. But the rich can afford to prepare for a pandemic with perquisites, like   private plane rides   out of town, calls with world-leading experts and access to luxurious medical care. One investor may fly to Idaho with or without family. Another may travel to a home in Italy (a country the CDC advises Americans to avoid at the moment). And one New Yorker called up the hospital with his name on it.

Before Clearview became a police tool, it was a secret plaything of the rich
Investors and clients of the facial recognition start-up freely used the app on dates and at parties — and to spy on the public. Clearview was unknown to the general public until this January, when it was reported the secretive start-up had developed a  breakthrough facial recognition system  that was in use by hundreds of law enforcement agencies.
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