Week InReview
Friday | Dec 18, 2020
2020 in review.
let's recap...
As economies recover from the coronavirus shock, worries over inflation are returning.
Illustration: Financial Times
Bond investors are braced for the risk that 2021 could herald the return of a long-dormant foe: inflation. The price of government bonds has rocketed this year, largely because of the huge bond-buying programs undertaken by central banks to soften the financial impact of the pandemic. Investors are assuming this support continues, even as economies pull out of their 2020 slump. (Financial Times | Dec 16)

The Federal Reserve held its final meeting of 2020 and made it very clear that easy money is here to stay for the foreseeable future. Remember, a few months ago the Fed made a major shift and said that it wants to see the average inflation rate near 2%, which means it can keep rates lower, for longer. Here are three key points from from the Fed’s last meeting of 2020.
  1. Easy money is here to stay
  2. Inflation is still below 2%
  3. Economy should rebound in 2021
(Forbes | Dec 16) see also Powell sees light at end of tunnel and policy staying very easy (Bloomberg Economics | Dec 16)

Fannie Mae and Freddie Mac plunged on Monday after Treasury Secretary Steven Mnuchin said he’s all but ruled out letting them exit U.S. control before he steps down, leaving it to the Biden administration to decide the fates of the mortgage giants. In a Wall Street Journal interview, Mnuchin said he’s not going to pursue any actions that put taxpayers at risk or limit consumers’ access to home loans. His decision prevents a major policy change in the last days of the current administration that risked disrupting the $10 trillion mortgage market. (Bloomberg Markets | Dec 15)

High-frequency traders are using an experimental type of cable to speed up their systems by billionths of a second, the latest move in a technological arms race to execute stock trades as quickly as possible. The cable, called hollow-core fiber, is a next-generation version of the fiber-optic cable used to deliver broadband internet to homes and businesses. (The Wall Street Journal | Dec 15)

The Department of Labor released its contentious fiduciary exemption that broadens the kinds of retirement plan investments from which financial advisers can profit. The fiduciary rule DOL officials announced opens federally protected retirement plan participants and beneficiaries to once-prohibited financial advice and follows a newly imposed best interest rule the Securities and Exchange Commission approved in June. (Bloomberg Law | Dec 15)
FHFA releases new Fannie-Freddie liquidity rule
Photo: krblokhin/Getty Images
(Dec 17) — The Federal Housing Finance Agency on Thursday released for public comment a new rule on how much liquidity mortgage giants Fannie Mae and Freddie Mac must maintain.
  • The agency says Fannie and Freddie already meet or exceed the proposed rule’s requirements
  • Rule includes two cash-flow-based requirements, including a 30-day requirement based on a net-cash-flow analysis plus a $10 billion buffer that must be met with “highly liquid” assets such as Treasuries
  • Two long-term requirements include that the ratio of long-term unsecured debt to less-liquid assets must exceed 120%
  • Comments on the proposal will be due 60 days after it’s published in the Federal Register

Source: Bloomberg Government
the cyber cafe
Fear tactics might get employees to take action on cybersecurity in the short term. But research is finding that its effectiveness wears off over the long term.
Illustration: Riki Blanco
Why companies should stop scaring employees about cybersecurity
Companies often turn to a powerful emotion to get employees to be vigilant about cybersecurity. They scare them. The problem is it doesn’t work. But fear not. Although scaring employees may not be an effective way to keep them vigilant, there are other tools that do work.

How Russian hackers infiltrated the US government for months without being spotted 
To carry out the breach, the hackers first broke into the systems of SolarWinds, an American software company. There, they inserted a back door into Orion, one of the company’s products, which organizations use to see and manage vast internal networks of computers. For several weeks beginning in March, any client that updated to the latest version of Orion – digitally signed by SolarWinds, and therefore seemingly legitimate – unwittingly downloaded the compromised software, giving the hackers a way into their systems. 

~18,000 organizations downloaded backdoor planted by Cozy Bear hackers
About 18,000 organizations around the world downloaded network management tools that contained a backdoor that a nation state used to install malware in organizations the used the software, the tools provider, SolarWinds, said on Monday.
binge reading disorder
Photo: Ben Krigler/The House of Krigler
Why you should never unpack your suitcase and other travel tips
A peripatetic childhood, split between Paris, Los Angeles, and other cities, turned Ben Krigler into a lifelong traveler. He likes to know, when he's checking into a hotel, if it’s clean or not, so he always carried a UV flashlight. When booking a pane or hotel, he checks out amateur videos on YouTube. And he never, ever puts things in hotel drawers. 

On a Covid-safe (virtual) vacation
Window-swap.com, founded by a young couple in Singapore, lets users peer through the windows of hundreds of locations worldwide. On WindowSwap, you might spot six maskless teen-age boys stroll along an Amsterdam canal and then disappear into the Sex Palace Peep Show, or a white bird fly high across the pyramids of Giza, Egypt.

America's economy faces a zombie recovery, even with vaccine
Much of the economy remains in suspended animation – a zombie recovery – that masks how much the crisis has curtailed ambitions and how much depends on a new injection of government aid that has languished for months in a partisan Congress.
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