Week InReview
I, Robot

When we evaluate and compare a range of data points - whether that data is related to health outcomes, head counts, or menu prices - we tend to neglect the relative strength of the evidence and treat it as simply binary, according to research published in Psychological Science, a journal of the Association for Psychological Science.

"People show a strong tendency to dichotomize data distributions and ignore differences in the degree to which instances differ from an explicit or inferred midpoint," says psychological scientist Matthew Fisher of Carnegie Mellon University.

In a  series of six studies, Fisher and coauthor Frank C. Keil of Yale University examined how people tend to reduce a continuous range of data points into just two categories.

Friday | Oct 26, 2018
Risky deals return to leveraged-buyout market
Extra debt rises, use of equity cash drops as federal banking regulators ease rules.  Nearly 13% of LBOs in the first nine months of 2018 were financed with debt equating to at least seven times the target company's earnings before interest, taxes, depreciation and amortization, or Ebitda. In another sign of growing risk, the amount of cash private-equity firms are putting into buyouts is falling. (The Wall Street Journal | Oct 24)

Fed warns over leveraged lending as banks chase riskier deals
The Federal Reserve is getting more concerned about risks from the leveraged loan market, with a key official saying it's now taking a "closer look" at whether Wall Street banks are chasing deals without adequately protecting themselves against losses. (American Banker | Oct 24)

SEC won't release 'speedbump' study it promised two years ago
The Securities and Exchange Commission won't release a study of the impact of brief delays in stock trading on market quality and pricing that investors have been expecting for two years. The SEC committed in June 2016 to complete the study when it reinterpreted one of its rules to allow so-called "speed bumps" that briefly pause trades before relaying them to exchanges for execution. The move allowed IEX Group Inc. to become the first exchange to offer a trading venue that slows the speed of trading. (The Wall Street Journal | Oct 24)

Can the stock market predict the next recession?
We'll have a recession at some point but odds are the stock market won't tip us off ahead of time. In fact, most of the time people don't even realize we're in a recession until after it's already begun. NBER (National Bureau of Economic Research) typically gives the official word for a recession around the time they're ending or already in the midst of a slowdown. (A Wealth of Common Sense | Oct 23)

Inside S&P 500, most stocks in correction or bear market
The S&P 500 may not yet be in correction territory, but the vast majority of the index's components have already gotten there. While the S&P 500 has yet to decline 10 percent from its high - what may investors consider a correction - three quarters of its components have fallen that much, or worse. (Reuters | Oct 23)
The Cyber Cafe
Cybersecurity news every Friday
Cybersecurity disclosure benchmarking
Boards, executives, investors, regulators and other governance stakeholders have expressed growing interest in understanding how companies guard against, plan for and respond to cybersecurity incidents. As cybersecurity threats evolve and risks become more complex and widespread, focus on corporate disclosures in public filings on the subject likely will intensify.

2 common eMail spoofing scams to avoid: SEC
The SEC made an example of nine firms that lost a total of $100 million to email fraudsters. Experts long have said spam is the first wave of cyberattacks, and in its investigation, the SEC wanted to see how firms were devising and maintaining internal accounting controls that were adequately protecting company assets.

Cyber education must address systems engineering, NIST official says
Cybersecurity training and education programs need to emphasize systems engineering perspectives in order to fully understand system vulnerabilities, said leaders from the National Institute of Standards and Technology (NIST) during an Oct. 10 webinar hosted by the agency's National Initiative for Cybersecurity Education (NICE).  
Binge reading disorder
Hand-curated, chosen with love
How one stubborn banker exposed a $200 billion Russian money-laundering scandal
A British employee of Danske Bank dug into the details and tried to alert his superiors. It took a £1 payment to uncover one of the world's biggest money-laundering scandals. Howard Wilkinson, a British trader at a Danish bank's branch in Estonia, noticed that a London business, which moved more than $1 million through the branch almost daily, had filed a report with the U.K. government claiming it had no income or assets. Downloading the report cost Mr. Wilkinson one pound.

Anonymity has ended. If your cousins are in a DNA database, you probably are too.
How to identify almost anyone in a consumer gene database: new techniques that dig more deeply into genetic databases may soon make the anonymity of their customers' DNA impossible to safeguard.

A techie discovered your vote might not count
"In 2016, I  bought two voting machines online for less than $100 apiece. I didn't even have to search the dark web. I found them on eBay. Surely, I thought, these machines would have strict guidelines for lifecycle control like other sensitive equipment, like medical devices. I was wrong. I was able to purchase a pair of direct-recording electronic voting machines and have them delivered to my home in just a few days. I did this again just a few months ago. Alarmingly, they are still available to buy online."
- Wired