Week InReview
Friday | May 15, 2020
Six Feet of Separation.
Just how big is a 6-foot social-distancing buffer? Big enough that, as economic activity starts to resume, many public and business settings will have to adapt.
In some cases, employees’ temperatures will be taken before entering the workplace. Desks may be spaced farther apart, and cubicles may make a reappearance in some offices.

in case you missed it...
The U.S. economy post-Covid-19 will look a lot like the one that struggled to recover from the 2008-09 financial crisis — only in some ways worse. Growth will be disappointingly tepid after an initial rebound and, for a time at least, inflation dangerously lower and unemployment heartbreakingly higher than they were back then. Government debt and the Federal Reserve’s balance sheet — will be much bigger, while interest rates stay low. (Bloomberg Economics | May 13)

Some large money managers are asking exchanges to enforce a more narrow definition of exchange-traded funds. The firms want a new naming system reflected in exchange data feeds that go out to traders and investors. A proposal, shared with exchanges this week, would shut out leveraged and inverse funds that seek to amplify returns or losses from the definition of an ETF. It would also distinguish ETFs from debt notes and some funds that rely on leverage and commodity bets. (The Wall Street Journal | May 13)

Having boomed over the past decade, these complex securities could be vulnerable if loan defaults spike. The close cousin of collateralized debt obligations that became notorious during the subprime mortgage meltdown over a decade ago, collateralized loan obligations package up risky corporate loans to back payments on a group of new securities that have cascading exposure to default by any of the underlying borrowers. (Financial Times | May 13)

Market volatility has abated after a painful stretch of turbulence, flashing a green light for some funds to buy U.S. stocks. The Cboe Volatility Index, or VIX, fell Monday to 27.57, its lowest level since Feb. 26. That was before the stock market suffered its most volatile month in history in March and the VIX jumped to a fresh record high, topping its prior peak hit during the global financial crisis. The options-based gauge tends to rise when markets are falling as investors reach for options contracts to protect their portfolios. (The Wall Street Journal | May 11)

Rather than the V-shaped Covid-19 recovery  –  a short, sharp collapse followed by a bounce back to pre-virus levels of activity  –  they had hoped for, many policy makers and corporate executives now expect a "swoosh" recovery. Named after the Nike logo, it predicts a large drop followed by a painfully slow recovery, with many Western economies, including the U.S. and Europe, not back to 2019 levels of output until late next year — or beyond. (The Wall Street Journal | May 11)
the cyber cafe
Companies wrestle with new cyber security threat: their own employees
Companies are increasingly turning to Big Brother-style surveillance tools to stop staff from leaking or stealing sensitive data, as millions work away from the watchful eyes of their bosses and waves of job cuts leave some workers disgruntled.

Intel, Microsoft study malware with neural network tools
The companies are experimenting with converting malware files into images that can be analyzed with so-called deep neural network tools. The Stamina project seeks to identify and categorize malware more accurately than current threat-detection methods. Stamina started with 2.2 million file samples provided by Microsoft. Algorithms used in the project are based on a machine-learning approach, meaning they improve as they analyze more data.

FINRA: Fraud continues to be major challenge during pandemic
Fraud continues to be a major challenge that broker-dealers face during the Covid-19 pandemic, with the “biggest potential problem” being phishing attacks, according to Bill Wollman, an executive vice president at the Financial Industry Regulatory Authority and head of its office of Financial and Operational Risk Policy.
binge reading disorder
The work-from-home trader who shook global markets
With no ties to the world of high finance, Sarao accumulated $70 million buying and selling futures as if he were playing a computer game. The bulk of his winnings came during periods of extreme volatility. He also manipulated the markets, according to the U.S. government, creating a computer program that placed then canceled huge volumes of orders to deceive other participants about supply and demand — a brand-new offense known as “ spoofing .” Authorities were careful to assert that Sarao’s antics had only contributed to the crash, essentially by creating false signals others reacted to, but that nuance was lost in the ensuing press coverage.

A dog's nose can do more than sniff
Recent research suggests that dogs live in an even richer sensory world than we expected. They can directly detect the warmth of a body from several feet away — and they do it with their noses.

Six feet of separation in reopening offices won't stop virus
Businesses face a range of challenges to prevent the spread of the virus as workplaces begin to reopen — from figuring out how to change air circulation patterns to deciding the fate of the community coffee pot. But few Occupational Safety and Health Administration rules directly apply to offices, and voluntary guidance from government agencies has been sparse.
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