Week InReview
Friday | Sep 27, 2019
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Wall Street’s main watchdog is cutting back regulatory red tape for exchange-traded funds, potentially triggering faster growth for the $4 trillion market.
After more than a decade of wrangling, the Securities and Exchange Commission said Thursday that it had eased constraints that the industry argues have slowed the process of issuing new ETFs. Specifically, the SEC eliminated the need for ETF providers to seek a special order from the agency before funds can be sold to investors. (Bloomberg Politics | Sep 26)
The
defining moment
of the 2019 US Treasury Market Conference on Monday was supposed to be a big government announcement: After years of internal debate, the Treasury Department had finally decided to recommend publicly releasing data on trading volume in the world’s biggest bond market. Instead, judging by the audience’s reaction, it was upstaged by a
bond-market joke
. (Bloomberg Markets | Sep 24)
Rumors of a global recession may have been exaggerated, or are at least premature. Two months ago, one key indicator of market distress
– an inversion in the yield curve of US government bonds
– began flashing red. While this event has preceded a recession in 85 per cent of cases since 1974, it is too soon to get jittery, said Adam Slater, lead economist at Oxford Economics. On average it takes 13 months for a recession to appear once interest rates on short-term bonds have risen higher than those on long-term debt. On occasion, it has taken as long as two years. (Financial Times | Sep 23)
And then, there's this:
Global recession fears grow among asset managers
(FT | Sep 23)
Although the move by private-credit investors into debt markets has enabled private equity firms to access cheaper financing, it has also led to a build-up of risk in the space. In particular, increased competition has led to a weakening of debt covenants and more risk taking. (Bloomberg | Sep 22)
Mortgage-finance companies Fannie Mae and Freddie Mac are expected to start keeping their earnings as early as this week, pausing a years long arrangement in which they handed nearly all of their profits to the Treasury Department, an initial major step in allowing the companies to build up capital so they can operate as private companies again. Under the forthcoming agreement, the companies would be allowed to retain about a year’s worth of profits, or about $20 billion, Mark Calabria, the Federal Housing Finance Agency chief, said. (The Wall Street Journal | Sep 22)
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This week in the repo market
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NY Fed boosts size of repo ops
(Sep 25) — The New York Fed boosted its repurchase operations. Overnight loans rose to $100 billion from $75 billion. The dominance of big firms trading in the overnight market for cash loans is hampering the Fed's efforts. —
The Wall Street Journal
See also:
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Repo agreement ops details
On days when only overnight operations are offered, the Desk will conduct the operation between 8:15 am
–
8:30 am ET. On days when both overnight and term operations are offered, the Desk will conduct a term repo operation between 8:00 am – 8:15 am ET, and an overnight repo operation between 8:30 am – 8:45 am ET. Securities eligible as collateral for both overnight and term operations include Treasury, agency debt, and agency mortgage-backed securities. Primary dealers will be permitted to submit up to two propositions per security type.
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Fancy Bear returns with updated backdoor malware
Suspected Russian cybercrime group Fancy Bear has unleashed refreshed backdoor malware targeting foreign ministries and embassies across Europe and Asia. The group's past targets include the Democratic National Committee, the World Anti-Doping Agency and the Ukrainian military.
Hackers are targeting hotel, casino, airport Layer 7 routers
Airports, casinos, hotels and other large companies may be at risk from a Magecart 5 targeting of Layer 7 routers. The goal is to steal credit card data, according to an IBM response team, although no systems have reported being compromised yet.
Russian admits JPMorgan hack, with little sign he's helping US
A Russian hacker admitted Monday that he executed the largest known cyber-attack against a US bank, pleading guilty to charges that he stole data on more than 80 million clients of JPMorgan Chase & Co. and other institutions that netted hundreds of millions of dollars in ill-gotten gains.
Earlier:
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Posh pre-drinking, inspired by Downton Abbey
Tailgating Guide:
The Official Downton Abbey Cocktail Book
has a chapter devoted to the kinds of beverages ideal for consumption at outdoor events where everyone has a witty retort at the ready. The drinks are designed to be refreshing and not too alcoholic, such as the Champagne Cobbler: a mix of sparkling wine, rich simple syrup, berries, citrus twists, and plenty of crushed ice to cool down sportsmen and sportswomen in a hurry.
Girls vs. boys: Brain differences might explain tech behaviors
Many parents of both boys and girls have witnessed striking differences in the way their kids use technology, with their sons generally gravitating to videogames and their daughters often spending more of their screen time scrolling through social media. Emerging research indicates that brain differences between males and females help account for the split.
'Quantum supremacy' became a reality ... maybe
In a paper that was briefly published on a NASA website, Google claimed it had achieved quantum supremacy. The news would be a huge step in the development of quantum computers, but the paper was eventually removed from the website. The paper claimed Google's computer took just 3 minutes and 20 seconds to solve a calculation that would take the world's fastest traditional supercomputer around 10,000 years to solve. But wait!: IBM, a fierce competitor of Google's in this space, says the claim of quantum supremacy is inaccurate because Google's effort was designed to tackle one specific problem, not general-purpose computing.
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