Week InReview
Friday | Jul 5, 2019
Bond ETFs turn one trillion.

" The amount of money in fixed-income exchange-traded funds passed $1 trillion last month, an ascendance that has reshaped the market in which countries and companies raise money to pay their bills....

"In June, The Wall Street Journal sat down with one of the biggest beneficiaries of the bond ETF boom: Rob Kapito, president of BlackRock. When asked about the liquidity-crunch criticism bond ETFs most often get, Mr. Kapito responded with an eye roll.

"Mr. Kapito made little effort to conceal his derision for armchair alarmists.

“'A lot of your colleagues have been trying to find a fault with this thing,' Mr. Kapito said. 'It’s a pent-up desire that hasn’t been fulfilled, because it actually works.'”

in case you missed it...
US bond traders who are planning to finish up for the week after Wednesday’s early close should take note that the last time the monthly jobs report landed on July 5, it produced an almost quarter-point jump in 10-year Treasury yields.  (Bloomberg Markets | Jul 2)

By most measures, the US is at or very close to full employment. The unemployment rate today is 3.6%, the  lowest  since 1969.  And yet, there is a sense that something is amiss. (Bloomberg Economics - opinion | Jul 1)

The reasons to bet against the rally across risk assets are numerous, serious, and almost exactly what they were before this year’s blistering melt-up. And yet this raging bull won’t go gently. It’s braved death and doubts — and beaten both. (Bloomberg Markets | Jun 28)
Align margin requirements for security futures: SEC
(Jul 3)  — The Securities and Exchange Commission has proposed to align the minimum margin required on security futures with other similar financial products.

  • If the Commodity Futures Trading Commission votes in favor of the proposal, the minimum margin requirement for security futures would be set at 15 percent of the current market value of each security future, the SEC said in a statement.

  • The CFTC has scheduled a vote for July 11, the SEC said.

  • NOTE: The SEC and the CFTC have joint rulemaking authority on margin requirements for security futures.

  • NOTE: In 2002, the agencies adopted rules establishing margin requirements for unhedged security futures products at 20 percent.

  • “In light of lower margin requirements that have been established for comparable financial products and the resulting asymmetry, the SEC has determined that it is appropriate to re-examine the minimum margin required for security futures” the SEC said in their statement.

Read the SEC statement here .
the cyber cafe
Study: US not equipped to counter Russian influence
The US is unprepared to counter Russia's increasingly aggressive political warfare to increase influence in the world, a white paper prepared for the US Joint Chiefs of Staff concludes. The paper also notes risk in Russia's increasing alignment with China.

US Cyber Command: Microsoft Outlook vulnerable to attack
A vulnerability in Microsoft Outlook could allow hackers to insert malware in government networks, US Cyber Command warned Tuesday. Though the agency did not identify the source of the malware, experts believe it is most likely Iran.
binge reading disorder
The Pentagon has a laser that can identify people from a distance — by their heartbeat.
The Jetson prototype can pick up on a unique cardiac signature from 200 meters away, even through clothes.

Your phone could help make mortgage bond traders miserable
Technology has good news for borrowers who can refinance faster than before. But it’s trouble for investors in the $7.3 trillion mortgage bond market, who will find their money getting returned to them sooner than they had expected, even compared to past times when home loan rates were falling. They will probably have to reinvest the money they get at lower yields. Investors that paid more than face value for their bonds could get particularly hurt, because they’ll get repaid at 100 cents on the dollar.

'It's all about the returns': Will Silicon Valley eat Wall Street's lunch?
Spotify and Slack cut Wall Street out of their public offerings, keeping the money in Silicon Valley. And Wall Street is starting to worry.
—  Vanity Fair