Week InReview
Friday | Aug 16, 2019
Will an obscure event trigger next crisis?

“The possibility of something triggering an event that moves us toward a crisis is way higher now than it’s been in a very long time,” said Glen Capelo, head of rates for Academy Securities in New York. “The rates market is telling you it’s going to happen, it just doesn’t know what it is yet: whether it’s Hong Kong, Brexit, European banks getting hammered, or the global economy. The system is in a more fragile state than I’ve seen in a long time and it will likely be an obscure, second-derivative event that creates the next crisis.”

Capelo said the unwinding of large positions or accounts being forced to take risk down could spark the next major volatility event.

“My guess is that the trigger will be something that’s not on the radar,” he said. “The next problem will be centered around liquidity.”

in case you missed it...
For the first time since 2007, t he yield on the 10-year Treasury note has fallen below the two-year yield, causing a sell-off in the stock market. An inverted yield curve has preceded every recession since 1950 by seven to 24 months. (Bloomberg Markets | Aug 15)

The spread between what the Federal Reserve pays banks to hold reserves and the interest rate lenders charge for cash in the US Treasury repurchase market has averaged 0.2 percentage point since early July, about twice the amount in the first half of this year. The rising repo rate, the result of a large inventory of Treasurys held by bond dealers, is causing anxiety among analysts and investors. (The Wall Street Journal | Aug 14)

A plunge in bond yields may leave investors feeling the “Tina” effect as in, “there is no alternative” to stocks. Nearly 60 percent of stocks in the S&P 500 offer a better dividend yield than where 10-year US Treasurys settled Monday. (The Wall Street Journal | Aug 12)

Global stocks are holding fast to robust 2019 gains, even as trade turbulence has sent bond yields to  multiyear lows  and pushed oil into  a bear market . The yawning gap between markets is perplexing some investors, who say they struggle to discern how stocks can churn higher when bond yields are signaling a downturn may not be far off. (The Wall Street Journal | Aug 12)

Money pools that mimic hedge fund strategies have fallen out of favor with investors after a decade of high-profile successes amid fears that the sector is vulnerable to a liquidity shock. (Bloomberg Markets | Aug 9)
the cyber cafe
New ransomware targets US and European companies
Sodinokibi, a new type of ransomware, is attacking companies across the US and Europe, prompting a surge in claims on cyber insurance policies. Cyber insurance specialists say that use of the ransomware has exploded in recent months, with ransom demands that are far higher than usual — often hundreds of thousands of dollars.

Report: Common office printers are prime points of entry for cyberattacks
Security vulnerabilities in networked printers make them prime targets for denial of service attacks and easy entry points for cyberattacks on businesses and government entities, NCC Group has found in a study. The manufacturers were notified, and they released patches, but systems that have not been updated still pose risks.
—  Forbes

UN says N. Korea raising money for weapons with cyberattacks
North Korean hackers are raising money to fund weapons programs, raising as much as $2 billion, by launching cyberattacks in 17 countries, UN experts said. In at least 35 instances, the hackers attacked cryptocurrency exchanges and financial institutions, mainly in South Korea, but they also targeted countries in Europe, Africa, Central America and elsewhere in Asia.
binge reading disorder
Are you agile enough for agile management?
If your boss is muttering about scrums , sprints and Kanbans , brace yourself: your department might be about to try agile management. A set of tools long used in Silicon Valley to keep software projects from falling behind schedule and becoming obsolete before they are done, agile principles are spreading to other industries. There are many potential benefits, but at its worst, agile management can devolve into a swamp of annoying jargon and tedious rituals — and risk career damage for the shy.

Navarro’s tiff with WSJ boils over as blame sought for slowdown
Trump administration officials have regular scuffles with newspapers, but rarer are fights over economics with the  Wall Street Journal  editorial page. So it’s noteworthy that Peter Navarro, the president's leading China hawk on trade matters, claims the paper’s opinion page sounds like Chinese propaganda .

Internet slang: much more than a trend toward global idiocy
A new book for "grumbling" grammarians —  Because Internet: Understanding the New Rules of Language — argues that informal online communication is sometimes more advanced than even the most elegant prose.
—  The Atlantic