Week InReview
Friday | Jun 24, 2022
History books.
Source: Bloomberg & Societe Generale
The S&P 500 Index may have another 24% to fall by year-end, if the past 150 years of financial-market history are any guide. That’s according to Societe Generale, which calculates the benchmark gauge may need to tumble as much as 40% from its January peak in the next six months to hit bottom. Overnight, US Treasuries rallied after another batch of economic data fell short of expectations, ratcheting up recession worries. The S&P 500 ended almost 1% higher as the decline in yields made stocks relatively more attractive. Equity futures signal cautious starts in Japan, Australia and Hong Kong.
let's recap...
’The events of the last few months around the world have made it more difficult for us,’ Jerome Powell testified on Wednesday in Washington. Photo: Win McNamee | Getty Images
Federal Reserve Chair Jerome Powell said the central bank’s battle against inflation could lead it to raise interest rates high enough to cause a recession, offering his most explicit warning this year. “It’s not our intended outcome at all, but it’s certainly a possibility,” Mr. Powell said Wednesday during the first of two days of congressional hearings. “We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential” to bring down inflation, which is running at a 40-year high. (The Wall Street Journal | Jun 22) see also All big US banks pass Fed's 'stress tests' (Associated Press | 6/23)

Crypto networks that pledged to put users in control have put themselves in charge as they try to survive the deepening crisis gripping the digital asset market. In the past week, three decentralized finance groups have stepped in with emergency plans to protect their projects and users from economic pain in the face of tumbling cryptocurrency prices. (Financial Times | Jun 22)

A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom. As central banks around the globe rapidly increase interest rates, soaring borrowing costs mean people who were already stretching to buy property are finally reaching their limits. The effects are being seen in countries such as Canada, the US and New Zealand, where once-hot residential real estate markets have suddenly turned cold. (Bloomberg Wealth | Jun 21)

Another week of whipsaw stock trading has many investors wondering how much farther markets will fall. If history is any guide, the selloff might still be in its early stages. Investors have often blamed the Federal Reserve for market routs. It turns out the Fed has often had a hand in market turnarounds, too. (The Wall Street Journal | Jun 20)

Think the Fed’s job is hard? At least the US Federal Reserve can concentrate on fighting inflation. In Japan and Europe, the central banks are battling the markets, not merely price rises. That’s leading to some very strange, even contradictory, policies. The troubles of the three central banks mean investors should prepare for the sort of low-probability, high-threat risks that lead to extreme shifts in prices. When central banks unexpectedly go into full reverse, watch out. (The Wall Street Journal | Jun 19)
SEC adopts electronic filing rules for institutional investors
(Jun 23) — The Securities and Exchange Commission on Thursday adopted amendments to require certain documents filed by investment advisers, institutional investment managers, and certain other entities to be filed or submitted electronically. The amendments also make technical amendments to modernize Form 13F and enhance the information provided. The amendments are intended to promote efficiency, transparency, and operational resiliency by modernizing how information is filed or submitted to the Commission and disclosed to the public. Electronic filings will be more readily accessible to the public and available on websites in easily searchable formats.

With the exception of the amendments to Form 13F, the new rules and form amendments will be effective 60 days after publication in the Federal Register. The amendments to Form 13F will be effective on January 3, 2023. The Commission is providing a six-month transition period to provide filers with adequate time to prepare to submit these documents electronically.

See the SEC's fact sheet here.
the cyber cafe
Microsoft says much of the malicious cyber activity linked to the Kremlin targeted NATO countries. Photo: Andrey Rudakov | Bloomberg News
Russia's APT28 launches nuke-themed 'Follina' exploit campaign
Russia’s notorious advanced persistent threat group APT28 is the latest in a growing number of attackers trying to exploit the “Follina” vulnerability in the Microsoft Support Diagnostic Tool (MSDT) in Windows. The threat group, also known as Fancy Bear and Sofacy, has increased the tempo of its cyberattacks against nations that support Ukraine, particularly the US.

Cybersecurity researchers face real-world threats
Security experts say some people who work to prevent cybercrime have received death threats, and professionals who engaged directly with ransomware groups have faced personal threats. In one case, a researcher’s child was threatened. Other hackers posted information they found on cyber experts’ families on darknet forums, and encouraged other hackers to target them.

Europol arrests nine suspects in phishing scam case
European police agency Europol, the Dutch police and the Belgian police worked together on a phishing case that resulted in the apprehension of nine suspects. The authorities searched 24 houses in the Netherlands and seized cryptocurrency, cash, firearms, electronic devices and jewelry, Europol said. The crime group contacted victims by email, text message and through mobile messaging applications, and sent them a phishing link to a fake banking website.
— The Record
binge reading disorder
Illustration: Institutional Investor
Crypto just had its Lehman moment. What's next?
It was bound to happen. The cryptocurrency industry, plagued with similar degrees of opaqueness and complexity to the subprime mortgage market of yore, finally had its Lehman moment. The fallout was considerable: The crypto market as a whole lost a quarter of its value over the next three days. And Janet Yellen, the US secretary of the Treasury, immediately called for legislation to regulate stablecoins after Terra’s UST offering, a token meant to track the US dollar, proved anything but steady. 

Here’s why you're still stuck in robocall hell
For years, the telecommunications industry has been trying to curb robocalls. But even after significant milestones in defense you're probably still getting spammy calls that drive you nuts. In spite of the setbacks, though, researchers say they've seen real progress on reducing spam calls in the US, and there's potential for even more improvement. 
— Wired

Wall Street gets ready to rumble over stock-trading rules
A battle is brewing in Washington and on Wall Street over how stocks get traded. At issue is whether retail investors get the best bang for their buck. The controversy may be puzzling to anyone outside the industry, given that commissions have fallen to zero on trading apps and discount brokerage services. But US SEC Chair Gary Gensler is asking whether those trades come with hidden costs, or if it’s even possible to tell under the current system whether retail investors are getting the best prices when they buy and sell stocks. “The markets have become increasingly hidden from view,” Gensler said in a June speech delivered remotely to an investment banking conference in New York. As he previewed a sweeping proposal for new rules, finance executives in the room sat furiously typing on their phones and shaking their heads, while neglecting their chicken entrees.