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Seeking clues.

Stocks in Asia were set for a mixed open following a slump in US equities and bonds, as focus shifts to Friday’s jobs report for clues on the outlook for the Federal Reserve’s next steps. Futures for benchmark indexes in Japan pointed to a decline, while those for Hong Kong were set to rise. The S&P 500 and the Nasdaq 100 both declined a third day, setting them on a course for their worst weeks since mid-March. Another slide in longer-dated Treasuries put them on pace for their worst week of 2023 amid signs of unexpected economic strength.

SEC Chair Gary Gensler. Photo: Jared Soares | Bloomberg Businessweek

Gensler says AI will probably spark next financial meltdown

Gary Gensler would like to talk about something other than crypto. After two years of battling an industry that he says is riddled with scams and fraud, the head of the US Securities and Exchange Commission is focused on a different technology that has all of finance buzzing: artificial intelligence. Unlike digital coins and nonfungible tokens, AI warrants the hype, according to Wall Street’s top regulator. (Bloomberg Law | Jul 3)

How bonds ate the entire financial system

The market is now facing one of its biggest tests in generations. Last year, resurgent inflation — the nemesis of financial securities that pay fixed interest rates — triggered the worst setback in at least a century. Overall losses were almost $10tn, shaking UK pension plans and regional banks in the US. And although bonds have regained their footing this year, they are still beset by rising interest rates. Even if the bond market adapts, as it has in the past, its ballooning power, reach, and complexity have some awkward implications for the global economy. (Financial Times | Aug 2)

Global think tank expects short, shallow recession

The Conference Board forecasts that the growth seen in many parts of the economy will gradually buckle under mounting headwinds later this year, leading to a very short and shallow recession. This outlook is associated with numerous factors, including, elevated inflation, high interest rates, dissipating pandemic savings, lower government spending, and the resumption of mandatory student loan repayments. We forecast that real GDP growth will slow to 1.9 percent in 2023, and then fall to 0.5 percent in 2024. (The Conference Board | Aug 2)

Fitch downgrade highlights crazy US fiscal policy

T.S. Eliot wrote that April is the cruelest month but for the US fiscal authorities, it is clearly August. Fitch Ratings’ sovereign downgrade wasn’t quite a dozen years to the day from the infamous S&P action in 2011, but it wasn’t far off. That the announcement came a day after the Treasury revised its current-quarter marketable borrowing estimate to north of a trillion dollars was a delicious coincidence, if indeed it was one. (Bloomberg Government | Aug 2) see also The Fitch fallout (Financial Times | Aug 3)

The case for a soft landing

Bringing down inflation can cause massive recessions. But three indicators suggest that this time it might be coming down without there being a crash. We look at how the latest CPI, real GDP, and consumer confidence numbers suggest the economy could be on the golden path to the mythical soft landing. Also, we go long robber barons and short broken glass. (Financial Times | Aug 1)

Image: Getty Images/iStockphoto

5 principles to accelerate your organization’s quantum cyber readiness

Many business leaders are unprepared for the cybersecurity risk posed by quantum computers. National cybersecurity agencies across the globe are beginning to take positions on the quantum threat. The World Economic Forum and Deloitte have formulated a list of five principles to ensure quantum readiness in business.

— World Economic Forum

New SEC rules still see cyber experience on boards as critical

Companies will no longer need to say if their boards have cybersecurity experts under new rules from US financial regulators, but that hasn’t diminished the importance of having them available, company directors say. We won't have a clear picture of what the SEC intends until a couple of major cyber incidents occur and the agency steps in to investigate.

— The Wall Street Journal

CISA, NSA, FBI, and global partners release joint CSA

The US Cybersecurity and Infrastructure Security Agency (CISA), National Security Agency (NSA), Federal Bureau of Investigation (FBI), and international partners released a joint Cybersecurity Advisory (CSA), 2022 Top Routinely Exploited Vulnerabilities. This advisory provides details on the top Common Vulnerabilities and Exposures (CVEs) routinely exploited by malicious cyber actors in 2022, and the associated Common Weakness Enumeration(s) (CWE), to help organizations better understand the impact exploitation could have on their systems.

— CISA

Sign up for CISA Alerts

Report a Cybersecurity Incident: Report anomalous cyber activity and/or cyber incidents 24/7 to report@cisa.gov or (888) 282-0870.

• Report an incident
• Report phishing
• Report a vulnerability

Contact CISA: https://www.cisa.gov/about/contact-us

Photo: Rolex

The great Rolex recession is here: How the Fed crushed the luxury-watch boom

The WatchCharts Overall Market Index — which tracks the prices of 60 timepieces from top brands including Rolex, Patek Philippe, and Audemars Piguet — has plunged 32% from a March 2022 peak. A separate index for just Rolex models fell 27% over a similar period. The US central bank's aggressive monetary tightening over the past five quarters is seen as a key reason for the slump in watch prices.

— Markets Insider

Einstein and Oppenheimer’s real relationship was cordial and complicated

Though Einstein didn’t help build the nuclear bomb and has just a few scenes in Oppenheimer, they pack a punch — and reflect the two physicists’ real-life dynamic.

— Vanity Fair

Home insurers are charging more and insuring less

Double-digit premium hikes. Higher deductibles. New coverage limits. Drones to check the state of roofs and yards. As the industry tries to rebound from years of losses owing to storms, fires, and inflation, home insurers are trying to claw their way back to profitability after losing money in five of the past six years, analysts and insurance agents say.

— The Wall Street Journal