Week InReview
Are derivatives sinful?

CFTC Chair J. Christopher Giancarlo, a "devout roman Catholic," and chief economist Bruce Tuckman, responded to Pope Francis's condemnation of derivatives in a letter to the Vatican. 

"Messrs. Giancarlo and Tuckman, in the letter, argued for the social utility of derivatives, saying that rather than preying on the vulnerable, derivatives are actually a boon for "the world's poorest farming communities."

The two backed up their rebuttal of the Vatican with detailed descriptions of how, for example, derivatives can help stem boom-and-bust cycles in Madagascar's vanilla-crop prices.

Friday | Jul 27, 2018
12 charts to watch for signs of the next U.S. downturn
U.S. economic growth will probably slow gradually over the next two years and the threat of a trade war has made a recession more likely, a recent Reuters poll predicted. A majority of bond market experts in a separate poll now predict a yield curve inversion in the next one to two years, a red flag for those who believe short-term yields rising above longer-term yields means an imminent recession. (Reuters | Jul 25)

Fed presidents seek Powell put to prevent inverted yield curve
When  Alan Greenspan  ruled the Federal Reserve, investors became convinced the central bank could be counted on to prevent a stock market collapse - the so-called Greenspan put. Now, Fed Chair  Jerome Powell  is under pressure to adopt what would amount to a put of his own, except this time it would be tied to the bond market. (Bloomberg Markets | Jul 25)

Fannie and Freddie widen scope, spurring concerns
Concerns expressed by Republican lawmakers and industry groups that GSEs (government-sponsored enterprises) Fannie Mae and Freddie Mac are broadening their offerings, 10 years after their near collapse, could have an effect on overall government policy regarding GSEs.  (National Mortgage News | Jul 24)

How to tell if the trade war is starting to damage the U.S. economy
A dashboard for evidence of economic damage from the trade war. What should be on it?  Early indicators include executive surveys and futures markets. (The New York Times | Jul 24)

Decade after crisis, a $600 trillion market remains murky to regulators
A decade after a financial crisis fueled in part by a tangled web of derivatives, regulators still have an incomplete picture of who holds what in this $600 trillion market. (New York Times | Jul 22)
The future of Fannie & Freddie 
GAO focus group explores GSE issues
(Jul 24) -- Dmitri Rabin, co-chair of the INVESTORS Mortgage Securitization Council, participated in a two-hour call with the Government Accountability Office (GAO), which focused on housing and mortgage policy in relationship with Fannie Mae and Freddie Mac. Topics ranged from key risks to the overall mortgage system to the ultimate number and capitalization of the GSEs. There was general agreement among the participants that 
  • GSEs are critical.
  • Housing policy, in order to be effective, needs to be coordinated beyond Fannie and Freddie to include FHA, Treasury, and other organizations.
  • Fannie and Freddie's footprint should be reduced but very gradually, with simultaneous policy to rebuild private market infrastructure.
The Cyber Cafe
Cybersecurity news every Friday
'We have to work together.' Government struggling with sharing cyberthreat information, officials say
The exchange of cyberthreat information between the government and companies was the cornerstone of a 2015 bill hailed as landmark legislation to protect against digital attacks. But more than two years later, the U.S. government has an incredibly long road ahead to effectively implement the legislation.

Russian hackers reach U.S. utility control rooms, Homeland Security officials say
Hackers working for Russia claimed "hundreds of victims" last year in a giant and long-running campaign that put them inside  the control rooms of U.S. electric utilities  where they could have caused blackouts, federal officials said. They said the campaign likely is continuing.

NSA chief forms group to counter Russian cyber threat
"They steal intellectual property, they steal P.I.I. or information on personnel, they cause discord within our social ranks or attempt to undermine our elections, all below the level of war," Paul Nakasone, U.S. cyber commander and director of the National Security Agency said the annual Aspen Security Forum in Colorado.
Binge reading disorder
Hand-curated, chosen with love
The end is near for the economic boom
 
Growth will slow. The bull market will expire. Here's why and what you need to do about it.
 
When airline CEOs try the cheap seats
U.S. airlines in recent years have improved on many fronts, from reducing lost baggage to consistently earning profits. The biggest backslide, at least from the reader emails, is standard coach accommodations.
Inside Google's shadow workforce
Every day, tens of thousands of people stream into Google offices  wearing red name badges. They eat in Google's cafeterias, ride its commuter shuttles and work alongside its celebrated geeks. But they can't access all of the company's celebrated perks. They aren't entitled to stock and can't enter certain offices. Many don't have health insurance.
Transparency.
Inclusiveness.
Consensus.