Week InReview
Friday | Oct 4, 2019
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Too big to lend?
“Analysts and bank rivals said big changes JPMorgan made in its balance sheet played a role in the spike in the repo market, which is an important adjunct to the Fed Funds market and used by the Fed to influence interest rates…
“Publicly-filed data shows JPMorgan reduced the cash it has on deposit at the Federal Reserve, from which it might have lent, by $158 billion in the year through June, a 57% decline.”
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It’s a marriage between two of Wall Street’s hottest products. Collateralized loan obligations
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typically chock-full of broadly-syndicated debt
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are increasingly being stuffed with private loans made to highly leveraged medium-sized companies with limited access to bank financing. (Bloomberg Markets | Oct 2)
Almost $7 trillion in US housing debt in 2019 is backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, which is the most in US history and 33% more than before the 2008 financial crisis. About 30% of mortgage payments are nearly half of the homeowner's income. (The Washington Post | Oct 2)
The US economy is losing speed, something that has economists wondering how slow the economy can go and still avoid crashing into a recession. Whereas growth below 2% used to almost guarantee the economy would subsequently contract, some economists now reckon the US can wobble around 1%-1.5% without falling over. (Bloomberg Economics | Oct 1)
The New York Stock Exchange, Nasdaq and other exchanges were dealt a blow Tuesday by the Securities and Exchange Commission, which said it’s considering chipping away at the broad authority that trading platforms have to increase the fees they charge for some data feeds. (Bloomberg Law | Oct 1)
The Securities and Exchange Commission has proposed a requirement that participants in the consolidated audit trail submit and make public an implementation plan and quarterly progress reports. When completed, the CAT will be a single database tracking all equity and options trades that occur on US exchanges. The Financial Industry Regulatory Authority began connectivity testing for CAT
on Monday
. (Pensions & Investments | Sep 30)
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More repo turmoil could lead to global ramifications: Fitch
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(Oct 1)
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Any further volatility in the US repo market has the potential to extend to “other asset classes and players,” such as smaller broker-dealers and REITs, and begin having worldwide ramifications, Fitch Ratings Ltd. analysts wrote in a report released Tuesday.
- The Fed was ultimately able to stabilize repo dollar funding rates through ad-hoc funding infusions, but more turmoil “could exacerbate global liquidity issues.”
- Small broker-dealers, mortgage REITS and certain hedge-fund strategies, all of which rely highly on repo funding, “would face the most downside risk in the event of a prolonged spike in borrowing costs.”
- “Thus far, the effects of the recent repo pricing volatility appear de minimis to these US borrowers.”
- However, “continued liquidity issues leading to higher or more volatile borrowing costs would be viewed negatively from a credit perspective and could lead to ramifications more globally.”
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Finra warns of cloud-based eMail hacks
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(Oct 2)
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The Financial Industry Regulatory Authority said several member firms have notified it that they have experienced email takeovers when using cloud-based email platforms.
Attackers use compromised email accounts to defraud member firms by requesting fraudulent wire transfers or stealing other personal information, Finra said in a statement.
Finra advised member firms to remember SEC regulation S-P, which requires firms to have policies and procedures that address the protection of customer information and records.
To view the source of this information click
here
.
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Hackers can access conference calls
Zoom and Cisco Webex conference platforms have a vulnerability called "Prying-Eye" that can give hackers access to video meetings that have no password protection. Cequence researchers say a bot can be used to identify alphanumeric sequences and determine whether a password is in place, a vulnerability the companies are patching.
Cybersecurity Directorate launched by NSA
The Cybersecurity Directorate, launched this week by the National Security Agency, will merge cyberdefense and foreign intelligence to "unify as a nation against our threats." Anne Neuberger, head of NSA's Russia Small Group, will lead the directorate that will initially focus on the defense industrial base and weapon security improvement.
Experts struggle to set red lines for cyber warfare
Nations hope for global framework to control attacks on digital technology. “Cyber warfare is much more convenient for states than kinetic warfare,” says Mariarosaria Taddeo, research fellow and deputy director of the Digital Ethics Lab at the Oxford Internet Institute. Compared with conventional weapons, digital means are cheaper and offer greater plausible deniability, she said.
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A new guide to tipping in the gig economy, from Airbnb to Uber
Few social situations puzzle even the most mannered etiquette experts so much as deciding how much and when to tip, especially in the US, where it’s not always optional and workers can be paid below minimum wage if they’re also receiving tips.
The art of money laundering
The loosely regulated art market is rife with opportunities for washing illicit cash.
“Art is a very attractive vehicle to launder money,” says Peter D. Hardy, a former US prosecutor who now advises corporations and industries on compliance with anti-money-laundering requirements. “It can be hidden or smuggled, transactions often are private, and prices can be subjective and manipulated
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and extremely high.”
Mattel’s newest dolls can be boys, girls, neither or both
Mattel Inc. unveiled a doll line that doesn’t come with a designated gender. The toymaker has left that for kids to decide. The toys come with long and short hair, dresses and pants. The new brand debuts on websites of Amazon, Walmart and Target.
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