Week InReview
Friday | Apr 15, 2022
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Illustration: Gabriel Zimmer | WSJ |
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AS BUSINESSES work to settle employees into offices, some are pulling out the stops – literally, on kegs, casks and wine bottles – in an attempt to make workplaces seem cool. Sure, executives could simply order people to return to their cubicles, and some have, but many want their workers to come back and like it.
That means giving people what they want, or at least what bosses think they want. People like to wear comfy hoodies, right? OK! They miss their dogs when they go to work, don’t they? The canines can come! They love an afternoon cocktail, yes? Check out our new office bar!
— The Wall Street Journal
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Illustration: Chris Nosenzo |
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Global businesses are tallying up tens of billions in losses from their Russian operations as they grapple with the impact of asset sales, shutdowns and sanctions, according to public statements and securities filings. The cost to shareholders of Western companies’ exodus from Russia will become clearer in coming weeks, as companies make their first earnings announcements since the invasion of Ukraine. (The Wall Street Journal | Apr 14 )
It’s the next big market call that could enrich traders across Wall Street: The raging global energy crisis and ever-more hawkish central banks knock key economies into 1970s-style stagflation. It’s a long shot for now, but anxiety is building among money managers that this market scenario – out-of-control inflation just as growth slumps – will eventually come to pass, especially in Europe. (Bloomberg Markets | Apr 13)
A pattern of prescient and potentially very lucrative trading has taken shape on a once-obscure corner of Wall Street — and U.S. investigators are suspicious. The setting is the world of special-purpose acquisition companies, or SPACs, the shell corporations that have flooded onto markets in recent years to raise money from investors and then hunt for companies to buy. The U.S. Securities and Exchange Commission is now examining warrant trades that took place before deals to discern whether they were illegally based on inside information. (Bloomberg Businessweek | Apr 12)
Fears about the outlook for global economic growth among large institutional investors have risen to their highest level in more than a quarter of a century, as Russia’s war in Ukraine enters its third month. A net 71 percent of fund managers in March said they expected the global economy to weaken over the next 12 months, according to a widely followed Bank of America survey that has data stretching back to 1995. (Financial Times | Apr 12)
U.S. asset managers are pushing back on draft rules aimed at fixing systemic risks in the $5 trillion money market funds industry, arguing that one of the proposed measures would kill off popular products, executives told Reuters. After taxpayers bailed out money market funds, a key source of short-term corporate and municipal funding, for the second time in 12 years during the pandemic-induced turmoil of 2020, the industry is facing renewed regulatory scrutiny. (Reuters | Apr 11)
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Treasury's issuance will dictate reserve drain source: NY Fed |
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(Apr 12) — Whether the adjustment on the Fed’s balance sheet happens through a reduction of reserves or the overnight reverse repurchase facility investment depends on the type of securities that Treasury issues, as well as on the relative return on different money-market instruments, according to a post on the New York Fed’s Liberty Street Economics blog.
- Authors examined impact of the Fed’s balance sheet unwind on the private sector, noting that adjustments “can be quite complex,” involving flows across markets and institutions that exceed the dollar value of the net increase in securities holdings by the private sector
- In the New York Fed’s example, non-bank financial institutions are the only private-sector entities to increase their security holdings, and they can fund the purchases solely through borrowing in the repo market
- “This implies that as a result of the runoff, leverage in the financial system has increased,” they wrote
- Other unlevered NBFIs, like open-ended mutual funds or pension funds, would fund their purchase of Treasury securities by either selling other assets or increasing the amount of cash balances they receive from households
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Read the full post here
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NOTE: This was the second of a two-part series of posts on the Fed’s balance sheet unwind. Read the first part here.
Source: Alexandra Harris | Bloomberg Government
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Hackers exploited the Ronin Network, software that allows players of the ‘Axie Infinity’ online game, pictured above, to transfer digital assets across different blockchains. Photo: Sky Mavis Ltd. |
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How hackers target bridges between blockchains for crypto heists
A $540 million cryptocurrency heist revealed last week marked the latest in a string of eye-popping hacks hitting a technology seen as a linchpin to building a more decentralized internet. Developers are rushing to create these bridges to build out decentralized systems – known by the “Web3” catchall – that can host increasingly complex applications such as games or lending services. But the expansion has come with growing security risks as users flock to blockchains and investors pump money into the companies behind them.
New SEC rules could redefine who knows about hacks
Public companies are supposed to let investors know when they have been hit with a significant cyberattack, according to guidance from the U.S. Securities and Exchange Commission. That hasn't worked out so well. That may be about to change after the SEC issued a series of proposals that would require public companies to report on material cyber incidents within four days of discovery and report on several other cyber-related issues, such as company policies for managing cyber-risks and the cyber expertise, if any, of members of the board.
The new cyberspace agency needs to tackle fraud, not just cyberattacks
For decades, cybersecurity experts have been held back by a relative lack of federal involvement across a range of issues in cyberspace. Now they’ve finally got their wish, but will the Bureau of Cyberspace and Digital Policy (CDP), which the State Department announced last week, focus on all of the right issues? For years there’s been a clear necessity for such an agency. Attacks such as last year’s Colonial pipeline hack and the 2020 Solar Winds attack on the U.S. software supply chain – both of which originated overseas – highlight the need to bring more federal clout to the cybersecurity conflict.
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Illustration: Kenneth Andersson/FT |
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Some work jargon is a lot worse than others
Just over a week ago, the United Nations made an announcement that prompted a biting put-down from a climate journalist named Megan Darby. “Ban the UN from naming things. I’m serious,” wrote Darby, after the UN launched an anti-greenwashing unit that it called the “High Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities,” or HLEG for short. This had to be a frontrunner for the worst jargon award of 2022, said Darby, editor of the U.K.’s Climate Home News site. Also, she added: “Has there ever been a low-level expert group?”
The perfect wine pour in 4 steps
If you’ve ever wondered how to pour wine without leaving a Jackson Pollock-style aftermath on your counter, rest assured, you’re not alone. Pouring wine like a sommelier is an art — the Court of Master Sommeliers actually evaluates the skill on its Level 2 exam. Whether you’re pursuing formal certification or simply want to use fewer paper towels at the dinner table, learning how to pour without spilling is crucial for anyone who loves wine.
Three reasons why you feel stressed when trying to relax — and what you can do about it
If you've ever tried to relax, only to find yourself overwhelmed with feeling stressed and having negative thoughts, you're not alone, which is why some have coined it “stresslaxing”. It happens to between 30% and 50% of people and can lead to a destructive, vicious cycle of negative emotions and panic attacks. The good news is that you can overcome it.
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