Banks
- Banks look for cheap way to store cash piles as rates go negative https://www.ft.com/content/e979d096-5fe3-11e6-b38c-7b39cbb1138a “private-sector banks are paying what amounts to an annual levy of 0.4 per cent on most of the funds they keep at the eurozone’s 19 national central banks … European central bankers say they could cut rates again should economic conditions worsen, but private bankers and insurers are already thinking of creative ways to avoid those charges altogether. One way is by turning the electronic money they keep at central banks into cold, hard cash.”
- BBA’s Way We Bank report https://www.bba.org.uk/landingpage/waywebanknow/ The report is here http://trtl.bz/bba-how-we-bank
- Bankruptcy for Banks: A Sound Concept That Needs Fine-Tuning http://www.nytimes.com/2016/08/17/b...s-a-sound-concept-that-needs-fine-tuning.html
- The Unconventional Mortgage: How Home Loans Have Changed since 2000 http://www.zillow.com/research/conventional-mortgage-changes-12999/
- Half of big banks unprepared for accounting shake-up (Lenders expect provisions for bad loans to soar after new rules come into force) https://www.ft.com/content/26dfb19c-60a4-11e6-b38c-7b39cbb1138a
- First Republic: Is It Wrong to Build a Bank for Wealthy Clients Only? http://www.wsj.com/articles/first-r...ld-a-bank-for-wealthy-clients-only-1471388308
- What is alpha? https://mathbabe.org/2016/08/16/what-is-alpha/ Is alpha “the return in excess of the returned above and beyond the market return, given the amount of risk the portfolio was carrying,” or is alpha “the return of a portfolio that was uncorrelated to the market?” This is a smart blog entry, especially when it comes to the definitional nature of risk (I commented with my views).
- Hedge fund investors push for ‘hard hurdles’ https://www.ft.com/content/a0ca7994-6304-11e6-a08a-c7ac04ef00aa “Investors in most private equity funds usually receive a preferred return of 8 per cent on funds before managers begin earning a share of profits. Hedge funds are adopting the measure just as the buyout industry moves to drop it … The practice is also common among new start-up hedge funds, as they attempt to encourage investors to take a chance on them.”
- Hedge Fund Manager Profited From Death Arbitrage https://www.bloomberg.com/view/articles/2016-08-16/hedge-fund-manager-profited-from-death-arbitrage
- Investment: Rise of the DIY algo traders https://www.ft.com/content/0a706330-5f28-11e6-ae3f-77baadeb1c93 “As banks, asset managers and hedge funds become dependent on technology, the demand for data scientists and programmers has become intense. Many hedge funds have been scouring Silicon Valley to attract some of the best minds in tech.”
- Tiny Satellites: The Latest Innovation Hedge Funds Are Using to Get a Leg Up (The latest technological innovation for data-hungry hedge funds is a fleet of five dozen shoebox-sized satellites) http://www.wsj.com/articles/satellites-hedge-funds-eye-in-the-sky-1471207062
- Bond Traders, Your New Government is Apple https://www.bloomberg.com/gadfly/ar...rs-your-new-government-looks-a-lot-like-apple “A funny thing happened on the way to economic growth: Top-rated corporate bonds increasingly became interchangeable with sovereign debt.”
- The Rise of the Buy Side http://www.bloomberg.com/news/features/2016-08-15/the-rise-of-the-buy-side “The banks’ global fixed-income businesses, once among the most lucrative in finance, have been torpedoed by rules imposed after the financial crisis to make banks take on more capital and less risk. Tougher regulations for dealers—including Basel III and the Dodd-Frank financial reform law—have eroded the financial rewards of trading and removed incentives for making markets … With higher regulatory costs and record-low interest rates suppressing returns, banks will look to reduce their balance sheets by about an additional 10 percent in the next two years” This last quote references this report http://trtl.bz/ms-ow-wholesale-banks
- Launch of ‘Flash Boys’ exchange IEX will test its philosophy https://www.ft.com/content/a0854f32-62ae-11e6-a08a-c7ac04ef00aa
- Market Signals Just Aren't What They Used to Be https://www.bloomberg.com/view/articles/2016-08-17/market-signals-just-aren-t-what-they-used-to-be “Financial markets are no longer just a barometer. Now they can cause storms. We can see two reasons that this happened: Active investors switched to autopilot, and economic regulators became followers rather than leaders. We can also see two outcomes: perverting the function of markets and creating new uncertainties in the economy.”
- A Simple Test to Dispel the Illusion Behind Stock Buybacks http://www.nytimes.com/2016/08/14/b...ispel-the-illusion-behind-stock-buybacks.html
- A Trading Halt, Two Years in the Making (SEC has questioned claims by Neuromama since 2014 but didn’t suspend its stock until Monday) http://www.wsj.com/articles/a-trading-halt-two-years-in-the-making-1471392133
- Sovereign Credit Swaps: Europe’s Sovereigns and Regime Changes http://www.allaboutalpha.com/blog/2...-swaps-europes-sovereigns-and-regime-changes/
- What rising LIBOR is and is not telling you https://www.blackrockblog.com/2016/08/16/rising-libor/
- To Crack Down on Securities Fraud, States Reward Whistle-Blowers http://www.nytimes.com/2016/08/22/b...ties-fraud-states-reward-whistle-blowers.html “[Indiana] State officials can award up to 10 percent of monetary sanctions received in an enforcement action to a person who provided original and significant information that led to the case … Under Utah’s whistle-blower program, which took effect in May 2011, people providing information leading to the collection of at least $50,000 from a violator can receive up to 30 percent of those proceeds as an award.”
- Morgan Stanley Neglected Warnings on Broker www.nytimes.com/2016/08/21/business/dealbook/morgan-stanley-neglected-warnings-on-broker.html
- The Fed Is Searching for a New Framework. New Minutes Show It Doesn’t Have One Yet http://trtl.bz/new-fed-framework “The Fed faces a profound question: Is the basic framework it has used over the last generation to set monetary policy the correct one in this moment, or has something fundamental shifted in the global economy that calls for a new one?” The old framework assumes the truth of the Phillips Curve, that lower unemployment should lead to inflation.
- Regulators See Danger in Clearinghouses (Inadequate risk-management and recovery practices pose an international threat) http://www.wsj.com/articles/regulators-see-danger-in-clearinghouses-1471345440
- Resilience and recovery of central counterparties (CCPs): Further guidance on the PFMI - consultative report http://www.bis.org/cpmi/publ/d149.htm
- Deutsche Bank whistleblower spurns share of $16.5m SEC award (Ben-Artzi, who exposed false accounting, declines share of payout after executives go unpunished) https://www.ft.com/content/9edb953a-655e-11e6-8310-ecf0bddad227
- After Louisiana Flooding, 40,000 Homes Damaged and 4,000 People Still in Shelters http://www.wsj.com/articles/after-l...and-4-000-people-still-in-shelters-1471644500
- The Hottest Weather Ever Visualized http://blogs.scientificamerican.com/sa-visual/the-hottest-weather-ever-visualized/
- Bracing Ourselves for the Climate Tipping Point (After Earth’s warmest month in history, climate scientists gather in Geneva to debate whether we’ve already gone too far) https://psmag.com/bracing-ourselves-for-the-climate-tipping-point-d507b826ecf6#.aeyry0818
- What We Can—and Can't—Learn From the Floods in Baton Rouge (Better planning, stricter construction standards, and expanded insurance can help cities prepare for the next 1,000-year rain. But they won’t be enough) http://www.citylab.com/design/2016/08/baton-rouge-floods-planning-resiliency/496172/
- Here’s why the green bond market is set to keep growing https://www.weforum.org/agenda/2016/08/here-s-why-the-green-bond-market-is-set-to-keep-growing
- Bonds and Climate Change: State of the Market 2016 https://www.climatebonds.net/resources/publications/bonds-climate-change-2016
- How to Measure Anything in Cybersecurity Risk http://amzn.to/2bqjbjS I am really looking forward to reading this latest by Douglas Hubbard because I am a fan of both of his previous books including the highly-regarded How to Measure Anything. The authors website is here http://www.hubbardresearch.com/
- Chuck Klosterman on But What If We're Wrong (EconTalk podcast) http://www.econtalk.org/archives/2016/08/chuck_klosterma.html “So, I want to start with the general question that runs through the book: Why are we so confident about so many things that are likely to turn out to be incorrect?”
- PwC on trial for not spotting $2.9bn fraud (Reputational damage looms as firm’s US arm says it was duped by ‘dedicated’ gang) https://www.ft.com/content/a351836c-63bb-11e6-8310-ecf0bddad227 “The biggest ever trial of an audit firm has a lot of lurid elements: a $2.9bn fraud, carried out over years, in which cash was looted to pay for a corporate jet, a seaplane and a vintage car collection. But the jury is basically being asked to answer a simple question: did PwC do all that it could to stop it?”
- A clubby oligopoly that is overdue for reform https://www.ft.com/content/b7b97e82-6540-11e6-a08a-c7ac04ef00aa “Fifteen years after the collapse of Enron, the big names in the corporate auditing sector are once again under the microscope. This week, a Florida jury has been hearing testimony in a $5.5bn lawsuit against PwC, the largest civil claim against a Big Four accounting firm to reach trial.”
- Who Would Win a Currency War? No One by Satyajit Das https://www.bloomberg.com/view/articles/2016-08-17/no-one-can-win-a-global-currency-war
- Two Lingering Suspicions About Economic Statistics https://www.bloomberg.com/view/arti...ingering-suspicions-about-economic-statistics “One is that the government numbers are unnaturally smooth, the other is that they suffer from what economics-data skeptic John Williams charmingly dubs “Pollyanna creep,” the tendency of statistics agencies to make adjustments that -- on balance, over the decades -- leave the data looking rosier than the economic reality.”
