Archive October 2018

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Week InAdvance: October 29, 2018

Mon Oct 29 SEC fixed income panel meeting/webcast. Our Ocean summit in Bali. | Tue Oct 30 IOSCO committee in Berlin. | Wed Oct 31 Fed meets on stress tests, living wills. | Thu Nov 1 Securities enforcement forum in DC.

Week InReview: October 26, 2018

I, Robot

When we evaluate and compare a range of data points - whether that data is related to health outcomes, head counts, or menu prices - we tend to neglect the relative strength of the evidence and treat it as simply binary, according to research published in Psychological Science, a journal of the Association for Psychological Science.

"People show a strong tendency to dichotomize data distributions and ignore differences in the degree to which instances differ from an explicit or inferred midpoint," says psychological scientist Matthew Fisher of Carnegie Mellon University.

In a series of six studies, Fisher and coauthor Frank C. Keil of Yale University examined how people tend to reduce a continuous range of data points into just two categories.

Binary bias distorts how we integrate information

Week InAdvance: October 22, 2018

Mon Oct 22 CFTC derivatives symposium. | Tue Oct 23 "Davos in the Desert". | Wed Oct 24 Fed's Beige Book. | Thu Oct 25 SEC market data/access roundtable.

Week InReview: October 19, 2018

Global finance chiefs urge trade war solution as Bali talks wrap

Global finance chiefs used the closing sessions of talks in the tropical resort of Bali to hammer home the message that simmering trade tensions are already denting global growth and need to be resolved.

Bank of Japan Governor Haruhiko Kuroda said it's essential to have dialogue on trade; Brazil's central bank President Ilan Goldfajn flagged the tensions as one of the biggest threats to emerging economies; Bank for International Settlements General Manager Agustin Carstens said there's a risk the global economy goes backwards due to rising protectionism.

People's Bank of China Governor Yi Gang called for a constructive solution to the dispute, adding that China is preparing for the worst. Meanwhile, here are the key takeaways from the International Monetary Fund meeting that has wrapped up in Bali.

Week InAdvance: October 15, 2018

Tue Oct 16 FSOC open & closed sessions. | Wed Oct 17 Boston Fed's fintech, financial inclusion forum. | Thu Oct 18 Fannie-Freddie Senate hearing. | Fri Oct 19 IOSCO stakeholders in Madrid.

Week InReview: October 12, 2018

Everything that goes wrong when stocks and bonds fall together Inverse correlation of U.S. bonds, equities has evaporated; inflation fears make stocks more sensitive to yield. The biggest post-crisis shift in the investment landscape may be looming, threatening more pain for investors besieged by an uptick in real interest rates and cross-asset volatility. (Bloomberg Markets | Oct 10) and more!

Week InAdvance: October 8, 2018

Mon Oct 8 Annual IMF/World Bank meetings begin. | Tue Oct 9 CPMI-IOSCO steering group in Hong Kong. | Wed Oct 10 FOMC minutes. | Thu Oct 11 G20 finmins & central bank guvs in Bali. SEC meets on swap regs. MSRB EMMA virtual workshop.

Week InReview: October 5, 2018

Crypto bots.

Is spoofing illegal? Well, sure, yes. There is a law against spoofing in U.S. commodity markets. In U.S. equities markets, where there is no explicit law against spoofing, it is still punished as a variety of fraud. Submitting orders to buy a stock, without intending to buy that stock, in order to push up the price so you can sell it: It sounds dishonest, and there's no particular problem with calling it fraust

But outside of electronic securities and commodities markets, things are a little murkier. A bond investor who gives a dealer the impression he might want to buy some bonds, asks for a two-sided market, and then sells the bonds to the dealer might just be a savvy trader, not a fraudster. Big activist shareholders of public companies sometimes offer to buy those companies, not because they really want to, but to put the companies in play so they can sell to a higher bidder. More broadly, creating an impression of demand for a product so that you can sell more of it is just fine in many businesses. Fashion brands pay influencers to wear their products so they can sell more of them. A mayo company bought some of its own mayo so that stores would order more of it; this was controversial but not obviously illegal.

There is I think no general rule to the effect of "you can't create the impression of demand for something in order to sell more of it." Sometimes you can, and sometimes you can't.

Matt Levine's Money Stuff: Crypto Bots Manipulate Proudly

Week InAdvance: October 1, 2018

Mon Oct 1 IOSCO World Investor Week. | Tue Oct 2 Bank relief hearing. | Wed Oct 3 CFTC fintech forum. | Thu Oct 4 G20 B20 Summit. | Fri Oct 5 CFTC TAC meeting