Endangered Giants

Have you ever been somewhere that inspires awe?

Photo: PDPhoto.org

It’s an amazing feeling. People speak in hushed tones, there’s a sense of majesty, you know you’re in the presence of something amazing. The Grand Canyon, the Giant Sequoias of California, a grand cathedral, or just a clear, starry evening: they stir our spirits and cause us to reflect on our place in the world.

That’s the way I often feel about markets – the complicated interweaving of supply, demand, fundamentals, and technical that make up the global stock, bond, currency, and commodity markets. Every day millions of investors make billions of decisions to allocate and move trillions of dollars. That’s not an exaggeration. On an average day, over $3 trillion in government securities move through the Fedwire system. On a busy day, it can be more than $9 trillion. That’s almost half of our entire economy.

That’s why cyber-hacking of central banks, like the attempt earlier this year on the Bank of Malaysia or the successful $100 million heist in 2016 on the central bank of Bangladesh need to be taken so seriously. These robberies used malware to infect the payments system and initiate fraudulent transfers to shell companies. The amounts involved are staggering, in part because so much global wealth has been financialized.

Screen-shot from Wanncry 2.0. Source: Wikipedia

These are like someone bringing a chainsaw into a redwood grove, or a malicious worker bringing in a toolkit and throwing hammers around in the Louvre Museum in Paris. Untold damage could be done to the artwork, but just as significantly, millions of people would be prevented from seeing the marvels as repairs were made and security was enhanced.

Michelangelo’s “Dying Slave,” The Louvre. Source: Wiki

Fraud and crime are like sand in the gears of commerce. Typically, they don’t get in the way of major activities. But if enough of them add up, serious damage to our finely-tuned economic machine will be the result. Just last month a team of hackers stole $13 million from an Indian bank with outdated ATM software.

So, don’t complain the next time you need to install a new security patch, or you need to update a two-factor authentication app on your smartphone. Our global economy increasingly depends on these details.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-10-23T06:48:52-04:00October 23rd, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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