Macaskill on markets: Making Markets Great Again in 2017
Jon 'Mystic Mac' Macaskill takes a look at the year ahead in banking and trading
Macaskill make markets great again-600
Gary Cohn thrills Goldman Sachs employees with a final podcast of life lessons before stepping down as number two at the bank and becoming president Trump’s head of the National Economic Council.
“As a dyslexic boy in Cleveland, Ohio I never dreamed I could make it to the top in Wall Street then take a senior role in Washington. I want to thank Brother Voldemort at my catholic school who looked past my reading problems and saw that my taste for ripping the wings off insects and stealing food from other boys marked me out as a future hall of fame trader,” Cohn said.
“Now that I am joining the Trump administration, I obviously won’t be able to quietly channel economic policy information to my former colleagues. That would be wrong in many ways, but also visually wrong (or do I mean cosmetically wrong)? Anyway, even though I won't be around in person to hike up a leg on your desk and tell you to make another $3 million by month end or pack your bags, I know that I can count on you to do what it takes to make Goldman great again. Goodbye (sort of!) and God bless you all.”
Goldman Sachs provides further details of changes to its management structure and branding in the wake of Cohn’s departure.
“We thought long and hard about ditching our recent marketing campaign where we rebranded ourselves as a technology company rather than a bank,” said chairman and CEO Lloyd Blankfein. “In the current climate there is something to be said for keeping it simple and billing Goldman as a trading firm with an inside track on policy making. Ultimately though, we decided the misleading marketing will actually help the trading by making customers put their guard down. I am therefore pleased to confirm that Marty Chavez remains head of Diversity, Awesome Technology And Cuddly Initiative Offers (DATA CIO); while Pablo Salame will run the serious business of monetizing this Trump Trade for however long it lasts.”
JPMorgan CEO and chairman Jamie Dimon points out that his guys still make way more money from trading than Goldman and he could have had any of the multiple Trump administration jobs that ultimately went to Goldman veterans.
“Listen, Trump came to me and begged me to be Treasury secretary and Commerce secretary rolled into one. I could have had State if I wanted it,” said Dimon. “I told him no; you think I’m moving to Washington? Forget about it. I only agreed to be on that advisory council or whatever it is so I can keep an eye on what Gary Cohn and Wilbur Ross are up to. And Steven Mnuchin as Treasury Secretary? If that guy ever makes another film it should be called Conflict of Interest.”
Deutsche Bank CEO John Cryan disappoints investors and German politicians by abandoning an attempt to claw back bonuses paid to former senior executives at the firm.
“Anshu Jain alone earned hundreds of millions of euros and his top cronies took out far more than that between them when they were saddling DB with the risk we have been paying for ever since. I am as keen as anyone to get some of that back,” said Cryan. “But realistically we have zero legal chance of a forced return and if you think you might be able to shame any of those guys into giving some of the loot up, you obviously haven’t met them. Even Ackermann wasn’t willing to make a token gesture. The best we can hope for is if they hook us up with some of those Middle Eastern sovereign wealth funds and Japanese technology billionaires they are advising nowadays.”
The election of Francois Fillon as French president is followed by the appointment of aristocratic insurance and banking industry veteran Henri de Castries as finance minister. De Castries had joined the board of HSBC in 2016 and was being lined up as its next chairman before switching to a political role.
“If Goldman can get its people into government in the US and the top central banks we can surely try to do the same in Europe,” said HSBC CEO Stuart Gulliver. “You might not think the French finance minister can deliver as much as some of the Goldman placements, but every bit of Brexit gossip counts at the moment, and you would be surprised how willing they are to push a commercial deal in the right direction in Paris. Plus Henri has absolutely impeccable manners and won’t throw food at your head the way Gary Cohn sometimes does.”
Credit Suisse defends its decision to slash its global markets division just before the election of Trump ushered in a new era of trading volatility and higher dealing revenue.
“There are those who say that driving around our dealing rooms in a golf buggy shouting ‘J’accuse’ at randomly selected traders is no way to run an integrated investment banking and wealth management firm,” said Credit Suisse CEO Tidjane Thiam. “To those people I say: ‘Non, je ne regrette rien’. The IPO of our Swiss business is on track and once that is completed I will have achieved my strategic goal of creating a much smaller Credit Suisse that generates much, much less money.”
SoftBank announces that its $100 billion technology fund is setting a new eventual fundraising target of $1 trillion and upgrading its goals to transform investing in the sector.
“Once people saw I could get access to Donald Trump with vague talk of huge new projects and completely unsubstantiated promises about job creation, and then Apple gave us the tech housekeeping seal of approval, I decided to keep pushing my luck,” said SoftBank founder and chairman Masayoshi Son. “Those ex-Deutsche Bank guys I have running the finances for the Vision Fund have already got an awesome office right beside Buckingham Palace in Mayfair and are hard at work creating complex new structures that ensure we will retain most of the profit and offload the risk to junior investors. That is what I call technology at its best!”
Former Credit Suisse CEO Brady Dougan reveals that his new merchant bank is already generating more trading and advisory revenue than his old firm within months of going operational.
“It really isn’t very complicated, though I can make it look complex when I need to,” said Dougan. “You just raise a few billion dollars from Middle Eastern sovereign wealth fund investors, top it up with some of your own cash, add as much leverage as you can get your arms round and steer well clear of regulators while you put some big trades on. The regulators have been staring at their shoes since Trump got in and his people started messing them about, so there is basically nothing to worry about. Except how long this rally lasts, of course.”
Bill Gross, the former head of PIMCO and onetime ‘Bond King’, uses his Janus fund’s monthly newsletter to declare that the multi-decade global bond rally is finally and irrevocably over.
“I didn’t join the Trump Dump of bonds at the end of 2016 when he was elected because I was too busy working on a complicated analogy likening my cat’s taste in ice-cream to the new Netflix show ‘Stranger Things’ and explaining the implications for municipal debt in the US versus Mexican peso denominated high-yield bonds,” said Gross. “Where was I? Yes - bonds! It’s time to sell them. Sell them all and get into stocks while the going is still good. Any stocks will do while we ride this crazy growth rocket to what I am already calling the New Everything Is Awesome.”
The 30th anniversary of the Black Monday market crash of 1987 is followed by a collapse on a bigger scale that is quickly dubbed Trump Tuesday, as investors flee stocks in sectors that had rallied during 2017 on hopes of growth and less regulation.
“Time for Janet Yellen to step down early from failing Fed and let my policies make the markets great again. Huge rally on way!” said president Trump in the first of a series of early hours tweets after the sell-off.
“People are saying this could be the biggest sell-off ever seen!”
“Glad I sold my stocks in time and only have licensing deals in rest of Trump Empire. Goldman guys in team say they sold too. Best people so important!”
Investment banks disclose substantial trading losses from Trump Tuesday that wipe out revenue gains made earlier in the year. Goldman Sachs is one of the few banks to avoid the carnage.
“We are taking this opportunity to finally pull out of debt and equity sales and trading,” said Deutsche Bank CEO John Cryan. “Our stock dealing losses were broadly in line with those at peer banks, but we have also been forced into a multi-billion dollar write down on our investment in SoftBank’s $100 billion Vision Fund. It turns out that we owned the tranches that wipe out when technology stocks in the ‘Special Sauce’ basket fall below a certain level. Live and learn! Maybe!”
Goldman Sachs announces it is establishing a consortium called MarcusHedge to handle the risk management and trading needs of a group of 10 banks that were once competitors, but are now withdrawing from market making.
“It appears that some former competitors lack the information flow and key client interaction that we enjoy at Goldman,” said CEO Lloyd Blankfein. “Their technology probably isn’t as good as ours either, and God knows, their marketing certainly isn’t. We are pleased that we can now take over the difficult job of hedging and dealing for them with the guaranteed liquidity and reasonable margins on offer at MarcusHedge. The health of the banking system is one thing that president Trump and his team members don't have to worry about as they begin the important work of making the markets great again.”