Macaskill on markets: Exploiting the coming missing decade

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By:
Jon Macaskill
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A no-growth decade won’t stop bankers from chasing fees and trading profits. Mystic Maca looks even further ahead.

Christine and Greta

2020

A slack start to the year prompts bankers to rethink their reservations about helping Saudi Aramco list its shares on international venues.

“You have to respect the way they were able to ramp the valuation on their domestic listing to $2 trillion with outright coercion and a few handouts for hedge funds. Sometimes I think we’re missing a trick in America,” says JPMorgan chief executive Jamie Dimon. “So I told Michael Klein if he can get us a soft guarantee of a $50 million fee, we’re all in. I’ll give the other Wall Street heads cover so they can do the same – what do I care? I’m leaving soon anyway.”

UK prime minister Boris Johnson declares that Britain is open for business post-Brexit and that a new dawn for non-disclosure should make London the perfect venue for a Saudi Aramco listing.

He is frustrated when departing Bank of England governor Mark Carney and European Central Bank president Christine Lagarde combine to thwart a move to relax UK listing rules.

“It looks like the wrong sort of Johnny Foreigner is stopping the right sort of Johnny Foreigner from selling shares and handing out some much-deserved moolah to the good people of Canary Wharf,” Johnson responds. “But nil desperandum, says I, and onwards we march towards the broad, sunlit uplands of deregulation.”

2021

Newly elected US president Elizabeth Warren joins European Union leaders in unveiling a global green new deal featuring carbon taxes and a levy on fossil fuel sales. 

Singapore-listed shares of Saudi Aramco collapse, setting off a chain reaction of selling in Asian markets. Riyadh-listed shares of Aramco prove more resilient. 

“HRH prince Mohammed bin Salman is pleased that loyal Saudi investors share his commitment to stable Aramco prices in the approach to fulfilling our goal of Mirage 2030,” a royal proclamation announces. Hedge funds with access to both types of shares generate billions of dollars in trading gains by arbitraging international against domestic Aramco stock holdings.

2022

ECB president Christine Lagarde celebrates the 10th anniversary of Mario Draghi’s “whatever it takes” speech by announcing that European banks will be able to count holdings of newly issued green Thunberg bonds as capital.

“Greta bonds may not pay a coupon or ever mature, but if the last decade has taught us anything, it is that minor tweaks to bank capital rules should be enough to finally revive growth in Europe,” Lagarde says.

Jean Pierre Mustier, chief executive of an alliance of European banks, agrees. 

“We accept the solemn responsibility of buying ECB green bonds and rebranding all of our loans as green loans in anticipation of the next leg of our long journey towards profitability,” he says. “It will be a journey without motor assistance or bonuses but courage, mes braves or indeed andiamo, depending on where we are today – all these first class airport lounges look the same to me.” 

2023

Goldman Sachs chief executive David Solomon announces that he is stepping down. 

“It has been a great five years, but there is only so much relentless chasing of every marketing fad that one person can do,” he says. “From Apple credit cards to wealth management apps and my ground-breaking initiative to make the executive board sit on Marcus beach balls in the middle of the trading floor, I’ve tried every gimmick I can think of, with pretty mixed returns.

“But to blow my own horn, I think everyone will admit that my move to muscle in on the green marketing pitch by the European banks worked out pretty well. ‘Gold(man) is the new green’ was trending for weeks on end, and not just because people were being snarky about the work we do for Aramco and the last of the oil trading hedge funds. Now it’s time for me to hang up my work bandanna and pursue my real dream of becoming the best damned 61-year-old DJ in Miami Beach. After all, it might not be above sea level much longer!”

2024

Wall Street banks increase their reliance on artificial intelligence solutions designed to enhance trading revenues, with many of the systems picking up avatar nicknames from the remaining human staff.

Robot Ted Pick at Morgan Stanley proves an initial success in deploying its nine boxes of algorithmic factor trading but is quickly overshadowed by the performance of robot Tom Montag at Bank of America.

“I don’t want to get into the details of our proprietary AI technology, but basically our model is just bigger and meaner than Morgan Stanley’s,” says the real Tom Montag, who is still serving as chairman emeritus of Bank of America from a fortified home trading desk carved out of a mountain top in Hawaii.

“Markets and systems will evolve, but it always helps to back your opponent into a corner and threaten him – metaphorically of course,” says Montag. “That applies to these new-fangled online trading avatars just as much as it did to junior human dealers in the good old days.”

2025

Bridgewater founder Ray Dalio announces that he has finally found a successor. 

“It was a tough 10-year search for someone who combined my towering self-importance with a corresponding lack of self-awareness,” he says. “Sure, there are plenty of hedge fund guys who think a few good trades make them geniuses. And more and more fund managers now follow my example of reading the first few pages of a book then producing a banal set of regurgitated principles that our employees are forced to treat like holy writ.

“But it takes a special kind of self-deception to try to foist this bilge on the wider public with titles like ‘Who melted my cheese? What Burning Man taught me about making and keeping your billions in a post-apocalyptic world’. That’s why I have decided that Bill Ackman is the only man who could succeed me at the helm of Bridgewater. Or maybe P Diddy would be a better fit. You know what, I may have to stay on for another year or two.”

2026

Footnotes to a convertible bond prospectus reveal that Citadel Securities generates more revenue from market-making than any bank apart from JPMorgan and is far more profitable. 

“Years ago, the Wall Street banks let Michael Bloomberg take their data and sell it back to them, and now they have let me skim off the only bits of market-making that generate any money,” says Citadel founder Ken Griffin. “Well, there’s a sucker born every minute, but at least I promise not to write a book about it. I’m an old-school hedge fund billionaire – all I want is to own the most expensive properties in each of Chicago, New York, London and Miami, then surround them with traditional shark-filled moats. Is that too much to ask?” 

2027

HSBC managers face a dilemma over how to celebrate the 30th anniversary of the return of Hong Kong to Chinese rule. An uneasy standoff between activists and the Chinese government is in its ninth year in Hong Kong and most regional financial trading activity shifted to Singapore long ago.

HSBC is still heavily reliant on revenue from mainland China, however.

The slogan ‘One bank, two faces’ is rejected by HSBC chairman Mark Tucker, who has engaged headhunters in a search for his eighth chief executive in 10 years as head of the board.

A group of HSBC lifers instead hit on what becomes known internally as the pirouette around Asian issues. Another headquarter review process by HSBC is initiated, then handled so slowly that the 30th anniversary of the Hong Kong handover is over by the time Chinese authorities notice that the bank’s only contribution was signing off on an extra drinks tent at the rugby sevens. 

2028

The 20th anniversary of the global financial crisis of 2008 is marked by another market meltdown.

“It turns out that two decades of low or zero growth, accompanied by a steady upward grind in financial asset valuations was a recipe for disaster,” says ECB president Christine Lagarde. “I don’t think anyone could have predicted that – or indeed the way the AI dealing systems first held down volatility for years, then drove it up so spectacularly on what we now know as ‘Cyborg Sunday’ before the opening of trading the next day. But I’m confident that our new system of checks and balances implemented by real humans will prevent this happening every 10 or 20 years. Filling in all trade tickets by hand and using bike riders to communicate between banks and exchanges should also provide a much-needed boost to employment.”

2029

Euromoney celebrates its 60th anniversary with a special printed edition highlighting the contribution of key market figures through the decades.

An inaugural ‘60 under 60’ awards ceremony for promising bankers in their 40s and 50s proves a big hit. 

Ashok Varadhan, who still runs trading for Goldman Sachs after more than 30 years at the bank and despite multiple job offers from former colleagues at hedge funds, accepts his award in absentia from the sidelines of a Duke basketball game.

Other ‘60 under 60’ winners are happy to show up in person.

“If you had told me that I would be able to get another job in banking after my wild and crazy ride at Deutsche Bank and then SoftBank’s Vision Fund, I’d have said you were crazy,” says Colin Fan, who now heads ESG product sales at a revived Merrill Lynch.

“But I’m still a youthful 56 and I feel I have a lot to give back to banking as a mentor to my even younger fellow financial ambassadors. That’s why I am setting up the Adam Neumann prize for services to entrepreneurs in order to encourage young bankers to focus on serving growth in the real economy. We should never lose our unwavering focus on the vital role bankers can and must play as culture carriers who set an example for everyone else in society.”