Remember

Blain’s Morning Porridge 10^th September 2021: Remember

“Names etched on the head of a pin.”

Tomorrow is the 20^th anniversary of 9/11.

Nearly 3000 people from all walks of life died, but I would urge all my professional readers to consider doing a trade today with my former colleagues at BGC. Every year they hold a charity day where all profits go to deserving causes. 658 Cantor Fitzgerald (now BGC) employees died that day – a quarter of the New York casualties. It’s a tribute to the firm that it thrives today after being nearly wiped out the day of the outrage. Read the story from the Evening Standard here – it was written 10-years ago, but as valid today. It is more than history.

20 years was a long time ago, but it feels like yesterday. Anyone over 40 working in finance then and today will remember every detail of Tuesday 9^th September 2021 clearly. The shock. The horror. The disbelief. The Anger. The days following the attack saw market carnage. Stock markets were closed for days. Banks could barely function. The skies were empty. Gold surged. Revenge was promised.

20 years later and we live in a world utterly changed, and the events that followed 9/11 have defined the 21^st Century. Homeland security, the War on Terror and a growing sense of distrust and insecurity have had profound economic and market consequences.

Is it a better world? Terror is still with us. This week France has begun the trial of self-declared “Soldiers of Islam” for the barbaric murder of over 150 innocents. Our society remains on constant watch. Yet, the West has just retreated in ignominy from Afghanistan.

Watching the fall-out from Afghanistan it can feel the West focused on the “War on Terror” to the exclusion of anything else these past 20-years. The claims of a war won look starkly wide of the mark when you look at continuing global poverty, Syria, the failed Arab Spring, Yemen, the ongoing repeated crises in Africa, and the ongoing wars on drugs. On the other hand – what did the terror achieve? We may moan and criticise, but the West remains resilient and if it happens again the response will be immediate.

A cynic might say the only beneficiaries have been the big defence contractors – the military industrial complex, supplying the forces with everything from bombs, bullets, vehicles and av-gas, and the generals who repeatedly told us these wars were winnable with just a few more resources. Yet, if the military-industrial-complex was the winner – why is Boeing in such dire straights? (Rhetorical question: badly managed bad companies will always get caught out eventually.)

The reality is the world moves on – just as it always does. There were no plots and the conspiracy theories are bunkum. America was attacked and responded. The sun comes up and we get older, not necessarily wiser, every day. The reality is today’s markets are not just the consequences of the war on terror, but that we live in constantly changing and unpredictable world where mistakes are commonplace.

Today the new realities are trade wars, the emergence of China, the shifting focus of global wealth to Asia, the relative decline of Europe, fractured political populism, and the consequences of monetary and interest rate repression since the global financial crisis that began in 2007 and is still with us today. These challenges are opportunities to recognise, to strategise, game, trade and invest around.

9/11 was not – it was sudden, shocking and caught everyone entirely by surprise. It was a brutal unforeseeable black swan / no-see-um event.

Consider that, the no-see-um events, this morning as you figure out the implications of the ECB “recalibration”, rather than taper of its Pandemic emergency asset purchase programmes, or the multiple warnings of an imminent market correction on the back of extremely inflation valuations, or the reality of a new China.

Just look at how the global business landscape has changed: The largest companies on the planet in 2001 were, (in order) General Motors, Wall Mart, Exxon, Ford, GE, IBM, AT&T and Boeing!  Where are they now…?

Today that list looks very different: Apple, Microsoft, Alphabet, Aramco, Amazon, Facebook, Tesla and chip-maker TSMC (Taiwan Semiconductors). The first name from 20 years ago, Walmart, comes in a 17^th! The next at 45^th – Exxon.

Let’s continue to move forwards, but never forget.

Five Thing to Read this Morning

BBerg – ECB Slows Crisis Stimulus in Shift Largarde Says Isn’t Taper

FT – Joe Biden calls Xi Jinping in bid to reset strained relations

FT – When is a market bubble not a bubble?

WSJ – Battery Makers Tied to Power Grid Attract Big Investors

BBerg – Bond Buyers Embrace 72 Hour, 52 Deal Corporate Borrowing Binge

9/11 – 20 years later

On the 11^th of September 2001 I was at my desk on the 28^th floor of Canary Wharf Tower, London, as head of the financial institutions group for Bear Stearns. It occurs to me: that day marked roughly the midpoint of my inglorious career in global finance.

It was early afternoon in London and I was on a call with treasurer of a German bank, making my arguments why they should entrust us with their planned subordinated bond issue. One of my colleagues grabbed my shoulder and pointed to the trading-room TV screens. Smoke was pouring out the North Tower of the World Trade Centre in New York. I’d been there, having a cocktail in Windows on the World on the top floor of one of the Twin Towers, just a couple of weeks before visiting clients.

Someone shouted a “plane flew into the tower”. I was immediately struck by two thoughts. I’d read a Stephen Coonts thriller called Under Siege a few years before about a drugs lord who declares war on America by flying aircraft loaded with explosives into government buildings, but surely that was just fiction. And I remembered a B-25 bomber flew into the Empire State Building during the war – but that had happened on a cloudy bay. We listened to the news as it developed, but no one sounded particularly worried… our colleagues in NY assured us the authorities would have it under control.

Then, even I was watching the screen, the second plane smacked into the South Tower. There was pandemonium. The penny dropped. Everyone appreciated it was a terror attack. Minutes later the head of the office told us all to grab our gear and go home – NOW! No one was taking chances. No 1 Canada Wharf was then the most prominent building in Canary Wharf and therefore London.

In those days I was cycling to the office. Instead of going straight home I went to the gym. It was full of other City Workers all glued to the screens. I was on a stairmaster when the first tower fell. I was sick as the second tumbled. We were quiet. We drifted home in shock and utterly helpless.

During my last visit to a pre-pandemic New York in 2019 I spent a Sunday at Ground Zero. I didn’t know any of the Cantor Fitzgerald employees listed with all the other victims on the surrounds of the two pools marking the footprints of the Two Towers. It happened 10 years before I joined the firm, but I walked round reading the names and wondering who they were and who still grieved for them. Ground Zero is a deeply moving place. We must never forget – the risk is we will.

Bill Blain

Strategist – Shard Capital