Thursday, 19 July 2018

On Verizon and 9/11

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  • Anthony Peters

Anthony Peters considers the lingering aftermath on the markets

I don’t know whether it was planned or whether it was serendipitous but it was not lost on me that on yesterday’s 12th anniversary of the attacks on the Twin Towers in New York, the American corporate bond market reminded all of us just who’s the boss.

In order to finance the repatriation of control of one of the country’s great corporate names, Wall Street knocked all issuance records into a cocked hat by announcing, launching and blowing out a US$49bn eight tranche bond issue for Verizon, the telecoms giant.

It takes more than just a little bit of imagination to get one’s head around the staggering size of the issue. Suffice to say the until yesterday Apple Inc. held the record for the biggest single issuance at a lowly US$17bn which was in itself as recently as May of this year, when it came to market in six tranches, regarded as an incredible milestone.

My first instinct is to raise two fingers at the equity markets in order to remind them who’s the daddy but I shall desist. My second is to remind myself just how far we have come since that fateful day, 12 years ago when we had all been cleared out of our offices for security purposes and when we were all assembled in the pub next door, pint in hand and watched the two towers collapse, one after the other.

I spoke yesterday to Andrew Bernard, now head of European sales at Tradeweb but who at the time ran Bank of America’s guvvie sales desk, next to whom I was standing and I recalled how one of us had said to the other – I can’t remember which way the conversation went – that we were watching history in the making and the other had replied that the world would never be the same again. Never has a truer word been said, either in jest or not.

Time to move on? Really?

Current graduate trainees would have still been in short trousers when it happened and the graduate trainees of the time are now vice presidents or even senior vice presidents – the odd one might have even made MD by now. So the collective memory of what trading floors looked and sounded like on the day are becoming diluted. I was slightly horrified to hear someone who shall remain nameless comment yesterday that it might be time to forget and to move on. To do so would be forget the impact that event had not only on those who lost their lives and their families, not only on the national psyche of America but on the very markets in which we work every day.

I guess it’s a bit of an old chestnut now and one which I roll out every year but just because I repeat it, it doesn’t become any less true or any less pertinent. The aftermath of the events of 9/11 are still hanging over us in markets every day and I fear that the parochial lessons will not have been learnt.                                                          

Politics and economics should not be confused. Alan Greenspan’s critical mistake was to believe that the horror of New York and Washington would put the entire US economy at risk and responded by entering into a sharp reversal of the prevailing interest rate policy – we had been in a tightening cycle – and began pumping cheap money into an economy which didn’t really need stimulation.

“Lions led by donkeys” is a phrase popularly used to describe the British infantry of World War I and to condemn the generals who commanded them. I’m afraid that I still reckon that the same can be applied to financial markets and that Greenspan himself was the Donkey in Chief. The credit bubble was conceived on 9/11. As much as the military events – if one can term the attacks as such – changed the global political and security environment forever, so the response by the Fed set the scene for what turned into the credit bubble, the credit bust and subsequently into the Global Financial Crisis. 

Alas, if anyone had ever doubted that America is open for business – which nobody really can have done – then yesterday would have put them right.

Meanwhile, President O’Bama continues to struggle with the New World Order by way of his relationship with Russia over the Syrian crisis. I must say, I am staggered to hear the bellicose rhetoric of this Nobel laureate for peace, despite it being wrapped in humanitarian wording. He has been caught offside left and no amount of whooping can change this. The more he continues to try to justify himself, the more he undermines what is left of US moral authority. Very poor and very sad.


Alas, for me it is that time of the week. Tomorrow is the first of the three days of the Goodwood Revival Festival, a Mecca (no pun intended) for the lovers of fast and furious classic motor cars. To date I have never missed one and I have no intention of changing the habit. Thus, all that remains is for me to wish you and yours a happy and peaceful weekend ahead unless you live near the Goodwood Motor Circuit in West Sussex in which case you either wear ear plugs or go away.

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