Macaskill on markets: Back to the future in 2024

Bridgewater founder Ray ‘Fredo’ Dalio struggles to refute allegations from the book ‘The Fund’ in a disastrous TV interview. “I’m smart! Not like everybody says. Calling me the Wizard of Odd and claiming I built the world’s biggest hedge fund on the basis of smoke, mirrors and a cult-like devotion to nonsensical principles isn’t just unfair; it will also get you fired with nothing but a huge payoff and a water-tight NDA,” Dalio tells a bemused interviewer.

“Bridgewater is doing better than ever on the back of my new 60/40/20 investing strategy, which I have back-tested to the time of Atlantis to ensure 120% outperformance,” he continues.

When he is pressed on what 60/40/20 investing actually involves, Dalio becomes evasive.

“The first rule of Trade Club is you do not talk about Trade Club. Bridgewater is an idea meritocracy where conflict equals peace, and excellence can make the extraordinary ordinary again,” he says.

Ted Pick hosts his first earnings call as Morgan Stanley chief executive and defends the $20 million pay-outs made to ensure his fellow candidates for the top job, Andy Saperstein and Dan Simkowitz, would stay at the firm during the management transition.

“James Gorman, the man I call the Godfather, took me through all this before he made me the new Don. Most of the money is in deferred shares, so all I have to do is humiliate them for the next year or two until they resign before the stock vests and then we pay them nothing,” says Pick.

“That’s why I’m sending Sapo and Simko on a world tour of contrition for whatever mistakes may have been made here in the past. You know – block trading, Twitter funding losses, dodgy wealth management clients, whatever,” he adds. “They’ll know all about bleeding Morgan Stanley blue when that’s over, believe me.”

Former SoftBank Vision Fund head Rajeev Misra hires WeWork founder Adam Neumann as chief inspiration officer for his new investment vehicle, OneIM.

“Adam is going to put the ‘I’ in OneIM,” Misra says. “My own career has been built on exploiting asymmetrical deal structures and complex documentation arbitrage to ensure that I come out on top of trades, even if everyone else involved loses. That’s a lot of hard work!

“Adam cuts out all that structuring and just pitches simple ideas to suckers with plenty of money. He’s also putting the $1.7 billion he cleared from SoftBank’s WeWork investment into a OneIM reverse convertible that I’ve put together specially for him, so he can rest assured that we really are all in this together,” Misra continues. “Sheikh Tahnoon from Abu Dhabi gets slightly different terms, given that he also runs their ‘national security’, but Adam will do just as well as other investors like my old friend and mentor Masayoshi Son.”

A flash crash in US Treasuries spreads panic among investors globally and prompts the Federal Reserve to intervene with emergency measures to calm markets. Hedge funds with basis trades between cash Treasuries and futures are set to be the biggest losers before the Fed intervention allows unwinding of leveraged positions.

“I have to say this is a testament to the vital role government plays in ensuring we have orderly markets,” says Citadel founder Ken Griffin.

“You won’t catch me lecturing the authorities about the need to allow unfettered trading and zero taxes for a special breed of wealth-creating supermen anymore,” he adds.

“April fool! The real lesson here is that Fed chair Jay Powell has shown himself to be the rule-loving inflation-boosting commissar I always suspected, and now Montgomery Burns and I are searching for a presidential candidate who can make America like 1913 again by abolishing the Fed. Not Ron DeSantis obviously, but someone.”

Elon Musk announces that his company X, the former Twitter, has a negative value of -$44 billion.

“By my reckoning that means the banks who funded the deal now owe me $13 billion,” Musk posts. “I can’t remember all the banks that were involved, but Morgan Stanley was definitely one of them, so the new guy there better send it over pronto.”

Morgan Stanley chief executive Ted Pick discloses that the bank is negotiating with Musk over how much it will pay him and unveils a management restructuring.

“Morgan Stanley is all about accountability, so whoever was in charge of the investment bank when that Twitter deal went through will have to pay the price,” Pick says. “Sadly, that means that my old friend Dan ‘Simko’ Simkowitz will be stepping down from his role as head of institutional securities and forfeiting his $20 million loyalty bonus.”

Goldman Sachs celebrates record first-half revenues from oil and gas company merger advisory work.

“I can’t believe I waited so long to take up golf instead of DJ-ing,” says Goldman chief executive David Solomon. “I closed half of these oil M&A deals myself while on the golf course with various Texas tycoons – and I’ve come to appreciate their Southern hospitality. No more Hamptons for me! I’m going to be spending this summer on a rubber tube floating through the bayou.”

Goldman later clarifies that the record oil advisory fee haul does not in any way represent a retreat from its commitment to environmental, social and governance (ESG) principles.

“We’re keen to help clients of all types on their energy transition journey and that’s why I’m shifting Jim Esposito from co-head of banking and markets to a newly created role as head of ESG,” says Solomon. “That is definitely a fast track to the top job at Goldman that Jim is so obviously keen to fill.”

Blackstone announces further steps to focus on private credit rather than its traditional strength of private equity.

“It’s about time to acknowledge that we have replaced banks as the main providers of credit to much of the market, though without the annoying regulation obviously,” says founder Steve Schwarzman.

“That’s why I am rebranding Blackstone as the Bank of Steve. Everybody knows I hate to take personal credit for a team effort or have my name plastered over buildings, but the guys all begged me to take a lead on this one and use my own personal brand strength to promote our business.”

Former US president Donald Trump provides an endorsement for the Bank of Steve and pledges to keep private credit unregulated in his next administration.

“Steve Blackstone is one of my oldest friends, and the Bank of Steve is going to help make Americans accumulate again with rates of only 20% or maybe 120% – we’re going to borrow so much, people will be sick of borrowing,” says Trump.

JPMorgan chief executive Jamie Dimon announces that he will run for president as poll results continue to point to a victory for Donald Trump over Joe Biden in the November US election.

“Some of my employees think that running JPMorgan is a bigger job than being president, and they may be right,” Dimon tells reporters. “But I’ve just about had it up to here with all this regulation that limits JPM to a $4 trillion balance sheet that generates $150 billion of revenue and $50 billion of profit a year. And if the only way I can level the regulatory playing field with people like Steve Schwarzman is to run the whole country, then so be it. Plus, it’s about time we had a president from Queens who actually knows what he’s talking about. With John McEnroe as my vice-president and Fran Drescher as Treasury secretary, I think we have a winning ticket.”

BlackRock reveals that its acronym-free policy has had no measurable impact on its results in 2024.

“I banned the use of the phrase ESG last year after getting all that flak from the anti-woke brigade and assorted red-state lunatics,” says BlackRock head Larry Fink.

“Then this year I quietly phased out any references to AI, followed by an end to all ETF launches. This has made no difference at all to our assets under management, or AuM as they are now not called, which have just gone past $10 trillion without any use of marketing gimmicks. I mean, WTF I was paying all that money to our branding people for is a bit of mystery, but hey, you only live once, I suppose. Actually, I quite like that one, LOL,” Fink says in a brief handwritten letter that is posted to shareholders.

UK elections result in a Labour victory and the appointment of former Bank of England governor Mark Carney as chancellor. In a surprise move, Carney replaces Andrew Bailey as governor of the Bank of England with Rachel Reeves, who had served as shadow chancellor before the election.

“I don’t know what Andrew has been doing since I left the Bank in 2020, but it certainly didn’t involve much regulating,” says Carney. “Now he can take as long for lunch as he wants, while Rachel becomes the first woman to run our great central bank. She’s already using ChatGPT to write her speeches and books, so I’m confident she will be able to focus all her energies on helping me to deliver the fund manager-friendly policies at the heart of everything we in the Labour Party stand for.”

Donald Trump is elected US president after the Jamie Dimon/John McEnroe candidacy siphons off disaffected Democratic Party voters. Trump takes credit for the resulting market rally and announces that his next administration will run for eight years instead of four in order to remove all deep-state regulations.

“I want all the great leaders on my team, including Steve Blackstone and even maybe Jamie Chase Manhattan, who knows, why not?” Trump muses in a rambling victory speech. “Wall Street can help me to build a wall with Canada as well as Mexico, so many walls – the best walls. And in return I will make sure that European banks are kept out of America, especially Credit Deutsche Bank – some very bad people who lent me money then wanted it back.”

Goldman Sachs announces that Gary Cohn will become chief executive, with David Solomon moving to a specially created new role as vice-chairman with responsibility for oil company coverage.

“Gary is our only point of contact with the Trump administration and now is not the time to abandon our historical role as Government Sachs,” says lead director Tom Montag, after convening a special meeting of the Goldman board to replace Solomon.

“Plus, the trend of bringing back half-forgotten former leaders to run things is now as firmly established as using AI to write your speeches and research reports. That’s why I am reappointing myself as head of trading at Goldman and making Ashok Varadhan chief swap dealer. It’s going to be like the good old days again – you eat what you kill and get cash bonuses at year-end, with none of this deferred stock nonsense.”