With apologies to Clement Clark Moore, the author of “A Visit from St. Nicholas” we have updated his timeless poem for “modern times”….
– Andre Ratkai, CFA
‘Twas the night before Christmas, and all throughout Wall Street
Investors anxiously waited for the next Trump tweet;
Investment banker’s Porsches were parked by the valet with care,
In hopes Wall Street bonuses soon would be there;
The brokers were nestled snug in their beds;
While visions of IPOs danced in their heads;
Bankers in pin stripes and day traders as one,
Were complacently dreaming of another bull run;
When from my iPhone buzzing with chatter,
I leaped to my Bloomberg to examine the matter;
Checking stock futures, which rose in a flash,
I bought and I bought fearing no risk of a crash.
But there was one thing I didn’t know,
Whether the Fed would push rates to new lows;
Then before my eyes appeared like seductive enchanters,
A pile of cash and the world’s central bankers;
Led by a man gray and wise as an owl,
I knew right away it was Fed Chairman Powell;
Their money printing machine was working full bore,
Though he hemmed and he hawed, he called out for more;
“More leverage! More borrowing! More lending! More debt!
“Compared to next recession, you ain’t seen nothing yet!”
“Flood the system with cash, drive rates down to zero!”
“Quantitative easing is now Wall Street’s hero!”
But as clouds before a wild storm spell trouble,
I asked Chairman Powell if he was creating a bubble;
“A bubble!” he laughed handing me a bankroll,
“Don’t worry! Be happy! Central banks have control!”
Then, in a twinkling, waving his monetary wand,
He once again manipulated the market for bonds;
I shook my head and started to wonder,
Is all this free money a colossal blunder?
With leverage pervasive from bottom to top,
What will happen when this merry-go-round stops?
He gave me a wink as he shared their big plan,
Which was to keep pedaling as hard as they can;
A trade war? Recession? They’ll be solved with more money,
And if you buy that, you’ll believe in the Easter Bunny;
Look at the market! New highs every day!
Proof positive quantitative easing is Wall Street’s new way!
But my mind harkened back to bullish peaks of the past,
Knowing euphoria never did last;
Valuations are now reaching the extremes of 2000,
Powell chuckled and said that risk didn’t rouse him;
Bullish sentiment, too, is now at lofty levels,
So buyers today may be making a deal with the devil;
Warren Buffett’s advice rang in my head,
The implications of which filled me with dread;
“Be greedy” Buffett said “when others are fearful.”
“But be fearful when greed has caused all to be cheerful;”
With America slowing, Europe on the brink of recession,
I remembered my late mentor’s salient lesson;
The crowd often forgets as they chase high after high,
In the world of investing trees don’t grow to the sky;
Then I heard Powell say, as he doled out his plenty,
“Happy Christmas to all, and good luck in 2020!”