DiMartino Booth, Bloomberg Opinion October 18

Why Main Street Should Worry About Wall Street’s Bond Selloff

The potential for higher borrowing costs to inflict damage on household finances has grown in the era of extraordinarily easy monetary policy.

The recent leg lower in the bond market has pushed mortgage rates to the highest since the start of the decade. The glass half full people might say that’s not a problem since rates are less than half the levels seen during the bad old days of the 1980s when borrowing costs exceeded 10 percent. But that’s not the way to think about the potential fallout from higher rates. The real issue is what current mortgage rates represent to the current generation of home buyers. And by that measure, the outlook is rather dire.

According to the Mortgage Bankers Association, the average loan rate for a conforming 30-year mortgage was 5.10 percent in the week ended Oct. 12, the highest since early 2011. Back then, that level didn’t hold for long, as rates crashed to 3.5 percent by late 2012 and held at those low levels for years. As recently as July 2016, the 30-year rate was at 3.6 percent. Starting points matter, especially now with home prices at nosebleed levels. According to Black Knight’s August Mortgage Monitor, the monthly payment on the average home has jumped by 16 percent since the start of the year. That’s up from a 3 percent increase in 2017, illustrating the effect of rising rates on affordability.

The potential for rising rates to inflict damage on household finances has grown in the era of extraordinarily easy monetary policy. Yes, mortgage lending standards were tightened after the housing bubble burst in the financial crisis, but record low rates have nevertheless allowed buyers to afford pricier homes and homeowners to refinance to improve their cash flow via lower payments in order to augment stagnant income growth. But that was then. Refinancing activity is off by a third compared with last year, an effective drag on households.

Twice a month, the University of Michigan reports its Consumer Sentiment Index. In the preliminary October report, reported buying conditions for autos and homes fell. The last time both of these gauges were as low as they are today was the early 1980s as the economy was emerging from a grueling recession. If history is any guide, a sustained level of higher rates is the second nail in the coffin for housing followed by an upward turn in the unemployment rate and recession. We’re well on our way to the second stage.

Determined homebuyers are increasingly turning to adjustable-rate mortgages, or ARMs, which have low initial rates that adjust either higher or lower after some period depending on prevailing rates at the time. Currently, the average 5-year ARM charges a rate of 4.34 percent. As per the Mortgage Bankers Association, ARMs comprised 7.1 percent of new applications in the latest week, the most in a year.

To be clear, demand for ARMs is a shadow of what it was during the last boom when underqualified buyers did whatever it took to get into overpriced homes and lenders were happy to accommodate. At the apex of the housing bubble, ARMs were over half of mortgage activity. The drivers of ARM usage, however, have not changed. It’s still all about price. The average ARM today is $661,000, which are clearly being used to finance high-end homes. And just like when the last housing bubble burst, the risk is that ARMs taken out in recent years will reset at higher rates, leading to defaults and weighing on housing prices.

DiMartino Booth, Bloomberg Opinion October 18

And don’t forget that well-heeled home buyers are also likely to have a high concentration of stock market holdings. And given that eight of the top 10 markets with the largest monthly declines in home prices in July as measured by Black Knight were on the tech-heavy West coast, a month when technology stocks were headed to record highs, it’s not hard to imagine how fast home prices will fall once the air comes out of the tech bubble.

Black Knight highlighted San Jose in its latest report. The average home price in San Jose fell 1.4 percent in July, a sharper decline than any other market and the steepest drop for any month in any of the top 100 markets since the housing recovery began. Prices are down by 2 percent since May following a cumulative rise of 35 percent over the prior 20 months. Black Knight notes that “71 of the largest markets nationwide have seen the rate of home price appreciation slow in recent months.”

How bad things get may depend on supply. The housing market has been marked by low inventories placing ever greater upward pressure on home prices. There are two root causes. The first is that both small and institutional investors have scooped excess supply to flip or rent homes. And the second is the millions of owners who were able to hold onto their homes by modifying their mortgages through a government program through 2016. But after five years, their 2 percent interest-only payment period ends. At that point their loans will fully amortize and the mortgage rate will rise by one percentage point per year for five years. The payment shock will be enormous and could lead to an exorbitant number of homes being dumped on the market.

Two announcements in recent weeks suggest lenders have grown wise to the building risks. Home builder Lennar Corp. put Rialto Capital, its real estate lending group, up for sale. And Goldman Sachs Group Inc. said it will rein in the expansion of Marcus, its direct lending to consumers arm.

The outlook for households, and by extension the economy, is on shaky ground. Many households simply cannot weather a rising rate environment.


This article originally appeared in Bloomberg Opinions — 10.18.18

Danielle DiMartino Booth, a former adviser to the president of the Dallas Fed, is the author of “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” and founder of Quill Intelligence.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

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DiMartino Booth, Quill Intelligence JONESING FOR NORMALITY

Jonesing for Normality — The Economy Goes Off Script

Ah, but to have come of age oblivious to John, Paul, George and Ringo and be too young to have partaken of that muddy, druggy rite of passage in Woodstock, NY. There was no draft and your father was likely not a World War II veteran. You may have had older brothers or sisters who protested Vietnam, but you were not burdened with that internal conflict. Your scars also differ. You cannot tell people where you were the day JFK or MLK was assassinated. And you don’t consider yourself to be “old.” That is reserved for the first wave baby boomers, who are entering their 70s at a rapid clip.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC

For a full archive of my writing, please visit my website Money Strong LLC at www.DiMartinoBooth.com

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Danielle DiMartino Booth, Economy, Federal Reserve, Quill Intelligence

A Private Affair — Shadow Bankers Ascend to Power

400 was a lonely number. At least that was the case circa 1836 New York when ex-mayor Philip Hone extended invitations to 250 “gentlemen of social distinction” to join the Union Club, the first private club to grace the streets of the metropolis. Once this cadre was formed, its membership was expanded to 400, coincidentally the capacity of Caroline Schermerhorn Astor’s Fifth Avenue ballroom. Why the cohort was checked at 400 first-generation Masters of the Universe remains an enigma. Less ambiguous were the club’s strictures. Dine, game, drink and puff away – its humidor once housed 100,000 cigars – but don’t think of dancing, a direct affront to the bastion of masculinity.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC

For a full archive of my writing, please visit my website Money Strong LLC at www.DiMartinoBooth.com

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The U.S. Economy Is on a Sugar High

The U.S. Economy Is on a Sugar High —

Many companies are rushing to secure products and materials before the trade war worsens

Across the U.S., companies are hitting the panic button. The Trump administration has levied 10 percent tariffs on $200 billion of Chinese goods, a charge that is expected to rise to 25 percent by 2019. This tops the tariffs on $50 billion of Chinese goods that were imposed in August, and is an effective tax on U.S. consumers, who will soon be paying more for everything from cosmetics to clothing to cars if they aren’t already.

Against that backdrop, it’s becoming clear that many companies are rushing to secure products and materials before prices rise regardless of current demand. You could say they are in panic-buying mode. The upside is that this behavior bolsters economic growth in the short term. The downside is that there is likely to be a nasty hangover. The noise in the economic data will be amplified by the rebuilding from Hurricane Florence. The estimates of the storm’s damage span from $20 billion to $50 billion.

Evidence that panic buying has set in was seen in the September Chicago Purchasing Managers Index report, which is a bellwether for the broader national manufacturing sector. While the results “disappointed,” with the index falling from 63.6 to a still high 60.4 and the new orders component sinking to a six-month low, the inventory component surged above the 60 mark. (In these diffusion indexes, readings above 50 denote expansion.) To put the stockpiling in context, inventories have only breached 60 twice this year. Such nosebleed readings are so rare that they rank in the 97th percentile over the last 30 years.

As per the Chicago PMI: “Firms continued to add to their stock levels, building on August’s marked rise. The scarce availability of inputs continued to encourage stockpiling while forecasts of higher future demand also contributed to the rise in inventories.”

There’s also been a pronounced increase in railcar volume. But the thing to know here is that data from the three biggest California ports, where the vast bulk of Chinese goods land on U.S. shores, arrives with a lag. We won’t have September data in hand until mid-October. Absent this port data, study the activity on BNSF and Union Pacific’s “Overland Route.” This old-school term begins at the West coast ports and ends at the railroads’ easternmost points. Take the number of rail cars in service and multiply it by how long these cars “dwell at terminal” to get a proxy of hours worked. That derivation roughly equates to aggregate hours worked in the employment report, due out Friday.

Indications that the tariffs will rise to 25 percent by year-end suggest the panic-buying mode will stay in effect for the next few months, making labor resources even more scarce. The latest Duke University CFO Survey reveals that those who set compensation budgets anticipate wages will rise by 4.8 percent over the next 12 months, the biggest increase in 18 years.

Artificial supply was evident in the August trade deficit, which came in at the widest in six months as exports slowed even as panic buying fueled imports. At the same time, wholesale inventories came in at nearly three times their expected rate while those of retail inventories came in stronger than their upwardly revised July levels.

The upshot is that economists have had to react in two ways. First, they’ve had to take down their third-quarter GDP estimates to account for weaker exports. On top of that, they’ve had to downgrade the quality of economic growth to account for the reasons behind the inventory build. Or, in the words of JPMorgan Chase & Co. chief economist Michael Feroli, the economy is looking “less boomy, more noisy.”

In the event you’re hoping the virtuosity of panic buying can become a permanent prop to the economy, you might want to rethink your thesis. To Feroli’s point, “less boomy” indicates a fundamentally weaker demand backdrop as the U.S. economy stretches into the final months to claim the trophy of the longest expansion in history.

Rather, artificial, tariff-driven panic buying pumps up GDP growth in the short term but ensures it will disappoint in the future. Look for fourth quarter estimates to be revised upwards and then look out below into the first of the year. And no, the first-quarter disappointment will not be the seasonal anomaly many economists typically ascribe to economic growth in the first three months of the year. In other words, it could be that much worse.


This article originally appeared in Bloomberg Opinions — 10.4.18

Danielle DiMartino Booth, a former adviser to the president of the Dallas Fed, is the author of “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” and founder of Quill Intelligence.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

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For a full archive of my writing, please visit my website Money Strong LLC at www.DiMartinoBooth.com

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Fulfilling the Forecast, Danielle Dimartino Booth

Fulfilling the Forecast — The Chimera of Nirvana in Price Controls

‘Tis better to attain or fulfill? A wise man in the Ghandara region of Pakistan, along its northern border with Afghanistan, once asked himself that very question. His answer was yes. Having heard Alexander the Great had reached his homeland, the king of Taxila wisely chose to attain survival, and in doing so, fulfill his Buddhist dream of achieving nirvana. Travelers to the remote region today can attest to the astonishing cultural fusion that took place beginning in the autumn of 327 BC as Alexander’s Macedonian army conquered even the most distant provinces of the Persian Empire.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

For a full archive of my writing, please visit my website MoneyStrong at www.DiMartinoBooth.com

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DiMartino Booth, Money Strong, Quill Intelligence, Federal Reserve, Economy,MISLEADING BY EXAMPLE1

Misleading by Example — Foiling the Figment of Forward Guidance

Ah, but to be suspended on tenterhooks, suspense pulsing through your veins as so much adrenaline. Or not… Time has glamorized few words more than it has “tenterhooks.” It all started with freshly woven wool and an aggravated 14th century fuller, a craftsman tasked with its cleaning. Removing the oil and dirt required wetting the cloth which all but guaranteed shrinkage, the arch enemy of fullers. To the rescue rode the tenter, (from the Latin tendere, to stretch) a simple wooden frame, often in the form of a double-sided fence. Securing the cloth using hooked nails driven into the tenter’s perimeter and stretching it to the other side ensured both shape and size were retained during the drying process and the fuller’s coffers plump.


Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

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Danielle DiMartino Booth, INEFFICIENT FRONTIER4

The Inefficient Frontier — The Buck Stops Nowhere

Spice was once the very spice of life. To bring this precious commodity to the table, on March 20, 1602, the Vereenigde Oost-Indische Compagnie (VOC), or Dutch East India Company, was chartered with its government’s blessing. To this pioneer conglomerate of commercial entities from Holland and Zeeland, the Dutch government gifted the VOC a first-mover advantage — a 21-year monopoly to trade spices between Asia and Europe. Before too long, spices were but a line item on the balance sheet for stakeholders to consider (the VOC also carries the minor distinction of being the first company to issue bonds and stocks to the general public). By way of its maritime prowess, the VOC expanded into a vast array of industrial and trade-related industries, including shipbuilding and wine to complement those spicy dishes its origins facilitated. As such, the Dutch guilder was the world’s first true anchor currency.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

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For a full archive of my writing, please visit my website Money Strong LLC at www.DiMartinoBooth.com

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Fed’s Inflation Focus Needs a Tuneup

Past errors by the central bank compel it to put less emphasis on consumer prices and more on financial stability.

What now? Continued Federal Reserve interest-rate increases for as far as the eye can see? Those are the primary questions with the last inflation target standing essentially hitting the central bank’s 2 percent bullseye.

The core personal-consumption-expenditures price index (PCE), a broad measure of inflation that excludes food and energy, rose 1.98 percent in July from a year earlier. The core PCE has long been the gentlest measure of inflation, so for many economists the evidence that it’s catching up to every other similar metric, such as the widely recognized consumer price index, that have long since pierced 2 percent is akin to the end of a vigil. (The government is expected to say Thursday that the consumer price index rose 2.4 percent in August from a year earlier when excluding food and energy.)

So, let’s get on with more rate hikes already — right? Perhaps, but such rigidity in the approach to monetary policy is a vestige of the past. Federal Reserve Bank of St. Louis President James Bullard has risen to the forefront of questioning the sanctity of relying solely on inflation in guiding policy. But it’s not because he feels inflation is too hot or too cold, but rather it is inappropriate.

Bullard can always be relied upon to strike a dovish tone — so much so that many consider him dovish for the sake of being dovish. He warned in a speech last week that Fed policy was already “neutral or somewhat restrictive” as reflected in a very flat yield curve, which is one of Wall Street’s most reliable indicators for forecasting recessions. He downplays inflation as a reliable metric given how the economy has evolved, with financial assets becoming a bigger part of the economy. “Neither low unemployment nor faster real GDP growth gives a reliable signal of inflationary pressure because those empirical relationships have broken down,” Bullard said.

9.5.18-us-private-sector-fin-assets

There’s some irony in markets branding Bullard as the most dovish member of the Federal Open Market Committee while placing Chairman Jerome Powell at the opposite end of the spectrum in the hawkish camp. The two are literally echoing one another’s views. Consider this from Powell’s Jackson Hole speech last month:

“Inflation may no longer be the first or best indicator of a tight labor market and rising pressures on resource utilization. Part of the reason inflation sends a weaker signal is undoubtedly the achievement of anchored inflation expectations and the related flattening of the Phillips curve. Whatever the cause, in the run-up to the past two recessions, destabilizing excesses appeared mainly in financial markets rather than in inflation. Thus, risk management suggests looking beyond inflation for signs of excesses.”

In an Aug. 15th interview with Central Banking, Bullard also said financial excesses should be monitored closely given the growth of the shadow banking system since the crisis a decade ago. Here, the Fed has always been handcuffed, limited to regulating bank holding companies and financial institutions with a bank charter. It has no jurisdiction over private equity or technology firms that have crept into the world of finance, entities Bullard said are in the business of avoiding regulatory overview:

“The whole game in Silicon Valley is to do regulatory arbitrage: ‘Let’s provide financial services in ways that are not covered by ordinary laws, and let’s build up a business, like Uber. Let’s build up a business and a constituency for that business outside of the normal legal framework, and then we will wait for the legal system to catch up, and then we’ll litigate at that point.’”

The geographic parallels with pre-2008 are striking. As the subprime mortgage lending apparatus was being built out in the housing boom years, then Fed Chairman Greenspan was repeatedly warned that the central bank would have to catch the falling knife when housing turned. To this, Greenspan’s stock reply was that the Fed only regulated a quarter of mortgage lending and therefore was not exposed to the mania building in Janet Yellen’s San Francisco Fed District, with Countrywide Financial at its epicenter. “It’s that shadow world where the next crisis will be brewing,” Bullard said, “and how is the regulatory apparatus going to handle that going forward?”

Bullard and Powell are both clearly looking back to the Fed’s past errors in judgment and questioning the efficacy of core PCE dictating monetary policy. They know that what started in the shadows of subprime lending ended with the fall of Lehman Brothers Holdings Inc. and the unleashing of systemic risk, the dangers of which were absent in a broken inflation metric. The question for the here and now is whether their shared perspective proves to be prescient, but at the same time, too late.


This article originally appeared in Bloomberg Opinions — 9.12.18

Danielle DiMartino Booth, a former adviser to the president of the Dallas Fed, is the author of “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” and founder of Quill Intelligence.

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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

Visit QuillIntelligence.com to find out more. Click HERE to SUBSCRIBE.

For a full archive of my writing, please visit my website Money Strong LLC at www.DiMartinoBooth.com

Click Here to buy Fed Up:  An Insider’s Take on Why the Federal Reserve is Bad for America.

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Of False Prophets and Promises, DiMartino Booth

Of False Prophets and Promises — From Subprime to “Investment Grade”

From Subprime to “Investment Grade” – Lehman’s Lessons Learned & Squandered

Does the wolf in sheep’s clothing always walk away fat and happy? Not according to 12-century Greek rhetorician Nikephoros Basilakis. In Progymnasmata, the traditional Biblical parable is prefaced with, “You can get into trouble wearing a disguise.” The shepherd in the Greek version did indeed admit the wolf into his sheep’s fold freely and even closed the wily, evil-doer in securely within the vulnerable flock’s shelter. But, alas, to the wolf’s comeuppance, the less-than-astute shepherd also had a craving for mutton for dinner. And so, ravenous, he unsheathed his knife and killed…the wolf. In Nick’s estimation, whether by design or chance, penalties will be meted out.

 


Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence LLC.

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9.11.01, Danielle DiMartino Booth, Quill Intelligence, Angels Manning Heaven's Doors

Angels Manning Heaven’s Trading Floors

The time is 8:46 am EST. The date is September the 11th.

It is a fact of life that time marches on. Memories fade. Still, it’s difficult to believe it has been 17 years since our nation’s innocence was robbed. Every anniversary brings less media coverage, which renders memories of past milestones that much more important.

If you can bear it, look back at September 2002, the one-year anniversary of 9/11. The wounds in our hearts were still open, the emotions raw. The stock market mourned alongside all of those who couldn’t fathom 365 days having passed. Between the NYSE and the Nasdaq, nearly $10 trillion had been lost. Routines ground to a halt. Our full attention was given to the families of those who had lost loved ones as 2,801 of their names were read out loud at Ground Zero, the gaping 16-acre concrete pit where the Twin Towers once stood. Candlelight vigils took place in every one of New York’s boroughs.

Today, it is with the deepest of respect that I humbly ask that you stop what you’re doing for a moment to look back and reflect on September 11, 2001. Your and my world changed that day, one on which so many heroes were made against their will. If you have more than a moment, please read Angels Manning Heaven’s Trading Floors. I have but words with which to honor the fallen. So that is what I give every year knowing with full confidence that it is yet another perfect trading day in heaven. And rightly so.

Never Forget.

Danielle

 

 

9.11.01, Danielle DiMartino Booth, Quill Intelligence, Angels Manning Heaven's Doors

Angels Manning Heaven’s Trading Floors

 

He could have passed for Yul Brynner’s twin if it wasn’t for those eyes. He was 57 years old, 6’2” tall, tan and handsome with a shining bald head. But his eyes, those elfish eyes dared those around him to partake of anything but his infectious happiness. It was those eyes I will never forget.

It was Labor Day weekend, 2001. One of my best friend’s college buddies from UCLA was in town and his uncle had a boat. So we had the good fortune to be invited to take a cruise around Shelter Island on that long holiday weekend 17 years ago. I was 30 years old at the time and I can tell you there was no “boat” about this Yul Brynner look-a-like’s 130-foot yacht. The crystal champagne flutes, the hot tub on the deck, the full crew – none of these accoutrements faintly resembled the boats I’d been on as a middle class girl spending summers off Connecticut’s stretch of Long Island Sound. The thing is, our friend’s uncle was none other than Herman Sandler, the renowned investment banker and co-founder of Sandler O’Neill.

I wasn’t sure what to expect of Sandler and I had no idea that this chance meeting would make a soon to happen unspeakable act that much more real. Would Sandler exude that same pomposity so common among the Ivy League investment bankers who had underwritten the Internet Revolution? In a word, hardly. Sandler personified self-made man. After introducing me to his family, of whom he was immensely proud, he graciously offered me something to eat or drink. And then, he told me a story about a man who knew the value of never straying the course. It haunts me to this day.

It was a good old-fashioned American Dream story about a man and some friends who started an investment bank to banks and built their firm to the top of the world. Literally. The secret to his success, which he enjoyed from his place in the clouds, on the 104th floor of the south tower of the World Trade Center was simply hard work, he said. He prided himself, relaying to me in what I could tell was a tale he’d repeated time and again, not only on making it to the top of the tallest building in the city, but on beating the youngest and hungriest to the office in the mornings and turning off the lights at night. Never forget where you come from. Never take for granted what you have.

In 2001, I had been on Wall Street for five years and was enjoying my own success and experiencing firsthand what money could buy. Given the choices my world offered, most would not have chosen night school. But I was determined to fulfill a lifelong dream and attend Columbia where I was to earn my master’s in journalism to complement my MBA in finance from the University of Texas. I guess I was not like most others. I wanted something tangible to open the next door in my career, which I knew would involve both the markets and writing. I called it my retirement plan.

Throughout this Wall Street by day, student by night chapter of my life, the minute the stock market closed at 3 pm, I would rush to the west side subway lines to trek north to Columbia’s campus. Just before Labor Day that year, I had turned in a class project, exploring the world of the famous Cornell Burn Center at New York-Presbyterian Hospital. During my time on the project, the unit was quiet save a few occupants, which apparently was not the norm. So those brave nurses had to paint a picture for me of what it was like when the floor was bustling with victims of fire-related disasters. Many of the stories of pain and suffering were so horrific I remember being grateful for the relative calm and saying a little prayer the unit would stay that way.

I returned to work on Tuesday, September 4, after that long weekend that proved to be fateful, with a new perspective on life and work, inspired by Sandler’s humility. Little did I know we were all living on precious borrowed time. It was impossible to conceive that one short week later, Sandler’s inspirational tale and those nurses’ surreal stories would collide in a very real nightmare.

It’s the Pearl Harbor of my generation. Most Americans can tell you where they were on the morning of September 11, 2001. I had walked part of the way to work that day, so picture perfect was the blue of the blue sky. I was in my office at 277 Park Avenue in midtown watching CNBC’s Mark Haines on my left screen and pre-market activity on my right screen. As was most often the case, it was muted as live calls on economic data and company news came over the real life squawk box on my desk. My two assistants were seated outside my office going through their pre-market routine, fortified as was usually the case with oatmeal, yogurt and coffee. In retrospect, the mundaneness of the morning’s details are bittersweet.

It was almost 9 am and out of the corner of my eye, I noticed that a live picture of the World Trade Center had popped up on CNBC. Haines reported, as did many initially, that a small commuter plane had hit the north tower of the World Trade Center. As distracting as the image was, I tried to go back to my own morning routine, preparing for the stock market open in what had ceased to be one-way (up) trading after the Nasdaq peaked in March 2000.

And then, at 9:02 am, time stood still. A scream pierced the floor as one of my assistants watched a second plane, a second enormous plane, fly straight into what appeared to be Morgan Stanley’s office floors in the south tower, where her father was at work. As things turned out, it didn’t matter where the plane had hit for the employees of Morgan Stanley that morning. They had Rick Rescorla, the firm’s Cornish-born director of security and a Vietnam veteran who had been preparing for this day for years. He knew the Twin Towers were an ideal target for terrorists. Thanks to his efforts and years of constant drilling – every three months, which some thought overzealous — all but 13 of Morgan Stanley’s 2,687 employees and 215 office visitors survived that day. With the evacuation complete, Rescorla heroically reentered the buildings to continue his rescue efforts and in doing so, paid the ultimate price.

Ironically, as was the case with Morgan Stanley’s Rescorla, some at Sandler O’Neill had lived through the first attack on the World Trade Center. When the young firm had outgrown its previous office space, it chose the south tower as its new home, moving in the same week it was bombed on Friday, Feb. 26, 1993. Many who struggled their way down over 100 flights in crowded stairwells, through seas of discarded women’s shoes, learned the lesson that they would have been just as well staying put. It was that very hesitation, borne of that lesson, that cost many of the firm’s employees their lives.

In the 16 minutes between the time the first and second planes struck the towers, the Port Authority had announced over the south tower’s intercom system that the issues were isolated to the north tower and to stay put. That didn’t mean the scenes across the way at the north tower were any less horrifying as rather than suffocate or burn to death, some leapt to their deaths before the very eyes of those across the way in the south tower. Amid this mayhem, Jennifer Gorsuch, a Sandler employee, emerged from the ladies room just in time to hear Sandler shout, “Holy shit!” Gorsach rushed to find a friend and fellow Sandler employee who had survived the 1993 ordeal and knew of an escape route. Together, the two set off down an open stairwell.

Sandler, though, going off his 1993 experience, told one investment banker who did survive 9/11 that the safest place to be was in the office. He added, though, that anyone who wanted to leave was welcome to do so. Of the 83 employees in the office that morning, 17 chose to leave right away. The bond traders and most of those on the equity desk chose to remain. Only three other Sandler employees would make it out alive. The rest, including Sandler himself, were never aware that one, and only one, open staircase offered them safe passage; the building’s intercom system had been knocked out at the time of the second plane’s impact.

From the little we know, many that day above the crash site tried to get to the roof. Though it would not have made a difference in the end, it is nevertheless deeply disturbing that the door to the roof was found to have been locked. The towers were exempt from a city code that required roof access to remain unlocked. The Port Authority and Fire Department had agreed that the safest evacuation route was down, not up. Plus, enforcing the exemption delivered a loud and clear message to vandals, media-mongering pranksters and those contemplating suicide.

For me, the sweetest sorrow came down to the nobility of those brash, boisterous traders. Many that day, at Sandler O’Neill and Keefe, Bruyette & Woods and Cantor Fitzgerald, among others, were among the 1,500 who could have possibly escaped but chose to do right by their firms’ clients. You see, once it was understood that the attacks were an act of terror, the markets began to flash angry red, promising to crash at the open, handing certain victory to the evil, soulless weaklings who took aim at the economic heart of this great country. It is the traders who chose to man their stations I mourn to this day, those I have always called, with utter reverence, the real Masters of the Universe

The helplessness I felt when the buildings fell was matched only by my horror at the silence that followed. At some point between 9 am and 10 am that morning, I found myself praying the deafening fire engine and ambulance sirens tearing down Park Avenue would just stop blaring. The cacophony had filled the 102 minutes that followed the initial plane striking the north tower at 8:46 am. But then the buildings did fall. Although the second to be struck by a plane, the south tower was the first to fall at 9:59 am. In the 29 minutes that followed, we all prayed the north tower would escape the fate of its sister to the south. But it was not to be. The unthinkable, the impossible happened, not once, but twice. And then it was quiet, quiet for days and months and now, 17 years.

Of course, there were miraculously 12,000 who walked away, mainly those who had evacuated the floors beneath the impact zones in both buildings. No doubt, the survivors paved a pathway of hope to help the country heal. But the dearth of rescues was nevertheless heartbreaking as we collectively sat vigil praying man and dog would pull a survivor from the pile. Hence the devastation wrought by the silence. It was unfathomable to contrast those who had braved the fires and lost, and the mere 22 survivors admitted to the no longer nearly vacant Cornell Burn Center of my Columbia class project experience. As if to punctuate the pain, four hospital EMS employees had been lost along with 408 other rescue workers that dark day.

Normalcy was suspended in the days and hellish nights that followed. We financial markets survivors, weighed down by guilt as we were, were told to do what those in those towers had done so bravely. We stayed on call in the event Dick Grasso and the other powers that be were able to open the markets for trading. We were prepared to be the calm in the stormy market seas that were sure to follow the initial open.

Unlike the markets, Columbia resumed classes on Wednesday, September 12th. The moment I stepped out of my cab on 125th Street that evening, the memories of the sounds of 9/11 were lost in the overwhelmingly toxic smells of its aftermath. Buffered as I was, at home in the middle of the island on Fifth Avenue, I had only experienced the tragedy’s aftermath from the nonstop playback news images of the towers that were, and then ceased to be. But Columbia, with its proximity to the Hudson, is an inescapable spot to take in what the winds carry. That evening it was the sad novelty of the smell of burning computers, steel and God knows what else, something I hope to never know again.

On Friday, September 14th, I was set free to travel north to Connecticut to the loving arms of my family who were worried so. They tried to bolster my spirits, what with my 31st birthday set to arrive on Monday. But I was in no place to find the will to celebrate. I was short the markets, poised to profit the minute trading opened on Monday morning and beating myself up as a traitor to my country for being so. The moment I was able to do so on the morning of September 17th, I closed out my position. And I manned my station.

That night, most of my friends dragged me out to my favorite Italian restaurant. But one of us was absent from the table. My dear friend, whose UCLA friend had introduced us to Herman Sandler, found herself in the right place at the right time to begin to help the healing process. At the time, she was working at Bank of America in midtown. The very day the towers fell, the bank had offered Sandler O’Neill survivors temporary office space in the same midtown office at which my friend worked. Jimmy Dunne, who found himself running Sandler O’Neill in the flash of an eye, gratefully accepted. Dunne had been out of the office on 9/11 trying to qualify for the U.S. Mid-Amateur Classic; he survived by chance and chance alone. So devastated was my friend that she chose to stay late every night, on her own time, to help Dunne write condolence letters to the families of the 66 Sandler employees who had lost their lives. She would eventually end up working at Sandler.

On my birthday, six days after 9/11, my friends insisted that robbing us all of joy, the very ability to celebrate life’s little occasions, would represent yet another feather in the caps of the cowards who attacked our fearless traders, our Masters of the Universe who were now all, and would be forever, on heavens’ trading floors. We raised our glasses to them that September evening and I remember thinking I hope Smith & Wollensky delivers in the celestial realm.

But I don’t digress. I never do on 9/11. I never shy away from remembering the worst day of my life. To do so would be an unforgivable dishonor to the 2,759 victims who gave their lives on that painfully beautifully September morning. And so, I never will.

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