During the first quarter of 2001, U.S. companies reported their worst profit growth in a decade. In this same period, unemployment in this country increased faster than it had for a decade. In April, however, the U.S. stock market soared, turning in its best monthly showing in a decade.
Does this make sense? Sure it does—in a Wall Street kind of way. The reason stocks soared in April is because the Federal Reserve made it very, very clear with its fourth rate cut that it means to do whatever is necessary to keep the economy from slipping into recession (or deeper recession), even at the cost of temporarily ignoring inflation. And as every trader learns in kindergarten, if you want to make money in markets, you don’t buck the Fed.
So much is obvious. The question for the wall street poet then became how best to express this truism in verse. Or more specifically, what famous poem from a famous poet past to parody to get across this message. The obvious answer, of course, was Lord Byron’s "The Destruction of Sennacherib." In this six quatrain, quasi-historical potboiler, Byron recounts how the Assyrian King Sennacherib (Sargon II’s kid) was brought low because he went up against God. Below, we look at how the bears got whipsawed going up against the stock market’s equivalent.
Don’t Buck The Fed
Short-sellers were growling like bears in the Spring,
At long last convinced it was time for their fling;
And the gleam in their eyes and the sneers on their lips,
Showed the market had taken some punishing dips.
Like a gold-sated miser they cackled with glee,
Quite sure at long last that the bulls now would flee;
But when April’s strong rally with geyser force rose,
These shaggy old Ursas once more had been hosed.
For the Governing Board of the Fed’ral Reserve,
Had decided the boom at all costs must be saved;
So while Europe’s staid bankers their price radars scanned,
The folks at the Fed said: ‘Inflation be damned.’
The doubters kept pointing at earnings turned red,
The markets stayed focused on rate cuts instead;
As nay-sayers anguished ‘bout energy costs,
More money from buyers in markets was tossed.
And when April ended and May did arrive,
Believers not Skeptics were those who did thrive;
The Nasdaq had bounced back, the Dow’s loss was past,
And the usual boosters said good times would last.
So wailing’s now heard in the temple of Ursa,
Where they like to grumble and they like to cursa;
‘Cause the market teeters but it sure ain’t dead,
In bull or bear season you can’t buck the Fed.
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©2007 Michael Silverstein
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