'Twas the week before Christmas
And all through the Street
Not a hedge fund was buying:
Instead--in retreat!
They'd bet big on oil--
Now they weren't in the black,
So they sold off their winners
To take up the slack.
The stock market tone?
Like taps on a bugle:
Down Apple, down Exxon;
Down Chevron and Google.
Through sixty, toward fifty,
The oil price descended;
Sayonara to fracking,
That party seemed ended.
The Saudi oil barons
Had put on a squeeze,
To force US frackers
To fall to their knees.
The banks how they quivered
To fund Bakken field;
And don't even bother
To think of high yield!
It's goodbye to boom times,
Dakota and Texas:
You'll take a big hit,
Best trade in the Lexus.
The big city bankers
Knew they were hurt, too,
So they called in their chits
At the Washington Zoo.
Their minions in Congress
Played games with Dodd-Frank,
And gave Morgan and Citi
A deal that just stank!
A little old rider
So quietly drafted
That none knew the score
Until they were shafted.
The law had told bankers:
Hive off your swap stakes,
So taxpayers won't have to
Bail out their mistakes.
But a twist of an arm,
And a wink of an eye,
Let Congress make sure that
This mandate would die.
A government shutdown
Was thereby curtailed,
But the process revealed
That we were blackmailed!
Banks swore they were acting
For the good of the nation,
But the Journal said greed
Was their main motivation.
If swaps get to stay in
Insured institutions
The banks get best prices--
A perfect solution!
So to maintain big profits,
The banks pulled a fast one;
Pelosi and Warren
Said it won't be the last one!
Next, Senator Cruz tried
A fresh point of order
To tie up the Senate
On the Mexican border.
He said he was willing
To shut D.C. down,
To make sure illegals
Would be run out of town.
But despite (and because of)
The Cruz machinations,
Harry Reid passed the Bill,
And won key nominations.
Obama's executive
Order prevailed;
Merry Christmas, five million;
You're not going to be jailed.
And then, just as wild market swings
Before the next Fed meeting flew,
Came a slew of predictions
Easy money was through.
GDP is up strong
And so is employment,
Why would a quick rate hike
Spoil the enjoyment?
But Europe is slowing,
And China is, too;
And on top of all that,
Greece defied the EU!
There's Putin, there's ISIS,
The Afghanistan War;
But the truth is we've all
Seen this movie before.
The trick of the hedge trade--
Get others to panic
That the Fed will cause stocks
To sink like Titanic
By hinting they plan to
Raise interest rates quickly
When, despite some good data,
The world is still sickly.
The prediction,
Whatever the reason or rhyme,
Was the Fed would no longer
Take "considerable time"
Before they decided
To press on the brakes--
That thought would give most of
Investors the shakes.
They'd part with their holdings
Before the Fed meeting,
Which then would give the hedge funds
A frenzy for feeding!
But the Fed's Janet Yellen
Was steadfast and bold;
She surprised TV pundits
And kept rates on hold!
"Considerable time"
Remained on the table:
Even "patience" was added--
(Just to stick it to Cable?)
Joy reigned in the market
For stocks of all sorts,
As hedge funds moved quickly
To cover their shorts.
On the very same day
The lame duck Obama
Decided to normalize
Dealings with Cuba.
Marco and Jeb said,
We shouldn't take chances;
But Obama had cover
From good old Pope Francis!
The Spirit of Christmas
Was abroad in the land,
If just for an evening;
Who knows what's at hand?
2015
May bring new solutions:
New Congress, new leaders,
New Year's resolutions.
Just be careful next year
Not to give too much cred
To rumors, and phonies,
And all that you've read.
When writing your e-mails,
Don't be a buffoon;
Don't get on the wrong side
Of young Kim Jong-Un.
Things are looking better--
California's turned soggy;
And Europe's still trusting
In Mario Draghi.
And there seems a consensus
What's best for our nation
Would be increasing pay
And a bit more inflation!
The Court will decide
If ObamaCare stays;
One way or the other,
Somebody pays.
But we've kept out Ebola,
When too many panicked;
Let's send more help soon
Across the Atlantic.
Trust nurses and nuns,
Give our kids renewed hope;
And pray CEOs
Get as wise as this Pope.
###
By Terry Connelly, Dean Emeritus, Ageno School of Business, Golden Gate University
Terry Connelly is an economic expert and dean emeritus of the Ageno School of Business at Golden Gate University in San Francisco. Terry holds a law degree from NYU School of Law and his professional history includes positions with Ernst & Young Australia, the Queensland University of Technology Graduate School of Business, New York law firm Cravath, Swaine & Moore, global chief of staff at Salomon Brothers investment banking firm and global head of investment banking at Cowen & Company. In conjunction with Golden Gate University President Dan Angel, Terry co-authored Riptide: The New Normal In Higher Education