12/18/2014 10:58 pm ET Updated Feb 17, 2015

The Fright Before Christmas

'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?


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