The Minyanville Schnitzel!

By Todd Harrison  FEB 24, 2005 8:17 AM

Thumper? I don't even know her!


He headed west
’Cause he felt that a change would do him good
See some old friends,
Good for the soul

(Bob Seger)

It's become a tradition of sorts, our Wednesday night Succofests, and each week seems offer new lessons and insights. Last night, as John and I held court at the Four Season's Hotel Bar, we were joined by a motley crew that included Collins, "Stunt man Johnny C," young Bill Meehan (breaking his cherry) and, of course, our charismatic cast of Minyanville critters. We enjoyed a spirited discussion on life, the world and the state of the global economy. Luckily, a beat reporter for the Gazette was nearby and scribbled the following conversation on her cocktail napkin. It went a bit like this:

(mid conversation)

Hoofy: (laughing) So let me get this straight, Boo, her name is Thumper? Thumper the Beaver? That's hilarious!

Boo: (straight face) She's Snapper's cousin and I was set up on a blind date. I'm diggin' her because she's completely different from Snapper--whereas he's a metaphorical representation of a sharp market rally, she prefers to go down. Let's just say that we have a lot in common and you may be seeing more of her in the 'Ville. What--is Hoofy the only one allowed to have a main squeeze around here?

Daisy: Maybe if you got your fur ruffled once in a while you wouldn't be so bitter!

Toddo: (smiling, and then turning to face John) Hey Succ--lemme ask you a question as I'm playing with a scenario in my head (shocker). If the dollar continues to melt, do rates have to migrate higher?

Succo: Yes, eventually.

Stunt Man Johnny C: But hasn't the dollar fallen the last coupla years and rates have stayed low?

Succo: Actually, short rates have moved up. It's the long end of the curve that hasn't participated which is why the yield curve is flattening.

Billy: And that's bad?

Sammy: It's a signal that the economy is slowing so, yeah, I suppose so. Unless, of course, you're a bear.

Snapper: It hasn't mattered yet. In fact, every time the bears get ornery, the tape snaps back.

Toddo: Yes and no. The Nazz hasn't exactly acted so snappy this year (-6.6%) and other major indices are pink as well (slightly red). And, on the other side, crude is up 17% this year and that's sparked a noice rally in the energy patch. Even gold, which started the year with a "crude type correction" is back in the saddle riding a pretty nice chart. My point--and yes, there is one--is that bull and bear markets exist each day within the same asset classes but they also exist among asset classes.

Collins: Do you still think crude and the metals have room?

Toddo: There are two variables to focus on here: time and price. I believe they're both in secular bull markets and there is plenty of time left (read: years). With that said, it's hard to game both sides of the equation (read: price) and we must allow for pullbacks in both. How you trade is a function of your individual approach (scales, stops, etc.) but if you're a long term holder, Greg, maybe you wanna buy a partial position (so you're there) and leave room (if you're early).

Sammy: What do you think of equities here?

Toddo: The near-term is noisy although it was right to expect some counter-trend action yesterday. S's over N's, banks over semis, dollars over metals. I don't have a super-strong feel (yet) but wouldn't be surprised to see a bit more bounce before a gut-check shake out. But then it'll get interesting as Hoofy has a window if the bulls can walk Elmer's tightrope and believe in the dream.

Boo: You mean nightmare?

Toddo: (turning to the bear) Lemme ask you a question, bro. Would it really surprise you if the yield curve inverts and equities continued to rally? I think the first part of that equation is a given and the second part could happen if Elmer's printing press keeps chuggin'. When yield curves "don't matter" anymore, just as valuations didn't matter in the first bubble, that may be the signal that the echo is losing her voice. That's a few steps away, I know, I'm just planting the seed as we sort out the probability spectrum.

The table suddenly hushed as Boo froze in his seat and fixated on the Beaver that walked into the bar. "Look at that tail!" he said under his breath to no one in particular, "she's fantastic." I looked around the table and make eye contact with Succo. "Hungry?" I asked, hinting that our table could be put to better use, "Why don't we head to Rosa and grab some guac?"

We got up from the table and, as I walked around to get my coat, bent down to whisper into Boo's ear. "Be yourself, relax and have fun," I said as I saw the sparkle in Thumper's eyes when she saw Boo, "Life isn't about the market, the market is simply a part of life."

Good luck today.


No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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