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The Rate Debate


Good Morning, and welcome back to the stressful step. We roll up our sleeves this morning to find the European markets under a bit of pressure with the German DAX (once again) the heaviest of Bourses. The slippy Nikkei, meanwhile, has quietly closed at a fresh NINETEEN year low! Now, and I have to ask, if the NASDAQ bubble (from trough to peak) was more than twice as large as the Japanese stock bubble, does that infer a 38 year bear market for the techs?!? Gulp!

I seriously doubt that it will be that bad for that long but, if nothing else, history teaches us perspective. Sometimes, while we're lost in the trees of trading, we lose sight of the bigger picture and from whence we came. The heyday of NASDAQ 5000 may seem like a lifetime ago, but the calendar (and history) measure it as only 2 ½ years. Heck, I have socks older than that!

Back in the here and now, I've been picking up increasing chatter of a potential (surprise) rate cut by the Fed. Now, I have never claimed to be an authority on the FOMC or their motivations, but the Fed Fund Futures are pricing in another ¼ point move by the end of the year. When will they "go"? Well, one would think that Elmer is holding this "ace" in his pocket for A) if/when we mix it up with Iraq or B) the maximum shock value. My humble belief is that a rate cut would be akin to a Band-Aid on a much larger wound, but how the market reacts will likely be a function of our field position at the time.

Deep breaths as we ready ourselves for another session of fun and games. Other than a Merrill Lynch downgrade of a handful of storage names, it's been a relatively quiet morning. On a housekeeping note, we tallied up our vote last night and found an overwhelming desire to flip this column over to "black letters on a white background." Also, for those of you who would like an email alert when a new post is up, fire an email over to Both of these changes will likely kick in on Monday. Ask, my friends, and you shall receive.

Good luck today.


No positions in stocks mentioned

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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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