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The Fine Line


Be yourself, sir--no matter what happens, they can't take THAT away from you.


Till we all fall down, it'll do you fine,
Don't think about what you left behind
The way you came or the way you go
Let your tracks be lost in the dark and snow

(Grateful Dead)

The Minxy journey continues as we edge ourselves through another five session span. With yesterday's Hump Day dump, traders are officially fried and tired of the seemingly haphazard action. I was speaking with a fund of funds fellow last night who complained that nobody is making money. We know that January caught most players leaning the long way and, after a whippy and trippy February kick-off, tensions are high as the yen for yield proliferates.

Compression is nothing new to Minyan faithful but reality is offering a painful lesson as funds scramble for performance. When we toss around terms like "overcapacity" and "weeding out," that doesn't necessarily mean the markets will implode. By definition, it implies that the supply of financial professionals is overwhelming the benefit of relative worth. Frustration and attrition are natural by-products of that process and stories abound of its relative manifestation.

Two common caveats rest at opposite ends of the effort spectrum. There's a lot of boredom, which is a function of too many players sitting at the same table. That often leads to sloppy or careless decisions that chew through the capital earned on the other side of the ledger. The mere idea of extending the trading day is painful and, dare I say, desperate. If the stealth goal is to drive capacity from the ranks, they will likely succeed in their mission.

The other option is to run full-speed ahead, work harder and leave it all on the field at the end of the week. This has been my preferred path--for better or for worse--but that too has downside. There's a reason that industry churn is so high and skill-sets are only half the equation. I think we all wonder, at times, what life would be like if we weren't constrained by bells and consumed with flickering ticks. That inflection point rests within each of us and will likely trigger a saturation point given time.

A common theme at our weekly Succofests is that of free will. Each of us is responsible for our own choices and that collective reasoning shapes change. But while we spend our days chopping down trees, echoes of laughter dance in the distant forest. Wall Street veterans typically share an ability to adapt, the discipline to take a loss and an insatiable desire to succeed. The curb is littered with flashy pans and blind betters but consistency, my friends, is the hallmark of a sustained existence.

I offer these thoughts with hopes of providing perspective in what is, by all accounts, a frustrating juncture. With rates dropping, gold heavy and equities fluxy, some hard questions are being fielded by the Street. If I didn't know better--and I may not--I would swear that hints of deflation are ticklin' the tea leaves. I know that sounds tough to swallow with crude at $45 (and costs rising around us) but that just may be the rock that is the other side of this hard place.

We power up this Thursday pup to find equities on the other side of support (S&P 1196) and traders a bit on edge. THE read yesterday was the bunk breadth and while volume was light, we must be careful not to rationalize the action. This morning's trade deficit wasn't a relative disaster (-56.4B vs. exp. -57B) and that has the dollar higher in pre-market trade (DXY 85.40). That has been a red flag for stocks (Friday notwithstanding) and should remain on ye radar as we wade our way through a brand new fray.

Good luck today.

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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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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