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Gettin' our Greenback


I guess that if you live long enough, you'll see just about everything!


Money, get away.
Get a good job with good pay and you're okay.
Money, it's a gas.
Grab that cash with both hands and make a stash.

(Pink Floyd)

It was a Wednesday like any other, I suppose, although John Succo and I decided to deviate from our usual Rosa Mexicana agenda. Our weekly mindmelds have become a salvation of sorts, an opportunity to sit back, digest the flickering ticks and, most importantly, spend some quality time with a close friend. As we saddled up to our seats at Mr. Chow--table for seven please--it was evident that this dinner would differ from the norm.

Toddo: (to the critters) I need you guys to behave--this is a particularly swanky restaurant--and they're used to serving your breed of customer.

Daisy: (being a bit of a poseur) No worries--if you haven't figured it out by now, humans have a natural affinity for critters!

Hoofy: Particularly if the markets continue to jig higher. With crude Earl giving back 15% in the last week, my equity brethren are feeling mighty emboldened. And if we can push through BKX 98 with vim and vigor, those newbie Debbie Downers (who viewed crude as a catalyst but have since rationalized their shorts) will find themselves with that ol' familiar feeling.

Boo: Maybe...but it's hard to make a strong bull case given the absent volume, tranched resistance in the S&P and the massively back-end loaded quarters in tech. I respect the potential for a psychology shift--particularly with the macro elements better behaved--but there's still a lot of uncertainty in the world (domestically and abroad).

Succo: (pensively postulating) Did you guys see Scotto Reamer's presentation in the Butte regarding swarm behavior in the financial markets? It was tremendously well thought out and made some potentially ground breaking assertions.

Toddo: It's funny you should say that Succ--his presentation planted a seed within me that I haven't been able to shake. It challenged the very fabric of the financial assumptions that the world has been conditioned to believe. I'll tell you what also piqued my interest--it was Snoop Tony Dwyer's chart of the dollar index and the eerie stochastic similarities to equities in early '03.

Boo: (stopping mid-chew) And....?

Toddo: And...(nervously eyeing the table)...I'm starting to think that the greenback could experience a similar counter-trend rally in the context of a longer secular--and structural--bear market. (closes eyes and awaits the verbal beat down).

Succo: You know, I've been having similar thoughts after my conversations with Scotto. (At this point, Hoofy starting choking on his chow mein and we had to wait for him to calm himself) It's not an outrageous thought, particularly as/if/when the European economies struggle through their considerable issues. They're not in any better shape than we are!

Sammy: (eyes wide) You guys are bullish on the dollar?

Toddo: Lemme put it in context--I've been bearish on equities since the spring of 2000 (better lucky than smart) and I remain of the opinion that they have a LONG way to go in terms of both price and time. Still, stocks enjoyed a bullish phase (2003) within the broader bear cycle. That's kinda what I'm sensing...and while it's still crystallizing in my mind, I wanted to put it out there.

Succo: You know who I actually feel bad for? The Japanese. They took a massive position in U.S real estate in the eighties, pretty much paid the top tick and got absolutely demolished on the trade (Pebble Beach, Rockefeller Center, etc.). They're now loaded to the gills with our debt and will eventually have to unload. When that happens, fixed income will get hit, yields will rise and the dollar will appreciate against the Yen.

Toddo: Exactly. And when rates start rising, it'll have a profound impact on the structural foundation of the financial markets (and will likely be exacerbated by the massive derivative maze). Just think of it as a huge game of Dominos with central bankers trying (in vain) to stop the chain reaction. Should make for a most interesting reality show if you ask me!

The critters sat there stunned. In fact, the entire restaurant felt like we were in an EF Hutton commercial. John and I have been bearish on the dollar for as long as I can remember and while we continue to feel that further devaluation is inevitable, we both sense that there could be a counter-trend rally that interrupts the spiral (much like we've seen in equities). The interesting aspect of our conversation was that we arrived at this vibe independently but communicated it simultaneously.

And right or wrong, that's something I felt we had to share with the Minyans.

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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