Hoping for a Rate Cut Isn't a Strategy

This column was originally published on Street Insight on March 29 at 8:58 a.m. EDT. It's being republished as a bonus for RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

I read Street Insight every day, and I really don't understand the bulls' argument.

Correct me if I'm wrong, but North American auto sales were down last year and are projected to decline again this year. Heavy truck sales peaked. Furniture sales are down, Ethan Allen (ETH - commentary - Cramer's Take) warned yesterday. Home sales are down. Unit shipments of washers, dryers, dishwashers, refrigerators, freezers and microwave ovens are a disaster.

Television nowadays is virtually all durable-goods commercials interrupted only by drug and fast-food commercials. (Didn't I see a 1.9% financing offer on a Mercedes last night? Or was it 0.9%?) The cash-out refinancing business has slowed. Next month, homeowners who took out three-year ARMs are expected to see a 60% to 100% increase in their interest rate. (That can't be good.) The Center for Responsible Lending estimates that 2.4 million homeowners will face foreclosure over the next 12 months.

Lawmakers in Massachusetts and Ohio are so concerned about future foreclosures that they are considering creating a bailout fund for families that have been duped by predatory subprime lenders. Massachusetts Secretary of State William Galvin wants to create a fund so that the state doesn't face "a whole new wave of homeless people."

On cable TV, there are two house-flipper shows -- Flip This House on A&E and Flip That House on TLC. The new season of Flip That House promises to follow a bunch of Yale grads and former Abercrombie & Fitch models flipping homes in New Haven, Conn. San Francisco, I understand, but New Haven? Good luck, guys.

With more than 12,000 hedge funds managing an estimated $1.8 trillion, all we need now is a TV show that follows a bunch of newly minted Harvard MBAs starting their own hedge fund. (Tonight on Crimson Alpha, Dirk and Braxton have a heated argument over the 3(c) exemptions. Will Maddox, the overachieving law review newbie, be able to settle their differences and get the due diligence questionnaires out on time? Stay tuned!)

---

At time of publication, Laudani was short Best Buy, though positions may change at any time.

Christopher R. Laudani is the founder and publisher of Short Ideas.com. He has 10 years' experience in the financial markets -- the past eight as a professional equity research analyst. Prior to publishing Short Ideas, he covered technology for the New England Trust Company, a subsidiary of National City Bank. He is a member of the New York Security Analyst Society, the Boston Security Analysts Society and the CFA Institute.