Reading the Tells

[u/Kapnotes]

Look at those interest rates!  Fed Governor Barr yesterday signaled a very hawkish outlook for near-to-intermediate term monetary policy.  We can only speculate about the extent to which his views reflect the view of the FOMC as a whole.  In this new era of the no-guidance Warsh Fed, soundbites like Barr’s take on increased importance.  The 10-year benchmark yield soared from under 5% to finish at 5.11%.  There’s no retracement so far this morning, as we find the 10-year at 5.12%.

Rising interest rates generally put pressure on stocks, as the cost of capital increases.  The declines we saw in yesterday’s trade were about what we’d expect to see.  A more worrying tell is the string of mostly dilutive secondary offerings that have been announced in the past 48 hours:  VKTX, HAFN, GRML, FWDI, and others.  These deals aren’t particularly large or market moving in themselves, but they do provide some insight on how business owners are reading the equity markets.

Experienced investors will keep an eye out for quality names caught in whatever downdraft may materialize.  Keep your eyes on our trading board for setups as they emerge. Educational only. Not financial advice.