The Fed Funds is moving up by 1/4% as we all (most) expected. Obviously the markets, while expecting the hike, did not like the announcement of potentially 2 rate hikes in 2019 as the DJIA has fallen almost 800 points from just before the announcement.
Honestly we think that the markets put too much credence in a statement that is fairly ‘squishy’. While I have been pretty hawkish on interest rates during 2018 I think the FED will probably be on hold for the foreseeable future–until June. It was a negative to the market that Powell answered a question as to whether the balance sheet ‘runoff’ might slow–his answer was that he didn’t see that changing.
Prior to the announcement preferreds shares and baby bonds had been pretty steady, but that has reversed a bit now. We do note that some shippers have been strong today and even the hated Spark Energy preferred was strong earlier, but now has given back the gains as holders couldn’t stand to hold (like I outlined yesterday–as shares base and start moving higher small holders will sell because they are bound and determined to book a loss–the old buy high, sell low strategy–Ha).
Well we have 2 trading days left in the week and we will see if folks ‘get a grip’ on the selling of common shares–who really knows, but it is not helpful to our holdings (talking our book here) when the ‘nervous nellies’ keep bailing for no real reason.