I wrote to clients in the February update that Federal Reserve Chairman Powell is a dangerous fellow. Last week he proved that causing a run on the banking system. Ironically if the creation of a new Bank Term Funding Program (BTFP)had been in place the week before, Silicon Valley Bank might have avoided failure and bankruptcy. Powell’s rapid hike in interest rates as a cure for the supply-side inflation shock is likely to be as successful as the ancient but now discredited medical practice of bleeding the patient. If Powell was the CEO of a public company, activist shareholders would be demanding his scalp.
Last week we saw a marked pick-up in insider buying in regional and community banks. To be clear, though, we are nowhere near a capitulation bottom in the overall market. The quarterly earnings blackout is adding to this fog of uncertainty. Schedule some time on my calendar to get our take. This may be turning into the market opportunity The Insiders Fund was built for.
Prosperous Investing,
