It's been a long time since the ducks quacked this loud

There is a timeless saying in the markets; “feed the ducks while they are quacking”.
There are periods when the market turns off and it is very hard to raise capital. At other times there can be a voracious appetite for stock which is partially satisfied by placements of new shares. The longer these periods last, the more companies go to the market for money, until brokers eventually suffer from deal fatigue. We have been in one of those times in recent weeks as the market continued to switch from a bearish sentiment to a bullish one. Companies are raising money, brokers are booking fees and investors are scrambling for stock as FOMO takes over. Whose complaining about that? Not I, but it can’t go on forever.

The first signs of saturation appear on Thursday with the our stock market showing a decent daily correction, but then the Dow was slammed down 6.9% that evening. The narrative was all about the virus and the fear that the recovery would take longer, but the reality of market dynamics is that there had to be a moderation of the enthusiasm, so traders aggressively took profits.

We are not yet immune to such large daily downward movements, so there will be some fallout as fear raises its head, but recent experience also tells us that such a fall doesn’t mean the game is over. Look at this as a circuit breaker while we try and figure out where the bigger trend lies. On Friday night the Dow bounced a little, but the real test will be how it performs next week.
 

 WeeklyComm13June2020.pdf

Tesoro Term Sheet

 Tesoro_TermSheet_June2020.pdf