Mike Lambrechts

I’ve said time and again that one of the biggest near- and long-term risks to an expensive growth sector is interest rates. When the candy is taken from the baby, we should expect to hear some crying. Over the last couple weeks, growth stocks (mostly tech) have been weeping, and we see it as a proper reaction to the swift rise in longer interest rates (10+ year Treasurys). With the irrational exuberance in the markets most obviously depicted by novice traders taking advice from Reddit posters, numerous SPAC (special purpose acquisition company) IPOs, extreme equity valuations, we felt the time was right for things to take a breather. Unbeknownst to many new retail traders driving this sentiment, trees do not grow to the sky.

It’s quite remarkable how retail investor (at-home traders and investors) behavior helps professionals get a gauge on the market’s sentiment and health. I’ve been reading all across social media platforms about what stocks people have been trading, many of whom just got started ‘day trading’. I’ve even seen threads on sports boards for my beloved Florida State Seminoles about what stocks are the flavor of the week and how much money is being made. Self-proclaimed experts seem to be rising by the masses. As this type of activity runs rampant through the markets, it screams a signal to us to prepare for some volatility that the market is due for.

Last week, biopharmaceutical companies Pfizer and BioNTech announced that their mRNA-based vaccine candidate has demonstrated evidence of efficacy against COVID-19 in participants without prior evidence of infection. The vaccine candidate was found to be more than 90 percent effective in preventing COVID-19 in participants in the first interim efficacy analysis. The study enrolled 43,538 participants, with 42 percent having diverse backgrounds, and no serious safety concerns have been observed. Submission for Emergency Use Authorization to the FDA is expected to occur in the third week of November.