Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $12B AUM, offering volatility management solutions to its investor base worldwide. Mike has been publishing his daily newsletter (Monday-Friday) privately for the firm’s investors and his personal contacts in the investment business since 2008, sending it daily shortly after the market close.
The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC.
Stocks vs bonds. Stocks were off to the races this morning and the S&P was 15-20 handles higher for most of the day. Bulls were bulling. Bonds weren’t having such a great time though as treasuries fell significantly across the whole curve. The two markets were experiencing completely different days….until 2:30 PM. At that point stocks stumbled and gave up most of the gains of the day. Maybe equity investors started to look at higher interest rates since we just broke out today? They haven’t cared about rates in forever so I don’t know why they’d start now… but as we all know, interest rates are important so it’s better late than never.
At this point I think the equity market gyrations are without much meaning. The next event in front of us is Friday’s nonfarm payrolls data (+184k est vs +201k prior). There hasn’t been much talk about how these numbers will be altered by hurricane Florence but I would expect some material impact. That said, it’ll take wild outlier to get the market to price in a different Fed hiking path. That’s unlikely but we still need to see the data and decide from there.
Tomorrow should be quiet but the bond market matters for the moment. It looks like equities are going to respond to treasuries in the short term.
See you tomorrow,