Mike Zigmont Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $10B 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

Uninfluenced. JP Morgan’s quarterly results were good. JPM beat across the board although significant weakness in their fixed income trading numbers weighed on the stock. JPM fell about 90 bps. Citigroup also announced today, it beat across the board, had different results in their business mix. The stock fell 3.4%.

So the two big financials that essentially start earnings season beat everywhere and their stocks drop. That’s interesting.

The broader market didn’t really care though. Whatever JPM and C investors didn’t like about the results today, it was confined to the financial sector. The broader market didn’t do much, again. Capital flow was about normal at 98%.

The inertia of the volatility of US equity markets is remarkable. There is almost nothing that injects energy into trading. The tape jiggles around a very little bit when major releases occur, when major central bank policy gets announced, when major stocks kick off earnings season.

Markets are calm and they *

want

* to stay calm. I don’t know whether that’s good or bad. I suppose it’s good on the surface. My worry is that the calm is artificial and/or investors are recklessly complacent. I am growingly concerned about when the weasel goes pop. US equities have demonstrated less risk than bonds for multiple years and delivered double-digit returns to boot. The perception that stocks only go up is out there and it’s building. How many investors have you spoken with in the last 3 months that have been pushing, *

begging

* to pursue more returns. Risk gets an obligatory mention in these chats but whether the message is heard or understood is dubious.

TANSTAAFL*

Until we (re)learn that lesson collectively, nothing is going to change.

See you

tomorrow

,

-Mike

* There Ain’t No Such Thing As A Free Lunch