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
It’s a fight. Bulls kept the buying party going this morning but bears had the last laugh in the afternoon. News today wasn’t terribly significant but there was a headline about how the Trump administration was considering limiting Chinese investments in technologies the US considers sensitive.
I have no idea what that means. Neither do you. Neither do the Chinese. *Maybe* the Trump administration knows what that means.
Tech stocks began to drop as a result and bearishness spread more broadly from there.
OK, et’s take a breath for a second and think about that Chinese/tech headline.
- This is *probably* another non-traditional move in the trade-negotiation poker game
- Do the vanguard of the US tech industry rely on (or even use) Chinese investments to do what they do?
- What’s China going to do in response?
- Is this an escalation of trade-tensions or just part of making the sausage?
I don’t know. I’m willing to guess the market is over-worrying about this (in the near term). Expect the narrative to change shortly. Prepare to hear that this “isn’t as bad” as it appears. Prepare for a Chinese response that isn’t a fold though. Prepare for a generally constructive tidbit about the overall negotiation later on.
When will all this happen?
I don’t know. If China follows their previous example, we should hear something tonight.
More important than the particulars of this phase of the trade negotiations, is the fact that we remain in a very rumor-driven, technically influenced, speculate first/analyze second stock market.
We are going to whip. Today’s just another example. I wouldn’t expect meaningful stability until the trade negotiations with China are concluded. While the game plays out, the market is going to *SWING*!
See you tomorrow,