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

Marching. US equities set new all-time highs today. The catalyst for today’s enthusiasm seems to be the passage of budget bills in both the House and the Senate. This is the first meaningful step in tax reform. The Senate passed their budget around

9:30 PM ET

last night and futures spiked immediately. The cause and effect seems to be legit.

Tax reform and the stock market is a tricky relationship. The market has been rallying on the anticipation of tax reform since late ’16 - supposedly. How much tax reform is priced in? It’s an unanswerable question of course. Some market pundits say that we’ll rally even further as we get closer to passing reform. Others say reform is dead, and has been dead, and the market knows it already. Where’s the truth lie? Your guess is as good as mine.

Anyway, we’re in the midst of earnings season and the beats keep coming…. except for General Electric.

GE reported awful results. Jim Cramer summarized one viewpoint that the accounting of past results was so generous to GE that it wasn’t quite fraud but it was the worst he’s ever seen. Another prevalent viewpoint was that the company made some very bad timing mistakes in the last handful of years and it caught up with them. Examples include getting out of the media business just before the Netflix, Amazon, etc. media lovefest and investing in the oil service sector business just before oil prices collapsed.

I have no idea what to think about GE. Here’s what’s interesting about the stock though. It opened down more than 6% and it rallied to a 1% gain on the day. GE wins the buy-the-dip award. No contest.

One last tidbit, yield hogs beware: the dividend for GE is widely expected to be cut. I wonder how many dividend-seekers piled in to GE today with the hope of collecting 4% yields going forward…. If/when the divs get chopped, this is what those investors will be thinking:

So the week is over and the bulls have won again. That’s not even an adequate description of the week. The bulls vanquished the bears. The S&P gained every day.

Here’s the picture

Have a great weekend, see you

Monday

-Mike