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
Answer: European equities rallied strongly on US tax reform!
I cannot believe that it takes *months
* to price tax reform into equities. Tax reform is not what’s actually going on right now, that’s just the low-hanging-fruit-explanation.The tricky part is that I have no satisfying explanation as to why equities across the globe continue to rally. All I can say is that capital is flowing into equities across the globe.
Maybe investors have decided to hop on the bullish trend and we’re simply observing a global tape-chase?
Maybe we’re looking at an anticipation of a January effect? With ’17 performance as strong as it is, new capital joining the equity party seems like a stone-cold-lock.
Maybe global growth is about to ramp? If this recent equity run is rooted in macro factors, we should expect positive GDP surprises over the next 6 months.
Maybe it’s all of the above?
This final stretch into year-end looked like it was going to be a snooze. It’s turned into another potent leg higher in the bull market. There’s no obvious driver behind this run so there’s no obvious reason for it to stop.
Like other times earlier in the year, we are in a sentiment-only stretch of trading. Unlike the recent past, there is no plausible market-moving news event on the horizon.
It’s a very odd moment in equities. Reminds me of a typical broker conversation, repeated countless times since before any of us were born:
“Why’d you buy?”