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
Tax reform is done. It’s finally over. No more nonsense about pricing it in. No more market moves at each stage of the sausage-making. Now we get to focus on something else. What that will be is a mystery but at least it’ll be different.
One last thing about the tax reform law. Even though tax reform is no longer a market-moving item, the outstanding question remains whether the law change justifies the expanded valuations. We shall see in time and market historians will debate it. We’ll start seeing the corporate results in the next few earnings seasons. Keep your eyes and ears open for gains attributed to tax changes.
Things are going to be boring until January. By this I mean news stories and capital activity. The momentum is still up so maybe the S&P continues to climb through year-end. So anyway, with an absence of news to talk about we can probably bounce around some ideas that will be significant to markets in January.
Let’s throw some possibilities out there
- Next earnings season (starts Feb 13th)
- Next FOMC decision (Jan 31st)
- Next European Central Bank decision (Jan 19th)
- Chinese economic data & policy decisions
I think those are the biggies. For every Spring since 2010, the theme of the new year has been the ramping up of economic activity. Green shoots was the phrase of hope right after the crisis and acceleration was term a few years later. Where are we now? There’s an obvious expectation for 3% US GDP and maybe 4% Global GDP.
My guess, at the moment, is that investors will be assuming those growths in early Jan and we’ll be reacting to data tidbits and central bank actions along the way. If the growth looks light to the tune of 50 bips or more, I think bearish winds will blow.
The opposite is also true.
I don’t know how sentiment will drive markets if everything comes in near expectations. Flat is the easy guess but this market doesn’t do easy.
See you tomorrow,