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
Meandering. Equities benefited from a quiet overnight and morning. Overseas markets were up modestly and our premarket was up in sympathy. Headlines and data were unremarkable and the tape wandered around without conviction over the session. Tariff issues continue to be the focus of investors but consensus is heavily discounting the seriousness of the tariffs. The growing narrative is that there won’t be a trade war and that the tariffs will be watered down or certain countries will be exempted (Canada).
I am very surprised that investors are so willingly ignoring the doubling down by Trump on this issue. He just answered a question about tariffs and he said that because we have big trade deficits, trade wars don’t hurt. Set aside that rationale and whether it’s correct or not…. It shows that Trump strongly believes that tariffs and trade wars are no big deal for the United States. Why the heck are investors thinking Trump’s talk can be dismissed?
Supposedly Gary Cohn, the Director of the National Economic Council and the chief economic advisor to the President, is going to try to get Trump to ease up on the tariff issue/trade war potential. I don’t know how much Cohn will be able to convince Trump to change but the current rumors are that if Trump doesn’t see things Cohn’s way, he’ll resign. That do-or-die moment is supposed to happen Thursday.
That is a big deal. Thursday now holds a very important catalyst. The rest of the week just got quite exciting.
- Wednesday has the ADP release (200k est vs 234k prior).
- Thursday has the next ECB rate decision (no change expected).
- Thursday has the tariff/Gary Cohn ultimatum.
- Friday has the nonfarm payrolls release (200k est vs 200k prior).
Buckle up. The action is about to pick up.
See you tomorrow,