FintekNews is pleased to launch our new feature “The Zigmont Report (Daily Market Recap)” today. We will publish this right after the market close, and each feature will appear the following morning on our M/W/F newsletter as well.
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 shortly after the market close.
The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC
Groundhog Day. Today was boring and the price action was essentially a copy of yesterday. We rallied small during the day and faded towards the close. There was a bit of a rally at the very end so that’s a bit different.
Here’s a picture of the last two sessions
On an otherwise dull day that’s as good as I got.
Where does this leave us? Same place as yesterday. The data bits we learn aren’t too significant and they tell us that things are so-so. The data is subject to spin. If you’re a bull, you say it’s showing signs of accelerating. If you’re a bear, you say it’s about to rollover. The truth is probably in the middle which favors status quo.
So if you ask me, we’re stuck until we get a big change in the investment landscape.
According to current market prices…
- Inflation is no worry (see implied inflation curve, bonds, and precious metals)
- Economic outlook is strong (see historically tight credit spreads and equity valuations)
- Complacency is high (see implied and realized volatilities and equity valuations)
- Old economy is dying (see fossil fuel prices and materials/industrials outlook)
- The US is the strongest/healthiest house on the block (see currencies and relative rates)
These market implications aren’t cuckoo. I think their overly optimistic but that’s not so bad.
That said, the markets skew to positivity right now. If negative surprises come, the downside is going to sting.
See youMonday
, have a great weekend.-Mike