The Zigmont Report (Daily Market Recap for 7/26/17)

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 shortly after the market close.

The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC

Predictable.  The FOMC decision was to do nothing and this was essentially unanimously expected.  The statement was modestly edited from the last statement and the key change was as follows:  (strikethrough text was in the prior statement, green highlighted text is new to today’s statement).

The Committee currently expects to begin implementing a its balance sheet normalization program this year relatively soon,

LOL, stop the press!  What a BIG change to the statement!  [insert eye roll here]

The equity market didn’t react very strongly and the consensus thinking is that the balance sheet will begin to shrink with the next FOMC decision (September 20th).  Whether the next rate hike happens in December or not remains to be seen but the market is pricing that as a 50:50 proposition.

These two views are about the same as the market perceived them yesterday.  No big deal.  Time to turn attention back to earnings season.

And I don’t need to tell you that earnings season is coming along nicely.  There are some big announcements coming.  Facebook is the most significant in the immediate term (they announce after the close).  I think I heard on CNBC that $3 trillion of market cap announces in the next day.  That’s going to matter.  It’s a tall order for this next wave of announcements to change the narrative of the season.  The market thinks earnings season is great right now.  It will think earnings season is great tomorrow.

I think we’re in for a very blah next couple trading days.

See you tomorrow,