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

The battle continues. Bulls weren’t going to concede anything after yesterday’s selloff and they responded as expected. The dip was bought and we add yet another round of back-and-forth action to recent history. This is becoming quite a heavyweight slugfest. I don’t think either camp is getting fatigued either. Expect more of the same until some big event or data changes the world.

Speaking of… let’s discuss June nonfarm payrolls data (222k vs 178k est & 152k prior revised from 138k).

This is a good surprise for the country and the economy. It’s a fairly large add of jobs and within the data, inflation pressures are non-existent.

For those reasons, the bulls ramped equity futures on the data release and maintained control of the market over the course of the day.

This NFP data doesn’t change the big picture but it certainly throws some cold water on those claiming a recession is upon us. The strength of the labor market also suggests that the Fed’s current plan will remain unaltered. Balance sheet reduction is probably going to commence in September and the third rate hike of the year will probably happen in December. That’s what the market expected yesterday and there’s a higher degree of certainty in that outcome today.

At this moment, the labor market and the Fed’s path are not reasons for repricing (whether lower or higher).

So now we look forward to earnings season. PepsiCo announces

Tuesday

but the big banks start sharing their results on Friday the 14th. PNC, JPM, WFC, and C announce that morning. If something will kick off a macro trend in the overall market, it’ll be surprises across the board from those four financials.

As we wait, we probably just continue the bull/bear 2-step.

See you

Monday

, have a great weekend.

-Mike