The Zigmont Report (Daily Market Recap for 8/4/17)

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

NOTE:  I’m going to be out all of next week.  Will see you again August 14th.

More jobs, fewer problems.  Nonfarm payrolls (205k vs 180k est & 194k prior revised from 187k) were good.  They weren’t too good to force the market to expect a hawkish shift in the Fed though.  That is good for the bulls.  Equities rallied small over the day and despite the NFP data, capital flow was somewhat light at 91%.

And so we continue the quiet climb of summer.  Don’t fight it.  I’m tempted to say if you can’t beat ‘em, join ‘em.  I’m nervous though.  I want to play long but not be too aggressive.

Anyway, let’s check in on earnings season again.

2017 Q2 Earnings season:

80% of the S&P 500 reporting (+59% vs 7/25 data)

Surprise vs Estimates

  • Sales: +0.8% (unch vs 7/25 data)
  • Earnings: +4.8% (unch vs 7/25 data)

Growth vs Prior (Y/Y)

  • Sales: 5.3% (+2.0% vs 7/25 data)
  • Earnings: 9.7% (+6.8% vs 7/25 data)

Two things to note:

  1. Good growth in both sales and earnings
  2. Good changes in those numbers as the season progressed

Is there anything else to say or do?  No.  These are the results that justify the narrative of this earnings season.  The narrative is that it’s good.  End of story.

We’ve gone down the valuation road before but as usual, that doesn’t matter.  Sentiment is the wind that blows the tape and sentiment is very positive and essentially unflappable.

Have a great weekend, see you in a week.