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
Still quiet. It’s September on the calendar but the trading is still summer-esque. Capital flow was 84% today and the market gently rallied. Same old, same old.
Maybe things liven up next week once we enjoy the 3-day holiday weekend. That’s been the thinking throughout the summer and it isn’t very radical. Summer is a seasonally quiet period and Labor Day usually ushers in a more active period. This summer has been so much calmer than prior summers however. As a result, while it’s typical to anticipate markets awakening in the fall, maybe they won’t this time around. We’re in such a tranquil stretch that it could stick around for the fall too. Who knows? We’ll find out together.
Getting back to today, the nonfarm payrolls data was light (156k vs 180k est & 189k prior revised from 209k). Markets didn’t initially react to the release so the quick-take is simply that the economic & financial world isn’t much different today, than we thought yesterday.
I think another quick-take is simply that the Fed has less pressure to normalize as quickly now. It’s not a major shift but the labor market is not running hot (it’s just running nicely). Inflation is fine too so why should the Fed feather the brakes again in December? I wouldn’t look at this as a bold opening for the bulls but the Goldilocks economy and corresponding Fed-path remains. That’s an all-clear signal for the bulls.
So to sum up, the world is about the same as it was, which is nice for the bulls. It doesn’t mean that the tape should be leaping higher one-to-three percent at a time but it does mean that the drift remains and the trend is the longs’ friend. Other than a war, there’s nothing plausible on the horizon that would shake the strong positive mood of the market.
Have a great weekend, see you Tuesday.