The Zigmont Report (Daily Market Recap for 11/2/18)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $12B 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 it daily shortly after the market close.

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

  • Apple announced last night
    • Results were better than expected.  No surprise there.
    • The guidance wasn’t what the Street wanted though *and* Apple isn’t going to report their unit sales numbers going forward.  This combination was viewed bearishly and the stock was punished.
  • Overseas markets shook off the Apple news and rallied nicely
  • Nonfarm payrolls was strong (+250k vs +200 est & +118k prior revised from +135k)
    • This number might be a bit too strong.  It will not give the Fed a reason to slow down.
  • Wage growth was strong (3.1% vs 3.1% est & 2.8% prior)
    • No surprise but this does not give the Fed a reason to slow down either.
  • Trump tweeted that he instructed the US to draft/prepare a trade agreement with China
    • Market rallied on this
  • Leaks from the Administration and then and interview with Larry Kudlow revealed that there is no draft in progress and the US has not even talked to China about a trade agreement
    • Market dropped on this
  • Trump later said to the press that he said China wanted to make a deal
    • Market didn’t move much on that…investors were skeptical by this point.

Those are the meaty events of the day.  We’ve got a mish-mash of positive and negative news.  The hope of the morning gave way to negativity by lunch.

The market ultimately fell.

I think we just found a short-term balance.  The bounce is over but the world isn’t freaking out again.  There’s a level of *uncertainty* out there that both sides are respecting and/or not ignoring.

Maybe, hopefully, we’re going to start doing some news-based trading next week.  The last two weeks have been emotionally-driven, look-at-the-chart-and-react environments.

It’s better to get that behavior into the rearview mirror.

Have a great weekend, see you Monday.