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 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.

Growth concerns. The Bank of England cut their UK growth expectations from 1.7% to 1.2%. The European Commission cut their eurozone growth forecast from 1.9% to 1.3%. There were some weak macro numbers out of Germany and Spain. That sent a risk-off chill down markets spines in the morning and futures implied an S&P drop of around 18 handles. The S&P treaded water around there until around 10:30 AM when Larry Kudlow was quoted as saying that the US and China were far apart with respect to trade talks and sometime later Trump said it was “highly unlikely” that he would meet Chinese President Xi Jinping before March 1st. That’s the date when tariffs go into effect. Those were the tariffs that were postponed last year to allow for time to cool off and negotiate and whatever.

I don’t find any of these news items to be new but that’s my personal reaction. Obviously these headlines splash cold water on the optimism that was creeping into equities. Optimism that growth wouldn’t turn. Optimism that the US and China would make everything okey-dokey before any meaningful consequences would occur.

So much for optimism.

Today wasn’t a disaster so the bulls shouldn’t abandon ship but the knee-jerk dip-buyers should probably take heed. There’s risk in them thar hills. December should’ve made that painfully clear to everyone. I think it did.

But then January’s rally came and gave the permabulls one helluva case of amnesia.

Now we’re all being collectively reminded that there are reasonable reasons for valuations to matter, and probably come down.

What will tomorrow bring? I don’t know. Even if the permabulls think today is just another opportunity to buy, the investors who were getting caught up in chasing the tape higher just experienced a yellow light. I don’t think they’ll help lift the tape like they did in January.

See you tomorrow.

-Mike