The Zigmont Report (Daily Market Recap for 4/6/18)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $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

FYI, I’m out of the office next week.  No recaps until Monday April 16.

Trade war!?!?  Last night, Trump asked, very publicly, for the US Trade Representative’s Office to consider tariffs on another $100 billion of annual Chinese imports.  S&P futures at the time dropped about 30 handles at the time but they were stable overnight.  Overseas markets took a little hit overnight but nothing too bad.

Bulls repaired some damage in the first 30 minutes of trading too.  It looked like the market was going to dismiss the latest trade threat as mostly saber rattling.  The thing that really sunk the tape was when China denied that they were negotiating behind the scenes with the US to resolve the trade problem.  This is exactly the opposite of what US officials are saying.

Cue the confusion and cue the selling.  Things got ugly from there but not horrendous.  The tape lifted in the last hour of trading so *probably* shorts covered and some ever-ready dip-buyers did their thing.

Oh, and nonfarm payrolls data (103k vs 185k est & 326k prior revised from 313k)… was a non-event.  The number was pretty weak but the narrative is that crummy March weather and the super-strong Feb data suggest that hiring was pulled forward into Feb and pushed out into April.  We shall see whether that’s a good explanation in time.  The key point here is simply that, the jobs data didn’t cause investors to react and the expectations are now slightly shifting to a slower-than-expected Fed hiking path.

That’s something to keep an eye on but for the moment it’s a trivial sideshow.

Trade is the front-and-center issue.  Yesterday sentiment was very sanguine on the trade situation.  Today it is dour.  Expect more flip-flopping.

I’ve said it before, I’ll say it again:

This is a blender.  There is no trend, only chop.

Batten down the hatches and don’t be a hero.  Now is not the time for big moves.  *If* you’re compelled to speculate, do it with small size.

See you on the 16th,