The Zigmont Report (Daily Market Recap for 8/30/18)

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.

Once in a blue moon.  Stocks finally went down and it was because Trump announced he wants to move ahead with $200 billion of tariffs on China next week.  This is an escalation of the trade war and would subject more than half of all Chinese imports to tariffs.  Hiyoooo!

China responded with threats of tariffs on $60 billion of US goods.

Double Hiyoooo!

So stocks went from down small to down medium on the news….and the dip-buyers still jumped in a couple times to turn the tide.  They couldn’t undo the damage completely but give them time.  In a session or two this could all be water under the bridge.

I happen to think that is nuts.  STOP THE INSANITY you dip-buyers!

  • Valuations are stretched AND
  • We’re staring an escalating trade confrontation in the face AND
  • Turkey blew up two weeks ago but we don’t know the consequences AND
  • Argentina is blowing up as we speak AND
  • All emerging markets are under pressure AND
  • Future US political volatility is climbing (2018 mid-term elections plus impeachment potential)

The point of this list is to highlight the disconnect between the many risks and the full steam ahead attitude of the market.

We’ve had moments like this in the past too and the risks never bore out and the market plowed ahead.  Maybe this time is the same?

I don’t know.  I just don’t feel like throwing caution to the wind.  Good luck to the dip-buyers though.

Anywho, even with today’s risk-off reaction, the S&P is still up 3% for the month and 8.5% for the year.

Bulls win.  End of month is tomorrow.  What manager isn’t going to be tempted to get longer then?

See you,