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.
Little waves. Asian equities sold off 1-3% last night as they reacted to our weak session on Friday. Europe only sold of a little bit. We bounced around some today, swinging around unchanged a few times and never veering too far in one direction. We finished a touch lower. News wasn’t too interesting and neither was macro data. The news cycle, both financial and general, was consumed with the Mueller report news, which isn’t too significant to markets. The flow today was about normal at 96%.
While economic slowdowns remain front-and-center for markets, there’s no new developments on that front so markets have stabilized today. The psychological impact of the slowing-growth narrative should be more significant than a 1-day hit to valuations but there’s a lot of legacy optimism out there and reflexive dip-buying bravado still. Those attitudes need to change. I think they will only change with the release of more evidence/data that things are slowing. As that data comes out, I would expect more negative pressure.
I don’t think we’re looking at a devastating drop but I would expect a back-and-forth fight but I think the bears will own the endpoint.
I’m speculating that while the softer data may surprise the permabull crowd, it won’t be that surprising to the market…so I *think* that the path lower won’t be that volatile and scary.
Hope I’m right.
See you tomorrow.