The Zigmont Report (Recap for 4/22/19)

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.

Still quiet.  The holiday weekend didn’t change investor psychology and the markets were tranquil as a result.  Although US equity markets started down just a little, investors pushed the tape higher and the S&P hovered around flat from 11 AM through the close.  Capital flow was anemic at 83%.  The excitement of the day came from the energy sector as the US tightened its ban on Iranian oil.  Crude jumped into the mid 60s and oil has climbed significantly since late December.  The unloved energy sector is getting attention.

Looking ahead, earnings season is about to get intense.  154 companies in the S&P 500 report this week so now’s the time for an earnings narrative to solidify.  At the moment, the narrative is missing in action.  The numbers are pretty uninteresting.  Surprises are coming in at a higher rate (approx. 80%) but the growth numbers are near-flat and the surprise magnitudes are small.  When you roll it all together, so far, you get a very blah start to earnings season… a start that will easily be forgotten and rewritten based on the wave of results coming this week.

It’s unlikely that the swath of results break terribly and give the bears the upper hand.  If the bears are going to chalk up a win, it’ll be because the results are uninspiring.  We’ll find out soon enough.

I’m very curious to see what drives the capital flows higher.  When are we going to see normal flows or even heavy flows?  What is going to motivate the market to move capital through equities again?

I find it hard to believe earnings season will do it but that’s the only thing on the horizon at the moment.

See you tomorrow.