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
Taking some back. Maybe investors re-thought the crazy rip on Friday and decided to take US equities back a little bit today?
There’s no headline to point to that explains today’s weakness. Research across the street circulated all weekend about how the S&P’s momentum has never been higher and how the latest run has been among the greatest stretches ever… so maybe that affected sentiment today and people decided to hit bids.
Also at play is that the FOMC meets tomorrow and Wednesday… no change is expected but treasury rates continue to climb and maybe, just maybe, the Fed will attempt to splash cold water on the equity party going on.
We shall see what the Fed says because the market doesn’t expect an actual interest rate hike until March. There’s a 2% probability of a hike Wednesday…there’s a 95% chance of a hike on March 21.
Optimism has had an historic run. It’s not crazy to expect a little realism, maybe pessimism, to show up.
I don’t think realism and pessimism will be around for long… but ya never know.
See you tomorrow,