The Zigmont Report (Daily Market Recap for 12/1/17)

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

Drama.  The first of the month started without much news yet a surprisingly weak premarket.  S&P futures were off 10ish handles before 8 AM.  This may have been due to nervousness about the tax reform or just a knee-jerk response to yesterday’s strong rally.  No matter, the S&P essentially opened flat and climbed small until around 11 AM.  That’s when the drama began.

Mike Flynn, former national security adviser and high-profile Trump campaign surrogate, pleaded guilty to lying to federal investigators.

Cue the impeachment worries.  Equities sold off fast.  The S&P fell 50 handles in about 25 minutes.  At that point the GOP announced that they had the votes to pass their tax reform in the Senate.  Bulls started bulling.  Supposedly some of the last minute changes needed to pass this thing aren’t so great for boosting earnings etc. but that isn’t relevant.  Bulls repaired almost all of the damage and it seems like today is yet another chapter in the bears’ favorite book “If at the hundredth attempt, you don’t succeed, try try again.”

Capital flow finished the day at a very heavy 150%.

So here we are.  There’s a new risk in the mix and it’s impeachment risk.  It was always there of course but now it’s an officially recognized risk.  What does it mean?

Good question.  Some argue that Pence as President would be bullish, so…. Buy the dip!  Some are saying impeachment isn’t likely, so… Buy the dip!  Some say the market has rallied because of all sorts of other reasons that have nothing to do with Trump, so… Buy the dip!

I haven’t heard anyone say impeachment would be bad, so…. Get out of the way.  Very curious.

I don’t know what an impeachment should or shouldn’t mean for equities but it’s being spun in a mostly bullish way.  Who am I to argue?

Sometimes good news is bad news.  And sometimes vice versa.  We are at a very unusual point in time where all news is good news.  That’s impossible to sustain.  You tell me when it ends and I’ll buy you a yacht.

Have a great weekend, see you tomorrow.