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
Another 25 bip hike. The Fed Funds target rate increased to 1.25-1.50% today, as expected. The rate-hike path is essentially the same as yesterday. 3 hikes are expected in 2018 and 2 hikes are expected in 2019. Equities were up a handful of points before the announcement and finished the day about flat. Equities jerked around after the decision of course but there was no strong net reaction from equities in response to the FOMC.
This was the last big event on the 2017 calendar and it sure looks like a non-event. Most investors will consider the year effectively over at this point. I suspect that big movements of capital are waiting until 2018 to occur. Trading in US equities should be thin and quiet and trendless until then. Famous last words.
The tax reform package qualifies as a major event too and its fate lies between now and year-end but I assume the market has priced this as a done deal. If the package passes, the equity reaction should be minor.
If it doesn’t pass, that’ll be a big event and the tape will drop a few percent.
What’s the likelihood of tax reform failing though? I don’t know how to handicap it. I’d personally guess failure to be a 1 in 10 chance (out of thin air guesstimate) but I think I’m way off from the market’s perceptions.
So that leaves the bears praying for a D.C. breakdown.
The bulls are sitting pretty as long as things go as planned.
See youtomorrow
,-Mike
