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.

Narrative change, sentiment change. Growth is slowing. We’ve known this for a while but for whatever reason, the market willfully ignored it until recently. Today the market couldn’t ignore the growth-is-slowing narrative. This was due to the ECB this morning. They are turning towards a dovish posture, they are anticipating a slowdown, and they cut their growth forecasts.

That actually sent equity futures up immediately! More accommodation was welcomed by the robots and the permabulls…for a time. As investors started to process that the ECB was tacking dovishly because of softening global economic conditions, the narrative of equities began to change. And then the tape began to drop. And then the sentiment began to turn.

Things are still very well behaved and the market isn’t even nervous but the get-longer-no-matter-what attitude of the market is over…for the moment.

This is a minature replay of December. Back then, optimism almost instantly became pessimism thanks to the Fed hike and hawkish guidance.

Today optimism is becoming tempered optimism thanks to gradually softer data and official forecasts.

I’d guess that permabulls will fight the good fight but I think the verdict is in. We’re slowing down.

I’m not sure if that pushes the market down significantly or just stalls it but I’m most confident in the fact that the all-time highs are going to stay in our rearview for a while. We have to actually experience a reacceleration of GDP growth for US equities to make new records.

Lots of attention will be re-focused on the Feb nonfarm payrolls data (180k est vs 304k prior) that releases tomorrow.

See you then. -Mike