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.
Bulls reassert themselves. The weekend delivered a bunch of US/China trade headlines and a bunch of other Trump headlines. On the US/China trade front we’re at a truce. Trump won’t increase existing tariffs while the negotiations continue. During this period, China will buy large amounts of agricultural products from the US. Restrictions on Huawei will be loosened in some regards. What does any of that actually mean? Good question. Nobody knows. But the market took it as a good development and global equities rallied strongly.
Our premarket futures indicated about a 1% gain on the open and that’s about what we got. The S&P opened about 34 handles above Friday’s close. The tape faded gently from there and caught a small bid in the last hour of trading. Flow was respectable at about 109% of normal.
In a less noticed corner of the financial press, softer economic data continues to show up. PMIs across Europe are sub 50 (indicating contraction) and various strategic research from Wall Street are either predicting recession, or cautioning about it’s possibility. All of these things contribute to the easing case facing the Fed. Whether the Fed will ease as aggressively as had been anticipated remains to be seen.
The July 31st FOMC decision has been anticipated as an ease for a long time but last week a 50 bip cut was priced with almost a 40% probability. Today that magnitude of a cut had a 17% probability.