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 shortly after the market close.

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The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC

It’s back on. The bull market that is. We printed new highs today with the assistance of mild CPI data (0.0% vs 0.1% est & -0.1% prior). Treasuries rallied on that and implied inflation fell. The market is assuming that the Fed will slow down or pause its normalization path because inflation is not picking up, which was/is an assumption of the Fed.

Of course investors could get quite a shock if the Fed says the following sometime in the future:

*

“WE WILL NORMALIZE UNTIL RATES GET TO [insert some number] OR THE ECONOMY/LABOR MARKET WEAKENS. LOW INFLATION WILL NOT ALTER OUR PLAN.”

*

Now what is the likelihood of that? 1 in 10? Probably more like 1 in 100. And so the bulls run and the bears hide.

There’s no fighting it. We are going to rally until the Fed says the above or until a recession shows up. Valuations schmaluations.

Let’s talk about earnings. Today a good batch of financials reported, JPM, C, PNC, WFC.

They all beat. No surprise there. And yet their stocks all fell today…. weird.

The 3 other S&P 500 stocks that announced earlier this week were:

PEP

FAST

DAL

And they all beat expectations…and their stocks fell on the day they announced also.

7 beats. 7 down stocks. Broader market makes new all-time highs.

That’ll get a bear to jump off a bridge!

Here’s the takeaway. The individual stock dynamic doesn’t matter. It doesn’t matter that every stock dropped after they reported. The whole market sees 7 stocks beating expectations (beats across the board!) and crafts the narrative that earnings season is great. That’s the story and it will only change if a wave of disastrous results crashes next week.

Read my fingers….that ain’t happening.

We’re in a new leg of the 9-year bull market. I still hate the valuations and I refuse to put new money to work, but the sun is shining and that’s the time to make hay.

Play long. Be fruitful and multiply. Vaya con Dios.

Just understand it’s a momentum play from here on out. We are renting stocks for the short/medium term.

See you

Monday

, have a great weekend,

-Mike