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Derek Moore
The Broken Pie Chart Podcast offers fresh looks at investment portfolio management, economics, markets, retirement planning, and more by simplifying and explaining important aspects of financial markets and the economy in easy to understand ways.
Nvidia Gets Cheaper?|Buying Bitcoin vs Michael Saylor’s MicroStrategy | Dominos vs. Google | Historical Post Election Markets | Morgan Stanley Says 6500 SPX in 25’
Derek Moore and Jay Pestrichelli are back on the big 300th episode to discuss whether Michael Saylor’s ‘Bitcoin Yield’ makes sense and looking at why people are buying MicroStrategy vs just buying Bitcoin. Then they talk Nvidia earnings and how it is getting cheaper on a forward 12-month PE ratio basis even as the price has moved higher. Plus, they look at the options action on Nvidia right before earnings. Speaking of semiconductors, they look at a potentially bearish pattern in the SOX Index, the Dollar Yen pair getting back to August levels, and ask the question if you could have bought Dominos Pizza or Google at their respective IPOs, which one would you have taken and how its worked out. MicroStrategy market cap value vs the value of their total Bitcoin holding Wall Street Journal Jonathan Weil article on Bitcoin vs MicroStrategy What is the Bitcoin Yield? Forward PE ratio of Nvidia vs its price Nvidia earnings options action Performance of Dominos Pizza vs Google since their respective IPOs Median S&P 500 Index historical performance post-election and after inauguration US vs international vs The Dollar post-election performance Argentia ETF post Javier Milei’s election victory bullish move The Dollar Yen pair moves back towards the old August highs, but does it mean anything? Morgan Stanley and Goldman Sachs put a 6500 year end 2025 price target on the S&P 500 Mentioned in this Episode MicroStrategy’s Magical Bitcoin Machine article in WSJ by Jonathan Weil https://www.wsj.com/finance/investing/microstrategys-magical-bitcoin-buying-machine-uses-some-wacky-math-da7d85d0?st=AUzUiM Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
53:4525/11/2024
MicroStrategy Market Cap vs Bitcoin | Valuations Getting Frothy ? | Yields vs Fed Cuts | Second Inflation Surge? | US Dollar Problem | Nvidia Options
Derek Moore and Jay Pestrichelli talk through the latest market action including the forward PE ratio looking frothy, yields continue rising, probability of rate cuts dropping, and when and if the US Dollar strength will be a problem. Plus, talking about Barron’s article comparing the market cap of MicroStrategy vs the value of their Bitcoin holdings. S&P 500 Index earnings yield vs the 10-year Treasury yield. Then, they discuss why people are saying we are going to have a coming second surge for inflation. Later, they talk about volatility on Nvidia a week out from earnings and their options, 90+ days delinquent credit card debt rising, and comparing post-election rallies around close Presidential elections. MicroStrategy market cap value vs the value of their total Bitcoin holding Post election rallies around close Presidential elections 10-Year Treasury Yields acting different than normal post Fed cutting action US 2-year Treasury yield vs the Fed Funds target rate Probability of interest rate cut in December update US Inflation progress stalled in October? US Dollar Index pushing through resistance When the US Dollar strength matters and when it doesn’t Comparing where we are today with inflation against the 1970s chart S&P 500 Index risk premium (forward earnings yield minus 10-year treasury yield) Percentage of US credit card debt that is delinquent reaches highest level in over a decade S&P 500 Index forward EPS estimates Barron’s article evaluating MicroStrategy’s premium to its Bitcoin holdings Mentioned in this Episode Barron’s Article on Bitcoin vs MicroStrategy valuation https://www.barrons.com/articles/microstrategy-stock-price-bitcoin-valuation-702281bd Explanation of US sugar tariffs and the history of behind them https://www.cato.org/policy-analysis/candy-coated-cartel-time-kill-us-sugar-program#an-overview-of-u-s-sugar-policy Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
49:0518/11/2024
S&P 500 6000 | Bitcoin Strategic Reserve? | Why Bond Yields May Go Higher | Fed Rate Cuts Near All-Time Highs Bullish?
Derek Moore and Jay Pestrichelli decide who got the S&P 500 Index 6000 prediction right. Then they talk about Bitcoin running to new highs and some theories about a Bitcoin strategic reserve now that Trump is the President Elect. Later, they review some data pointing to bond yields remaining high (or going higher). Then discussing how investment banks S&P targets rise to follow the markets. All that plus a listener email. Small Cap fund flows into IWM TLT ETF bond flows Bitcoin makes new highs and ETF fund flows surge Hussman 12-year forward estimate nonfinancial market cap divided by gross value-added Goldman Sachs 12-month S&P Price Target Markets 12-month forward performance after Fed cuts rates near all-time highs 10-Year Treasury Yield vs. Nominal GDP Growth Trump to stockpile Bitcoin in a strategic reserve? VIX and implied volatility collapse post-election Jay and Derek discuss who correctly called S&P 500 6000 by the end of the year Mentioned in this Episode Trump – Stockpile Bitcoin in strategic reserve https://www.politico.com/newsletters/morning-money/2024/08/05/trumps-latest-crypto-gamble-00172611 Podcast where Jay and Derek predicted S&P 500 6000 back in mid June https://open.spotify.com/episode/5kEdjbbXKuCJ114381jYL8?si=420ed5b0864e4aea Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
59:2711/11/2024
Unemployment Bad News? | Markets After Elections | Earnings Beats | Trump vs. Harris Election Analysis
Derek Moore and Jay Pestrichelli go through the recent unemployment numbers to see whether it was as bad as reported. Plus, did the recent hurricane throw off the surveys? Then they look at next week’s prediction for interest rates for the Fed Meeting. Derek and Jay pull up the 30-year mortgage rate vs the 10-year treasury and talk about what’s happened since the first Fed cut. Later they look at housing starts vs completions and try to make sense of whether it's bullish or bearish, the market concentration of the top 10 stocks, seasonality in the S&P 500 index, and looking at earnings so far including whether companies are beating and what sectors are doing well. Then stay tuned as Spencer Wright joins Derek to review the data in the upcoming election. Are the polls accurate? How is Trump performing vs Biden and Clinton in previous races? The electoral college states that matter and even a potential election tie. Unemployment disappoints? How the predictions all missed except for Bloomberg survey that was closer Analyzing the jobs data and is it the bad news is good news again scenario ahead of the Fed? Earnings beats and evaluating the EPS and revenue by sector S&P 500 Index seasonality post elections and non-election years Housing starts minus completions and what it means if anything The stock markets current bullish streak Top 10 S&P stocks now 37% of the index US Federal government spending vs. tax revenue 30-year mortgage rates and the 10-year treasury go higher since 1st Fed cut What are fed funds futures predicting for rate cut at next week’s Fed meeting? Is bad weather to blame for low respondent rates to employment surveys? Trump vs. Harris based on the latest polling data Will the polls be accurate this time (correcting polling errors?) Predictions on who will win Comparing Trump’s numbers this year 2024 vs 2020 and 2016 in the swing states Mentioned in this Episode 2024 Presidential Election Interactive Map https://www.270towin.com/ BLS October Employment release https://www.bls.gov/news.release/empsit.nr0.htm 30 Year Fixed Rate Mortgage US Average https://fred.stlouisfed.org/series/MORTGAGE30US US Market Returns by Political Party Historical https://zegafinancial.com/blog/should-investors-be- worried-about-the-election-and-what-to-do-if-you-are Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
01:33:0903/11/2024
Goldman Makes News With 3% S&P Target | Markets Too Concentrated? | What If Mortgage Rates Don’t Fall? | Gold Returns Examined
Derek Moore and Jay Pestrichelli talk about everyone talking about Goldman’s 3% annual return target for next 10 years. What’s behind their analysis includes whether the S&P 500 Index has too much concentration. Then they discuss what is responsible in retrospect for markets going up or down including profit margins, sales, buybacks, dividends, and EPS. Later, they talk about gold and its huge jump in 2024. Finally, how underwhelming the small caps have been relative to past bull markets, S&P 500 Index constituent turnover, and Apple’s options volatility pre-earnings. Goldman Sachs base case of 3% annualized return next 10 years Vanguard’s June 2024 10 year forward annualized return estimates How market movement is attributed to EPS, Sales, Dividends, Margins, and Buybacks Historical 10-year constituent turnover for S&P 500 Index Touching on Meb Faber’s observation of both Gold and the S&P 500 above 25% return for year Small caps lowest bull market return covering 13 bull markets since 1949 Apple earnings and the option volatility Cost of the Apple straddle a week before earnings Uber’s implied volatility pre-earnings week Spread between the 30-year mortgage and the 10-year treasury yield What if mortgage rates and long bonds go up not down? MBS bonds (mortgage backed securities) nuances Mentioned in this Episode Goldman Sachs forward baseline 3% annual return forecast next 10 years full report https://www.gspublishing.com/content/research/en/reports/2024/10/18/29e68989-0d2c-4960-bd4b-010a101f711e.pdf Vanguard June 30th 2024 10 year forward returns forecast https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/vemo-return-forecasts.html#:~:text=The%20largest%20shift%20was%20in,Capital%20Markets%20Model%20(VCMM) Mortgage Spreads and The Yield Curve Economic Brief Richmond Federal Reserve Bank https://www.richmondfed.org/publications/research/economic_brief/2023/eb_23-27 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] 296
01:00:5527/10/2024
Small Caps Get Their Day | Buffett’s Apple Blunder? | Bull Market Length | Nvidia Cisco Comparison | Netflix Options Volatility
Derek Moore and Jay Pestrichelli are discussing what segments of the market are now working on in October plus whether new auto loan delinquencies are something to worry about. Then, reacting to Barron’s headline saying Warren Buffett selling Apple shares may have resulted in leaving $25 billion on the table. Later, they get into whether the comparisons of Nvidia today to Cisco in the late nineties is a fare comparison and if Nvidia is as overvalued as Cisco was in retrospect. Finally, they delve into the options action on Netflix and earnings, S&P 500 Index changes, and whether this bull market is young or really young depending on how you gauge the start of one. Russell 2000 Index vs S&P 500 Index vs Nasdaq 100 Index performance in October Auto Loan Serious Delinquent by 90 days move up to 2011 highs The age of the bull market and length of previous bull markets When do bull markets begin? CSCO Cisco Systems vs NVDA Nvidia comparisons Forward PE ratio of Nvidia today vs CSCO in 1999 and 2000 Net profit margins comparing NVDA today to CSCO in late nineties early 2000’s Barron’s article saying Berkshire left $25 billion on the table by selling Apple shares Amentum AMTM joins the S&P 500 Index while BBWI Bath & Body Works exits Netflix option volatility at earnings Would the long or short straddle have worked after earnings on Netflix? Mentioned in this Episode Where Markets Go After All-Time Highs by VIX Level | Crazy Earnings Estimates | CPI is Rarely 2% | Latest Interest Rate Probabilities https://open.spotify.com/episode/6U5IIpZmeY3s01GsUS0trt?si=a9a3be7a9a504882 Guggenheim info on Historical cycle trend periods https://www.guggenheiminvestments.com/advisor-resources/interactive-tools/dow-jones-historical-trends Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
01:05:3021/10/2024
Where Markets Go After All-Time Highs by VIX Level | Crazy Earnings Estimates | CPI is Rarely 2% | Latest Interest Rate Probabilities
Derek Moore and Jay Pestrichelli are back again to discuss whether the level of the VIX Index at all-time market highs is a predictor of future market moves. Then, with earnings season kicking off in earnest, reviewing the analyst lofty estimates including some very surprising numbers for Russell 2000 Index companies. Later, Derek goes through some data that basically says the CPI YoY % change isn’t around 2% too often despite the Feds “mandate” of 2% inflation target. Finally, they discuss NFLX earnings and what the options market is saying plus a few other companies including United Healthcare. The level of the VIX Index at all-time S&P 500 Index highs and the next 60 days, 3&6 months Does where the VIX Index is at all-time market highs really matter? The Fed’s elusive 2% target when looking at monthly data back to January of 2012 How often the year over year (YoY) percent change in CPI is at different levels VIX Index vs bond volatility seen via the MOVE Index Netflix (NFLX) and United Healthcare (UNH) options market pre-earnings check in Implied volatility of options prior to earnings releases Predictions for the November Fed meeting Quarterly earnings estimates for the S&P 500 Index over the next two years are bullish Reviewing the Russell 2000 Index earnings estimates and how lofty they are currently Looking at growth of next 12 months earnings estimates vs the S&P 500 Index itself Mentioned in this Episode VIX Too High at All-Time Market Highs? | Employment Surprises | Interest Rate Cut Expectations Drop| No More Port Strike | Technical Analysis on Markets https://open.spotify.com/episode/7uOX1CRDw8T9q1lNpx2lHc?si=2078c3e6fbec4a2c Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
01:01:4014/10/2024
VIX Too High at All-Time Market Highs? | Employment Surprises | Interest Rate Cut Expectations Drop| No More Port Strike | Technical Analysis on Markets
Derek Moore and Jay Pestrichelli ask whether the VIX is too high given markets are at all-time highs and compare today to some previous periods. Then, they delve into the employment report which surprised in a positive way. Was good news good news for once? What this means for probabilities of future rate cuts by the Fed, the port strike that wrapped up, and a look at some individual tickers and markets from a technical analysis standpoint. Resistance, support, wedges and more on this week’s episode. Why is the VIX so high with the market at all-time highs VIX historically at market all-time highs Looking at 2000 and 2007 VIX at all-time market highs Dissecting the employment report Why good news is bad news for those wanting massive rate cuts Looking at bond yields since the first Fed rate cut The port strike wraps itself up which is good news for markets Technical analysis of the S&P 500 Index, Apple, Nvidia, and more Mentioned in this Episode S&P 500 Going to 7000? | NAV Erosion Myth | Fed HAS Cut Rates at All-Time Highs| China & Emerging Markets Surge | Answering Audience Questions https://open.spotify.com/episode/4rcKF9Df3YNHkBrlY2yekg?si=253cf93f379a4111 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
48:5006/10/2024
S&P 500 Going to 7000? | NAV Erosion Myth | Fed HAS Cut Rates at All-Time Highs| China & Emerging Markets Surge | Answering Audience Questions
Derek Moore and Jay Pestrichelli this week answer some audience questions plus comparing 1995 first Fed rate cut to today’s market and asking if the next year can be a repeat of the 1995-96 period. They also dispel the myth that the Fed has never cut rates when markets are at all-time highs. Later, they look at the China and Emerging markets surge after the Chinese government does a bunch of things to juice markets. In the questions Derek and Jay dispel some myths between NAV erosion and NAV decline. All this and more this week on the Broke Pie Chart Podcast. Similarities between 1995 and 2024 Fed rates cuts Why longer duration bond yields may go up not down post Fed rate cut Emerging market finally having its day in the sun? China markets go crazy after government stimulus announced. What does NAV (Net Asset Value) or price mean? NAV Erosion vs NAV Decline explained Interest rate changes effect on option prices The least popular option Greek Rho comes into play Fed cuts when markets are at all-time highs Recession or no recession determining next year’s market returns Oil prices, container shipping rates, Mentioned in this Episode Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions https://open.spotify.com/episode/3se9kb5ew488TPYKoVohgn?si=FLXDtZz0TgSKo5f1d-aQjg Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
55:2929/09/2024
Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions
Derek Moore and Jay Pestrichelli are back to do a post Fed 50 basis point cut analysis. What typically happens a year later in markets after the first interest rate cut? Maybe there isn’t election volatility priced into the VIX and it’s all to do with interest rates. Plus, looking back at the S&P 500 year end 2024 predictions top investment banks made in December of 2023. Hint, it didn’t go the way they expected. How many new all-time highs have we had this year and how does that compare with past years? More all-time highs All-time highs by month Will the market go to 6000? Jay Powell goes big but what does it mean for markets? Contrarian corner TIPS Bond ETFs and Gold VIX Futures over the next couple months Mentioned in this Episode Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Too Many Cuts Priced In? https://open.spotify.com/episode/6eFhqLyirKKiHKl7yYVDNV?si=08e63f4f058a4d44 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
51:1622/09/2024
Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Market Pricing in Too Many Cuts?
Derek Moore covers what you need to know going into the fed meeting. Plus, reviewing whether the Fed has ever cut rates with a forward price to earnings ratios this high? Then looking at potential technical analysis outcomes on the S&P 500 Index include a cup with handle, triple top, and more. Historical Forward PE ratios at Fed cuts VIX Index doesn’t go berserk during Wednesday’s CPI selloff and recovery Is the market pricing in too many future fed cuts Comparing CPI Supercore, CPI Core, and CPI from a month over month annualized basis Does CPI tell us anything about future Fed cuts? What is a cup and handle technical pattern? What is a triple top technical pattern? Mentioned in this Episode Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade https://open.spotify.com/episode/2PzBKek4qM4HfJQGodsxea?si=9vkdi40ETayaVFPiUlHMOQ Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
37:1815/09/2024
Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade
Derek Moore and Jay Pestrichelli are back to talk employment, Fed cuts, recession (or not), forward earnings multiples, VIX, VVIX, crude oil recession sign, currencies, and more! Looking at 3 2024 stock market selloffs this year Crude oil as a recession indicator? Currencies and Commodities driving stocks right now? Why markets may be trading on technical VIX and VVIX goings on Why VIX is tough to trade S&P 500 Index forward earnings and multiples First rate cut isn’t always the biggest Response rates of employment surveys Non-farm payrolls Unemployment report breakdown and factors US Dollar Japanese Yen pair resumes Yen strengthening Mentioned in this Episode All the News is Out? | Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the long bond trade getting crowded? https://open.spotify.com/episode/2LsHNmpPGY3jKpfS9WnjVt?si=21de3281be394249 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
01:10:4609/09/2024
All the News is Out? |Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the Long Bond Trade Getting Crowded?
Derek Moore is back to break down Nvidia’s beat, but not beat (whisper number), their growth year over year, their profit margins, and percent they beat on the top and bottom line. Then, looking at the implied volatility and expected move post earnings in Nvidia and how to calculate it. Understanding why sometimes a long straddle option position before earnings makes money and other times it doesn’t. Later, peeking in at the implied Fed Funds rate cut probabilities for the September meeting. Finally, “everyone” seems to be saying its time to buy longer maturity bonds. Is that view getting crowded and why will or won’t long rates move lower because the Fed lowers the Fed Funds rate. Nvidia earning beat but misses the “whisper” number After hours trading reaction to Nvidia earnings Difference between Gross profit and Net profit Nvidia’s massive profit margins compared to grocery stores Earning growth year over year Implied volatility pre-earnings to compute the implied expected stock move Why option premiums and volatility rise before earnings announcements How implied volatility gets sucked out of markets post earnings Long Straddles at the money before earnings characteristics and risks The Fed is expected to lower the front part of the interest rate curve What does that mean for the back half of the longer duration bond maturities? The spread between the 10-year treasury bond and the 30-year mortgage rate Hindenburg Research negative piece on Super Micro Computer SMCI Mentioned in this Episode Hindenburg negative research on Super Micro Computer https://hindenburgresearch.com/smci/ Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down? https://open.spotify.com/episode/09SZBfu7OSlh5ygHONqY1s?si=SwTdDLMUQS67KHvCjNkZMA Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
34:2831/08/2024
Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down?
Derek Moore and Jay Pestrichelli once again are here to break down the Jay Powell Jackson Hole statement and the market reaction including latest interest rate projections. Then they comment on the idea proposed by politicians of price caps and whether companies are making record profits based on net profit margins. Later they discussed the huge revision lower in employment number in the establishment survey and whether it’s a big deal or now and why the difference between the monthly releases and the first preliminary annual revision. Finally, they discuss the positive of the US Dollar potentially breaking down for US companies and the latest in volatility markets. Jay Powell Fed signals the time is now to change policy The “Goodship Transitory” and Jay Powell Fed funds interest rate projections Whether the Fed raising or lowering interest rates made any impact Huge first preliminary revision by 800k in the establishment employment survey What Goldman Sachs cited for the reason in the revisions in data Difference between the monthly employment numbers and these annual revisions US Dollar index and how a lower dollar helps multinational US company earnings Politicians are talking price caps and why those never work Examining a few companies net profit margins to see if they are actually making record profits Volatility markets including the VIX and VVIX Mentioned in this Episode Fastest Correction Ever? | VIX Index Collapse Post Spike | Will the Fed Push Back on a 50 bps Interest Rate Cut? | Latest Inflation Analysis and Soft, Hard, or No Landing? https://open.spotify.com/episode/1L5RNtfOKAc59TtOODf1dK?si=dzldc_NFSuKuve7nkZc4Ig Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
43:1725/08/2024
Fastest Correction Ever? | VIX Index Collapse Post Spike| Will Fed Push Back on 50 bps Interest Rate Cut? | Latest CPI Inflation Analysis and Soft, Hard, or No Landing?
Derek Moore and Jay Pestrichelli are back to discuss the surge and record collapse back below 17.6 in the VIX Index. Plus, Reviewing the difference between the VIX Index (not tradable) and VIX Futures relative spike levels. Then, they go into the latest CPI numbers including CPI Supercore to see what is sticky and what is negative. Finally, they discuss whether Chairman Jerome Powel is going to disappoint markets with only a 25-bps cut when everyone seems to want more. All that and more including the yield curve inversion, mentions of job cuts vs AI on earnings calls in Q2, expectations for a soft, hard, or no landing and what the heck that even means. VIX only takes 7 days to go back below 17.6 after spiking above 35 Comparing previous VIX Index surges and length to come back down Difference between hard , soft, and no landings Fed prepares for Jackson Hole meetings and sure to signal its interest rate intentions Will Powell and the Fed disappoint markets? Chance that Powel pushes back to not be bullied into rate cuts Mentions of AI on corporate earnings calls vs mentions of job cuts and employment Inverted yield curve and what the 2-year bond is predicting for rates in the future Fed balance sheet below the radar Will Fed stop letting treasury bonds and mortgage backed bonds run off the balance sheet? Comparing current and past VIX spikes against the relative spike level of the VIX futures Mentioned in this Episode Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades https://open.spotify.com/episode/2mF1zkDaqWZLRhumfs0VJh?si=j5sn9DZpS3mmyM3Y5VM_1A Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected]
49:5218/08/2024
Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades
Derek Moore and Jay Pestrichelli jumped on a special edition podcast to discuss whether the move in things like the VIX and VIX were warranted given the technical surroundings of the carry trade and where markets went. Looking back at previous VIX spikes and the high yield spread in times of crisis. Plus, discussing how some strategies held up and some insights into what went on. Finally, what a higher volatility regime would mean for strategies that sell options like covered calls or high probability credit spreads. VIX 3rd highest spike in history going back to 1992 VVIX 4th highest spike ever Comparing the VIX Index spike to the High Yield Spread There was no VIX Index back in 1987 but estimates say it would have been highest ever Are there currently structural problems showing in the US Economy? Unemployment rate up due to increase in population and size of labor force Explaining the VVIX Index Warren Buffet comment about whether you should be invested in stocks People don’t make good investment decisions when they panic Market performance historically after major VIX spikes Comparing the carry trade blowup to August 2015 drop due to the Chinese Yuan move Mentioned in this Episode Podcast Market Volatility | Yen Carry Trade Unwind Explained | High Yield Holds Up | Dissecting the Unemployment Rate Rise Causes https://open.spotify.com/episode/4aBJMdpmanE3Anncxlzfqs?si=zflHqMZuS7OZ5cAL0ae0Sg Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
46:3709/08/2024
Market Volatility | Yen Carry Trade Unwind to Blame? | High Yield Holds Up
Derek Moore is back to talk through the latest market volatility as the VIX and VVIX both spiked this week. Markets had 2 greater than 2% pullbacks. Reading into the latest unemployment rate data. Plus, unpacking the unwinding of the carry trade involving the Japanese Yen and how this started before the recent market retracement. Finally, examining the high yield bond market as it has shown positive non-correlation with equities of late. What does a currency Carry Trade mean? What is the carry trade unwinding mean? Why carry trades may show leverage in the system that causes ripples in financial markets S&P 500 Index back to levels not seen since….June 7th Unpacking the unemployment rate and how the rate rose even though more people working Explaining the VVIX Index VIX and VVIX spike this week with the market volatility Comparing returns since the July 16th all-time high of equities vs high yield bonds Mentioned in this Episode Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
39:0104/08/2024
Is Trump or Harris Better for the Stock Market? |Answering Options Questions | Why Do People Sell Covered Calls?
Derek Moore is back to take some listener questions on the political ramifications for the stock market, covered calls, and other general market and option questions. Also, he’ll cover the continued coverage of the market broadening out in its participation especially from small caps and the non-mag-7 companies. What about on the economic front? All this and more this week. What political party is better for the stock market? Does it matter who is in office? Google earnings announcement $1Billion in quarterly profit Richmond Fed Manufacturing Index shows weakness Shipping container rates continue rising What does the perception of lower rates and strong earnings mean for stocks? Why do people sell covered calls? Why are options more expensive around earnings announcements? Who is on the other side of my option trade and does it matter? Mentioned in this Episode Download white paper on concentrated stock management with options https://static.twentyoverten.com/5b313bf81c53ec3270915df3/27gJFrs2H/Concentrated-stock-positions-Full-White-Paper.pdf Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
27:2129/07/2024
Mag 7 Pauses| Everything Else Takes Its Turn | VIX Seasonality | High Yield Spread
Derek Moore looks beyond mega cap tech by examining while this month the S&P 500 Index is relatively flat, equal weight and extended markets catch a bid. Plus, talk of a tight high yield spread but what does that mean? Later, looking at the upcoming earnings including Tesla and Google. Finally, reviewing typical VIX seasonality patterns. Earnings including Tesla and Google this week Performance of the S&P 500 Index against extended markets and equal weight S&P 500 Index Comparing the S&P 500 against international developed markets and emerging markets Comparing the VXF etf and RSP etf against the S&P 500 Index Why protecting with buffers and/or hedges can help assuage short term market worries What is the high yield spread? Comparing the current high yield spread against recent history What does it mean when the high yield spread gets tight Largest companies in the Nasdaq 100 Index in March of 2000 VIX Seasonality patters What did the VIX and VVIX do this week? What have the EEM etf and EFA etf do this week on the international front? Mentioned in this Episode Where to find the High Yield Spread https://fred.stlouisfed.org/series/BAMLH0A0HYM2/ Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
31:1621/07/2024
Market Returns After 1st Rate Cut? | AI Revolution Like 1990s Internet? | What If They’re Wrong on Rates?
Derek Moore and Jay Pestrichelli are back together to discuss what happens after the Fed makes its first rate cut historically in markets. Plus, what if everyone is wrong about rate cuts? Then, they look at the historical spread between inflation and the Fed Funds rate plus how would investors take the other side of rate cuts? Finally, they discuss the idea of this being the 1990s all over again with AI as a technological revolution like the internet boom? Earnings season is in full bloom Fed Funds rate vs the YoY CPI Inflation comparison Why historically Fed Funds does not have to equal annual inflation What is the Fed afraid of? Nasdaq Composite returns after major releases of new technologies Record call volume on the IWM ETF (Russell 2000) Total return for markets 12 months post 1st rate cut going back to 1974 Implied interest rate based on fed funds futures VIX and the market both go up? Mentioned in this Episode Podcast 1994-95 All Over Again in Markets? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
48:2615/07/2024
Economy Weaking? | What Makes Markets Go Up or Down? | Tesla Goes Up and Option Volatility Up | Economic Surprise Index
Derek Moore is back to discuss the recent talk from the “talking heads on TV” that the economy is weakening. What are they looking at and are they right? Then Derek explains using Tesla as an example of implied volatility going higher while a stock runs higher. Reviewing the latest nonfarm payrolls, unemployment rate, and initial jobless claims. Finally, Derek goes through what happens when markets go up from a fundamental standpoint including Forward PE multiples changing, earnings estimates, share buybacks, and dividend yield. All of this and more on this week’s episode. Tesla implied volatility surges along with its stock price Why volatility can go higher even when markets or stocks don’t go down Is the economy weakening? Reviewing the economic surprise index and what it measures Share buyback yield Share buybacks effect on EPS Dividend yields as a contribution to total return Forward PE multiples and effects on market prices Forward earnings estimate on the S&P 500 Index companies How companies joining and leaving the S&P 500 Index can affect earnings Looking at college bachelor’s degree and higher unemployment rate for clues Atlanta Fed GDP Now Mentioned in this Episode Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
35:5707/07/2024
Is Nvidia in a Bubble? | Don’t Give Up on the Bull Market Yet? | French Election Implied Volatility | Shipping Containers
Derek Moore is back to discuss the WSJ article comparing Nvidia to Cisco and Jim Cramer’s response. Is Nvidia in a bubble? Wall Street Journal Article on Cisco 2000 vs Nvidia 2024 Forward PE multiples then and now Cisco vs Nvidia Data showing bull markets often continue the second half of the year When markets are up 10% first half of the year what happens next? Don’t give up on the bull market yet based on data? Implied Volatility spikes in France compared to Germany What does 100% Moneyness mean in options speak? Explaining option moneyness at different levels How does July stack up against other months of the year for S&P 500 returns? August and July market returns in Election years Inflation PCE cools while PCE Services less housing still elevated YoY Container shipping rates rising again to highest level since September 2022 French CAC 40 Market near 10% drawdown from highs Mentioned in this Episode WSJ article comparing Cisco in 2000 vs Nvidia in 2024 https://www.wsj.com/finance/investing/nvidia-is-no-cisco-but-it-is-getting-expensive-1938fcc0 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
31:2630/06/2024
Volatility Problem | Probability S&P 500 Goes Up or Down 9.8% | Cracks in Economy? | Earnings Estimates Rise
Derek Moore is back to go over some bullish and bearish economic and market items. Avocado prices are spiking while lumber prices are falling. Divergence between the Trucking Tonnage Index vs the S&P 500 Index. Later we discuss the lack of historical volatility in the market given we haven’t had a greater than 2.05% down day for over 375 days. Then taking listener questions around the probability a market goes up or down 9.8% and what goes into calculating option probabilities. Finally, Derek explains the “Volatility Problem” from a listener question comparing the difference between average returns and CAGR compounded annualized growth rate. What is the volatility problem? CAGR Compounded Annualized Growth Rate Average return vs CAGR return and why it matters Avocado vs Lumber prices Trucking Tonnage Index vs the S&P 500 Index EconPi median of coordinates showing decline quad for economy Economic surprise index explained Why hedging makes sense to manage volatility Mentioned in this Episode Econ PI site http://econpi.com/index.php Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
33:4723/06/2024
Market Crash? | Fed Meeting Dot Plots | Inflation Break | Apple’s AI Breakout |
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial are back with a Fed meeting day edition where they break down the new end of year interest rate dot plots and Jay Powell’s press conference. Plus, they riff on Harry Dent’s latest prediction saying Nvidia is going down 98% and why the doom and gloom crowd are harmful to investors. Later discussing Apple’s breakout after their AI announcement at WWDC conference and the reaction to the CPI inflation print. All this and more! Apple’s AI WWDC announcement reaction by the stock market Apple vs Nvidia vs Microsoft for the title of largest market cap Buy the Rumor Sell the News Buy the News on Apple Post Fed Meeting announcement reaction Fed newest Dot plots and what they say for the year end target for interest rates The fed funds futures moves intraday How to calculate the implied fed funds rate Inflation print comes in light but year over year numbers still above Fed’s target How the CPI Supercore is still running over 4.8% year over year Harry Dent says markets are going to crash but has said the same thing over and over again Why doom and gloom predictions are harmful for investors Reviewing some past Harry Dent prognostication Harry Dent says Nvidia may go down 98% while the Nasdaq will see a -92% crash Battle for the largest market cap between Apple, Nvidia, and Microsoft gets interesting Mentioned in this Episode Harry Dent predicts Nasdaq to crash 92% https://www.livemint.com/market/stock-market-news/boy-this-is-over-economist-harry-dent-predicts-98-crash-in-nvidia-92-drop-in-nasdaq-heres-why-11718162529764.html CBS News article “Harry Dent and the chamber of poor returns” https://www.cbsnews.com/news/harry-dent-and-the-chamber-of-poor-returns/ GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages? https://podcasts.apple.com/us/podcast/gamestop-option-bets-s-p-too-top-heavy-nvidia-passes/id1432836154?i=1000658371572 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
33:1014/06/2024
GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial look at some what seem like crazy options trades in GameStop. Plus, examining Nvidia passing Apple as the second largest stock in the S&P 500, and can it pass Microsoft for #1? They also talk about whether it’s a problem the top 4 stocks in the S&P 500 make up such a large percentage of the weighting and comparing it to the last time it was this high. Later they take some listener questions including whether the data shows cracks in the regional banks due to mortgage delinquencies, what happened in the unemployment report, and more. Unemployment reaches 4% Top 4 companies in the S&P 500 Index highest since the 1960’s Comparing the contribution to returns S&P 500 Index top 496 vs the top 3 and Nvidia Residential mortgage delinquencies and effect on regional banks FDIC quarterly data on the health of banks Nvidia passes Apple for #2 as its market cap exceeds Apples but will Microsoft be next? 1964 vs 2024 top 4 company weighting in the S&P 500 Index Now the top 4 companies today are a lot more diverse business GameStop options trading Looking at the 128 calls open interest, volume and probabilities next 2 weekly expirations Volatility in the GameStop option chain Mentioned in this Episode Mortgage Bankers Association data on residential mortgage delinquencies https://usreop.com/mba-chart-of-the-week-seriously-delinquent-rates-by-loan-type-conventional-fha-va-may-17-2024/ Delinquency rates on commercial real estate loans from FRED https://fred.stlouisfed.org/series/DRCRELEXFACBS CNBC piece on potential cracks in the banking system https://www.cnbc.com/2024/03/19/where-cracks-in-the-banking-sector-may-appear-without-more-ma.html Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE https://podcasts.apple.com/us/podcast/crazy-vix-bets-due-to-election-market-reversal-home/id1432836154?i=1000657610266 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
45:4109/06/2024
Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial review some interesting VIX option trades around the election and around inauguration day in 2025 compared to the next few months options action. When young people say home ownership dreams are dead is that true? Surprising numbers to compare inflation adjusted costs. Plus, on Friday the market swung from down over 1% to up almost 1% as we continue to be in a buy the dip regime. Later discussing the evolving Fed rate cut expectations and why it shouldn’t be a surprise. Finally, they go bring up container shipping costs rising again and what that means for inflation, the Presidential election market cycle, history of interest rates, and more. Looking at VIX trades far out of the money around election and inauguration day Are retail investors making bets on a rise in volatility due to the election? Why trading VIX options can be frustrating and may be misused by retail traders Home ownership dreams dead for young people? Comparing a monthly mortgage payment today on an inflation adjusted basis to historical Home prices compared on an inflation adjusted basis History of interest rates over 5000 years Container shipping costs on the rise Share buybacks at highest level over the last couple years and what that means for earnings Friday’s huge market reversal going from down to up in the last hour Fed rate cut expectations through the end of 2024 down from 7 cuts to 1 cut 4th year of the Presidential cycle and the S&P 500 Index What Shiller Cape ratio means for returns over the next 10 years Cape PE ration and Price to Free Cash Flow Mentioned in this Episode History of Interest Rates book by Sidney Homer and Richard Sylla https://amzn.to/3V3TNEJ Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
49:5902/06/2024
Nvidia Earnings Recap | Get Over It Rates are Staying Higher | Despite Rates Home Prices Up YoY | AI Mentions in Earnings Calls | What VVIX and VIX Did
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial talk about Nvidia’s earnings report and how they are catching up to Apple in total market cap. Will they cash Microsoft? Then they note the percentage of companies mentioning AI on earnings calls. What does that mean for CAPEX spending on semiconductor chips? Later they look at how housing prices after a small drop are now growing YoY despite higher interest rates and higher payment per median home price. The gold rally now one is noticing in 2024. A little Japan 10-year bond talk as rates hit 1%. Finally, Jay and Derek talk about how rates are staying higher for longer and the market might need to get over it while the “threat” of lowering rates might help markets. Earnings mentions of AI on earnings conference calls surge Nvidia is catching up to Apple in market cap What is market cap and how to compute it? Surprising market cap size for one semiconductor company. Comparing S&P 500 Index market return paths since 1990 Is 2024 the new 1995 for S&P 500 returns? Nvidia stock price growth vs income and revenue growth last 10 years Now investors don’t thing there is a chance for a recession Investor sentiment or likelihood of recession being high might be contrarian indicator University of Michigan inflation expectations over next 5 years surges Historical asset class by year returns Gold still rallying but does anyone care? One family home sales median price year over year price change growth Charting monthly mortgage payment on purchasing a median priced home Japanese 10 year bonds hit 1% Why investing for longer means your win probability gets really high Mentioned in this Episode Roaring Kitty Tweets and Gamestop rises and falls https://open.spotify.com/episode/5PtbYzdRunB7UPJRWQaXYK?si=OkMXUjOnQRGaJ2OZY-y8YQ Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
57:5727/05/2024
GameStop Options Activity Prior to Roaring Kitty Reemergence | S&P 500 Makes New High | 90% of the Time No Recession or Stagflation | When Covered Calls Get Called Away Early
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial start by looking at GameStop’s (GME) call option open interest and activity in the days prior to Roaring Kitty tweeting . They notice the increase in options activity ahead of the surge in the stock’s price and volume spike and whether the options market led the stock market on GME. Then they comment on another new all-time high by the S&P 500 Index and how according to a BofA chart 90% of the time markets are not in a recession or in stagflation since 1948. Later Derek and Jay bring up the CPI Supercore trending higher while car insurance rates are soaring. What does this mean for the Fed and rates? Finally explanation of when covered calls get called away early. Roaring Kitty comes out of hibernation to tweet. Looking at GameStop options activity prior to Roaring Kitty’s tweet Did the options activity prior to the stock activity mean people knew the tweet was coming? Are we in for a GameStop meme stock part 2? Why retail investors should use caution in trading GameStop. Looking at the implied volatility on GameStop options to understand expected volatility. CPI Supercore continues to rise YoY and what that means for interest rates and the Fed Car insurance rates are surging 20%+ and rising How long it takes the S&P 500 to go up each 100 point increment According to a Bank of America graph 90% of the time since 1948 no recessions or stagflation Enough about the Fed and rates? When do covered calls get called away early and assigned? Understanding dividends vs time value in deciding when covered calls get assigned Early assignment for options What implied volatility says about what the options market expects a stock to move GameStop 300% implied volatility is massive and how expensive the ATM straddle is Mentioned in this Episode PPI comes in hotter than expected click below to read the PPI report release https://www.bls.gov/news.release/ppi.nr0.htm Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
01:03:1219/05/2024
Goldilocks Stock Market and What Could Derail It? | Interest Rates Aren’t Historically High | Cheap to Hedge the Downside Now with Options
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial discuss the idea that the stock market is in a Goldilocks period based on sustained higher margins and earnings growth. Then, they discuss how out of the headlines the Fed has already started easing by reducing their balance sheet runoff each month. Why reducing the Overnight Reverse Repo usage (RRP) isn’t restrictive but rather was a reaction to demand for short term treasuries by money markets. Later they talk about how interest rates are below long run averages despite what everyone tells you on CNBC and why high rates may not be a problem. Finally, they look at corporate earnings and profit margins for the S&P 500 Index and how they’ve growth over the years, gold prices vs oil prices as a predictive model, and yes some shipping container inflationary commentary. Growth in S&P 500 earnings per share analyst projections How net profit margins for the S&P 500 Index companies has growth over the years Why this might be a hated bull market despite some goldilocks market aspects What could derail this market? Why profit margins continue to be higher and why they do or don’t have to revert to the mean The Fed balance sheet explained How the Fed is going to be reducing the amount of bonds running off the balance sheet. How the Fed is restrictive and easing at the same time Explaining what the Overnight Reverse Repo Market (RRP) is Why the Fed reducing the balance of Overnight Reverse Repos isn’t restrictive policy The order of how the Fed may ease (hint, it may not start with interest rates) The 1990s bull run with higher interest rates and lower profit margins Maersk container shipping operating hints at higher costs due to capacity, fuel, and congestion What does higher container shipping costs mean for inflation and prices? Do Gold prices project out what oil prices will do in the next 19 months? Explaining the cost of hedging and how it is very cheap to put on downside hedges right now The cost of a 1 year 10% out of the money put option The cost of a 1 year ATM at-the-money put option Using low or no cost collars to hedge the downside Using long put spreads to hedge or buffer the downside Mentioned in this Episode Explaining High Dividend ETFs and Stocks and How Reinvesting Dividends Works to Build Share Count and Compound Returns https://podcasts.apple.com/us/podcast/reinvesting-high-dividends-deep-dive-unemployment-the/id1432836154?i=1000654585450 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
59:5612/05/2024
Reinvesting High Dividends Deep Dive | Unemployment & the Fed | Option Time Value Explained | Shareholder Yield
Derek Moore is back with Jay Pestrichelli, CEO of ZEGA Financial this week to discuss the Jay Powell Fed decision and the latest in employment and inflation. Then, they do a deep dive into dividend reinvestment. Specifically, analyzing the idea of acquiring more shares and can dividends reduce or eventually pay down your initial cost? They then do a deep dive into how the time premium works on options. Lowest year over year wages since 2021 Unemployment ticks up. High dividend stocks and dividend reinvestment deep dive Acquiring more shares through dividend reinvestment Compounding dividends through dividend reinvestment and increasing share count. What is shareholder yield? What is buyback yield vs dividend yield? Fed higher for longer is now consensus. What is time value of an option Looking at option premium and time value through the market maker lens Exploring the SPX 6000 Call option expiring Dec 31st, 2024, premium and time value How options are priced How market makers taking the other side of customer orders have to hedge their positions Components of unemployment report labor force size vs employed and unemployed Selling option premium to create high dividends Mentioned in this Episode Is it 1994 All Over Again? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306 Now Its 1 Fed Rate Cut? | Nvidia Options Volatility Implied Move at Earnings | Sell in May and Go Away in Election Years? | Inflation Higher Than 1970s? https://podcasts.apple.com/us/podcast/now-its-1-fed-rate-cut-nvidia-options-volatility-implied/id1432836154?i=1000653836218 Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Contact Derek [email protected] www.zegafinancial.com
01:02:4905/05/2024
Now Its 1 Fed Rate Cut? | Nvidia Options Volatility Implied Move at Earnings | Sell in May and Go Away in Election Years? | Inflation Higher Than 1970s?
Derek Moore discusses the declining probabilities for Fed interest rate cuts in 2024. Plus, how PCE Supercore did not make the case for Fed rate cuts. Later, looking at the analyst’s expectations for earnings growth within the S&P 500 Index. Finally, comments on a paper showing how using the pre-1983 methods to compute CPI Consumer Price Index show we had higher inflation that the 1970s. Declining Fed Funds rate cut probabilities for 2024. Explaining how implied interest rates from Fed Funds futures are computed. The case against rate cuts seems to be buoyed by sticky US CPI Supercore measures. What is CPI Supercore and PCE Supercore compared to CPI Core and plain old CPI? Explaining how the US CPI Consumer Price Index used to compute inflation prior to 1983. How measuring housing inflation changed in 1983. Why did they change how CPI is measured to owners’ equivalent rent? Looking at the probabilities for rate cuts across different Fed FOMC meeting dates What about Sell in May and Go Away in election years? Explaining how to tell what the options market is implying for a 1-standard deviation move Implied volatility around Nvidia earnings date scheduled for May 22nd How to calculate the implied move in a stock based on the options market Examining the at the money ATM straddle on Nvidia options expiring 2 days after earnings Mentioned in this Episode Is it 1994 All Over Again? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306 Podcast: Explaining How and Why Bonds Make or Lose Money https://open.spotify.com/episode/3AUT2DVbHfEQyJglpe70nP?si=wIFug8IfR1-sb_bX03qNHA Previous Week’s Podcast: Market Correction | Mortgage Rates Higher | No Thanks 24-Hour Trading | Synthetic Options https://podcasts.apple.com/us/podcast/market-correction-mortgage-rates-higher-no-thanks-24/id1432836154?i=1000653114012 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
39:4128/04/2024
Market Correction | Mortgage Rates Higher | No Thanks 24-Hour Trading | Synthetic Options
Derek Moore and Mike Puck from ZEGA Financial discuss Friday’s selloff. It’s official, we are in a 5% market correction. Looking back at other corrections greater than 5% from the highs. Mortgage rates move back up while 10-year treasury yields surge. Commodities are higher on the year but still down from all-time highs. Gold makes another all time high. Later they look at the value vs growth performance including the magnificent 7 stocks compared to the rest of the market. Finally, stocks and bonds are more correlated than people realize in higher inflation regimes. Futures selloff overnight and why we don’t need 24-hour trading in the stock market Market corrections of over 5% 30-year mortgage rates are spiking again Looking at the high yield bond market with spreads widening 10-year treasury bonds on the way to 5%? Gold makes another all-time high Stock and bond correlations historical look Will bonds still be a good hedge against stocks? Value vs Growth check in Magnificent 7 vs the rest of the S&P 500 Index Synthetic option positions Listener question about knowing what positions make up what strategies Duration of High Yield Bond Index vs time to maturity and Yield to Worst Container shipping rates Check in on where commodity prices are Mentioned in this Episode Podcast: Explaining How and Why Bonds Make or Lose Money https://open.spotify.com/episode/3AUT2DVbHfEQyJglpe70nP?si=wIFug8IfR1-sb_bX03qNHA Previous Week’s Podcast: Market Selloff | No Rate Cuts? | Bitcoin vs Gold | CPI Inflation Sticky | VIX Curve https://podcasts.apple.com/us/podcast/market-selloff-no-rate-cuts-bitcoin-vs-gold-cpi-inflation/id1432836154?i=1000652413865 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
58:1221/04/2024
Market Selloff | No Rate Cuts? | Bitcoin vs Gold | CPI Inflation Sticky | VIX Curve
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Friday’s selloff. So, was it all the readjustment of Fed rate cut expectations? Is CPI Inflation putting the Fed in a box? Michael Saylor says Bitcoin is better than Gold. The rally in Gold that everyone is sleeping on. CPI Supercore trending higher showing services not goods are the culprit. Later they examine the VIX Futures curve as the front months rise. Finally, they talk about the continued bear market due to higher rates on 10-to-30-year US Treasuries from the March 2020 all-time highs against the stock market and high yield. Michael Saylor Bitcoin vs Gold Market selloff reasons High Yield bonds vs equities CPI Supercore trending higher lately. CPI Core vs CPI year over year VIX futures curve and explaining difficulty in picking how to play expected rise in volatility US 30-Year Treasuries made all-time high in March of 2020 but down -44% since What would it take for bond holders to get to break even? Stealth rally in Gold and comparing buying physical gold to gold ETFs GLD and GLDM Comparing inflation outlook between Democrats, Republics, and Independents Earnings season arrives while banks reported but talked NIM net interest margins suffering Mentioned in this Episode Podcast: Explaining How and Why Bonds Make or Lose Money https://open.spotify.com/episode/3AUT2DVbHfEQyJglpe70nP?si=wIFug8IfR1-sb_bX03qNHA Previous Week’s Podcast: Buying At All-time Highs Better? | S&P 500 Returns After Last Hike | Developed International Beats the S&P | How To Tell Whether Options Are Expensive https://podcasts.apple.com/us/podcast/buying-at-all-time-highs-better-s-p-500-returns-after/id1432836154?i=1000651729073 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
56:0814/04/2024
Buying At All-time Highs Better? | S&P 500 Returns After Last Hike | Developed International Beats the S&P | How To Tell Whether Options Are Expensive
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are back to explore surprising data about buying the market at all-time highs vs any other day. Plus, how do markets and bonds perform post the last fed hike? Later, while you were sleeping developed international markets outperform U.S. markets. And listener question “who do I know what a good price for an option is?” What is a high or low price for an option? Components that make up and drive option prices Market performance post last fed rate hike Bond market performance after last fed rate hike MSCI EAFE developed markets international outperforms U.S. large cap Why people aren’t buying the inflation is lower narrative S&P 500 earnings estimates continue to rise Forward PE multiple on the S&P 500 dynamic Unemployment drops as more people are working and in the labor force How does immigration if at all impact employment data? How far $100 gets you at the grocery store today vs 2019 Understanding the cumulative effects of inflation vs the year over year percent change Why high prices aren’t going back down as only the rate of future change adjusts Mentioned in this Episode How far does $100 get you at the grocery store post inflation? https://www.wsj.com/business/retail/inflation-food-price-of-groceries-2024-5010700b?mod=hp_lead_pos7 Previous Week’s Podcast: Most Record Highs Since 2013 | The Fed No Rush to Cut? | VVIX and VIX Super Quiet | Value vs Growth | Cocoa More Valuable than Gold? https://podcasts.apple.com/us/podcast/most-record-highs-since-2013-the-fed-no-rush-to-cut/id1432836154?i=1000651003743 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
58:4008/04/2024
Most Record Highs Since 2013 | The Fed No Rush to Cut? | VVIX and VIX Super Quiet | Value vs Growth | Cocoa More Valuable than Gold?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Fed governor Waller (not Christopher Walkin) hinting the Fed should be in no rush to cut interest rates. Plus, we haven’t seen this many record stock market highs since Q1 of 2013. So, what does that mean if anything? Examining VVIX and VIX which both are really quiet and low right now. Growth has outperformed value by quite a bit, but do some relative value charts hint value may have its time in the sun? Later, corporate profit margins continue to be strong despite many saying they must revert to the mean. Finally, no Cocoa is not worth more than gold per ounce despite what the internet says. Fed Governor Waller says no so fast on the need to cut rates Why would the Fed cut rates if the economy is doing well? Most record stock market highs since Q1 2013 in Q1 of 2024 Corporate profit margins remain strong The VVIX has been sitting below the 80 level VIX index not showing signs of worry Triple top in the Growth relative to Value chart? Cocoa futures make another new high Value of Cocoa futures vs Gold futures Public service (PSA) difference between price return and dividend adjusted return in ETFs Mentioned in this Episode Why cocoa prices spiked and what it means for chocolate lovers from Bloomberg https://www.bloomberg.com/news/articles/2024-03-31/why-cocoa-prices-spiked-and-what-it-means-for-chocolate-lovers Previous Week’s Podcast: The Fed Gets Bullish? | Markets Don’t Go Down Just Because They Go Up | Yield Curve Inversion Record | Bitcoin Halving https://podcasts.apple.com/us/podcast/the-fed-gets-bullish-markets-dont-go-down-just/id1432836154?i=1000650266452 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
27:3731/03/2024
The Fed Gets Bullish? | Markets Don’t Go Down Just Because They Go Up | Yield Curve Inversion Record | Bitcoin Halving
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed getting bullish by reducing unemployment estimates, raising GDP growth estimates, and doing nothing else but the market liked it. All while the yield curve inversion sets a record for longest in history. What is Bitcoin halving and what does it do for supply and demand? Looking at the stock market after going up a lot, why historically it can continue going (or not) up. Looking at 1995-1999 post Fed cut bullish moves. Why media explanations of 2 or 3 interest rate cuts by the Fed based on the median interest rate aren’t entirely true. Tip, how to calculate the median of something. All that and plenty more this week! What is Bitcoin halving? How to calculate the median of Fed funds dot plot rate What is the Fed dot plot Fed GDP growth rate upped at the March meeting while unemployment rate lowered Core PCE inflation year end estimate increased by the Fed Is the Fed just going to let inflation run a little hotter? 1995-1999 super strong S&P 500 market returns New Yield Curve inversion record High Yield debt maturity wall pushed out further High Yield debt can be reduced by paying off, rolling, bankruptcy, or become investment grade Looking at times when the market was up double digits over 30 days and what happens next Mentioned in this Episode What is Bitcoin ‘Halving’ and Does it Push Up the Cryptocurrency’s Price? https://www.bloomberg.com/news/articles/2024-03-06/what-is-bitcoin-halving-and-does-it-push-up-the-cryptocurrency-s-price Previous Week’s Podcast: Michael Saylor is Right on Bitcoin? |Worst Crash Since 1929 Coming? | Semiconductors Get Big Flows | 0 DTE Option Stats https://podcasts.apple.com/us/podcast/michael-saylor-is-right-on-bitcoin-worst-crash-since/id1432836154?i=1000649479605 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
56:2124/03/2024
Michael Saylor is Right on Bitcoin? |Worst Crash Since 1929 Coming? | Semiconductors Get Big Flows | 0 DTE Option Stats
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, talk through some examples of options trading in 0 DTE options on the SPX and Nvidia. Plus, a hedge fund manager says the worst crash since 1929 is coming. Looking at huge inflows into the semiconductor ETFs. Derek actually agrees with Michael Saylor’s points on Bitcoin including whether it’s a currency or property. Media mentions of stock market bubble are rising but so are continued mentions of AI. Finally, PPI producer price index comes in hot especially services while real retail sales still hasn’t gone above its 2022 highs. All that and more this week. Is Bitcoin a currency or property? MicroStrategy’s Michael Saylor interview on CNBC Hedge fund manager says worst market crash since 1929 coming How the same people make the same market predictions all the time Semiconductor ETFs get massive flows of money last week Examining detailed option data on SPX and NVDA 0 DTE options Media mentions of “stock market bubble” are rising Media mentions of AI and artificial intelligence jumped prior to the takeoff in AI stocks PPI producer price index comes in hotter than expected Services inflation now higher than goods inflation Comparing US Deposits at commercial banks vs money markets Money markets assets hit new highs What do big money market balances mean for the stock market if anything? Advanced real (after inflation) retail and restaurant sales YTD 2024 ETF category flows bitcoin vs gold Mentioned in this Episode Michael Saylor CNBC interview about Bitcoin and whether it’s a currency or property https://twitter.com/saylor/status/1767178599390458285 Previous Week’s Podcast: Worst Market Timing Ever? | Options Cost of Carry | Option Put Call Parity | Unemployment Bad News Is Bad News? https://podcasts.apple.com/us/podcast/worst-market-timing-ever-options-cost-of-carry/id1432836154?i=1000648820557 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
56:4117/03/2024
Worst Market Timing Ever? | Options Cost of Carry | Option Put Call Parity | Unemployment Bad News Is Bad News?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss how the magnificent 7 stocks aren’t all going up this year. Plus, reviewing what the worst time to buy stocks was and how investors would have done even if they had. Later, they explain why the last 10-15 years before retirement need growth but hedging. How Japan’s central bank might take interest rates from negative to positive, shipping container rates, inflation, Nvidia probabilities and the 15th anniversary of CNBC’s “Mark Haines Bottom” 3/10/2009. What is the cost of carry for options What is put call parity Option market probabilities What if you bought stocks at the worst time twice? Drawdowns since March of 2000 and October of 2007 15 years since the Mark Haines bottom on CNBC 2009 Comparing stock market drawdowns 2000-2002, 2007-2009, 2018, 2022 Time in the market not timing the market Japan interest rate probabilities What may happen if and when Japan raises interest rates? Japan’s currency with a rise in interest rates and implications for US Dollar and Treasuries Magnificent 7 stocks Tesla, Apple, and Google to name a few are down for the year Nvidia and Eli Lilly keeping the S&P 500 Index up Shipping container rates ease but still high, will we see that filter through CPI Inflation data? Explaining the unemployment report Mentioned in this Episode 15 year anniversary of the Mark Haines Bottom March 10th 2009 https://twitter.com/carlquintanilla/status/1766138788881826035 Previous Week’s Podcast: Why VIX Is Hard to Trade | SuperCore PCE High Again?| High Yield Bond Spreads | The Fed Is Not Cutting? | Semiconductors Surging (Again) https://podcasts.apple.com/us/podcast/why-vix-is-hard-to-trade-supercore-pce-high-again-high/id1432836154?i=1000647836923 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
01:07:0911/03/2024
Why VIX Is Hard to Trade | SuperCore PCE High Again?| High Yield Bond Spreads | The Fed Is Not Cutting? | Semiconductors Surging (Again)
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, explain why it’s so hard to trade the VIX via options or VIX futures given the nature of the products and how VIX works. Supercore PCE, yeah that’s a thing now, came in hot so what does that mean for the Fed and rates? Speaking of the Fed cutting rates, what if they don’t cut this year? Later they explore how High Yield Bonds aren’t showing any fear and comparing the High Yield spread, the long term annualized total return of the High Yield Bond Index, and how CCC Junk Bonds once were yielding a few years ago what short duration Treasury Bills are yielding now. Oh, and let’s not forget to look at the SOX Semiconductor Index which just surged again to new highs. What is PCE Supercore compared to CPI? PCE Supercore comes in higher than expected. What if the Fed doesn’t cut interest rates and why they would or wouldn’t cut this year? What is the VIX Index Explaining VIX Futures and VIX Options Why its so hard to play the VIX using futures or options? The VIX Futures curve What the VIX Futures around the election are showing What is the high yield spread? Annualized returns for the High Yield Index since 1997 Examining times when high yield spreads spiked CCC rated bonds yield to worst What is a Yield to Worst for bonds? SOX Semiconductor Index and future projected earnings growth Remember when Cisco was thought to be the picks and shovels of the internet? Has Cisco ever eclipsed its 2000 dotcom era highs? Super Micro Computer joins the S&P 500 Index replacing Whirlpool Comparing Super Micro Computer’s revenues vs Whirlpool’s Largest companies by market cap in each decade Mentioned in this Episode: Super Micro Computer joins the S&P 500 Index https://www.cnbc.com/2024/03/01/super-micro-joining-sp-500-after-20-fold-jump-in-stock-in-two-years.html#:~:text=Super%20Micro%20Computer%20is%20joining,in%20extended%20trading%20on%20Friday. Previous Week’s Podcast: Nvidia To the Moon | Implied Volatility and Earnings | Earnings and Markets Have Low Correlations? | Nvidia Cheap? https://podcasts.apple.com/us/podcast/nvidia-to-the-moon-implied-volatility-and/id1432836154?i=1000646788686 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
01:00:2303/03/2024
Nvidia To the Moon | Implied Volatility and Earnings | Earnings and Markets Have Low Correlations? | Nvidia Cheap?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Nvidia’s beat on earnings, their march towards $2trillion market cap, and how as earnings forecasts rise, even though the stock has made new highs, forward PE ratios go lower. Then, they explore what the options market via implied volatility was forecasting for an Nvidia move post earnings. Later, they review a comparison between the S&P 500 Index annual return vs the EPS growth to see if there is any relationship. Hint, it’s not too correlated even when they compare the current year market performance against the 1 year forward actual earnings. All that and more will be explained including some recommendations. Nvida’s stock is rising while its forward PE just got cheaper Nvidia’s recent earnings beat including EPS growth, revenue growth, and gross and net margins What would it take for Nvida to overtake Microsoft as the largest company in the S&P 500? Implied move post earnings based on the implied volatility of the options market Price of the at the money long straddle on Nvidia the afternoon of earnings Regression analysis of S&P 500 Index annual return vs EPS growth Correlations between market returns and earnings growth Comparing correlations with same year market returns vs same year and 1 year forward EPS Markets are forward looking Probability of Nvidia reaching $3.06T in market cap in one year per options market Mentioned in this Episode: Where returns come from see start of page 23 in Semper Augustus group letter https://static.fmgsuite.com/media/documents/db64b928-53d6-43a9-a4d0-a9d2f69f76ba.pdf Previous Week’s Podcast: Put & Call Implied Volatility Mismatch? | US Dollar vs S&P 500 Correlation | Sticky Inflation | Japan Recession | Explaining Why Stocks Go Up (or down)https://podcasts.apple.com/us/podcast/put-call-implied-volatility-mismatch-us-dollar-vs-s/id1432836154?i=1000645873203 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
46:5625/02/2024
Put & Call Implied Volatility Mismatch? | US Dollar vs S&P 500 Correlation | Sticky Inflation | Japan Recession | Explaining Why Stocks Go Up (or down)
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, follow up on last week’s PE ration (useless?) discussion explaining how stocks go up or down based on earnings, multiples, and other factors. Then they delve into correlations between the US Dollar Index and the S&P 500 Index. Later, the surprising fact that as Japan’s Nikkei Index makes 35-year all-time highs they are in a technical recession. Finally, more evidence shows that inflation may be stickier and some that it may not. As always, they’ll have some recommendations! Explaining how EPS earnings per share works How the PE can change due to earnings going up or the multiple going up How a stocks movement from one year to the next can be attributed to earnings and multiples How the correlation between the US Dollar Index and the S&P 500 Index has flipped of late Why a lower dollar helps large multinational companies earnings Congratulations, Japan is making all-time highs while in a technical recession What is a technical recession that everyone is now calling 2 quarters of negative GDP growth Car insurance premiums rose another 20% year over year…inflationary? How lagging price changes may continue to be sticky for inflation Looking at how OER Owners Equivalent Rent has been trending lower How higher rates may have put pricing pressure on rents How market returns and earnings growth aren’t the same every year Mentioned in this Episode: Historical Returns on Stocks, Bonds and Bills: 1928-2023 NYU Aswath Damodaran https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html Previous Week’s Podcast: Is the Forward PE Useless?| S&P 500 Election Seasonality | Gen Z vs. Gen X Special https://podcasts.apple.com/us/podcast/is-the-forward-pe-useless-s-p-500-election/id1432836154?i=1000644953963 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
55:1319/02/2024
Is the Forward PE Useless?| S&P 500 Election Seasonality | Gen Z vs. Gen X Special
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, ask whether forward PE ratios are predictive of future market direction? Then they review how the S&P 500 Index has performed during each presidential election going back to 1996. Does it matter which party (Republicans or Democrats) are in office for markets? Is Tesla going to get kicked out of the Magnificent 7? Later Jay and Derek are joined by two Gen Z’ers (Zander and Bobby), to explore what their views are on money, markets, and take some questions. Explaining what the forward PE is for the S&P 500 Index What are the current forward EPS estimates for the S&P 500 Index What if Forward PE ratios don’t tell us too much about future direction for markets? Cocoa futures go parabolic during latest spike Where cocoa beans come from Delinquencies on auto loans rise Seasonality in markets during presidential election years Stock market returns when Republicans vs Democrats controlling presidency, senate, and house Magnificent 6? Is Tesla going to get kicked out of magnificent 7? Gen Z trading options Does Gen Z really invest as much as the media suggests? Where does Gen Z get their financial education online? Quick explanation on the option greeks How stocks are discounting the known future of companies Surprising data on historic stock returns vs real estate Mentioned in this Episode: Cocoa prices soar https://www.ft.com/content/c163633a-cd9e-4962-8b7f-3d6c44463405 Historical Returns on Stocks, Bonds and Bills: 1928-2023 NYU Aswath Damodaran https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html Previous Week’s Podcast: Too Focused on Fed Rates?| META Earnings Implied Volatility | NAV Erosion Mythhttps://podcasts.apple.com/us/podcast/too-focused-on-fed-rates-meta-earnings-implied-volatility/id1432836154?i=1000644131131 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
01:12:2911/02/2024
Too Focused on Fed Rates?| META Earnings Implied Volatility | NAV Erosion Myth
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed and Powell press conference market reaction. Plus, they look at META and Apple option’s implied volatilities did or didn’t predict the post earnings moves. 1994-95 experience in Fed rates and bond yields compared to today. Later, they set the record straight on what NAV erosion is, why the Shiller PE may not be predictive of markets, low response rates to economic surveys, and correlation between CPI and shipping container rates. Fed Meeting Powell press conference roiled markets for all of 1 day Who is right, the bond market or the stock market on rates? Typical moves in bond yields around fed meetings and outside of fed meetings The Fed Funds rate and the 10-year treasury bond yield aren’t as related as you think Looking back at the 1994-95 Fed rate hiking and easing cycle META blows out earnings and adds the most market cap ever in one day Looking at META options implied volatility pre-earnings to see if it got it right Reviewing Apple’s ATM straddle, implied volatility, and post earnings move Confusion around what the meaning of NAV erosion is Total return which includes dividends vs price return. Correlation between CPI year over year change and container shipping rates JOLTS Job Openings Less Turnover Survey response rates drop How economic surveys sample small amounts to gauge total economy Shiller PE CAPE Ratio and predictive power Mentioned in this Episode: 1994-95 All Over Again in Markets? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306 BLS Bureau of Labor Statistics January 2024 employment report https://www.bls.gov/news.release/pdf/empsit.pdf Previous Week’s Podcast: What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson? https://podcasts.apple.com/us/podcast/what-option-volatility-means-for-markets-is-the/id1432836154?i=1000642385904 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
01:02:3104/02/2024
Explaining Telsa Implied Volatility | Bitcoin Selloff Post Spot ETF | What History Tells Us About Election Year Returns
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are it at once again where they analyze Tesla’s implied volatility right before earnings vs what happened. Did the option’s market misprice premiums? Also, in the episode they talk about Bitcoin’s drop as a sell the news buy the rumor example while Derek argues that Bitcoin’s volatility make it unusable as a currency to transact business. Later they dive into some data showing that when markets are up 20% the year before the election, election years historically have never been down and does that mean anything for 2024? Finally, they talk about China’s selloff relative to US markets and how everyone thought emerging markets would be the thing in 2023. Bitcoin in a bear market drawing down greater than 20% from pre-ETF launch high Bitcoin at least in the short term seems like people bought the rumor but are selling the news Can Bitcoin be a currency if it drops 20% within a month? What is an option’s implied volatility mean vs an option’s historical volatility Looking at the price of the at the money straddle on Tesla right before earnings How to figure out what the options market is pricing in for a 1 standard deviation move Post Tesla earnings did the markets accurately price in how much Tesla moved after earnings? 2023 was up > 20% so what does that mean for election year based on some data? Election year and the markets China’s stock market gets a little rocky but no bearing on US markets? Emerging markets were picked at the beginning of 2023 to close the gap on US markets Emerging markets still underperforming the S&P 500 Index Explaining how companies earnings in S&P 500 Index are aggregated together not weighted Comparing Apple’s earnings in a quarter to Starbucks and why the big 7 matter most right now Semiconductors weighting in the S&P 500 Index hits a high Semiconductors as the picks and shovels, bluejeans play for AI? Mentioned in this Episode: What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson? https://podcasts.apple.com/us/podcast/what-option-volatility-means-for-markets-is-the/id1432836154?i=1000642385904 Hedging With Options Examples | Soft Landing? | US Congress Trading Returns | Is Good News or Bad News Good? https://podcasts.apple.com/us/podcast/hedging-with-options-examples-soft-landing-us-congress/id1432836154?i=1000640844619 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
43:4428/01/2024
What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are back to discuss whether the Fed grasps how prices historically always rise. That prices never drop and inflation dropping doesn’t mean prices go down. Then they discuss the forward earnings estimates showing growth for the S&P 500 Index while comparing price to sales compared to January of 2022. Later, they discuss what the option volatility markets are signaling for the S&P 500 over the near term. All that and more plus is the market pricing in too many rate cuts? Is the market pricing in too many rate cuts? What the option volatility markets are signaling for the S&P 500 Inflation dropping doesn’t mean prices go down Supply side inflation vs demand side inflation Why throwing money (stimulus) into the economy during a supply side problem was misguided Reviewing option market volatility and what the volatility indicators are telling us about markets The volatility of volatility (VVIX) movements of late Forward earnings estimates point to growth expectations for the S&P 500 Index Mentioned in this Episode: Hedging With Options Examples | Soft Landing? | US Congress Trading Returns | Is Good News or Bad News Good? https://podcasts.apple.com/us/podcast/hedging-with-options-examples-soft-landing-us-congress/id1432836154?i=1000640844619 Bitcoin ETF Sell the News? | Expect Stock Market Corrections | Value vs. Growth | Travel Inflation Cooling?https://podcasts.apple.com/us/podcast/bitcoin-etf-sell-the-news-expect-stock-market/id1432836154?i=1000641595251 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
45:5521/01/2024
Bitcoin ETF Sell the News? | Expect Stock Market Corrections | Value vs. Growth | Travel Inflation Cooling?
Derek Moore and Mike Puck of ZEGA Financial join up to discuss the run up and selloff in bitcoin around the bitcoin spot etf launches. Is it the obvious buy the rumor sell the news situation? How CPI components like lodging away from home and travel pricing are starting to cool. Later, examining the value vs growth debate and whether this is the year for value to finally have its day. Plus, forward PE valuations and how they have fluctuated over the last 2 years. Bitcoin ETFs finally launch Bitcoin prices rally ahead of the ETF launch and selloff on launch day Buy the rumor sell the news? Why value stocks have had difficulty outpacing growth Cost of capital value stocks vs growth stocks CPI travel components are cooling off bringing some pricing power back to consumers Forward PE ratios How the forward multiple has expanded after dropping in 2022 Why corrections are normal Historically the markets suffer corrections but are often up for the year 1987 crash was big but market actually ended the year up Once again why predictions and guessing market direction can be futile Mentioned in this Episode: Hedging With Options Examples | Soft Landing? | US Congress Trading Returns | Is Good News or Bad News Good? https://podcasts.apple.com/us/podcast/hedging-with-options-examples-soft-landing-us-congress/id1432836154?i=1000640844619 2024 Predictions | Late Year Rally Bullish? | What if Investors Are Expecting Too Many Rate Cuts? https://podcasts.apple.com/us/podcast/2024-predictions-late-year-rally-bullish-what-if-investors/id1432836154?i=1000640245688 0 DTE Options to Blame for Selloff? | 2024 Targets for S&P 500 Index | Fed Dot Plots Always Wrong?https://podcasts.apple.com/us/podcast/0-dte-options-to-blame-for-selloff-2024-targets-for/id1432836154?i=1000639530301 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
49:0514/01/2024
Hedging With Options Examples | Soft Landing? | US Congress Trading Returns | Is Good News or Bad News Good?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are back this week to discuss some hedging examples and how hedging is cheap right now. They even go through a few examples. Then they get into the sharp rise in container shipping costs before discussing the weaker PMI Services data. Later they note Bloomberg’s data showing articles mentioning “soft landing” are the highest since the 2000-2001 recession. A fun segment where they go through data from Unusual Whales showing the 2023 returns from members of congress and which members traded the most including options. Finally, they discuss whether so goes January goes the rest of the year in markets is a good indicator. The cost of hedging with options is cheap right now. Examples of hedging using the S&P 500 Index ETF SPY and Nvidia Zero cost collars to hedge downside risk. Is good news in markets or bad news in markets good news? Container shipping costs spike due to the Red Sea and Suez Canal re-routing. PMI Services data shows employment dipped below 50, which is contraction. What is the PMI Services Survey? “Soft Landing” shows up in Bloomberg articles the most since the 2000-2001 recession. Which members of the US Congress beat the markets last year 2023? Unusual Whales publishes report showing number of trades and performance of US Congress Which congressman traded over 4000 times last year? What does January performance say about the rest of the year’s performance in markets? NY Fed global supply chain pressure index Mentioned in this Episode: Report from Unusual Whales showing 2023 members of congress trading returns https://unusualwhales.com/politics/article/congress-trading-report-2023 December ISM Services PMI report https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/december/ NY Federal Reserve Bank Global Supply Chain Pressure Index (GSCPI) https://www.newyorkfed.org/research/policy/gscpi#/interactive 2024 Predictions | Late Year Rally Bullish? | What if Investors Are Expecting Too Many Rate Cuts? https://podcasts.apple.com/us/podcast/2024-predictions-late-year-rally-bullish-what-if-investors/id1432836154?i=1000640245688 0 DTE Options to Blame for Selloff? | 2024 Targets for S&P 500 Index | Fed Dot Plots Always Wrong?https://podcasts.apple.com/us/podcast/0-dte-options-to-blame-for-selloff-2024-targets-for/id1432836154?i=1000639530301 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT Contact Derek [email protected] www.zegafinancial.com
50:0008/01/2024
2024 Predictions | Late Year Rally Bullish? | What if Investors Are Expecting Too Many Rate Cuts?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, go through their 2024 predictions and review how right or wrong they were in 2023. Why predictions are so hard to make and why they are overrated. When markets go up over 10% in the final 2 months of the year historically what does that mean for returns the following year? How earnings growth and market returns are non-correlations. According to NAAIM Active Manager Equity exposure is now greater than 100% compared to the October lows where it was only around 30%. No surprise there as people are more bullish when markets are making highs. 2024 predictions covering interest rates, the fed, markets, earnings, gold, bitcoin, oil and more. Reviewing the 2023 predictions and how wrong or right they were. How investors and institutions tend to be more long stocks when markets are at highs How investor psychology gets in the way of buying when they should be buying Questioning that everyone sold stocks to go into money market funds. How bank assets may have rolled into money markets due to low interest rates at banks Comparing correlations between earnings growth in a year and the market returns When markets are down greater than 22% in a year, what is the average return the next year? What if investors are expecting too many Fed rate cuts? S&P 500 Index price vs EPS during bear markets When final two months of the year are up greater than 10% what are returns the following year? NAAIM Active Manager Equity exposure now 103% vs under 30% during October lows Mentioned in this Episode: 0 DTE Options to Blame for Selloff? | 2024 Targets for S&P 500 Index | Fed Dot Plots Always Wrong?https://podcasts.apple.com/us/podcast/0-dte-options-to-blame-for-selloff-2024-targets-for/id1432836154?i=1000639530301 Everyone Betting on Rate Cuts | Blackrock Buying 44% of Homes? | Record Call Option Volume & VVIX and VIX Out of Synch? https://podcasts.apple.com/us/podcast/everyone-betting-on-rate-cuts-blackrock-buying-44-of/id1432836154?i=1000638850473 No, Wall Street investors haven’t bought 44% of homes this year https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr Contact Derek [email protected] www.zegafinancial.com
51:2801/01/2024
0 DTE Options to Blame for Selloff? | 2024 Targets for S&P 500 Index | Fed Dot Plots Always Wrong?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss how people are blaming the Wed 1.5% selloff on 0 DTE options while the CBOE says not so fast as dealers may have been buying stocks during the drawdown thus stabilizing markets. Later they talk shipping container rates spiking higher due to issues in the Suez Canal and Red Sea. Is this a fly in the ointment for inflation? Then they talk about how analysts making 2024 S&P 500 Index price and earnings estimates must get the forward 2025 earnings estimate right and what multiple the market will be trading at. What about oil in 2024? Analysts seem to be bearish, but Jay and Derek look at potential for refilling the SPR (strategic petroleum reserve). Finally, they talk VIX and VVIX and note how compressed the daily changes have been and what if anything that means going forward. 0 DTE Options (or ZERO Days to Expiration Options) are blamed for midweek selloff. Why the CBOE says 0 DTE options are not to blame and instead dealers were buying stocks. How market makers were a stabilizing force during the selloff rather than adding to selloff Are they getting wrong the impact of 0 DTE options? Why calls for Volmageddon 2.0 might be missing what caused Volmageddon 1.0 S&P 500 Index targets for 2024 vary quite a bit Why is it so hard to nail next years S&P 500 Index targets because you really need 2025 EPS. How analysts could have the same earnings targets but different multiple expectations Shipping container rates spiked due to the issues in the Red Sea leading to the Suez Canal Below the surface inflation pressure and remembering how container rates foretold inflation SPR Strategic Petroleum Reserve levels and whether refilling them will be inflationary. Gasoline prices have softened while analysts are pretty bearish on oil for 2024. Contrarian view might be to look at oil to recover which would move CPI. The Fed Dot Plots never wind up being correct. Is Diehard a Christmas movie or not? Mentioned in this Episode: Zero-Day Options Shouldn’t Be Blamed for Selloff, Cboe Says https://www.bloomberg.com/news/articles/2023-12-21/zero-day-options-catch-blame-for-selloff-cboe-says-not-so-fast?embedded-checkout=true Everyone Betting on Rate Cuts | Blackrock Buying 44% of Homes? | Record Call Option Volume & VVIX and VIX Out of Synch? https://podcasts.apple.com/us/podcast/everyone-betting-on-rate-cuts-blackrock-buying-44-of/id1432836154?i=1000638850473 No, Wall Street investors haven’t bought 44% of homes this year https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html S&P 500 Targets | VIX Index Largest 7-Week declines | Simplifying Synthetic Long Stock with Covered Calls | Labor Force Participation https://podcasts.apple.com/us/podcast/s-p-500-targets-vix-index-largest-7-week-declines-simplifying/id1432836154?i=1000638193441 Dave Ramsey Wrong? | Huge VIX Options Bets | S&P 500 Seasonality | When Does Government Debt Become a Problem? https://podcasts.apple.com/us/podcast/dave-ramsey-wrong-huge-vix-options-bets-s-p-500-seasonality/id1432836154?i=1000636559171 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr Contact Derek [email protected] www.zegafinancial.com
48:1023/12/2023
Everyone Betting on Rate Cuts | Blackrock Buying 44% of Homes? | Record Call Option Volume & VVIX and VIX Out of Synch?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the new consensus of the Fed doing multiple rate cuts so what could go wrong? Record call option volume while the VVIX makes a move higher while the VIX continues lower. Viral article said 44% of home sales were to big institutions like Blackrock and Innovation homes but it was less than 0.4%. Later they look at whether the Powell Fed and the Voelker Fed are similar in declaring mission accomplished. Finally, they cover how bullish investors have gotten now that we are close to the all-time highs again and any flies in the ointment economically. Consensus of multiple Fed rate cuts can be wrong, can it? Why when everyone on the same side sometimes surprises VIX vs the VVIX index What the VVIX spiking while the VIX moves lower means Comparing Chairman Powell’s Fed today to Voelker’s 1982 Fed and going forward for markets The AAII Bull – Bear survey points to high bullishness with market approaching all-time highs. 44% of home sales being bought by Blackrock? Not so fast! Atlanta Fed GDP is now ticking up again. Record Call option volume Fed rate probability tracker tool Mentioned in this Episode: No, Wall Street investors haven’t bought 44% of homes this year https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html S&P 500 Targets | VIX Index Largest 7-Week declines | Simplifying Synthetic Long Stock with Covered Calls | Labor Force Participation https://podcasts.apple.com/us/podcast/s-p-500-targets-vix-index-largest-7-week-declines-simplifying/id1432836154?i=1000638193441 Dave Ramsey Wrong? | Huge VIX Options Bets | S&P 500 Seasonality | When Does Government Debt Become a Problem? https://podcasts.apple.com/us/podcast/dave-ramsey-wrong-huge-vix-options-bets-s-p-500-seasonality/id1432836154?i=1000636559171 0DTE Options Analysis| Inflation Coming Back? | Strong US Dollar Impact https://podcasts.apple.com/us/podcast/0dte-options-analysis-inflation-coming-back-strong/id1432836154?i=1000628157831 Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr Contact Derek [email protected] www.zegafinancial.com
44:0817/12/2023