Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, join up once again to discuss the drop in the VIX Index off the highs. How S&P 500 2024 targets are showing up and why investors may not care. Labor force participation turned down so what does that mean if anything? Finally, Simplifying what synthetic long stock strategies are and synthetic long stock with covered calls. What are the features and benefits? How are they like just owning stock and or owning stock with a covered call? What investors give up by selling covered calls in exchange for additional income.   2024 S&P 500 Year End Price Targets from the investment banks Why investors should probably ignore market predictions Largest VIX Index 7-week declines and whether its significant or no Unemployment remains low but labor force participation move lower What does Labor Force participation measure? What are synthetic option positions? What are synthetic long stock with a covered call position? What are the benefits of using synthetic options to build market exposure?     Mentioned in this Episode:   VIX Index Goes Nowhere | Cheap Puts to Hedge? |Cheaper to Rent Than Buy? | Markets During Presidential Election Years https://podcasts.apple.com/us/podcast/vix-index-goes-nowhere-cheap-puts-to-hedge-cheaper/id1432836154?i=1000637335338   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

Derek Moore and Jay Pestrichelli join up to discuss an unchanged VIX and VVIX index. Was our trading platform screen broken? Whether the VIX and VVIX Index is a coiled spring as they are both in compression mode of late. Then, they explore new data that shows the cost to buy a home vs rent is really high meaning its very costly to buy vs rent right now. Did the Fed cause this? Jay and Derek also explore how cheap 1 year out puts are on the S&P 500 Index right now. Does no one want protection? Finally, they dip their toes into the all to soon 2024 presidential election looking at data around how markets do during election years. Does it even matter if it’s a Republican or Democrat?   The VIX Index and the VVIX Index both closed unchanged on Wednesday this week Both VIX and VVIX are showing signs of compression in their standard deviations of late What smaller ranges over a period mean for the VIX and markets with regard to expected moves Not since the pre-Great Financial crisis has buying a home been more expensive than renting How now one ever compares the interest paid in a mortgage payment to rental payments Did the Federal Reserve cause rent inflation by freezing the housing market creating demand? The 1-year out at-the-money-puts are a cheap hedge right now, does anyone want hedged? How everyone wants to be hedged when markets are crashing but not when its cheap Why buying but hedging makes sense for the long haul. How do markets do in the 4th year of a presidential cycle election year? Market returns during presidential elections when democrats vs republicans get elected     Mentioned in this Episode:   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   Total compounded annualized growth rate S&P 500 index by decade https://zegafinancial.com/blog/where-did-the-2010s-rank-for-total-return-on-sandp-500-index   Probability of Recession? | Explaining How US Treasury Bond Auctions Work | S&P 500 Index Member Changes | Option Premium Intrinsic vs. Extrinsic https://podcasts.apple.com/us/podcast/probability-of-recession-explaining-how-us-treasury/id1432836154?i=1000635380296   Stock Market Returns after First Rate Cut https://podcasts.apple.com/us/podcast/stock-market-returns-after-first-rate-cut-yield-curve/id1432836154?i=1000634550774   Option Selling ETFs Boom | Probability of Future Fed Moves | Bad News is Good News on Employment https://podcasts.apple.com/us/podcast/option-selling-etfs-boom-probability-of-future-fed/id1432836154?i=1000633983056   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

Derek Moore is back with Jay Pestrichelli this week where they analyze the recent viral video where Dave Ramsey suggests people can safely withdraw 8% forever in retirement. What doesn’t make sense, what is left out, and why the assumptions may be faulty. Then, they discuss the market seasonality and whether this November pop higher already delivered a year end rally? Later Jay and Derek discuss the huge purchase of VIX calls this week and what it did to the VVIX Index as well as an interesting VIX option trade for December. Finally, they touch on Argentina’s plan to dollarize the economy and when the US and other countries high debt to GDP can expect it to be a problem and what is so frustrating to traders making bearish bets against it.   Dave Ramsey viral video saying 8% withdrawal rate on accounts will work forever How Dave Ramsey makes fun of people arguing for 3%-5% withdrawal rates The claim of simply investing in mutual funds making 12% annually doesn’t add up How ignoring the sequence of return risk doesn’t paint a true picture for retirees Dave Ramsey seems to imply even retirees should be 100% invested in equities How the sequence of returns only matters to returns when withdrawing or adding money Simple average annual return vs CAGR compounded annual growth rate Contrary to Dave Ramsey’s advice not everyone should paying off their mortgage early What historical seasonality of the S&P 500 Index says about year end performance One of the largest November month returns on record for S&P 500 Index since 1928 What does Novembers month to date returns mean for seasonality? Sovereign government debt at historic highs measured as debt to GDP Argentina new president Javier Milei’s plan to dollarize Argentina’s history of debt defaults Discussing the huge VIX call trade that moved the VVIX Index this week Why people are buying VIX calls The VIX Index closed at the lowest level since January of 2020 Interesting VIX call breakeven levels for December calls     Mentioned in this Episode:   Total compounded annualized growth rate S&P 500 index by decade https://zegafinancial.com/blog/where-did-the-2010s-rank-for-total-return-on-sandp-500-index   Probability of Recession? | Explaining How US Treasury Bond Auctions Work | S&P 500 Index Member Changes | Option Premium Intrinsic vs. Extrinsic https://podcasts.apple.com/us/podcast/probability-of-recession-explaining-how-us-treasury/id1432836154?i=1000635380296   Stock Market Returns after First Rate Cut https://podcasts.apple.com/us/podcast/stock-market-returns-after-first-rate-cut-yield-curve/id1432836154?i=1000634550774   Option Selling ETFs Boom | Probability of Future Fed Moves | Bad News is Good News on Employment https://podcasts.apple.com/us/podcast/option-selling-etfs-boom-probability-of-future-fed/id1432836154?i=1000633983056   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

Derek Moore is back with Jay Pestrichelli, CEO of ZEGA Financial, to review the Goldman Sachs probability of recession and Fed rate forecast for 2024. Then they do a deeper dive on key aspects of US Treasury Bond auctions. Hint, it’s a Dutch auction and how to read the results of treasury auctions including the bid to cover ratio. Later they talk through changes in the makeup of the S&P 500 Index companies and what the impact on earnings may be. Plus, how even when stocks go in and out of the index how the “divisor” calculation smooths the S&P 500 price out. Finally, Jay and Derek do a deep dive into the difference of options premium intrinsic value vs. extrinsic value using some examples. Oh, we have some recommendations as well.   What does Goldman Sachs have for probability of recession now? What does Goldman Sachs estimate for Fed interest rates in 2024? How do US Treasury bond auctions work? What is a Dutch auction? What is the bid to cover ratio mean in a US Treasury auction? Looking at supply and demand metrics within Treasury Bond auctions. S&P 500 Index committee that determines what companies come in and out of the index. What is the S&P 500 Index divisor? The largest company not in S&P 500 index is Uber? Index changes underappreciated for earnings growth? Airbnb, Blackstone, Lululemon all added to the S&P 500 Index in 2023 What is the difference between intrinsic premium and extrinsic premium in options? How the option greeks like delta, gamma, theta impact extrinsic premium but not intrinsic Comparing covered calls to ITM short puts on an index Time decay implied in extrinsic premium When covered calls are likely to get called away around dividends and extrinsic premium left Why are ITM cash secured puts misunderstood     Mentioned in this Episode:     Stock Market Returns after First Rate Cut https://podcasts.apple.com/us/podcast/stock-market-returns-after-first-rate-cut-yield-curve/id1432836154?i=1000634550774   Option Selling ETFs Boom | Probability of Future Fed Moves | Bad News is Good News on Employment https://podcasts.apple.com/us/podcast/option-selling-etfs-boom-probability-of-future-fed/id1432836154?i=1000633983056   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

Derek Moore does a deep dive asking the question why is everyone rooting for the Fed to lower rates? If the Fed must lower interest rates, doesn’t that mean there is trouble? Should investors instead be rooting for stable but higher rates where the long end un-inverts as a proxy for higher growth? What happens to market performance between the last Fed hike and first rate cut? What is the historical performance of markets post the first Fed rate cut? Then looking at past yield curve (10-year treasury minus 3-month treasury yield) before recessions. How the Fed normally inverts and then un-inverts the curve by hiking and then lowering interest rates. Finally, what is the NBER (National Bureau of Economic Research Board) looking at to determine recessions?   What is the inverted yield curve? How have past yield curves inverted and un-inverted around recessions? How does the stock market perform between the final rate hike and first rate cut? How does the stock market perform after the first rate cut by the Fed? Are rate cuts a sign of strength in the economy? How the Fed typically causes inversions by hiking the Fed funds rate. Historically the yield curve un-inverted because the Fed is cutting rates. Will this time be different where long rates move higher to un-invert the curve? What is the NBER National Bureau of Economic Research looking at for recessions? How predictive of recessions is the yield curve?   Mentioned in this Episode:   Liz Young Sofi article showing S&P 500 Index market returns from last rate cut to first hike and post first Fed cut https://www.sofi.com/article/investment-strategy/liz-looks-at-recent-rally/   FRED Spread of 10-year treasury bond to 3 month treasury bill difference updated https://fred.stlouisfed.org/series/T10Y3M   NBER business cycle dates (past recession dates) https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions     Option Selling ETFs Boom | Probability of Future Fed Moves | Bad News is Good News on Employment https://podcasts.apple.com/us/podcast/option-selling-etfs-boom-probability-of-future-fed/id1432836154?i=1000633983056   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

Derek Moore and ZEGA Financial CEO Jay Pestrichelli ponder whether the Fed is truly done and if the street is too optimistic on rate cuts in 2024. Plus, they discuss new data showing option selling ETFs are having record assets between inflows and new entrants. Bad news is good news still as employment ticks up. They delve deeper into the numbers including labor participation rate, size of workforce, and more in the household survey data. Finally, they talk about options volatility and how it got sucked out of the market this week.   Option selling ETFs set new record high for assets Is the Fed really done raising rates? Is the street too optimistic about Fed rate cutting in 2024? Sahm Recession Rule indicator says recent employment data hints at recession 3-Month moving average of the unemployment rate in the Sahm recession rule indicator VIX hits lowest level in a while Earnings and Nvidia options Bad news is good news regime is still alive and well in markets US unemployment rate ticks up to 3.9% Understanding the household survey numbers What is the labor force participation rate? Size of the US workforce   Mentioned in this Episode:   BLS US Unemployment Rate report https://www.bls.gov/news.release/empsit.nr0.htm   Correction Territory | No Fear Yet in Markets? | When Does Capitulation Happen in Markets? https://podcasts.apple.com/us/podcast/correction-territory-no-fear-yet-in-markets-when-does/id1432836154?i=1000632979045   Fed Rate probability tracker https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html   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

Derek Moore and ZEGA Financial CEO Jay Pestrichelli to discuss how despite the correction territory (markets down 10% from top), the VIX index hasn’t shown any real fear. So, what will it take to see capitulation in the markets? Thus far high yield spreads haven’t reflected too much worry. Then Derek is tired of pundits talking about equal weighted market vs the “Magnificent 7” comparison as this is why you buy the index! Later, they discuss the new Fed survey showing how much net worth one needs to get into the top 10% plus median net worth by age range. All this and more plus some recommendations.   Is there enough fear in the stock market? Why hasn’t the VIX spike more during a 10% stock market correction? VVIX vs VIX What would capitulation in the stock market look like right now? What is a stock market correction vs a bear market? Checking in the on High Yield bond spread Is rebalancing traditional portfolios from stocks to bonds causes equity weakness? The “Magnificent 7” Tesla Apple Google Meta Microsoft Nvidia Amazon Equal weighted stock indexes vs the S&P 500 Index Fed survey on household finances shows how much net worth to get into different percentiles. What is the median net worth by age group? How US median net worth has increased. Fed Survey of Consumer Finances (SCF)   Mentioned in this Episode:   Fed Survey of Consumer Finances (SCF) showing median net worth and income by age https://www.federalreserve.gov/econres/scfindex.htm   Powell vs. Bond Traders | Option Volatility During Earnings | Mortgage Rate Spread to Treasuries https://podcasts.apple.com/us/podcast/powell-vs-bond-traders-option-volatility-during-earnings/id1432836154?i=1000632184399   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   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 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

Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss whether Jay Powell or bond traders are in charge of interest rate policy? How option volatility changes around earnings announcements. Why the spread between the 30-year Mortgage Rate and 10-year treasuries is historically wide including MBS (Mortgage-Backed Securities) impact. Plus, how MBS are doing something kind of weird right now. Later they discuss financial conditions, how high yield loans and bonds have greatly outperformed “safer” fixed income areas, and the breadth of the market vs the “magnificent 7” companies.   Is the bond market doing the Fed and Jay Powells work for them? How higher interest rates tighten financial conditions. The Fed not buying bonds creating lack of buyers? Typical spread between the 30-year mortgage rate and the rate on US 10-year treasuries How the spread is historically high (like 2 standard deviations) When the 30-year mortgage spread over treasuries widened in the past Does this mean mortgage rates need to come down or treasury rates have more to rise? What are MBS Mortgage-Backed Securities How MBS bond convexity is positive (hint, it’s almost always negative) Interest rates moving higher means less refinancing (and home sales) extending loan durations. What is bond convexity and how does it relate to interest rate sensitivity risk High yield bonds and loans surprising outperformance over investment grade and treasuries Divergence is higher now than before Silicon Valley Bank Chicago Fed National Financial Conditions Index S&P 500 Equal Weight Index vs the magnificent 7 How the S&P 500 Index forecasted next 12-month earnings are higher now The forward PE ration of the S&P 500 Index back down to about 17.5 PE Are we behind the trough in earnings?   Mentioned in this Episode:   Deep Dive: Can Bonds Recover? | TLT ETF Breakdown |Inflation and the Fed https://podcasts.apple.com/us/podcast/deep-dive-can-bonds-recover-tlt-etf-breakdown-inflation/id1432836154?i=1000631358491   Bond Market Collapse https://podcasts.apple.com/us/podcast/bond-market-collapse-oil-price-problems-bond-stock/id1432836154?i=1000630742799   Cheap vs Expensive Options | Warren Buffett on Options | Fed Powell Presser https://podcasts.apple.com/us/podcast/cheap-vs-expensive-options-warren-buffett-on-options/id1432836154?i=1000629058900   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   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446 The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp 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

Derek Moore explains what it would take interest rate wise for bonds and TLT to get back to breakeven on price. A lot of misunderstanding is out there on buying bonds at the bottom and what that means.  How bonds have different drivers than stocks. Plus, inflation is ticking back up and what that means for the Fed. Finally, a deep dive into TLT components and the math behind what those buying TLT are hoping for.   What would make bonds go back up? Examining TLT iShares 20+ etf components Effective Duration to show how interest rates affect bond etfs and bonds. Math behind movement in bonds What would it take for TLT to get back to breakeven with regard to interest rates? Looking at 30-year treasuries issued in 2020 that are down greater than 50% Inflation ticked back up with CPI year over year reaching 3.7% YoY from its low of 3% What does inflation moving back up mean for the Fed and interest rates? Earnings seasons begins with expectations rising Are earnings still the most important driver of price? Multiple expansion vs earnings falling     Mentioned in this Episode:   Bond Market Collapse https://podcasts.apple.com/us/podcast/bond-market-collapse-oil-price-problems-bond-stock/id1432836154?i=1000630742799 Government Shutdowns & Markets | Short ITM Puts Alternative to Covered Calls | Why Hedging Works https://podcasts.apple.com/us/podcast/government-shutdowns-markets-short-itm-puts-alternative/id1432836154?i=1000629813419   John Hussman 12-year forward nominal return estimates chart https://www.hussmanfunds.com/comment/mc230724/     Cheap vs Expensive Options | Warren Buffett on Options | Fed Powell Presser https://podcasts.apple.com/us/podcast/cheap-vs-expensive-options-warren-buffett-on-options/id1432836154?i=1000629058900   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   Warren Buffett and Charlie Munger Berkshire Hathaway meeting discuss using and pricing options https://www.youtube.com/watch?v=SMkpou-YBGw   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446 The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp 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

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, observe the destruction in long term treasury bonds due to the reflation of the yield curve. How does the market do with higher rates? What does a flattening yield curve mean for the economy? Bond and Stock correlations mean bonds not protecting portfolios? The Hussman 12-year forward return gauge. Strategic petroleum reserve (SPR) now only has 17 days of supply left. And by the way, there is still a lot of good news like improving mortality rates around the world. That and more including some recommendations.   How much long-term US Treasury Bonds have dropped from the high The yield curve is getting flatter meaning long rates are rising Cam Harvey’s 10/3 yield curve inversion is on the path the un-inverting? How the yield curve un-inverts before recessions Examining a 100-year Austrian bond and how it once was up 250% and now down 40% Stock and bond correlations going closer to 100% Starting interest rates vs. the stock market since 1926 Starting inflation rates vs. the stock market since 1926 Comparing the yield curve today vs. early September John Hussman estimated 12-year annual nominal total returns SPR Strategic Petroleum Reserve and the days left of inventory (it is getting lower) Infant mortality rates continue falling and are at lowest levels back to 400 BC   Mentioned in this Episode:   Government Shutdowns & Markets | Short ITM Puts Alternative to Covered Calls | Why Hedging Works https://podcasts.apple.com/us/podcast/government-shutdowns-markets-short-itm-puts-alternative/id1432836154?i=1000629813419   John Hussman 12-year forward nominal return estimates chart https://www.hussmanfunds.com/comment/mc230724/     Cheap vs Expensive Options | Warren Buffett on Options | Fed Powell Presser https://podcasts.apple.com/us/podcast/cheap-vs-expensive-options-warren-buffett-on-options/id1432836154?i=1000629058900   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   Warren Buffett and Charlie Munger Berkshire Hathaway meeting discuss using and pricing options https://www.youtube.com/watch?v=SMkpou-YBGw   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446 The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp 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

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, look at how markets have done during past Government Shutdowns. The S&P 500 Index during, and 3 and 6 months later. Then they get in dept on why selling in-the-money puts is the same as selling covered calls on stock. What are cash covered puts? How US Treasuries yielding 5% plus may tip the scales. The risks and payoffs of one versus the other. How cash settled European style options differ from American style options at expiration (and before).  Finally, they touch on why hedging works to take pressure off investors while reducing the need to time markets. Of course, some recommendations as well.   How have markets historically performed around government shutdowns Should investors fear government shutdowns? How long do government shutdowns typically last? What was the longest government (or partial) shutdown? Why hedging all the time helps investors stay invested. The hedgers opportunity where potential exists to buy more shares lower. What is an in-the-money (ITM) cash secured put? What are the mechanics of a cash secured put? What are cash settled European style option characteristics? What are American style options with assignment and exercise components? Risk of American style options vs cash settled options. How selling ITM Cash Secured Puts is like buying the underlying and selling covered calls. Why do investors get confused with cash secured puts or in-the-money put selling? Payoffs and risks of ITM cash covered puts. Why interest rates on short-term treasuries above 5% are a potential game changer. Treasuries with ITM short puts vs long stock with covered calls   Mentioned in this Episode:   Cheap vs Expensive Options | Warren Buffett on Options | Fed Powell Presser https://podcasts.apple.com/us/podcast/cheap-vs-expensive-options-warren-buffett-on-options/id1432836154?i=1000629058900   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   Warren Buffett and Charlie Munger Berkshire Hathaway meeting discuss using and pricing options https://www.youtube.com/watch?v=SMkpou-YBGw   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446 The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp 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

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discussed the fallout in the markets during Jerome Powell’s press conference post Fed decision. Then, they talk about high yield spreads and current interest rates across relative fixed income like investment grade, high yield, and treasuries. Finally, they explore how options are priced and which options are considered expensive or cheap vs one another. It might surprise you to take a step back looking at the per day costs. How options are priced using various inputs like implied volatility, interest rates, and time value. How Warren Buffett and Charlie Munger at Berkshire Hathaway have used options. Charlie Munger says Black Scholes is useless to price longer term options. Finally, some recommendations.     The Federal Reserve has no action, but rates move higher. Rising long end of the yield curve Does the bond market finally believe the fed? Jerome Powell post press conference market selloff When all the high yield is due to be refinanced in the debt maturity wall. Looking at 0 DTE option with a half hour left compared to 3-day options. Comparing 0 DTE options all the way out to 5year+ options prices What is the per day cost of an option? Comparing longer vs shorter-term options from a cheap vs expensive standpoint How implied volatility currently is higher in much longer options. What implied volatility says about 1 standard deviation expectations for price? Cost of carry and interest rates in the pricing of options Constructing hypothetical option trades holding treasuries with long term calls Is Charlie Munger right that Black Scholes mispriced long term options? ISDA agreement Big Short Brownville Capital talking about mispriced long-term options. Warren Buffett talks about selling very long term options to get paid to have an option   Mentioned in this Episode:   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   Warren Buffett and Charlie Munger Berkshire Hathaway meeting discuss using and pricing options https://www.youtube.com/watch?v=SMkpou-YBGw   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446 The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6 Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp Recession Predictions Still Wrong? | Synthetic Options | Unemployment Anomalies | Oil Prices Breakout https://podcasts.apple.com/us/podcast/recession-predictions-still-wrong-synthetic-options/id1432836154?i=1000626691109   0 DTE Options No Problem? | Jay Powell’s Wyoming Speech Points to More Interest Rate Hikes? https://podcasts.apple.com/us/podcast/0-dte-options-no-problem-jay-powells-wyoming-speech/id1432836154?i=1000625845803     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

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, talk through the recent CBOE analysis on impact of 0DTE options. Contrary to popular belief, 0DTE options may not be causing imbalances according to the data. Plus, explaining how cash settled (European) style options differ from American style where you can be assigned (or auto exercised). How short puts can mirror covered calls. Not surprisingly, Jay and Derek get detailed into some of the similarities. Plus, is inflation coming back after the CPI report and the recent push higher in oil prices? How a strong US Dollar impacts companies and how the price of the new Apple iPhone is more expensive around the world. Finally, some recommendations and a Tim Tebow Johnny Manziel comparison.   What CBOE (Chicago Board of Options Exchange) data says about 0DTE options Evaluating net buyers vs sellers of 0DTE options How CBOE data on 0DTE options seems to indicate more balance in positioning What is the difference between cash settled index options and American style options? How cash settlement differs from getting assigned or auto exercising into underlying shares Comparing the structure of covered calls with selling ITM in the money cash settled puts. Comparing risk of owning shares and selling covered calls vs selling cash secured puts How a strong US dollar impacts multinational corporation’s earnings. Using the new Apple iPhone as an example of strong dollar impact to prices around the world Latest CPI (Consumer Price Index) came in hotter than expected. Is inflation making a comeback? How rising oil prices can impact inflation given its place in the CPI. Using the 1994-95 example of higher rates with a rising market Are people too worried about higher rates? Existing US mortgages are still primarily at much lower rates. Tim Tebow vs Johnny Manziel statistical comparison     Mentioned in this Episode:   Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia https://podcasts.apple.com/us/podcast/implied-volatility-deep-dive-real-interest-rate-yields/id1432836154?i=1000627400400     GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446   The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6   Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp   Recession Predictions Still Wrong? | Synthetic Options | Unemployment Anomalies | Oil Prices Breakout https://podcasts.apple.com/us/podcast/recession-predictions-still-wrong-synthetic-options/id1432836154?i=1000626691109   0 DTE Options No Problem? | Jay Powell’s Wyoming Speech Points to More Interest Rate Hikes? https://podcasts.apple.com/us/podcast/0-dte-options-no-problem-jay-powells-wyoming-speech/id1432836154?i=1000625845803     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

Derek Moore is back with ZEGA CEO Jay Pestrichelli where they discuss whether higher real yields are an issue for markets and how this period seems similar to the 1990’s. Then they dive into implied volatility using companies like Tesla TSLA and Nvidia NVDA as examples to explore how options markets express views on expected moves based on options prices. What are the drivers of volatility moving higher or lower. How earnings affect implied volatility and what typically happens after the announcement. They also have a side bar discussion comparing the debt of Tesla to Ford for no reason than that it’s quite different. Finally, some recommendations.   What is implied volatility? How to calculate implied price moves using implied volatility Comparing the implied volatilities of NVDA Nvidia vs TSLA Tesla as examples How implied volatility often rises and falls with earnings. How option prices bake in expectations The rule of 16 and implied volatility Stories about implied volatility rising around major events. Debt of Tesla vs Ford What is enterprise value? What are real yields? Real yields vs nominal yields Are higher real yields a problem for markets? 10-year real yield rising Comparing real yields today vs the 1990’s bull market in equities Why investors should want positive real yields. GameStop armchair analysts in the end weren’t right about the company. Upcoming GameStop movies and whether sensationalizing this hurts investors. Did the Big Short Movie cause investors to always be trying to bet on the next big thing?     Mentioned in this Episode:   GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446   The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6   Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp     Recession Predictions Still Wrong? | Synthetic Options | Unemployment Anomalies | Oil Prices Breakout https://podcasts.apple.com/us/podcast/recession-predictions-still-wrong-synthetic-options/id1432836154?i=1000626691109   0 DTE Options No Problem? | Jay Powell’s Wyoming Speech Points to More Interest Rate Hikes? https://podcasts.apple.com/us/podcast/0-dte-options-no-problem-jay-powells-wyoming-speech/id1432836154?i=1000625845803     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

Derek Moore is joined once again by Jay Pestrichelli, CEO of ZEGA Financial where deep dive into the latest employment numbers. Plus, they ponder whether once everyone flips a recession finally comes? Later, they noticed some technical analysis on crude oil prices and a stealth rally. Then Jay and Derek talk through the idea of synthetic option positions including synthetic long stock and its attributes. Q2 earnings wrap up and how analysts over promised worse earnings and what’s ahead.   Unemployment BLS methodology deep dive The unemployment rate rises in August to 3.8% due to anomalies in the report. Yellow Trucking shutdown causes spike in transportation unemployment. Hollywood writers and actors’ strikes cause unemployment rise. Labor force participation rate has been highest since Feb of 2020 25 to 54 age bracket labor force participation rate rises to highest since May of 2002 What are synthetic option positions? What is synthetic long stock using options? Mixed bag of economic data Everyone predicted wrong on recession. US Crude Oil inventories are declining. Q2 S&P 500 earnings wrap up. Q3 earnings and beyond preview How earnings predictions have declined over time Are we passed the trough in earnings? Why do people still hold money at large banks getting almost zero interest? What is a cup and handle technical pattern? Crude oil breaks out from cup with handle pattern.   Mentioned in this Episode:   0 DTE Options No Problem? | Jay Powell’s Wyoming Speech Points to More Interest Rate Hikes? https://podcasts.apple.com/us/podcast/0-dte-options-no-problem-jay-powells-wyoming-speech/id1432836154?i=1000625845803   EconPi website http://www.econpi.com/   Employment Numbers from the BLS https://www.bls.gov/ces/   Fed Funds CME probability tracker tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.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

Derek Moore is joined by Jay Pestrichelli, CEO of ZEGA Financial, to discuss the Bank of America piece saying maybe Goldman Sachs got 0 DTE option effects wrong. Plus, what did Jay Powell’s speech mean if anything? New Fed Funds futures probabilities point to the Fed raising yet again. Then, they go through some odds and ends like how participation in employment surveys is dropping, the high Atlanta Fed GDP now numbers, and more.   The Fed on track for more interest rate hikes? Jay Powell will do what needs to be done! Fed Funds futures probabilities What are 0 DTE Options? Bank of America says 0 DTE options were not the cause of a late-day market drop. Explaining how market makers hedge based on delta. Interest rates and the cost of carry in option prices Small discussion on what option Gamma is. Liquidity in the options market What is the Atlanta Fed GDP Now indicator? Surprising Q3 GDP Now reading over 5.7% What is the establishment employment survey? Dropping participation rate of the unemployment surveys   Mentioned in this Episode:   Bank of America Disputes Goldman Logic on Zero-Day Option Threat to Stocks https://finance.yahoo.com/news/bank-america-disputes-goldman-logic-185606310.html   S&P 500 Forward PE Valuations vs Future Returns | Volatility in Stock & Option Markets https://podcasts.apple.com/us/podcast/s-p-500-forward-pe-valuations-vs-future-returns-volatility/id1432836154?i=1000624302870   Everyone Wrong on Interest Rates and what Fed Funds Probabilities Mean https://podcasts.apple.com/us/podcast/everyone-wrong-on-interest-rates-what-fed-funds-probabilities/id1432836154?i=1000625408660   Fed Funds CME probability tracker tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.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]

Derek Moore discusses how everyone seemed to get the direction of rates across the yield curve wrong. How adding duration in hindsight was the wrong choice. Comparing market prognostications in 1995 to today. What the Fed Funds rate probabilities really measure. Plus, explaining why bonds make or lose money based it their duration (sensitivity to interest rates).   The bond market got rates wrong. What is happening at the long end of the yield curve? Why doesn’t the Fed have to lower rates without a recession or weakness. Explaining what “duration” means with bonds. How changes in interest rates make bonds go up or down. Comparison of 10 year and 30-today year treasury yields vs June 1st. Comparing yield curve today vs. 1995 What does the Fed Funds futures probability tracker measure? Explaining what the implied interest rate is from looking at futures prices. How Fed Funds futures are the markets’ view TODAY of where rates might be in the future. How the Fed Funds futures market got interest rate trajectory wrong     Mentioned in this Episode:   S&P 500 Forward PE Valuations vs Future Returns | Volatility in Stock & Option Markets https://podcasts.apple.com/us/podcast/s-p-500-forward-pe-valuations-vs-future-returns-volatility/id1432836154?i=1000624302870   Liz Young’s article showing current forward PE ratios and subsequent 10-year market annualized returns https://www.sofi.com/article/investment-strategy/liz-looks-at-wrong-calls/   Cheapest (SPX) PUT Protection You've Ever Seen? | S&P 500 Index Rebalancing | Bank of Japan Hawkishnesshttps://podcasts.apple.com/us/podcast/cheapest-spx-put-protection-youve-ever-seen-s-p-500/id1432836154?i=1000623047871   Fed Funds CME probability tracker tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html   LA Times Jan 1995 article on stock and bond market views https://www.latimes.com/archives/la-xpm-1995-01-01-fi-15454-story.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]  

Derek Moore and Jay Pestrichelli return this week to discuss what current forward PE rations and whether that informs future market returns. Reasons PE ratios may go up or down including earnings increasing or markets going lower. Have there been a jump in forward earnings expectations? Then they check in on the high yield spread against treasuries and relationship to the VIX Index. Later they discuss the moving average of the unemployment rate and whether that is leading or lagging as an indicator. Finally, before some recommendations, Jay and Derek take a win vs. the Fed when looking at the supply chain pressure index vs. the CPI.   What is the Forward PE Ratio definition? What is the current forward pe on the S&P 500 Index? Is the forward pe ratio high in relation to the 25-year average? How markets falling or earnings rising can lower the forward PE ratio What is the high yield spread against treasuries? High Yield spread vs the VIX Index Global Supply Chain Pressure Index vs Consumer Price Index How inflation was a supply side issue Moving average of the unemployment rate as a leading indicator of recession? Do higher ranges of market intraday highs and lows mean anything? Next year’s earnings estimates 2024 and 2025 S&P 500 earnings estimates     Mentioned in this Episode:   Liz Young’s article showing current forward PE ratios and subsequent 10-year market annualized returns https://www.sofi.com/article/investment-strategy/liz-looks-at-wrong-calls/   US Debt Down Grade Effects | Interest Rates Effect on Option Prices | US Treasury Yield Curve Dis-inverting? | US Debt Massive Expansion https://podcasts.apple.com/us/podcast/us-debt-down-grade-effects-interest-rates-effect-on/id1432836154?i=1000623596920   Cheapest (SPX) PUT Protection You've Ever Seen? | S&P 500 Index Rebalancing | Bank of Japan Hawkishnesshttps://podcasts.apple.com/us/podcast/cheapest-spx-put-protection-youve-ever-seen-s-p-500/id1432836154?i=1000623047871   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]

Derek Moore and Jay Pestrichelli are back at it discussing how higher interest rates have impacted the price of call and put options. They use some examples of what happens to options prices due to rates and dividends. Then they discuss the recent rise in long term treasury rates, the downgrade of US Treasury debt, and what if any effect the US Treasury issuing massive amounts of new treasury bonds into the market may have. Exploring the 36-month drawdown in the US Aggregate Bond Index compared to other periods. Finally, they check in on how the 3rd year of a presidential cycle is going and then move on to some recommendations.     What effect do higher rates have on option premiums? How are dividends factored into the prices of options? Delving into examples of the value of cost of carry interest rates into call prices The longer end of the treasury curve includes 10 years to 20 years out. More supply of US Treasury bonds issued by the treasury causing higher rates due to increased supply. Best and worst market months historically during the 3rd year of the US Presidential cycle Size of net interest payments expected over the next year. US State and Local income tax receipts falling? How net interest debt payments are now larger than Social Security, Defense, and Medicare/Medicaid Does the US Debt downgrade matter? How sovereign debt is a relative game as many countries have growing debt to GDP. The US Aggregate Bond Index is still in 36 months and counting drawdown due to rising rates. Will the US treasury curve un-invert? Debating whether a curve reflating involves lower short rates or long rates rising? Bill Gross bearish on 10-year bonds believing curve may dis-invert by 10 year rising     Mentioned in this Episode:   Cheapest (SPX) PUT Protection You've Ever Seen? | S&P 500 Index Rebalancing | Bank of Japan Hawkishnesshttps://podcasts.apple.com/us/podcast/cheapest-spx-put-protection-youve-ever-seen-s-p-500/id1432836154?i=1000623047871   Does Inflation Matter? | Make More by Losing Less? | Volatility and Cost of Hedging | Someone Buys a lot of VIX Calls https://podcasts.apple.com/us/podcast/does-inflation-matter-make-more-by-losing-less-volatility/id1432836154?i=1000621261669   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]

Derek Moore responds to a Bloomberg chart highlighting how cheap protective puts are right now according to Bank of America research. At least since 2008, and why it might be good to be hedged when it’s cheap rather than waiting for a market crash to happen first. Then he explains some requirements for a stock to get included in the S&P 500 Index, when it regularly rebalances, and how relaxing the rules on multi share class stocks might pave the way for stocks like AirBnB to potentially be added to the S&P 500 Index at some point. Finally, while you were sleeping the Bank of Japan is going to loosen the cap on the JGP bonds to 1% and what that may mean if anything.   The Bloomberg graph showing how cheap protective puts are on the S&P 500 Index right now. BofA points out 5% out of the money options are cheap and payoffs larger than they’ve been. Why being hedged all the time makes sense. How protection gets expensive when everyone “needs” it so why not be hedged when its cheap? S&P 500 Index rebalancing periods and what it means. NDX Nasdaq 100 special rebalancing to relieve too few stocks being too highly weighted. Requirement and restrictions on a company to be included in the S&P 500 Index S&P 500 Index relaxes rules on allowing companies with multi share classes into the index. Potential for Air BnB and Blackstone getting added to the S&P 500 Index Aspects of index membership changing no one ever talks about including aggregate earnings. Bank of Japan hawkish turn What is yield curve control by the Bank of Japan?     Mentioned in this Episode:   Why Crash Predictions Don’t Help | What Does the Market Fear? | Confusing Market Data | 11th Best Start to the Year https://podcasts.apple.com/us/podcast/why-crash-predictions-dont-help-what-does-the-market/id1432836154?i=1000622056946   Does Inflation Matter? | Make More by Losing Less? | Volatility and Cost of Hedging | Someone Buys a lot of VIX Calls https://podcasts.apple.com/us/podcast/does-inflation-matter-make-more-by-losing-less-volatility/id1432836154?i=1000621261669   Short Sellers Give Up? | The Case for Interest Rates to Stay High for Longer https://podcasts.apple.com/us/podcast/short-sellers-give-up-the-case-for-interest-rates-to/id1432836154?i=1000620571083   Nasdaq 100 Index Strong First Half Equals Strong Second Half? | Overbought or not? | Trying to Guess the Forward PE Multiple Is Hard!https://podcasts.apple.com/us/podcast/nasdaq-100-index-strong-first-half-equals-strong-second/id1432836154?i=1000619186796     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]

Jay Pestrichelli checks in with Derek Moore to discuss people that always predict horrible market crashes are coming and why it’s so unhelpful for investors. Then they talk through what the market fears (besides the normal stuff) at this point including profit margins and looming strikes. Why is economic data so confusing and if its broken. Finally, they go through the S&P 500 having the 11th best 1st half and compare this market cycle to the 2000 bear market.   Fear and market crash prediction do investors no good in the long run. What does the best 1st half market years tell us about the rest of the year’s returns? S&P 500 Index has the 11th best first half of a year. Beyond inflation, what is left for the market to fear? How profit margins may be the next thing to watch The relationship between sales, margins, and earnings The economic data is all over the place. Leading economic indicators would seem to indicate recession, but other things are just fine. PPI minus CPI plotted against GAAP earnings over past years. What does PPI coming down greater than CPI tell us if anything? Surprising that the Dow Jones DIA ETF has a higher total return than SPY since inception. The number of workers on strike by year could hit some recent highs in 2023. What would large numbers of workers striking mean for the economy? Comparing 2000 bear market vs 2022 bear market       Mentioned in this Episode:   Does Inflation Matter? | Make More by Losing Less? | Volatility and Cost of Hedging | Someone Buys a lot of VIX Calls https://podcasts.apple.com/us/podcast/does-inflation-matter-make-more-by-losing-less-volatility/id1432836154?i=1000621261669   Short Sellers Give Up? | The Case for Interest Rates to Stay High for Longer https://podcasts.apple.com/us/podcast/short-sellers-give-up-the-case-for-interest-rates-to/id1432836154?i=1000620571083   Nasdaq 100 Index Strong First Half Equals Strong Second Half? | Overbought or not? | Trying to Guess the Forward PE Multiple Is Hard!https://podcasts.apple.com/us/podcast/nasdaq-100-index-strong-first-half-equals-strong-second/id1432836154?i=1000619186796       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]

Derek Moore is joined once again by ZEGA Financial CEO Jay Pestrichelli to debate whether inflation still matters to the market. Plus, even though stocks like META are up huge off the bottom, they still are down from their prior highs. Why this shows the power of losing less through proper hedging and how it can potentially increase returns during volatile times. Speaking of volatility, they discuss the state of Vol in the markets including the VIX and why volatility isn’t lower considering the market run. Finally, they illustrate the cost of hedging downside risk in individual stocks like Nvidia, Tesla, and more. Finally, before some recommendations, they showcase the report of a huge buy of VIX October calls.   The CPI Consumer Price Index inflation report and ramifications Does inflation even matter to markets? META/Facebook is still down -20% from its 2021 high despite being up 250% off the bottom. How much you must make to overcome large losses. Cost of hedging annualized for individual stocks like Tesla and Nvida as examples. How to look at the cost of hedging So why isn’t the VIX Index lower considering markets are at 1-year highs. Comparing short term VIX vs normal VIX levels Evaluating a big purchase of October VIX calls on the VIX future. VIX futures vs spot VIX (the one you see on CNBC)     Mentioned in this Episode:   Short Sellers Give Up? | The Case for Interest Rates to Stay High for Longer https://podcasts.apple.com/us/podcast/short-sellers-give-up-the-case-for-interest-rates-to/id1432836154?i=1000620571083   Nasdaq 100 Index Strong First Half Equals Strong Second Half? | Overbought or not? | Trying to Guess the Forward PE Multiple Is Hard!https://podcasts.apple.com/us/podcast/nasdaq-100-index-strong-first-half-equals-strong-second/id1432836154?i=1000619186796   Fear and Greed Index | Volatility Surface | Put Call Ratio | Wall Street Gets Bullish | Homebuilders Surprise https://podcasts.apple.com/us/podcast/fear-and-greed-index-volatility-surface-put-call/id1432836154?i=1000618362312     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]

Derek Moore points out that no, the Fed doesn’t need to lower rates without some problem or a recession. Looking at the nineties when markets went up despite Fed Funds rate above 5%. Then looking at the net short positions of traders via the commitment of traders report. It shows recently at markets moved higher, short sellers covered causing a short squeeze? Finally, before a recommendation, some talk about the upcoming earnings season and a reminder in 2022 earnings did not go below those of 2021 and the market still sold off due to multiple contraction.   What is a short squeeze? What is the commitment of traders report? Bloomberg article pointing to bears (short positions) being closed the most since 2020. How short sellers closing positions add fuel to market rallies. Are large net short positions in the S&P 500 futures a good contrarian bullish signal? How earnings still grew in 2022 a little bit but markets still sold off due to multiple contraction. What is multiple contraction? Earnings season is coming up and expectations are for a down quarter. Comparing the Fed Funds rate in the nineties to today How markets went up even with rates above 5% in the 1995 to 2000 bull run What would make the Fed lower rates? Bloomberg article hints that with less short positions outstanding the short squeeze effect drops?   Mentioned in this Episode:   Bloomberg article on bears covering their short positions https://www.bloomberg.com/news/articles/2023-07-07/force-firing-up-the-stock-market-cools-off-with-shorts-conceding#xj4y7vzkg   Nasdaq 100 Index Strong First Half Equals Strong Second Half? | Overbought or not? | Trying to Guess the Forward PE Multiple Is Hard!https://podcasts.apple.com/us/podcast/nasdaq-100-index-strong-first-half-equals-strong-second/id1432836154?i=1000619186796   Fear and Greed Index | Volatility Surface | Put Call Ratio | Wall Street Gets Bullish | Homebuilders Surprise https://podcasts.apple.com/us/podcast/fear-and-greed-index-volatility-surface-put-call/id1432836154?i=1000618362312     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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli comment on Bloomberg’s article showing the Nasdaq 100 Index just had its best 1st half since the early nineties. Is the market overbought or rightly valued and trending? Do investors who missed the rally say it’s overbought because they need it to go back down? Looking at how markets do when they are up big in the first half of the year. Plus, Jay and Derek go back over some predictions from December to see how right or wrong they were. Finally, some quick thoughts on student loans from an economic standpoint. Some good recommendations.   Bloomberg’s article showing the Nasdaq 100 Index just had its best 1st half since the early nineties. Is the market overbought or rightly valued and trending? When markets have big first half historically how do they end the second half of the year? Do investors say markets are overbought because they missed out? Reviewing our predictions from December to now Student loan decision Looking at the cost of college from an economic standpoint Student loan payments start again in October and potential impact on GDP and inflation. You could nail next year’s earnings but not the market multiple. What is the forward PE ratio? What were 2023 predictions on the S&P 500, Inflation, GDP, Gold, Bitcoin, Fed Funds and more   Mentioned in this Episode:   Fear and Greed Index | Volatility Surface | Put Call Ratio | Wall Street Gets Bullish | Homebuilders Surprise https://podcasts.apple.com/us/podcast/fear-and-greed-index-volatility-surface-put-call/id1432836154?i=1000618362312   Bear Market Rally or New Bull? |The Fed Talks Tough but Does Nothing | PE Like its 1995 https://podcasts.apple.com/us/podcast/bear-market-rally-or-new-bull-the-fed-talks-tough-but/id1432836154?i=1000617455261   Cheaper to Rent than Buy? | Beneish-M Score Near Market Highs? | Top 10 Market Cap Companies by Decade | VIX Level Makes Multiyear Low https://podcasts.apple.com/us/podcast/cheaper-to-rent-than-buy-beneish-m-score-near-market/id1432836154?i=1000615625441   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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli talk about CNN’s Fear and Greed Index and whether it’s a good indicator for markets. Then they explore differences in Put Call Ratios and how they may not measure what people think. Plus, they look at the volatility surface across different option maturities noting how low near-term options implied volatilities have gotten indicating there is no fear. Once again, they comment on how the VIX is NOT broken! Later they discuss investment banks raising their year end S&P 500 targets now that markets are higher and how no one expected homebuilders to be up 43% from the October 2022 lows but they are. Finally, Jay and Derek comment on data comparing market performance in the first ½ hour, middle of the day, final hour, and buy and hold. Of course, they have a recommendation.   CNN’s Fear and Greed Index What goes into the Put Call Ratio How Option Open Interest changes depending on the transaction. Option open interest can be selling options to open or buying options to open. Wall Street investment banks raise their year-end S&P 500 targets. Bespoke chart showing S&P 500 returns held during different periods. Performance of S&P 500 in first ½ hour, middle of the day, final hour, and buy and hold. Surprise Strong performance by US Homebuilders up 43% since October 2022 lows Existing One Family Home Sales Median Price YoY change goes negative. The VIX isn’t broken and how the CBOE has different VIX indexes for various time periods Mentioned in this Episode:   Bear Market Rally or New Bull? |The Fed Talks Tough but Does Nothing | PE Like its 1995 https://podcasts.apple.com/us/podcast/bear-market-rally-or-new-bull-the-fed-talks-tough-but/id1432836154?i=1000617455261   Cheaper to Rent than Buy? | Beneish-M Score Near Market Highs? | Top 10 Market Cap Companies by Decade | VIX Level Makes Multiyear Low https://podcasts.apple.com/us/podcast/cheaper-to-rent-than-buy-beneish-m-score-near-market/id1432836154?i=1000615625441     AI Driving Market Returns? | Size of Top 2 S&P 500 Stocks Now 15%? | Relative Performance of Tech vs S&P 500 Index at Extreme Levels https://podcasts.apple.com/us/podcast/ai-driving-market-returns-size-of-top-2-s-p-500/id1432836154?i=1000613885329   AI Is the New Crypto & Blockchain Post Nvidia Earnings | Reach for Long Duration Bonds | More Fed Rate Increases Coming? | 7% Treasury Bills?    https://podcasts.apple.com/us/podcast/ai-is-the-new-crypto-blockchain-post-nvidia-earnings/id1432836154?i=1000614778019   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]

Jay Pestrichelli is back with Derek Moore to discuss Jay Powell’s tough talking but no action Fed. Plus, is this a repeat of the 1994-1995 forward PE expansion bull market? Also, they go back to the 200-2002 bear market where the Nasdaq 100 had 7 different 20% bear market rallies and the S&P 500 had its own share. Is this different? Finally, Jay and Derek look at instances where the S&P 500 made new highs with only 5% of the companies also making 52-week highs and the subsequent future historical returns. Off course some recommendations and they read a listener note.   Why is 20% of the low a new bull market suddenly? New bull market or another bear market rally? The 1994-95 blueprint of markets rallying with forward PE expansion with rate hikes. Jay Powell and the Fed claim they are doing 2 more rate hikes? Tough talk by the Fed but they sit on their hands at the meeting. Why the Fed had nothing to do with taming inflation. PE multiple expansion responsible for the market rally. Fed may keep rates higher for longer. Does the Fed and inflation even matter anymore? Reviewing the 2000-2002 many failed greater than 20% bear market rallies Quantity theory of money PQ = MV The velocity of money and why quantitative easing doesn’t always cause inflation Inflation dropping (caused by supply chain problems and government stimulus) not the Fed Mentioned in this Episode:   BLS info showing auto dealership markups go way up https://www.bls.gov/opub/mlr/2023/article/automotive-dealerships-markups.htm   Cheaper to Rent than Buy? | Beneish-M Score Near Market Highs? | Top 10 Market Cap Companies by Decade | VIX Level Makes Multiyear Low https://podcasts.apple.com/us/podcast/cheaper-to-rent-than-buy-beneish-m-score-near-market/id1432836154?i=1000615625441     AI Driving Market Returns? | Size of Top 2 S&P 500 Stocks Now 15%? | Relative Performance of Tech vs S&P 500 Index at Extreme Levels https://podcasts.apple.com/us/podcast/ai-driving-market-returns-size-of-top-2-s-p-500/id1432836154?i=1000613885329   AI Is the New Crypto & Blockchain Post Nvidia Earnings | Reach for Long Duration Bonds | More Fed Rate Increases Coming? | 7% Treasury Bills?    https://podcasts.apple.com/us/podcast/ai-is-the-new-crypto-blockchain-post-nvidia-earnings/id1432836154?i=1000614778019   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]

Derek Moore and Mike Puck from ZEGA Financial discuss how unlike what all the “experts” thought, international stocks have done quite well, and Europe’s economy held up. They look back at how long US large cap has outperformed international developed country markets. Then they look at some sector flows and note the parabolic nature of the chart into the tech sector. Plus, they talk about US Equity Factors through very early June comparing growth, value, high beta, and low volatility performance. Finally, in a follow up to a previous episode’s debate about car prices, Derek reads some reader emails and reviews the BLS data showing markups at dealerships are way up!   Auto dealership markups go up big compared to the increase in cars themselves. US Equity Factors through early June High Beta vs Low Volatility names How international developed markets have lagged US large cap for years. Are there green shoots for developed international markets? What areas are included in developed international? Sector fund flows show tech gets a ton of new money flowing into it. What sectors have fallen out of favor looking at sector fund flows? Projections on some emerging economies share of middle class rising. Reading some reader email comments on car prices   Mentioned in this Episode:   BLS info showing auto dealership markups go way up https://www.bls.gov/opub/mlr/2023/article/automotive-dealerships-markups.htm   Cheaper to Rent than Buy? | Beneish-M Score Near Market Highs? | Top 10 Market Cap Companies by Decade | VIX Level Makes Multiyear Low https://podcasts.apple.com/us/podcast/cheaper-to-rent-than-buy-beneish-m-score-near-market/id1432836154?i=1000615625441     WSJ article M-Score Messod D. Beneish Accounting-Fraud Indicator Signals Coming Economic Trouble https://www.wsj.com/articles/accounting-fraud-indicator-signals-coming-economic-trouble-506568a0?mod=article_inline     AI Driving Market Returns? | Size of Top 2 S&P 500 Stocks Now 15%? | Relative Performance of Tech vs S&P 500 Index at Extreme Levels https://podcasts.apple.com/us/podcast/ai-driving-market-returns-size-of-top-2-s-p-500/id1432836154?i=1000613885329   AI Is the New Crypto & Blockchain Post Nvidia Earnings | Reach for Long Duration Bonds | More Fed Rate Increases Coming? | 7% Treasury Bills?    https://podcasts.apple.com/us/podcast/ai-is-the-new-crypto-blockchain-post-nvidia-earnings/id1432836154?i=1000614778019   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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli explore data showing its cheaper to rent vs. buying a home in all but 3 markets. Then they bring up the WSJ article saying companies are “juicing” earnings evidenced by the Beneish-M score and historically whether a high M-score predated market tops. Later they look at how the top 10 market cap weighted companies have changed over the decades and why this supports buying indexes (but being hedged!). Finally, the VIX did something it hasn’t done since….All this and more in this week’s episode.   Where is the homeownership premium the highest? Cheaper to rent vs own based on data from Redfin and Freddie Mac Comparing interest portion of mortgages to paying rent What is the Beneish M-score? Article by WSJ shows M-score is elevated at market peaks. A WSJ article says companies are using financial accounting to juice earnings. Top 10 largest by market cap companies in the S&P 500 index by decade What about top 10 by market cap companies in the world? The VIX now has a low not seen for several years. What is going on in the world of volatility? Equity market leadership shifts over time Are Apple, Microsoft and the rest of the FAAMG stocks an exception? Mentioned in this Episode:   WSJ article Business Is Slowing. So Companies Are Juicing Profits https://www.wsj.com/articles/profit-numbers-get-spruced-up-as-business-slows-8eec5017   WSJ article M-Score Messod D. Beneish Accounting-Fraud Indicator Signals Coming Economic Trouble https://www.wsj.com/articles/accounting-fraud-indicator-signals-coming-economic-trouble-506568a0?mod=article_inline     AI Driving Market Returns? | Size of Top 2 S&P 500 Stocks Now 15%? | Relative Performance of Tech vs S&P 500 Index at Extreme Levels https://podcasts.apple.com/us/podcast/ai-driving-market-returns-size-of-top-2-s-p-500/id1432836154?i=1000613885329   AI Is the New Crypto & Blockchain Post Nvidia Earnings | Reach for Long Duration Bonds | More Fed Rate Increases Coming? | 7% Treasury Bills?    https://podcasts.apple.com/us/podcast/ai-is-the-new-crypto-blockchain-post-nvidia-earnings/id1432836154?i=1000614778019   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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli have a lively discussion on whether AI is supplanting Crypto and Blockchain as the new thing. Then they point out fund flows going to long duration treasury (and 3x triple leveraged Treasury ETF) and why? Later we discussed the new increase in probabilities for more Fed interest rate hikes. Finally, Nvidia broke out after beating earnings and revenue expectations and a massive rise in expectations. Of course, they make some recommendations.   AI is the new Crypto and Blockchain? Nvidia revenue guidance gets raised by a lot after beating estimates on earnings. Are there other instances where companies have added as much market cap in one day? Greater than 7% Treasury Bills Explaining why debt ceiling fears caused 6% and 7% very short-term treasuries. Nvidia’s market cap gain in one day alone would equal the 35th largest S&P 500 Index company. Long Duration treasury ETFS including TLT and TMF see large inflows from investors. What are the risks of very long-dated treasury bonds? 3x Leveraged ETFs First 100 days market up >+7% so what happens to the rest of the year? Fed funds probability for interest rate rises or cuts. Probability now for at least one additional fed interest rate hike by markets   Mentioned in this Episode:   AI Driving Market Returns? | Size of Top 2 S&P 500 Stocks Now 15%? | Relative Performance of Tech vs S&P 500 Index at Extreme Levels https://podcasts.apple.com/us/podcast/ai-driving-market-returns-size-of-top-2-s-p-500/id1432836154?i=1000613885329   US Default Chances Overblown? | Option and Bond Markets Not Showing Fear https://podcasts.apple.com/us/podcast/us-default-chances-overblown-option-bond-markets-not/id1432836154?i=1000612967755   Dividend Deep Dive | ChatGPT AI Fed Research | Do Markets Go Up After Fed Pauses?https://podcasts.apple.com/us/podcast/dividend-deep-dive-chatgpt-ai-fed-research-do-markets/id1432836154?i=1000612068985   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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli do it again. That’s right they talk about AI but this time around how it may be driving Mega Cap Tech performance relative to the rest of the market. Plus, the weight of the top 2 S&P 500 companies is the highest since 1978 and the top 10 companies weighting is now 30%. They debate whether this is nothing or something. Finally, they discuss the LEI Leading Economic Indicator declining for 13 straight months without a “declared” recession yet.   LEI Leading Economic Indicators Relative performance year to date between mega cap tech down the line to micro caps FAANMG forward PE ratios FAANMG = Facebook, Amazon, Apple, Netflix, Google, Microsoft. Carter Worth CNBC talks about relative tech performance at extreme levels. Top 2 companies at the highest weighting since 1978 Today its Apple | Microsoft but in 1978 its was AT&T and IBM Top ten companies in S&P 500 average weighting vs today ChatGPT time to reach 100 million users vs TikTok, Instagram, Google Translate, and Netflix Investors seem to be flowing into mega cap tech as an AI play. ChatGPT reached 100 million users in just 2 months. The Levis blue jeans (picks and shovels) approach to new tech? Mentioned in this Episode:   Global X article explaining ChatGPT and regenerative AI https://www.globalxetfs.com/generative-ai-explained/   US Default Chances Overblown? | Option and Bond Markets Not Showing Fear https://podcasts.apple.com/us/podcast/us-default-chances-overblown-option-bond-markets-not/id1432836154?i=1000612967755   Dividend Deep Dive | ChatGPT AI Fed Research | Do Markets Go Up After Fed Pauses?https://podcasts.apple.com/us/podcast/dividend-deep-dive-chatgpt-ai-fed-research-do-markets/id1432836154?i=1000612068985     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]

Derek Moore and ZEGA Financial CEO Jay Pestrichelli discuss whether the option markets via Volatility Indexes are underrating potential market turmoil. Plus, they debate whether fears of the US defaulting on Treasury Bonds is Overrated? Using ChatGPT AI to research the 1979 US Treasury default. Then they talk through what they are seeing in the options market including variances between implied volatility between different places on the volatility surface. Finally, before some recommendations, they discuss calls for banning of short selling on regional banks and why its not a great idea.   Explaining implied volatility What the current volatility levels across the volatility surfaces is saying about market worries What the Bond volatility index is saying about markets Is it too quiet in markets or rightly quiet and the options markets know best? Are debt ceiling default fears overblown? Wouldn’t the government prioritize interest on debt over other random expenses? The treasury is still collecting tax revenue each week, so don’t they have money to pay debt? ChatGPT AI research on the 1979 technical treasury bond default Why did Treasury Bonds default in 1979? CDS (Credit Default Swap) rates on US Treasuries New talk on banning short selling on regional banks. What function does short selling provide to markets? Why banning short selling would cause option premiums to rise.   Mentioned in this Episode:   The Big Short Movie and Credit Default Swaps Explained https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6   Article detailing prior U.S. Defaults https://www.theglobalist.com/a-brief-history-of-u-s-defaults/   Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp   Dividend Deep Dive | ChatGPT AI Fed Research | Do Markets Go Up After Fed Pauses?https://podcasts.apple.com/us/podcast/dividend-deep-dive-chatgpt-ai-fed-research-do-markets/id1432836154?i=1000612068985     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]

Jay Pestrichelli is back on with Derek Moore where they do a deep dive into dividends. There are a lot of misconceptions around things like total return vs price return, ex-dates, payable dates, record date and more. Plus, they look at an example ETF before noting that there seems to be a movement of young investors focusing on dividend paying stocks to generate income. Finally, Jay and Derek talk about the Fed interest rate decision and even task ChatGPT AI to pull some research on what happens with markets once the Fed pauses. Oh, and Derek reconsiders whether ChatGPT is in fact a valuable service.   ChatGPT AI Fed interest rate research Imagining ChatGPT AI with full access to investment return databases like S&P Global Are there instances where markets go down post a Fed pause? When did markets rise post Fed pause? Why would the Fed cut rates unless the economy is bad (or more bank failures)? Deep dive on dividends Total returns (including dividends) vs. price return. Explaining ex-dates, record date, payable dates for dividends Discussion of young investors gravitating towards a dividend portfolio strategy Dividend reinvestment income vs. reinvestment into more shares to compound Years to double examples of reinvesting dividends Converting annual dividend income to an hourly rate (Dividends Receive Annually / 2080) Mentioned in this Episode:   Weird Bond Yield Stuff Happening | New 1 Day VIX Index? https://podcasts.apple.com/us/podcast/weird-bond-yield-stuff-happening-new-1-day-vix-index/id1432836154?i=1000610209621   Debt Ceiling Risk | Recession Signals | 10/3 Yield Curve Inversion Podcast https://podcasts.apple.com/us/podcast/debt-ceiling-risk-recession-signals-10-3-yield-curve/id1432836154?i=1000609174431   Can the Fed Fail? https://podcasts.apple.com/us/podcast/can-the-fed-fail-q1-winners-surprise-the-crowd/id1432836154?i=1000608060319   What are Reverse Repos and Repos? Fed usage of overnight reverse repos https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx   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]

Derek Moore poses some investment questions to ChatGPT, is it helpful? Instances where ChatGPT is wrong. Then, looking at the bulk of Q1 2023 earnings releases and what we’ve learned. Were analysts too bearish? Finally, Derek delves into the below the surface aspects of 1 month T-Bills yields so much less than 2- and 3-month T-Bills. Even less than the Fed Funds rate. Derek’s theory is with the increase in cash flowing to money markets, and levels of Overnight Reverse Repos not increasing, the Occam’s Razor answer is too little availability of near cash T-bills.   ChatGPT as an investment advisor? Asking ChatGPT for some investment questions Is ChatGPT correct on stuff? 1-month US Treasury Bills yield much less than 3-month US Treasury Bills How historic is the difference between 1-month yields and 3-month yields? What does it mean if anything when 1-month T bills yield less than Fed Funds? Overnight Reverse Repo market used by the Fed as alternatives to near money T-bills. Compare the Reverse Repo interest rate to 1-month treasuries. Were analysts too bearish on Q1 2023 earnings? How analysts change their estimates over time Money Market funds have the highest level of assets all the way back to 2007. 20–30-year-olds should focus on increasing balances Why 20–30-year-olds spend too much time on optimizing returns     Mentioned in this Episode:   Weird Bond Yield Stuff Happening | New 1 Day VIX Index? https://podcasts.apple.com/us/podcast/weird-bond-yield-stuff-happening-new-1-day-vix-index/id1432836154?i=1000610209621   Debt Ceiling Risk | Recession Signals | 10/3 Yield Curve Inversion Podcast https://podcasts.apple.com/us/podcast/debt-ceiling-risk-recession-signals-10-3-yield-curve/id1432836154?i=1000609174431   Can the Fed Fail? https://podcasts.apple.com/us/podcast/can-the-fed-fail-q1-winners-surprise-the-crowd/id1432836154?i=1000608060319   What are Reverse Repos and Repos? Fed usage of overnight reverse repos https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx   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]

Derek Moore and ZEGA CEO Jay Pestrichelli are back again to discuss the CBOE launching a new 1 Day VIX Index and what it means in relation to the viability of the traditional VIX Index. Plus, they note that 1 month treasury bill yields are far below the 3 month which is odd when looking historically at the relationship. Hint, it has something to do with money market funds and the Fed Overnight Reverse Repos. Then they discuss the decline in the money supply but when put into context, is it really a big deal? Finally, they dish out some recommendations.   1-month US Treasury Bills yield much less than 3-month US Treasury Bills How historic is the difference between 1-month yields and 3-month yields? What does it mean if anything when 1-month T bills yield less than Fed Funds? CBOE launches a new 1 Day VIX Index Is the traditional VIX Index broken? Differences between various VIX index terms and what they tell us. What is the VVIX Index? What does the VVIX Index tell us about option prices on the VIX? Current shape of the VIX Futures expiration curve Relationship between spot VIX (what you see on TV) and the VIX Futures Flows into money market funds continue but from where? Overnight Reverse Repos from the Fed as a competitor to 1-month treasury bills   Mentioned in this Episode:   Debt Ceiling Risk | Recession Signals | 10/3 Yield Curve Inversion Podcast https://podcasts.apple.com/us/podcast/debt-ceiling-risk-recession-signals-10-3-yield-curve/id1432836154?i=1000609174431   Can the Fed Fail? https://podcasts.apple.com/us/podcast/can-the-fed-fail-q1-winners-surprise-the-crowd/id1432836154?i=1000608060319   What are Reverse Repos and Repos? Fed usage of overnight reverse repos https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx   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]

Derek Moore and ZEGA CEO Jay Pestrichelli are back again to discuss Cam Harvey’s 10/3 Yield Curve Inversion and its track record. What it has meant and can mean going forward. Looking at the Real Retail Sales importance for predicting recessions. What various Fed members and Jamie Dimon say about where interest rates are going. Plus, what is going on with wages and how real wage growth may or may not give the Fed cover to raise more. Then, they discuss banks going to the discount window and the new Bank Term Funding Program (BTFP) to borrow money. Finally, what do credit card interest rates and increased usage tell us about the health of the consumer, and why is no one talking about the upcoming debt ceiling deadline?   What is the 10-year 3-month yield curve inversion? Cam Harvey and the inception of the 10/3 yield curve as a predictor How often has the 10/3 yield curve inversion predicted recessions? Does the steepness of the yield curve say anything about the depth of recessions? Debating whether the 10/3 inversion in 2019 predicted the 2020 recession? Average time from yield curve inversion to the declaration of recessions Cam Harvey interview saying this time might be different. How real retail sales peaked back in March of 2021 Nominal retail sales disappointed while year over year hit lowest level in a while. What is the Bank Term Funding Program (BTFP)? Banks accessing the Fed’s discount window plus the BTFP Consumer credit usage makes a new high while credit card interest rates reach new high Jamie Dimon comments on higher rates for longer and implications Real wage growth has been negative for the last 2 years What is the debt ceiling and what does it mean for the US Treasury US Treasury keeps a “checking” account at the Fed   Mentioned in this Episode:     Atlantic article from 2011 explaining potential option to get around debt ceiling by US Treasury getting overdraft protection from the Fed https://www.theatlantic.com/business/archive/2011/07/the-us-government-cannot-ever-run-out-of-money/242622/   Can the Fed Fail? Q1 Winners Surprise the Crowd podcast https://podcasts.apple.com/us/podcast/can-the-fed-fail-q1-winners-surprise-the-crowd/id1432836154?i=1000608060319   One Thing No One Ever Talks About within the S&P 500 Index | FANG Stocks 1 Rest of Market 0  https://podcasts.apple.com/us/podcast/one-thing-no-one-ever-talks-about-within-the-s-p-500/id1432836154?i=1000607742682   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]

Derek Moore and ZEGA’s Mike Puck are paired once again to talk about markets and the economy. They discussed how Q1 asset class winners and losers weren’t what many thought coming into the quarter. They also talk about correlations, or how different asset classes and sectors have been more correlated over the last 12 months and what that means for portfolios. The lack of high yield debt coming due and how that keeps company’s interest costs down given they refinanced already. Finally, they check in with the Fed and how much of an IOU they owe the US Treasury. The Fed can’t fail, can it?   How correlations go to 1 when things get bad If correlations go to 1, what does that mean for diversification? Comparing 12-month correlations between stocks, bonds, commodities, and other factors What do the current 12-month trailing PE ratios tell us if anything? When do most high yield bonds and loans mature? How companies locked in lower rates and what that means for interest coverage ratios Using Netflix as an example by looking at their weighted average yield on their debt What is the Federal Reserve Deferred Assets to the US Treasury? Why is the fed running an IOU to the US Treasury? When did the fed go from paying out excess interest to the treasury to owing a deferred asset? Can the Federal Reserve fail? How bad are the Fed’s unrealized losses on their own balance sheet at the end of 2022? The Fed isn’t like commercial banks.     Mentioned in this Episode:   Fed Tightening and Easing all at once? https://podcasts.apple.com/us/podcast/fed-tightening-and-easing-all-at-once-how-wrong-were/id1432836154?i=1000605934758   What are Zombie Companies https://open.spotify.com/episode/3j2jm6hbS981GZGhIQn5X3   Is Warren Buffett right on stock buybacks? https://podcasts.apple.com/us/podcast/is-warren-buffett-right-on-stock-buybacks-bank-failures/id1432836154?i=1000604780531   Podcast Explaining Overnight Reverse Repos ON RRP by the FED https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx   How Senior Loans work with Dan McMullen https://podcasts.apple.com/us/podcast/dan-mcmullen-talks-senior-loans-leveraged-loans-clos/id1432836154?i=1000527737992     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]

Derek Moore and ZEGA CEO Jay Pestrichelli are back together to debate the dollar, markets, earnings, and more. Plus, they discuss one aspect of S&P 500 Index estimates that no one ever talks about. Then, MSFT, META, AAPL, GOOGL, and AMZN have driven all the YTD gains in the S&P 500 Index compared to the rest of the market. Finally, they discuss whether the market is still keying off the US Dollar level, S&P 500 profit margins, and more.   US Dollar still wagging the tail of the stock market? Correlations of US Dollar to Equities (S&P 500 Index) S&P 500 Index profit margins come off record highs. What would declining profit margins mean for earnings? Historical growth of S&P 500 Index revenues What no one ever talks about within the S&P 500 Index S&P 500 Index constituent changes – out with the old in with the new What does the S&P 500 Index divisor mean relative to S&P 500 Index total market cap? 2022 negative EPS on S&P 500 Index driven by multiple and margin contraction. EPS growth through margins, revenue, and share count. Silicon Valley Bank and Signature bank get boot from S&P 500 Index Quarterly rebalancing of S&P 500 Index 5 Fang stocks drive YTD performance of the S&P 500 Index What annualized return needed to make a new high in the S&P 500 Index       Mentioned in this Episode:   Fed Tightening and Easing all at once? https://podcasts.apple.com/us/podcast/fed-tightening-and-easing-all-at-once-how-wrong-were/id1432836154?i=1000605934758   Sequence of recessions and what comes first https://podcasts.apple.com/us/podcast/sequence-of-recessions-slowdowns-dividends-make/id1432836154?i=1000603802075   Is Warren Buffett right on stock buybacks? https://podcasts.apple.com/us/podcast/is-warren-buffett-right-on-stock-buybacks-bank-failures/id1432836154?i=1000604780531   Podcast Explaining Overnight Reverse Repos ON RRP by the FED https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx     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]

ZEGA CEO Jay Pestrichelli rejoins Derek Moore to talk Jay Powell and the Fed seemingly tightening and loosening all at once. They raised rates, but then increased the size of their balance sheet through the SVB (and other) bank bailouts.  Then, observing the deep discounts, some REIT etfs are currently trading to NAV and what that infers. Also, Hindenburg research (a short seller) put out negative research on Block (Square). The role of short-selling firms and noting the high stock-based compensation impact on non-GAAP earnings in Block. Finally, Jay and Derek discuss the changes to sector classifications and the impact on financials, how bad a year 2022 was for both stocks and bonds together, and how earnings estimates look going forward and how far off analysts were last year. Of course, they’ll have some recommendations.   2023 Q1 earnings estimates on the S&P 500 Index companies How the analysts brought down earnings estimates How off analysts were from their early estimates to actual earnings Hindenburg negative Block (Square) piece before they sold short SBC or Stock Based Compensation impact on GAAP earnings vs adjusted earnings Real Estate REITs seem to be trading below their NAV, are they ahead of the game? Goldman Sachs points out tightening financial conditions are a quasi-25-50 bps raise How the bank crisis may make lending standards tighter Will financials have a headwind on earnings due to tightening credit conditions? Fed balance sheet balloons up after bailouts of banks GICS sector re-classification by moving companies like Visa and Mastercard to financials They discuss whether sector re-classifications in many companies were the right fit Berkshire Hathaway holds Apple and other non-financials but are the highest weighted in XLF What the earnings outlook shows for first quarter through the end of 2023 How far off analysts were when looking at their projections for Q4 22 a year out How much analysts estimates for sectors and the S&P 500 earnings change over time QT Quantitative Tightening and QE Quantitative Easing all at the same time? Treasury Secretary Janet Yellen confusing answers to congress on bank bailouts Did the Fed need to raise 25 bps to keep its credibility?     Mentioned in this Episode:     Sequence of recessions and what comes first https://podcasts.apple.com/us/podcast/sequence-of-recessions-slowdowns-dividends-make/id1432836154?i=1000603802075   US Debt Bomb and Growing Interest Rates effects on US Federal Deficit and Budget https://podcasts.apple.com/us/podcast/us-debt-bomb-interest-rates-brewing-auto-loan-problem/id1432836154?i=1000602839094 Bloomberg Odd Lots Podcast deep dive into state of commercial real estate and loans https://podcasts.apple.com/us/podcast/where-stress-is-showing-in-the-%2420-trillion/id1056200096?i=1000604934309   Podcast Explaining Overnight Reverse Repos ON RRP by the FED https://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx     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]

Derek Moore is back with Mick Puck to discuss the Warren Buffett quote excoriating opponents to share buybacks. Why buybacks and dividends are more closely related than you think. Using Walmart to explain how the change in shares outstanding affect EPS. Where to see share repurchases and dividends on a company’s cash flow statement. Plus, our quick overview of the Silicon Valley Bank (SVB) debacle and what the FDIC’s list of troubled banks at the end of 2022 told as (if anything) about the 3 banks that failed the last 2 weeks.     SVB Silicon Valley bank example of duration risk in bonds (mortgage-backed securities) How MBS mortgage-backed bonds see duration sensitivity to interest rates rise as rates rise Where to find the FDIC quarterly report on banks including their watch list and amounts Warren Buffett statement on how share buybacks are misunderstood. Do companies always buy back shares when their stock is undervalued? Where to find on cash flow statement share repurchases and issuance Where to find on cash flow statement dividends paid out Explaining the difference between a buyback yield and dividend yield How much did Apple repurchase through buybacks last year vs dividends Walmart as an example showing how reduction in outstanding shares effects earnings per share Comparing capital gains on shares to dividends for normal investors and their preferences How buybacks are more flexible for dividends Do buybacks show confidence in one’s own shares for companies? Positives and negatives for buybacks including stock based compensation and dilution Finally, some recommendations on a movie and a TV show   Mentioned in this Episode:   FDIC watch list of troubled banks and quarterly bank profile graphs https://www.fdic.gov/analysis/quarterly-banking-profile/graph-book/2022dec/   Sequence of recessions and what comes first https://podcasts.apple.com/us/podcast/sequence-of-recessions-slowdowns-dividends-make/id1432836154?i=1000603802075   US Debt Bomb and Growing Interest Rates effects on US Federal Deficit and Budget https://podcasts.apple.com/us/podcast/us-debt-bomb-interest-rates-brewing-auto-loan-problem/id1432836154?i=1000602839094   Underperformance of International Stocks https://podcasts.apple.com/us/podcast/underperformance-of-international-stocks-valuations/id1432836154?i=1000601650028   Wharton Magazine article Beware of High Dividends https://magazine.wharton.upenn.edu/digital/beware-high-dividend-yield-stocks/   Reuters article showing Discount Window picked up towards the end of 2022 https://www.reuters.com/markets/us/fed-discount-window-borrowing-is-edging-up-is-it-problem-2022-12-09/   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]

Jay Pestrichelli, CEO of ZEGA Financial, joins Derek Moore again to discuss markets going higher even when earnings decline post bear markets. Plus, they discuss Michael Kantro’s HOPE graph showing the order of slowing in the economy through the lens of Housing, New Orders, Profits, and Employment. Then they move on to the drivers of returns talking through PE multiples, margins, revenues, buybacks, and dividends. Speaking of dividends, are they going to be the next big thing if investors believe markets may trade flat for a while? Finally, Jay and Derek give some recommendations that may or may not be good.     Percentage of total stock returns dividends historically make up Examining prior 1 year forward stock returns after bear market low is in vs. earnings declines HOPE or Housing, Orders, Profits, Employment, and typical cycles from slowdown to expansion How dividends plus premium (covered call) selling may augment returns in flat markets Where market returns come from How changing margins, PE multiples, share buybacks, and revenues determine returns Examining where returns came from in other decades and where we stand now Will dividends be the next hot investment area funds flow to? Number of new highs in markets by year Number of greater than >1% down days in the S&P 500 Index How much the Fed Funds futures implied interest rate has changed by a wide amount Being hedged vs a dividend strategy   Mentioned in this Episode:   US Debt Bomb and Growing Interest Rates effects on US Federal Deficit and Budget https://podcasts.apple.com/us/podcast/us-debt-bomb-interest-rates-brewing-auto-loan-problem/id1432836154?i=1000602839094   Underperformance of International Stocks https://podcasts.apple.com/us/podcast/underperformance-of-international-stocks-valuations/id1432836154?i=1000601650028   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]

Jay Pestrichelli, CEO of ZEGA Financial, joins Derek Moore again to discuss whether this current bear market is tracing the 2000/2001 bear market. Plus, they highlight how tight yield spreads are looking at what the 3-month treasury bill/ 2-year treasury note are yielding compared to high yield and investment grade bonds. Then Jay and Derek go through the looming US debt bomb in regard to where interest payments might go and whether there will be political pressure for the Fed to keep rates low. Finally, after going through the avocado vs bitcoin relationship, they give a few recommendations.     The US Federal Debt is growing but what if rates stay higher and net interest owed goes up? What does the yield spread tell us about relationships of corporate bonds to treasuries? Is the current bear market tracking the 2000-2001 bear market? Does the price of Bitcoin and Avocados really track one another? Tom Lee points to breakouts in Nasdaq stocks Tom Lee Ex-FAANG forward PE ratios for the S&P 500 Index US Federal Debt held by the public Nominal GDP Growth vs US 10 Year Treasury Yield Looking at John Hussman regression chart on 10-year trailing growth vs nominal GDP US government spending next 10 years at WWII levels Current net interest payments by US government Average car price in the US hit new highs in 2022 while interest rates rising Negative equity on used cars getting rolled into new car loans Most home owners locked in really low interest rates Corporations interest costs as percent of cash flows low because they locked in low bond rates Comparing 3-Month Treasury Yields spread to high yield and investment grade bonds Car loans are getting too long considering cars are a depreciating asset   Mentioned in this Episode:   Underperformance of International stocks for a long time and valuations still too high? https://podcasts.apple.com/us/podcast/underperformance-of-international-stocks-valuations/id1432836154?i=1000601650028   No Volmageddon 2.0 | No Landing for the Economy? https://podcasts.apple.com/us/podcast/no-volmageddon-2-0-no-landing-for-the-economy/id1432836154?i=1000600413796   2019 WSJ article on car owners rolling negative equity on long term car loans into their next car https://www.wsj.com/articles/the-seven-year-auto-loan-americas-middle-class-cant-afford-their-cars-11569941215 Nominal (not inflation adjusted) US GDP https://fred.stlouisfed.org/series/GDP Federal government current expenditures net interest payments on debt https://fred.stlouisfed.org/series/A091RC1Q027SBEA Words and Numbers Podcast where they talk about tax receipts (what government takes in) have gone up 50%+ since 2020 https://open.spotify.com/episode/2zjC18iPqIm0LUeDPF2nAP?si=o2wX9sn8SB25BMSMrk2xzw   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]

Derek Moore is back with Mike Puck, Director of Business Development at ZEGA Financial to talk underperformance of international stocks and how “everyone” is saying this is the year that trend gets reversed. Mike shares what people were talking about at the Miami ETF Conference around flows into international funds to start the year. Plus, they talk about what investors give up if they rotate out of S&P 500 US type investments and how you might already have international exposure in large US companies. Finally, they discuss the consensus for the US Dollar to drop in 2023 along with some other odds and ends within markets and the economy.     Why we don’t try and pick markets and instead just Buy and Hedge! Comparing the performance of international stocks and value stocks Relative underperformance for over a decade in international stocks Is 2023 the year international finally outperforms again? Spain’s IBEX Index price (not including dividends) is the same as it was in 1997-98 Makeup of stocks within the S&P 500 Index vs some international indexes Looking at the top 100 companies worldwide by market cap John Hussman Price/Sales ratio chart Price to sales still higher than average – although margins remain higher than average Market may be assuming net profit margins will stay elevated Google searches for Soft Landing are up Comparing the Nominal GDP growth to the 10-Year Treasury yield Early 90s Emerging Markets dominance International stock indexes have less technology and more value type stocks       Mentioned in this Episode:   No Volmageddon 2.0 | No Landing for the Economy? https://podcasts.apple.com/us/podcast/no-volmageddon-2-0-no-landing-for-the-economy/id1432836154?i=1000600413796   John Hussman article on current valuations https://www.hussmanfunds.com/comment/mc230221/   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]

Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss recent discussion on 0 DTE (zero days to expiration) options and potential for a new Volmageddon event due to them. Then, they again get into The Fed and the idea of hard landing, soft landing, or no landing (that’s a new one). Plus, they discuss some odds and ends within markets and the economy including some chart crimes, shipping container rates, next 12 month returns ONCE a bear market bottom is in, and why US Investment Grade Bonds are yielding less than the 3-month treasury bond at higher percentages than before.     Volmageddon 2.0 (or Volpocalypse 2.0) What are 0 DTE Zero Days to Expiration Options Why we now see much more trading in 0 DTE Options Why 0 DTE options aren’t that big of a deal What is a No Landing Economy scenario? Why the Fed might revert back to the 90s on interest rates If the economy is growing why do rates need to fall? The idea of the Fed keeping dry powder just in case Non-voting Fed members are making a lot of noise about rates IF the bear market low is in (and that’s still an if) forward 12 month returns positive Shipping container rates including the Rotterdam to New York down 80% off highs Examples of 2011 expiration of SPY options available versus now (hint a lot more now) Comparing treasury yield curves over select periods Bankruptcies and 90-day credit card delinquencies are up (do these lack perspective?)   Mentioned in this Episode:   Jay and Derek’s prior episode ‘Now Everyone is Bullish? | Shocking Impact of Missing Just the 2 Best Days Each Year’ https://podcasts.apple.com/us/podcast/now-everyone-is-bullish-shocking-impact-of-missing/id1432836154?i=1000599235040   Bloomberg: JP Morgan’s Kolanovic Warns of Volmageddon 2.0’ risk in Options https://www.bloomberg.com/news/articles/2023-02-15/jpmorgan-strategist-kolanovic-warns-of-volmageddon-2-0-risk-in-options-market   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]

Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss how AFTER the market ran up in January people are bullish according to the new AAII Individual Investor survey. Plus, updated numbers on the difference in hypothetical returns if you missed ONLY the 2 best day each year over a 10 or 20-year period. Then, we continue to get economic data that is telling different stories so what to believe? Then they give some recommendations.     AAII Sentiment Poll Bulls minus Bears turns positive after 44 consecutive weeks bearish. NAAIM Exposure Index (Active Manager Equity Exposure) most bullish since Jan 2022 Shocking difference in returns when taking out 2 best market days over 10 and 20 years Worst 20 year rolling return was still positive Atlanta Wage Growth tracker shows wage growth still strong Difference between job switchers and job stayers still wide (make more switching) Leisure and Hospitality wages still surging to new highs Since WWII markets have taken off 7 months post inflation peaks on average Inventories in durable goods and lumber (and other construction materials) move higher Fed governors talk tough and market implied fed funds rate surges higher People are spending down the post-Covid excess savings     Mentioned in this Episode:   Personal Savings https://fred.stlouisfed.org/series/PSAVE   Wage growth tracker https://www.atlantafed.org/chcs/wage-growth-tracker   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]

Derek Moore is back to talk about the one thing no one seems to think is a possibility with interest rates. Plus, why the tightening of the triple BBB corporate bond spreads above 3-month Treasury Bills and Fed Funds is something to watch for markets. Then, Derek explains the 4 stock market scenarios people are watching.     Disconnect between market expectations and the Fed Spread between corporate bonds and treasuries narrows BBB Corporate bond spread to Fed Funds smallest since 2007 What do interest rate spreads mean? How are interest rate spreads calculated? What happens when spreads widen or narrow in bonds and stocks? What are Overnight Reverse Repos Fed Funds ranges vs exact rate What is the effective fed funds rate Where to find the fed funds rate CME Fed Interest Rate probability tool The federal reserve dot plots   Mentioned in this Episode:   What are Overnight Reverse Repos ON RRP that Fed is using nowhttps://open.spotify.com/episode/09VOIffldtn3WxNm7rzyNx   Effective Fed Funds Rate https://www.newyorkfed.org/markets/reference-rates/effr   See Probabilities of future Fed Funds hikes or lowering https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html   The triple BBB bond spread https://fred.stlouisfed.org/series/BAMLC0A4CBBB   Wall Street Journal banks predict recession and Fed Pivot in 2023 https://www.wsj.com/articles/big-banks-predict-recession-fed-pivot-in-2023-11672618563   Prof Aswath Damodaran market scenarios post https://aswathdamodaran.blogspot.com/2023/01/data-update-2-for-2023-rocky-year-for.html   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]

Derek Moore and Mike Puck discuss the upcoming Fed meeting and whether rates will stick around at higher levels for a while despite general estimates for lower rates in the back half of 2023 and early 2024. Mixed signals in the labor market as tech announces layoffs while other companies point to hiring. Why it’s tough to pick individual stocks using Tesla as an example.   Does the Fed still want bad things to happen in the economy? Watch the Fed press conference Tech stocks see gains after layoff announcements Why picking individual stocks is so hard Tesla record earnings and revenues but 2022 was a bad year for its stock price Bull market in Orange Juice? LEI Leading Economic Indicators flashing recession signal Strong Q4 GDP but interesting durable goods transportation contribution Fed Funds futures don’t believe the Fed will keep interest rates high Would it be so bad if we got to 4.8% Fed Funds and stayed there? Why markets don’t like rate uncertainty Q4 earnings look to be below the prior year Accuracy of the Atlanta Fed GDP Nowcast Model NFIB Small Business survey not so rosy? Jeremy Siegel the eternal optimist So is good news “good news” again?   Mentioned in this Episode:     Earnings declines don’t always mean stock market declines https://podcasts.apple.com/us/podcast/max-bearish-earnings-declines-dont-mean-falling-stocks/id1432836154?i=1000596061448   1994-95 all over again for stock market? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306   ZEGA Financial https://zegafinancial.com/   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

Jay Pestrichelli, CEO of ZEGA Financial and Derek Moore are back to talk Netflix earnings, why earnings declines don’t necessarily mean falling stock prices, wide bid ask spread in housing, and volatility dropping in the currency and fixed income markets. Plus, the AAII investor survey points to record lows in bullish sentiment. Why margins are being overlooked in earnings estimates.  Finally, is Japan an unknown, unknown and Derek (without any knowledge) predicts Amazon buys AMC and Apple buys Netflix.   Does the market still care about Netflix earnings? Netflix low YoY quarterly revenue growth Wild prediction on Apple buying Netflix Why doesn’t Amazon buy AMC? Existing home sales continue to make new lows year over year Earnings declines don’t equal lower stock prices all the time Comparing years where earnings are lower but stocks are higher Why markets look forward to future earnings expectations Volatility dropping in FX and fixed income markets Spread between equity volatility and Fixed Income volatility still wide Used car prices finally printing lower lows AAII survey points to low bullish sentiment and high bearish sentiment Margins in earnings should be the story Why Japan may be a thing to watch as an unknown unknown     Mentioned in this Episode:     2023 market predictions that will probably be wrong again https://podcasts.apple.com/us/podcast/2023-predictions-markets-and-the-economy/id1432836154?i=1000591390337   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   Jay Pestrichelli’s book Buy and Hedge https://www.amazon.com/Buy-Hedge-Iron-Rules-Investing/dp/1087941849/ref=nav_signin?_encoding=UTF8&qid=&sr=&asin=1087941849&revisionId=&format=4&depth=1   Contact Derek [email protected]

Derek and Mike Puck, ZEGA Director of Business Development, discuss whether Value will have a period of outperforming Growth. How Value and Growth have experienced long regimes where one outperforms another. Where we are in the current cycle. Plus, how dividends historically have accounted for 40% of total returns in the S&P 500 Index.   What makes a stock a “value stock”? Growth vs Value historically How growth has outperformed value for extended period of time Are we about to switch where value outperforms growth? How value investors have been fooled in the past How older companies reap the benefits of technology. Different types of assets and do they get missed with Growth stocks? Dividends have accounted for 40% of S&P 500 index total returns historically. Dividends over last few decades less than buybacks as percentage of net income Idea of strategy that has dividends Plus option premium from covered calls. Goals of covered call strategies Concept of dogs of the Dow How dividend yields move higher as price moves lower (so long as they keep paying dividends)   Mentioned in this Episode:     Chart showing Growth vs Value relative performance historically https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP105.pdf   Dividends as percentage of total returns historically S&P 500 Index https://www.hartfordfunds.com/insights/market-perspectives/equity/the-power-of-dividends.html   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]