Broken Pie Chart

Derek Moore and Jay Pestrichelli this week answer some audience questions plus comparing 1995 first Fed rate cut to today’s market and asking if the next year can be a repeat of the 1995-96 period. They also dispel the myth that the Fed has never cut rates when markets are at all-time highs. Later, they look at the China and Emerging markets surge after the Chinese government does a bunch of things to juice markets. In the questions Derek and Jay dispel some myths between NAV erosion and NAV decline. All this and more this week on the Broke Pie Chart Podcast.

Similarities between 1995 and 2024 Fed rates cuts

Why longer duration bond yields may go up not down post Fed rate cut

Emerging market finally having its day in the sun?

China markets go crazy after government stimulus announced.

What does NAV (Net Asset Value) or price mean?

NAV Erosion vs NAV Decline explained

Interest rate changes effect on option prices

The least popular option Greek Rho comes into play

Fed cuts when markets are at all-time highs

Recession or no recession determining next year’s market returns

Oil prices, container shipping rates,

Mentioned in this Episode

Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions https://open.spotify.com/episode/3se9kb5ew488TPYKoVohgn?si=FLXDtZz0TgSKo5f1d-aQjg

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Jay Pestrichelli are back to do a post Fed 50 basis point cut analysis. What typically happens a year later in markets after the first interest rate cut? Maybe there isn’t election volatility priced into the VIX and it’s all to do with interest rates. Plus, looking back at the S&P 500 year end 2024 predictions top investment banks made in December of 2023. Hint, it didn’t go the way they expected. How many new all-time highs have we had this year and how does that compare with past years?

More all-time highs

All-time highs by month

Will the market go to 6000?

Jay Powell goes big but what does it mean for markets?

Contrarian corner TIPS Bond ETFs and Gold

VIX Futures over the next couple months

Mentioned in this Episode

Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Too Many Cuts Priced In? https://open.spotify.com/episode/6eFhqLyirKKiHKl7yYVDNV?si=08e63f4f058a4d44

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore covers what you need to know going into the fed meeting. Plus, reviewing whether the Fed has ever cut rates with a forward price to earnings ratios this high? Then looking at potential technical analysis outcomes on the S&P 500 Index include a cup with handle, triple top, and more.

Historical Forward PE ratios at Fed cuts

VIX Index doesn’t go berserk during Wednesday’s CPI selloff and recovery

Is the market pricing in too many future fed cuts

Comparing CPI Supercore, CPI Core, and CPI from a month over month annualized basis

Does CPI tell us anything about future Fed cuts?

What is a cup and handle technical pattern?

What is a triple top technical pattern?

Mentioned in this Episode

Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade https://open.spotify.com/episode/2PzBKek4qM4HfJQGodsxea?si=9vkdi40ETayaVFPiUlHMOQ

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli are back to talk employment, Fed cuts, recession (or not), forward earnings multiples, VIX, VVIX, crude oil recession sign, currencies, and more!

Looking at 3 2024 stock market selloffs this year

Crude oil as a recession indicator?

Currencies and Commodities driving stocks right now?

Why markets may be trading on technical

VIX and VVIX goings on

Why VIX is tough to trade

S&P 500 Index forward earnings and multiples

First rate cut isn’t always the biggest

Response rates of employment surveys

Non-farm payrolls

Unemployment report breakdown and factors

US Dollar Japanese Yen pair resumes Yen strengthening

Mentioned in this Episode

All the News is Out? | Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the long bond trade getting crowded?

https://open.spotify.com/episode/2LsHNmpPGY3jKpfS9WnjVt?si=21de3281be394249

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to break down Nvidia’s beat, but not beat (whisper number), their growth year over year, their profit margins, and percent they beat on the top and bottom line. Then, looking at the implied volatility and expected move post earnings in Nvidia and how to calculate it. Understanding why sometimes a long straddle option position before earnings makes money and other times it doesn’t. Later, peeking in at the implied Fed Funds rate cut probabilities for the September meeting. Finally, “everyone” seems to be saying its time to buy longer maturity bonds. Is that view getting crowded and why will or won’t long rates move lower because the Fed lowers the Fed Funds rate. 

Nvidia earning beat but misses the “whisper” number

After hours trading reaction to Nvidia earnings

Difference between Gross profit and Net profit

Nvidia’s massive profit margins compared to grocery stores

Earning growth year over year

Implied volatility pre-earnings to compute the implied expected stock move

Why option premiums and volatility rise before earnings announcements

How implied volatility gets sucked out of markets post earnings

Long Straddles at the money before earnings characteristics and risks

The Fed is expected to lower the front part of the interest rate curve

What does that mean for the back half of the longer duration bond maturities?

The spread between the 10-year treasury bond and the 30-year mortgage rate

Hindenburg Research negative piece on Super Micro Computer SMCI

Mentioned in this Episode

Hindenburg negative research on Super Micro Computer https://hindenburgresearch.com/smci/

Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down?

https://open.spotify.com/episode/09SZBfu7OSlh5ygHONqY1s?si=SwTdDLMUQS67KHvCjNkZMA

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli once again are here to break down the Jay Powell Jackson Hole statement and the market reaction including latest interest rate projections. Then they comment on the idea proposed by politicians of price caps and whether companies are making record profits based on net profit margins. Later they discussed the huge revision lower in employment number in the establishment survey and whether it’s a big deal or now and why the difference between the monthly releases and the first preliminary annual revision. Finally, they discuss the positive of the US Dollar potentially breaking down for US companies and the latest in volatility markets.

Jay Powell Fed signals the time is now to change policy

The “Goodship Transitory” and Jay Powell

Fed funds interest rate projections

Whether the Fed raising or lowering interest rates made any impact

Huge first preliminary revision by 800k in the establishment employment survey

What Goldman Sachs cited for the reason in the revisions in data

Difference between the monthly employment numbers and these annual revisions

US Dollar index and how a lower dollar helps multinational US company earnings

Politicians are talking price caps and why those never work

Examining a few companies net profit margins to see if they are actually making record profits

Volatility markets including the VIX and VVIX

Mentioned in this Episode

Fastest Correction Ever? | VIX Index Collapse Post Spike | Will the Fed Push Back on a 50 bps Interest Rate Cut? | Latest Inflation Analysis and Soft, Hard, or No Landing?

https://open.spotify.com/episode/1L5RNtfOKAc59TtOODf1dK?si=dzldc_NFSuKuve7nkZc4Ig

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli are back to discuss the surge and record collapse back below 17.6 in the VIX Index. Plus, Reviewing the difference between the VIX Index (not tradable) and VIX Futures relative spike levels. Then, they go into the latest CPI numbers including CPI Supercore to see what is sticky and what is negative. Finally, they discuss whether Chairman Jerome Powel is going to disappoint markets with only a 25-bps cut when everyone seems to want more. All that and more including the yield curve inversion, mentions of job cuts vs AI on earnings calls in Q2, expectations for a soft, hard, or no landing and what the heck that even means.

VIX only takes 7 days to go back below 17.6 after spiking above 35

Comparing previous VIX Index surges and length to come back down

Difference between hard , soft, and no landings

Fed prepares for Jackson Hole meetings and sure to signal its interest rate intentions

Will Powell and the Fed disappoint markets?

Chance that Powel pushes back to not be bullied into rate cuts

Mentions of AI on corporate earnings calls vs mentions of job cuts and employment

Inverted yield curve and what the 2-year bond is predicting for rates in the future

Fed balance sheet below the radar

Will Fed stop letting treasury bonds and mortgage backed bonds run off the balance sheet?

Comparing current and past VIX spikes against the relative spike level of the VIX futures

Mentioned in this Episode

Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades

https://open.spotify.com/episode/2mF1zkDaqWZLRhumfs0VJh?si=j5sn9DZpS3mmyM3Y5VM_1A

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Jay Pestrichelli jumped on a special edition podcast to discuss whether the move in things like the VIX and VIX were warranted given the technical surroundings of the carry trade and where markets went. Looking back at previous VIX spikes and the high yield spread in times of crisis. Plus, discussing how some strategies held up and some insights into what went on. Finally, what a higher volatility regime would mean for strategies that sell options like covered calls or high probability credit spreads.

VIX 3rd highest spike in history going back to 1992

VVIX 4th highest spike ever

Comparing the VIX Index spike to the High Yield Spread

There was no VIX Index back in 1987 but estimates say it would have been highest ever

Are there currently structural problems showing in the US Economy?

Unemployment rate up due to increase in population and size of labor force

Explaining the VVIX Index

Warren Buffet comment about whether you should be invested in stocks

People don’t make good investment decisions when they panic

Market performance historically after major VIX spikes

Comparing the carry trade blowup to August 2015 drop due to the Chinese Yuan move

Mentioned in this Episode

Podcast Market Volatility | Yen Carry Trade Unwind Explained | High Yield Holds Up | Dissecting the Unemployment Rate Rise Causes

https://open.spotify.com/episode/4aBJMdpmanE3Anncxlzfqs?si=zflHqMZuS7OZ5cAL0ae0Sg

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to talk through the latest market volatility as the VIX and VVIX both spiked this week. Markets had 2 greater than 2% pullbacks. Reading into the latest unemployment rate data. Plus, unpacking the unwinding of the carry trade involving the Japanese Yen and how this started before the recent market retracement. Finally, examining the high yield bond market as it has shown positive non-correlation with equities of late.

What does a currency Carry Trade mean?

What is the carry trade unwinding mean?

Why carry trades may show leverage in the system that causes ripples in financial markets

S&P 500 Index back to levels not seen since….June 7th

Unpacking the unemployment rate and how the rate rose even though more people working

Explaining the VVIX Index

VIX and VVIX spike this week with the market volatility

Comparing returns since the July 16th all-time high of equities vs high yield bonds

Mentioned in this Episode

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to take some listener questions on the political ramifications for the stock market, covered calls, and other general market and option questions. Also, he’ll cover the continued coverage of the market broadening out in its participation especially from small caps and the non-mag-7 companies. What about on the economic front? All this and more this week.

What political party is better for the stock market?

Does it matter who is in office?

Google earnings announcement $1Billion in quarterly profit

Richmond Fed Manufacturing Index shows weakness

Shipping container rates continue rising

What does the perception of lower rates and strong earnings mean for stocks?

Why do people sell covered calls?

Why are options more expensive around earnings announcements?

Who is on the other side of my option trade and does it matter?

Mentioned in this Episode

Download white paper on concentrated stock management with options https://static.twentyoverten.com/5b313bf81c53ec3270915df3/27gJFrs2H/Concentrated-stock-positions-Full-White-Paper.pdf

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

www.zegafinancial.com