Broken Pie Chart

Derek Moore looks beyond mega cap tech by examining while this month the S&P 500 Index is relatively flat, equal weight and extended markets catch a bid. Plus, talk of a tight high yield spread but what does that mean? Later, looking at the upcoming earnings including Tesla and Google. Finally, reviewing typical VIX seasonality patterns.

Earnings including Tesla and Google this week

Performance of the S&P 500 Index against extended markets and equal weight S&P 500 Index

Comparing the S&P 500 against international developed markets and emerging markets

Comparing the VXF etf and RSP etf against the S&P 500 Index

Why protecting with buffers and/or hedges can help assuage short term market worries

What is the high yield spread?

Comparing the current high yield spread against recent history

What does it mean when the high yield spread gets tight

Largest companies in the Nasdaq 100 Index in March of 2000

VIX Seasonality patters

What did the VIX and VVIX do this week?

What have the EEM etf and EFA etf do this week on the international front?

Mentioned in this Episode

Where to find the High Yield Spread https://fred.stlouisfed.org/series/BAMLH0A0HYM2/

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli are back together to discuss what happens after the Fed makes its first rate cut historically in markets. Plus, what if everyone is wrong about rate cuts? Then, they look at the historical spread between inflation and the Fed Funds rate plus how would investors take the other side of rate cuts? Finally, they discuss the idea of this being the 1990s all over again with AI as a technological revolution like the internet boom?

Earnings season is in full bloom

Fed Funds rate vs the YoY CPI Inflation comparison

Why historically Fed Funds does not have to equal annual inflation

What is the Fed afraid of?

Nasdaq Composite returns after major releases of new technologies

Record call volume on the IWM ETF (Russell 2000)

Total return for markets 12 months post 1st rate cut going back to 1974

Implied interest rate based on fed funds futures

VIX and the market both go up?

Mentioned in this Episode

Podcast 1994-95 All Over Again in Markets? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to discuss the recent talk from the "talking heads on TV" that the economy is weakening. What are they looking at and are they right? Then Derek explains using Tesla as an example of implied volatility going higher while a stock runs higher. Reviewing the latest nonfarm payrolls, unemployment rate, and initial jobless claims. Finally, Derek goes through what happens when markets go up from a fundamental standpoint including Forward PE multiples changing, earnings estimates, share buybacks, and dividend yield. All of this and more on this week's episode.

Tesla implied volatility surges along with its stock price

Why volatility can go higher even when markets or stocks don't go down

Is the economy weakening?

Reviewing the economic surprise index and what it measures

Share buyback yield

Share buybacks effect on EPS

Dividend yields as a contribution to total return

Forward PE multiples and effects on market prices

Forward earnings estimate on the S&P 500 Index companies

How companies joining and leaving the S&P 500 Index can affect earnings

Looking at college bachelor's degree and higher unemployment rate for clues

Atlanta Fed GDP Now

Mentioned in this Episode

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to discuss the WSJ article comparing Nvidia to Cisco and Jim Cramer's response. Is Nvidia in a bubble?

Wall Street Journal Article on Cisco 2000 vs Nvidia 2024

Forward PE multiples then and now Cisco vs Nvidia

Data showing bull markets often continue the second half of the year

When markets are up 10% first half of the year what happens next?

Don't give up on the bull market yet based on data?

Implied Volatility spikes in France compared to Germany

What does 100% Moneyness mean in options speak?

Explaining option moneyness at different levels

How does July stack up against other months of the year for S&P 500 returns?

August and July market returns in Election years

Inflation PCE cools while PCE Services less housing still elevated YoY

Container shipping rates rising again to highest level since September 2022

French CAC 40 Market near 10% drawdown from highs

Mentioned in this Episode

WSJ article comparing Cisco in 2000 vs Nvidia in 2024 https://www.wsj.com/finance/investing/nvidia-is-no-cisco-but-it-is-getting-expensive-1938fcc0

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore is back to go over some bullish and bearish economic and market items. Avocado prices are spiking while lumber prices are falling. Divergence between the Trucking Tonnage Index vs the S&P 500 Index. Later we discuss the lack of historical volatility in the market given we haven't had a greater than 2.05% down day for over 375 days. Then taking listener questions around the probability a market goes up or down 9.8% and what goes into calculating option probabilities. Finally, Derek explains the "Volatility Problem" from a listener question comparing the difference between average returns and CAGR compounded annualized growth rate.

What is the volatility problem?

CAGR Compounded Annualized Growth Rate

Average return vs CAGR return and why it matters

Avocado vs Lumber prices

Trucking Tonnage Index vs the S&P 500 Index

EconPi median of coordinates showing decline quad for economy

Economic surprise index explained

Why hedging makes sense to manage volatility

Mentioned in this Episode

Econ PI site http://econpi.com/index.php

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial are back with a Fed meeting day edition where they break down the new end of year interest rate dot plots and Jay Powell's press conference. Plus, they riff on Harry Dent's latest prediction saying Nvidia is going down 98% and why the doom and gloom crowd are harmful to investors. Later discussing Apple's breakout after their AI announcement at WWDC conference and the reaction to the CPI inflation print. All this and more!

Apple's AI WWDC announcement reaction by the stock market

Apple vs Nvidia vs Microsoft for the title of largest market cap

Buy the Rumor Sell the News Buy the News on Apple

Post Fed Meeting announcement reaction

Fed newest Dot plots and what they say for the year end target for interest rates

The fed funds futures moves intraday

How to calculate the implied fed funds rate

Inflation print comes in light but year over year numbers still above Fed's target

How the CPI Supercore is still running over 4.8% year over year

Harry Dent says markets are going to crash but has said the same thing over and over again

Why doom and gloom predictions are harmful for investors

Reviewing some past Harry Dent prognostication

Harry Dent says Nvidia may go down 98% while the Nasdaq will see a -92% crash

Battle for the largest market cap between Apple, Nvidia, and Microsoft gets interesting

Mentioned in this Episode

Harry Dent predicts Nasdaq to crash 92% https://www.livemint.com/market/stock-market-news/boy-this-is-over-economist-harry-dent-predicts-98-crash-in-nvidia-92-drop-in-nasdaq-heres-why-11718162529764.html

CBS News article "Harry Dent and the chamber of poor returns" https://www.cbsnews.com/news/harry-dent-and-the-chamber-of-poor-returns/

GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages? https://podcasts.apple.com/us/podcast/gamestop-option-bets-s-p-too-top-heavy-nvidia-passes/id1432836154?i=1000658371572

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial look at some what seem like crazy options trades in GameStop. Plus, examining Nvidia passing Apple as the second largest stock in the S&P 500, and can it pass Microsoft for #1? They also talk about whether it's a problem the top 4 stocks in the S&P 500 make up such a large percentage of the weighting and comparing it to the last time it was this high. Later they take some listener questions including whether the data shows cracks in the regional banks due to mortgage delinquencies, what happened in the unemployment report, and more.

Unemployment reaches 4%

Top 4 companies in the S&P 500 Index highest since the 1960's

Comparing the contribution to returns S&P 500 Index top 496 vs the top 3 and Nvidia

Residential mortgage delinquencies and effect on regional banks

FDIC quarterly data on the health of banks

Nvidia passes Apple for #2 as its market cap exceeds Apples but will Microsoft be next?

1964 vs 2024 top 4 company weighting in the S&P 500 Index

Now the top 4 companies today are a lot more diverse business

GameStop options trading

Looking at the 128 calls open interest, volume and probabilities next 2 weekly expirations

Volatility in the GameStop option chain

Mentioned in this Episode

Mortgage Bankers Association data on residential mortgage delinquencies https://usreop.com/mba-chart-of-the-week-seriously-delinquent-rates-by-loan-type-conventional-fha-va-may-17-2024/

Delinquency rates on commercial real estate loans from FRED https://fred.stlouisfed.org/series/DRCRELEXFACBS

CNBC piece on potential cracks in the banking system https://www.cnbc.com/2024/03/19/where-cracks-in-the-banking-sector-may-appear-without-more-ma.html

Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE

https://podcasts.apple.com/us/podcast/crazy-vix-bets-due-to-election-market-reversal-home/id1432836154?i=1000657610266

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial review some interesting VIX option trades around the election and around inauguration day in 2025 compared to the next few months options action. When young people say home ownership dreams are dead is that true? Surprising numbers to compare inflation adjusted costs. Plus, on Friday the market swung from down over 1% to up almost 1% as we continue to be in a buy the dip regime. Later discussing the evolving Fed rate cut expectations and why it shouldn't be a surprise. Finally, they go bring up container shipping costs rising again and what that means for inflation, the Presidential election market cycle, history of interest rates, and more.

Looking at VIX trades far out of the money around election and inauguration day

Are retail investors making bets on a rise in volatility due to the election?

Why trading VIX options can be frustrating and may be misused by retail traders

Home ownership dreams dead for young people?

Comparing a monthly mortgage payment today on an inflation adjusted basis to historical

Home prices compared on an inflation adjusted basis

History of interest rates over 5000 years

Container shipping costs on the rise

Share buybacks at highest level over the last couple years and what that means for earnings

Friday's huge market reversal going from down to up in the last hour

Fed rate cut expectations through the end of 2024 down from 7 cuts to 1 cut

4th year of the Presidential cycle and the S&P 500 Index

What Shiller Cape ratio means for returns over the next 10 years

Cape PE ration and Price to Free Cash Flow

Mentioned in this Episode

History of Interest Rates book by Sidney Homer and Richard Sylla https://amzn.to/3V3TNEJ

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial talk about Nvidia's earnings report and how they are catching up to Apple in total market cap. Will they cash Microsoft? Then they note the percentage of companies mentioning AI on earnings calls. What does that mean for CAPEX spending on semiconductor chips? Later they look at how housing prices after a small drop are now growing YoY despite higher interest rates and higher payment per median home price. The gold rally now one is noticing in 2024. A little Japan 10-year bond talk as rates hit 1%. Finally, Jay and Derek talk about how rates are staying higher for longer and the market might need to get over it while the "threat" of lowering rates might help markets.

Earnings mentions of AI on earnings conference calls surge

Nvidia is catching up to Apple in market cap

What is market cap and how to compute it?

Surprising market cap size for one semiconductor company.

Comparing S&P 500 Index market return paths since 1990

Is 2024 the new 1995 for S&P 500 returns?

Nvidia stock price growth vs income and revenue growth last 10 years

Now investors don't thing there is a chance for a recession

Investor sentiment or likelihood of recession being high might be contrarian indicator

University of Michigan inflation expectations over next 5 years surges

Historical asset class by year returns

Gold still rallying but does anyone care?

One family home sales median price year over year price change growth

Charting monthly mortgage payment on purchasing a median priced home

Japanese 10 year bonds hit 1%

Why investing for longer means your win probability gets really high

Mentioned in this Episode

Roaring Kitty Tweets and Gamestop rises and falls

https://open.spotify.com/episode/5PtbYzdRunB7UPJRWQaXYK?si=OkMXUjOnQRGaJ2OZY-y8YQ

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

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

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

Contact Derek [email protected]

www.zegafinancial.com

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial start by looking at GameStop's (GME) call option open interest and activity in the days prior to Roaring Kitty tweeting . They notice the increase in options activity ahead of the surge in the stock's price and volume spike and whether the options market led the stock market on GME. Then they comment on another new all-time high by the S&P 500 Index and how according to a BofA chart 90% of the time markets are not in a recession or in stagflation since 1948. Later Derek and Jay bring up the CPI Supercore trending higher while car insurance rates are soaring. What does this mean for the Fed and rates? Finally explanation of when covered calls get called away early.

Roaring Kitty comes out of hibernation to tweet.

Looking at GameStop options activity prior to Roaring Kitty's tweet

Did the options activity prior to the stock activity mean people knew the tweet was coming?

Are we in for a GameStop meme stock part 2?

Why retail investors should use caution in trading GameStop.

Looking at the implied volatility on GameStop options to understand expected volatility.

CPI Supercore continues to rise YoY and what that means for interest rates and the Fed

Car insurance rates are surging 20%+ and rising

How long it takes the S&P 500 to go up each 100 point increment

According to a Bank of America graph 90% of the time since 1948 no recessions or stagflation

Enough about the Fed and rates?

When do covered calls get called away early and assigned?

Understanding dividends vs time value in deciding when covered calls get assigned

Early assignment for options

What implied volatility says about what the options market expects a stock to move

GameStop 300% implied volatility is massive and how expensive the ATM straddle is

Mentioned in this Episode

PPI comes in hotter than expected click below to read the PPI report release

https://www.bls.gov/news.release/ppi.nr0.htm

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

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

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

Contact Derek [email protected]

www.zegafinancial.com