Broken Pie Chart

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]