Broken Pie Chart

Derek goes beyond the headlines to look under the hood of the labor market, jobs, and unemployment. Plus, he reviews the container shipping issues and port delays, semiconductors now delayed over 20 weeks. Finally, he discusses whether the government stimulus for a drop in demand might have miscalculated the recession. Instead, what if it's a supply side issue where falling supply and rising prices is the regime? Both demand shock and supply shock are covered so you can talk to your friends about it.

Transitory or Non-Transitory case for inflation

Container shipping issues with inflation

The Fed interest rate tapers and rate decisions

Supply Side Shock

Demand Side Shock

Wage growth

Labor force participation rates

Government transfer payments (social programs) growth

Mentioned in this Episode:

Contact Derek [email protected]

Follow Derek's blog articles on the ZEGA site https://zegafinancial.com/blog

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Inflation-Markets at All-time Highs, Interest Rates, Covid and the Markets, Afghanistan

https://podcasts.apple.com/us/podcast/talking-inflation-all-time-market-highs-interest-rates/id1432836154?i=1000533456019

Sticky CPI vs Flexible CPI

https://podcasts.apple.com/us/podcast/how-is-inflation-measured-sticky-cpi-vs-flexible-cpi/id1432836154?i=1000521909707

What are Repos and Reverse Repos https://podcasts.apple.com/au/podcast/what-are-reverse-repos-and-repos-fed-enters-overnight/id1432836154?i=1000523659106

Jay Pestrichelli, CEO of ZEGA Financial, is back to talk a walk around the markets to discuss both sides of inflation debate, interesting numbers around all-time highs, hedging, the FED, Housing Prices. Jay turns the tables and hosts asking Derek about the case for and against inflation being transitory.

Transitory or Non-Transitory case for inflation

Container shipping issues with inflation

The Fed interest rate tapers and rate decisions

Market at All-time highs

Just best Hedge

Housing Prices big deal nor no-deal?

Demand for Treasuries

Reverse Repos and the Fed

Covid risks in the economy

Afghanistan risk to markets

Mentioned in this Episode:

Contact Derek [email protected]

Follow Derek's blog articles on the ZEGA site https://zegafinancial.com/blog

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Gamestop short squeeze and wall street bets podcast https://podcasts.apple.com/us/podcast/gamestop-short-squeeze-by-reddit-wall-street-bets-traders/id1432836154?i=1000507187446

What are Repos and Reverse Repos https://podcasts.apple.com/au/podcast/what-are-reverse-repos-and-repos-fed-enters-overnight/id1432836154?i=1000523659106

How much Bitcoin or Ethereum to hold https://podcasts.apple.com/au/podcast/how-much-ethereum-and-bitcoin-should-i-have-in-my-portfolio/id1432836154?i=1000520947855

Traderscoach.com founder Bennett McDowell joins Derek Moore. They hit the record button and what ensues is a free-flowing discussion around what common themes they see from successful investors and trades. Plus, what common mistakes they see repeated by those struggling to find their trading voice. Later they discuss trading live in front of an audience in a trading challenge. Favorite trading movies. And writing and publishing investment books.

Bennett McDowell and Derek Moore reminisce about their days on air doing the Market Huddles

Discussion around common mistakes traders and investors make repeatedly

What traits successful traders make

What percentage of traders make money?

Doing presentations at the Traders Expos in Las Vegas and New York

Participating in a live trading challenge

Favorite trading movies

What percentage of asset to put into trading versus your larger investing assets?

Writing investment books

Derek's favorite book by Bennett McDowell

Impact of technology on investing

Tracking your trading

How you can be wrong a lot and still win at trading

Risk of ruin tables

Process of writing financial books

Mentioned in this Episode:

Contact Derek [email protected]

Bennett McDowell www.traderscoach.com

Click Here for Bennett's free PDF article on money management, trade size, and risk of ruinhttps://ea125.isrefer.com/go/mmshare/jeanmcd/

Bennett McDowell's Books on Amazon https://www.amazon.com/Bennett-McDowell/e/B001JS8NWY%3Fref=dbs_a_mng_rwt_scns_share

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Day Trading for A Living Podast Around Brazil Study Showing 97% Don't Make Money https://www.iheart.com/podcast/269-broken-pie-chart-29878781/episode/day-trading-for-a-living-68947906/

Gamestop short squeeze and wall street bets podcast https://podcasts.apple.com/us/podcast/gamestop-short-squeeze-by-reddit-wall-street-bets-traders/id1432836154?i=1000507187446

You hear it all the time: start early contributing money to investment accounts. But just how big of a difference does it make? What about doing a monthly budget? Are detailed budgets more of a hassle than they are worth?

How much money at various ages needed to contribute to build wealth?

Why some budgets may not be beneficial

The big items like cars, rent, and mortgages make an impact not your Netflix account

What if you invested the difference?

How to review your statements to find things you don't want or need anymore

Look around your house to find things to fund your account

Mentioned in this Episode:

Contact Derek [email protected]

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Netflix is not making you broke

https://open.spotify.com/episode/06EbLDvG2oUxRlYILF0ngH

How to find money around your house to fund your investment accounts

https://open.spotify.com/episode/4pqFDUwNV8wmVPyJUbMa1e

You often hear people quote historical stock and bond returns. But are they useful to investors? What lessons can you take from them to help with your portfolio construction? What challenges do historical investment returns have concerning dividend reinvestment and commissions? What about bond historical averages given our low-interest-rate environment?

S&P 500 Index Total Returns 1928- 2020

History of index funds and dividend reinvestment

Treasury Bonds historical returns 1928-2020

Probabilities based on historical stock returns

S&P 500 Index Total Return by decade

Sources for historical return data

Mentioned in this Episode:

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Robert Shiller historical market data http://www.econ.yale.edu/~shiller/data.htm

Aswath Damadoran website, blog, and data https://pages.stern.nyu.edu/~adamodar/

Robert Shiller book Irrational Exuberance https://www.amazon.com/Irrational-Exuberance-Revised-Expanded-Third/dp/0691173125?_encoding=UTF8&qid=1628453580&sr=8-1&linkCode=ll1&tag=tradesurfer-20&linkId=eea68424f97b1bf760a2d5bc1df2120a&language=en_US&ref_=as_li_ss_tl

Jeremy Seigel book Stocks for the Long Run https://www.amazon.com/Stocks-Long-Run-Definitive-Investment-dp-0071800514/dp/0071800514?_encoding=UTF8&me=&qid=&linkCode=ll1&tag=tradesurfer-20&linkId=e34a4e3f2b776fcd7a89fa9e1297e9cc&language=en_US&ref_=as_li_ss_tl

Watch CNBC or Fox Business for a short while and you are likely to see predictions on interest rates. But how would you see for yourself what the various futures markets are implying for future interest rates? Learn how you can look at the Fed Funds, Eurodollar, SOFR (Secured Overnight Funding Rate), and soon BSBY Rate futures to see into the future what market participants are currently thinking. Plus, many of you have variable-rate mortgages or home equity loans that are tied to the Libor Rate, or now SOFR or BSBY. See how to quickly recognize what the implied interest rates are on these key metrics.

How to calculate implied future fed funds rate

CME Fed Funds Probability Tracker

SOFR Secured Overnight Funding Rate

Eurodollar Futures and implied 3-month Libor rate

BSBY Rate based on CDs, Commercial Paper, Bank Deposits USD, Short term bank bond trades

Fed Funds Futures

SOFR Rate Futures

Eurodollar Futures

Mentioned in this Episode:

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Eurodollar futures chain https://www.cmegroup.com/markets/interest-rates/stirs/eurodollar.quotes.html

SOFR Futures rates CME https://www.cmegroup.com/markets/interest-rates/stirs/three-month-sofr.html

CME FedWatch Probability Tool and Fund Funds Futures by Fed Meeting Date https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

This week we discuss how advances in technology and dropping costs have made it better for investors. Has it ever been this good? Maybe investors worrying about payment for order flow are worried about the wrong things? Looking back when there was no dividend reinvestment and high commissions, it would have cost you an arm and a leg to replicate the index. Then we discuss updates to the S&P 500 earnings estimates and forward PE valuations. How things have changed from March of 2020.

How bid/ask spreads have narrowed greatly over the years.

Decimalization vs. fractions in trading

Higher commissions changed to zero commissions

Payment for order flow

Dividend Reinvestment

Before index funds no way to replicate the S&P 500 Index

How earnings estimates have risen since March of 2020

Earnings estimate ranges for the S&P 500 Index

Forward PE Ratios

Historical Averages PE Ratio S&P 500 Index

Calculating the forward PE

Mentioned in this Episode:

JP Morgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Last week the latest CPI inflation data came out from the BLS. If you watched the news, they played it up. While we don't know what inflation will be with any certainty, stop watching the news and start watching the data for yourself. In this week's episode, Derek runs through factors to keep an eye on and where you can track the data for yourself.

What's going in with rental car prices? What about energy prices? What happens if you remove the re-opening items from core CPI?

CPI Consumer Price Index up 5.4% year over year in June 2021

Why are rental car prices surging?

Commenting on Scott Minerd's piece on Guggenheim's site around inflation

Sticky CPI vs Flexible CPI

Real Disposable income check-in

Housing prices vs mortgage payments as a percent of real disposable income

Interesting items in CPI including rent, owners equivalent rent, shelter, used cars, rental cars, and more

How you can track CPI trends

Where to find the data on FRED Federal Reserve Bank of St. Louis site

Mentioned in this Episode:

Real Disposable Income data https://fred.stlouisfed.org/series/DSPIC96

Sticky CPI vs Flexible CPI data https://www.atlantafed.org/research/inflationproject/stickyprice

Mortgage Debt Service as Percent of Disposable Income https://fred.stlouisfed.org/series/MDSP

Household Debt Service as Percent of Disposable Income https://fred.stlouisfed.org/series/TDSP

Article explaining the rise in rental car prices https://www.businessinsider.com/rental-car-shortages-us-travel-demand-chip-shortage-2021-4

Scott Minerd Guggenheim piece saying not to panic on inflation https://www.guggenheiminvestments.com/perspectives/macroeconomic-research/still-no-reason-to-panic-about-inflation?utm_source=twitter&utm_medium=social&utm_term=scott+minerd&utm_content=macroeconomic+research&utm_campaign=macro+alert

BLS Inflation Data Release https://www.bls.gov/cpi/

Derek Moore's Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

Container shipping rates are at all-time highs. So How bad is the situation? How bad is the backup at various container shipping ports? What effect is this having on inflation in the short term? Evergiven container ship released from Suez Canal

Busiest Container Shipping Ports

Problems at Yantian port

Ships anchored of container shipping ports causing backups

The surge in Container shipping prices

Panana Spread all-time high container shipping rates

Empty sailings containing shipping

Dwelling time container shipping

The difference in rates Shanghai to LA vs La to Shanghai

Container shipping rates impact on inflation

New container shipbuilding orders up in 2021 to around 17% to 20% of the fleet

Evergiven stuck in Suez Canal

Evergiven container ship finally release from Suez Canal

Effect on global trade due to container ships stuck in Suez Canal

Mentioned in this Episode:

Book The Box by Marc Levinson https://amzn.to/3hwcj61

Book Outside the Box by Marc Levinson https://amzn.to/3e7AgyN

Podcast Is Inflation Really Out of Control? https://podcasts.apple.com/us/podcast/is-inflation-really-out-of-control/id1432836154?i=1000526178078

Supplychaindive charts showing Covid container ship problems https://www.supplychaindive.com/news/yantian-china-port-covid-charts-data-congestion-ships-supply-chain/602014/

Balance of Trade Chart https://fred.stlouisfed.org/series/BOPGSTB

Yantian port back to normal? https://theloadstar.com/yantian-back-to-normal-tomorrow-but-box-backlog-will-take-weeks-to-clear/ from THELOADSTAR site

Infographic showing impact to global trade from stuck Evergiven container ship in Suez Canal from Freightwaves site https://www.freightwaves.com/news/daily-infographic-ever-given-finally-released-from-custody-in-egypt

Yantian port to re-engage with pre-financial crisis expansion of 3 million TUEs at port https://theloadstar.com/port-of-yantian-dusts-off-pre-financial-crisis-plan-to-add-3m-teu-capacity/

Dan McMullen Senior Managing Director and Senior Portfolio Manager in Blackstone's Credit Liquid Credit Strategies Unit, SPDR Blackstone Senior Loan ETF (Symbol: SRLN) joins the podcast to explain what senior loans are. How senior loans compare to leveraged loans and CLOs or collateralized loan obligations. Plus, Dan explains what the risks are, how they compare to high yield bonds, and what happens in the event of bankruptcy. Later Dan gets into how loans trade and are priced plus whether they are based on SOFR, LIBOR, or something else. What types of covenants or restrictions do investors put on companies accessing these markets? What type of companies use senior loans and why this instrument versus equity or bonds. Dan McMullen also is a member of Blackstone Credit's LCS Management, LCS US Syndicated Credit, Global Structured, and Asset Allocation investment committees.

What are senior loans?

Senior Loans versus Leveraged Loans

What are CLOs (Collateralized Loan Obligation)

What types of collateral do companies put up against loans?

Where do senior loans site on the balance sheet?

Where do ongoing interest payments sit on the income statement?

What happens if companies go bankrupt?

What is a typical recovery percentage on loans in default?

Is the industry transitioning away from Libor and to SOFR?

Effect of interest rates on existing and future issuance of senior loans

Where do senior loans sit in the capital structure

Why companies use senior loan markets

Senior loans during the worst of Covid

Prices of loans versus prices of high yield bonds

Recovery rates on loans versus high yield bonds

How loans in bankruptcy can be sold

Amortization in senior loans

Restrictions or covenants put on senior loan issuers

Mentioned in this Episode:

More on Dan McMullen and senior loans ETF https://www.ssga.com/us/en/institutional/etfs/funds/spdr-blackstone-senior-loan-etf-srln

Marcel Benjamin deconstructs High Yield Bonds and What are Zombie Companies https://podcasts.apple.com/be/podcast/marcel-benjamin-high-yield-bonds-explained-what-are/id1432836154?i=1000517760353

Derek Moore book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=&sr=