Broken Pie Chart

Derek Moore, Shane Skinner, and Mike Snyder team up to discuss whether a Fed rate cut matters as much as people seem to think, especially given that most people have mortgages locked in lower. Plus, reviewing the revised lower employment numbers and whether the economy is truly slowing. ORCL moved 40% higher at one point in a single day, but what other large companies have moved that much? Later, based on U-Mich surveys, inflation expectations are dropping while Gold reaches a new all-time high even on an inflation adjusted basis. All this and more this week.

ORCL single day move vs Volkswagen in 2008

University of Michigan inflation expectations survey

Employment revisions

Gold price vs Gold Mining Stocks

Fed rate cuts are coming but what does it mean for housing?

Bond PE ratios

Market expectations for Fed Funds dip below 3% by end of 2026

Distribution of outstanding 30-year conventional mortgage borrower interest rates

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Shane Skinner talk about the rally in gold no one seems to care about and the gold oil ratio. Then, they go through the indicators used to determine recessions and note they don't seem that bad, although nonfarm payrolls did disappoint. But private sector jobs are growing while the government jobs are falling, so are fed cuts greenlit? Later, looking at S&P 500 net income margin percentage average per decade. Yup, they've been rising each decade. Finally, looking at forward PE ratios against forward EPS and how some stocks like Broadcom got cheaper after last earnings. All this and much more!

Next companies that are likely to join the S&P 500 Index

Employment rate and non-farm payrolls

Government vs Private Sector jobs

Gold Oil ratio and what it means at these levels

The rally in Gold over the past couple of years

Central Banks buying gold

AVGO Broadcom earnings and forward PE ratio and forward EPS estimates

Recession indicators

S&P 500 Index net profit margins by decade (they are rising)

Why margins may not revert to the mean

Fed rate cut probabilities jump after employment report

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Michael Snyder touch on Nvidia post earnings to see whether the options market go the expected moves right or not. Then, they explore Interactive Brokers replacing Walgreens in the S&P 500 Index and how new entrants are often a big, overlooked aspect of S&P earnings growth. Then, they once again check in on the Fed and PCE Inflation which while not dropping isn't rising either. Later they look at how the Atlanta GDP Now model shows increasing growth while personal income is rising as well, so what could go wrong?

Nvida post earnings options moves

Why Nvidia long straddles before earnings didn't' work

Personal Income is rising

PCE Personal Consumption Index is flat

Cumulative flows into Ethereum are driving price

New entrants and drops from the S&P 500 Index

Interactive Brokers replaces Walgreens in S&P 500 Index

Vanguard VXF ETF Extended Markets Gives Potential S&P 500 Candidates

The Fed and the interest rate probabilities for a cut through end of 2025

Atlanta Fed GDP Now

Nvidia Forward PE Ratio vs Forward EPS Estimates vs Price

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Shane Skinner geek out on the second derivative option Greek Vanna to understand how implied volatility changes cause buying or selling in markets. Plus, does Powell and the Fed not care about inflation anymore? Later, examine the post-election year seasonality to see if we are entering a historically weak period. All that plus what happens historically in markets when the fed has long period between rate cuts, interest rate probabilities, how to understand why stocks go up or down (return attribution).

What is Options Vanna?

Why do implied volatility changes cause buying and selling in markets?

How do option market makers hedge or offset option orders?

Understanding how price to forward earnings (the multiple) and EPS estimates drive price

What type of environment are we in currently?

The Fed's Jerome Powell Jackson Hole speech hints at dropping 2% inflation target

Did the Federal Reserve just give the 'all clear' for a rate cut turning dovish?

Why earnings estimates drive price in the S&P 500 index

How implied volatility changes affect an option's Delta

How VIX Spikes and subsequent drop causes additional buyers to come in

What historically happens August to October from a post-election seasonal standpoint?

Data shows that when the Fed has time between interest rate cuts historically markets do well

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore reviews the relative valuation between MSTR MicroStrategy and the Bitcoin ETF IBIT, plus deconstructing the recent PPI report which may not be the inflation problem many people initially thought. The VIX Index has seasonal patterns, and we are going into the season for increased historical VIX levels, but will history repeat itself? What about corporate buybacks seasonality and what it means for the stock market over the next two months. Derek also reviews how railroad stocks were once a way bigger percentage of the US stock market than the top stocks in the index are today. It might surprise you just how much higher! Shipping container rates, mentions of stagflation, and some critiques of the Fed's data dependence.

US Corporate Buybacks at Records

Buyback seasonality

Seasonality of VIX Index prices

Mentions of Stagflation

PPI vs CPI numbers

Comparing CPI month over month (MoM%) when the Fed last cut vs now

Tariffs are not showing up yet in the inflation data

Import Prices down -0.2% month over month

US Export prices 2.2% month over month

Spot shipping container rates WCI Shanghai to Los Angeles Container Freight Benchmark Index

Mentioned in this Episode

Trade PPI explanation from Richmond Fed https://www.richmondfed.org/research/national_economy/macro_minute/2023/mm_09_05_23

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

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

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

Contact Derek [email protected]

Derek Moore and Mike Snyder compare the 2009 bull market to today plus Wall Street year end estimates get bullish again. Plus, What Nvidia's options market is forecasting for implied moves around earnings. Later, explaining (or trying to) the revisions to the employment data, historical perspective, and the low response rates. All that and more as markets try to make another all-time high.

2009 Bull Market vs 2022

Non-Farm Payroll Downward Revisions

Average Differential Between Final Estimate and Initial Estimates

30 Consecutive Downward Revisions

Market Cycles and Market Breadth

Wall Street Forecasts Revert to Pre Tariff Turmoil Levels

CPI Rent New Tenants collapses so what does it mean?

Nvidia (NVDA) option implied volatility implied move through earning

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Shane Skinner get into how investors are looking at high dividend ETFs the wrong way as total return vs distribution yield is what matters. Plus, how to think about how much in dividends you can take out knowing its total return that drives the probability of assets lasting during distribution phase. Later, they look at correlations between different asset classes over the years and ask whether today they are way more positively correlated. They then delve into concentration today in stock indexes vs prior periods. You might be surprised by who were the highest waited stocks throughout the years.

Dividend Yield vs Total Return

Implied volatility in the options for Opendoor

Sequence of return risks during withdrawals

Tradeoff between premium selling and upside capture

Ordinary income vs capital gains and losses

Can investors really live off dividends?

Understanding the risks of concentration in asset deployment

Cross asset correlation

Comparing correlations over different periods in history

Have stocks and bonds become more correlated?

Nvidia and Microsoft are the highest 2 stock concentration in the Dow Jones Index?

Surprising companies that have been the highest weighted in the Nasdaq and S&P 500 Indexes

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Mike Snyder get into why anyone was short Opendoor and how the options market is flashing crazy implied volatility. Plus, how volatility and price movement may cause market makers to buy shares known as a "Gamma Squeeze". Later, they get into how the signs are there that this bull market might have more to run (or not). Oh, and let's not forget to look at what the options market is forecasting for expected moves on Microsoft, Amazon, and Apple earnings next week. All this plus some recommendations this week.

Short Interest on Opendoor

Implied volatility in the options for Opendoor

What is a gamma squeeze?

Why market makers might be forced to buy more shares to hedge when people buy calls

How implied volatility, price, and time impact how many shares market makers buy

Looking at a monthly breakdown of when all-time highs are reached by month

Analysts are forecasting the most dissents by FOMC members at a meeting in 30 years

Looking at market breadth widening

Comparing the RSP equal weight ETF vs the SPY ETF performance lately

Median single family home prices are holding up

Why Are Stocks Up? Nobody Knows WSJ article

Median S&P 500 Index Performance after 60 days above the 20-day moving average

Mentioned in this Episode

WSJ Article Why are Stocks Up? Nobody Knows https://www.wsj.com/finance/stocks/why-are-stocks-up-nobody-knows-e40e5f42?gaa_at=eafs&gaa_n=ASWzDAgNaz0DDWFH6gDHn6aERrjSRwPmYAW_gghkSG_vodoYjhptA0P1MDkxjbWf_I8%3D&gaa_ts=6884571e&gaa_sig=yozSyPX1hqhHz6UAZ2l-hgP3YdDvVJAHPTMiUXl-RbQszZ0B_F6nf5MoO9DjUl2uwotmVVavxIG3wmp2BPUwOg%3D%3D

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

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

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

Contact Derek [email protected]

Derek Moore and Shane Skinner give their thoughts on the Fed, interest rates, and the Trump vs. Powell situation. Plus, looking at new data on how much revenue US companies derive from overseas markets. Later the talk about what many get wrong about where their stock market returns come from year over year plus those crazy surveys and inflation expectations. Finally, they talk about what the option market is expecting around TSLA earnings

How long are Fed Governor terms?

How long is the term of the Federal Reserve Chair?

Where returns come from changes in revenues, margins, EPS, buybacks, and dividends

Q2 Earnings Season kicks off

Will earnings beat by more than people expect?

What percentage do S&P 500 Index companies revenues come from overseas?

What about the Mag 7 percentage of foreign earnings?

U of Michigan inflation survey still shows crazy disparity between democrats and republicans

Trump vs Powell debate

Fed interest rate probabilities

Will the Fed lower interest rates in July?

What the options market says about the TSLA earnings move this week

TSLA implied volatility

Mentioned in this Episode

Semper Augustus 2021 letter talking about where returns come from over longer periods https://static.fmgsuite.com/media/documents/db64b928-53d6-43a9-a4d0-a9d2f69f76ba.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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]

Derek Moore and Shane Skinner examine some market myths. Does a weak dollar mean problems for the stock market? Looking at tax rates and the effect on government spending vs revenue. Plus, some international market ETFs are up huge so can they continue? Later, looking at the national debt and when it might matter. All that and more market musings.

Best performing international markets

Is the US Dollar weakness really that bad compared to other periods

Government revenue as a percentage of GDP

Government expenditure as a percentage of GDP

Do higher tax rates really make a difference when it comes to revenues and debt?

Looking at options market pricing of JP Morgan options ahead of earnings

Implied volatility of options prior to earnings estimated expected one standard deviation moves

How a weak dollar can raise earnings from multinational companies

Comparing the change in the US Dollar to the change in the S&P 500 Index

Are the US Dollar and the S&P 500 Index correlated?

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 book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

Contact Derek [email protected]