Deep Dive: Can Bonds Recover? | TLT ETF Breakdown |Inflation and the Fed
Release Date: 10/15/2023
Barons Contrarian Cover | Negative GDP Details | Fed Rate Cuts? | Unemployment Was Fine | Sell in May? | S&P 500 After Near Bear Markets 1-Year Later
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Derek Moore talks through what caused the negative GDP number and compares it to 2022 Q1’s more negative print. Hint, it’s those darn imports and exports. Should you sell in May and go away? Plus, whether the Fed may do anything at the May meeting. Unemployment was ok while inflation hasn’t gone back up so why won’t they cut? What happens 1-year later after an almost bear market (less than -20% drawdown)? All that plus some volatility talk. Components of GDP Net exports calculation When markets have a near bear market how much on average is the market higher 1-year later? What...
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Is The Bottom In? | Now They Change Their S&P 500 Targets | Apple Earnings Implied Volatility Expected Move |
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Derek Moore goes through how markets have bottomed (maybe?) and are now up 10% since then. All the while investment banks have now started moving their 2025 year end targets down. The bear case on corporate net profit margins (and bull case). Plus, how max bearishness against US equities at market lows may have been a contrarian signal. With more earnings this week, Apple’s implied volatility is forecasting what as an expected 1 standard deviation move. Keeping perspective on the markets as the media talks about ends of eras and more. Apple earnings implied volatility What is...
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Economic Forecast Crowding | Gold ATH | High Yield Spreads Not Recession Levels | Flight to Quality Trades Not Working | No the VIX Is Not Predicting Actual Moves Still
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Derek Moore talks about airport business as a sign or lack thereof of recessions. Gold makes another all-time high while the safety trade like treasuries and the US dollar aren’t working lately. Plus, looking at typical widening of high yield spreads during recessions compared to today. Later, the VIX Index is still not appropriately pricing in historical volatility given the moves again this week in equity markets. Also, surveys of economists are up to 45% probability of recession in the next 12 months although short of the 60%+ probability in late 2022 and early 2023 so why should we even...
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Market Bottom? | VIX Should Be 100 | Bond Market Yields Spike | Bitcoin and S&P 500 10 Day Volatility is Equal Wow!
Broken Pie Chart
Derek Moore reviews the surge in bond yields, and why the VIX Index should have been 100-125 this week as there is a mismatch between expected volatility and realized volatility. Earnings season begins but will analysts start downgrading their S&P 500 Index forecast? Why does the market often bottom out ahead of whatever reason its scared happens. Plus, believe it or not over the past 10 days Bitcoin’s historical volatility is the same as SPY. All this and more this week. Bitcoin volatility vs SPY volatility Did the market bottom this week? Comparing volatility in March 2020 to...
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Sell Sell Sell | Tariffs | Nasdaq in Bear Market Territory | Buying Opportunity?| Don’t Make Emotional Decisions
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Derek Moore is joined by Mike Puck to compare this selloff to others like 2020, 1998, 2015, 2000 and more. Then they talk about how the Trump administration is arriving at their tariff percentages. Later, they discus how the market didn’t price in the eventual announcement. How things like the VIX Index and the High Yield Bond spread Thursday weren’t high enough. Did the market miscalculate the tariff announcement? What is the sentiment among advisors and investors from what we are hearing and are we at max panic yet plus the continued case for hedging. When do we...
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Back in Correction? | Recession? | Atlanta FED GDP Now | S&P 500 Index Year End Target Update | Useless Fed Dot Plots | 1 YR Stock Market Expectations Plummet | Implied Volatility
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Derek Moore reviews two paths for market post -10% correction with and without a recession. Plus, talking through the difference between expectations miss vs the actual data through the lens of YoY PCE Core Inflation. Later, confidence in the stock market plummeted. Oh, and like clockwork, the first investment bank lowered its year end S&P 500 Index price target and 12-month forward earnings outlook. Are more coming? And what is going on with the Atlanta Fed GDP now model? Tune in for this and more this week. Recession or not in next year may determine market returns from here Inflation...
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Intra Year Drawdowns | LEI Leading Economic Indicator | VIX Index to Be Normal Soon? | Useless Fed Dot Plots
Broken Pie Chart
Derek Moore is back to discuss markets, volatility, and the economy through the prism of intra year drawdowns, Spot VIX vs Vix Futures prices, and LEI or Leading Economic Indicator. Why are the Fed’s Dot Plots useless (still). Thoughts on the idea that Buffered strategies don’t beat the market. How different markets have performed since the first Fed rate cut in September and much more. Since September Rate Cut Mag 7 vs SPX vs Equal Weight Intra Year Drawdowns vs full year return Comments on AQR post on Buffered funds VIX Index vs VIX Futures in the coming months AAII Bull...
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Max Bearishness at a Bottom? | VIX Curve Inversion | Nvidia Rallies | Dollar Problem Solved? | Fear and Greed Index | Consumer Sentiment Indicator is Worthless
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Derek Moore is back to break down the wild week including Nvidia rallying when against the bearish tide. How the US Dollar index pulling back might be bullish for earnings. Plus, have we reached max panic and max bearishness setting up for a near term bottom in markets? Later, looking at the Fear and Greed Index, the VIX Inversion and what that means for markets, and why people are now bullish or bearish based on politics. All that and more! Fear and Greed Index Drawdowns vs full year market performance US Dollar index US Trade Weighed Dollar Index University of Michigan Sentiment...
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Market Correction Turmoil | Don’t Panic | VIX Spikes | 3 Fed Cuts? | Atlanta Fed GDP Now Collapses | Tariffs | Listener Emails
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Derek Moore is back together with Jay Pestrichelli this week to react to the market turmoil. What is going on and is this just a revaluation or something worse? Plus, now the Fed Funds’ futures indicate 3 rate cuts. Looking at the Mag 7 selloff compared to the rest of the market. Unemployment was fine so what’s the big deal? Later, looking at whether the options market via the implied volatility readings is pricing in more, less, or just right actual historical volatility. They even take a listener question and read a sad email from an avid listener who is boycotting the show. We hope they...
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Investors Get Bearish |Nvidia Earnings | Implied Volatility Broadcom | Effective Tariff Increase | Mag 7 Correction
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Derek Moore goes through last week’s pullback and Nvidia’s post earnings move. Then, looking at the AAII survey where investors got really bearish. Later, he looks at how the Mag 7 hasn’t made a new high since December but other things have. The yields are dropping at the same time forward PE ratios are lower after a slight increase in forward earnings expectations and the market dropping down. Nvidia kills earnings but sells off proving investing is hard Treasury yields ease Mag 7 vs the total world stock market ETFs Forward PE levels drop as markets retrace while...
info_outlineDerek Moore explains what it would take interest rate wise for bonds and TLT to get back to breakeven on price. A lot of misunderstanding is out there on buying bonds at the bottom and what that means. How bonds have different drivers than stocks. Plus, inflation is ticking back up and what that means for the Fed. Finally, a deep dive into TLT components and the math behind what those buying TLT are hoping for.
What would make bonds go back up?
Examining TLT iShares 20+ etf components
Effective Duration to show how interest rates affect bond etfs and bonds.
Math behind movement in bonds
What would it take for TLT to get back to breakeven with regard to interest rates?
Looking at 30-year treasuries issued in 2020 that are down greater than 50%
Inflation ticked back up with CPI year over year reaching 3.7% YoY from its low of 3%
What does inflation moving back up mean for the Fed and interest rates?
Earnings seasons begins with expectations rising
Are earnings still the most important driver of price?
Multiple expansion vs earnings falling
Mentioned in this Episode:
Bond Market Collapse https://podcasts.apple.com/us/podcast/bond-market-collapse-oil-price-problems-bond-stock/id1432836154?i=1000630742799
Government Shutdowns & Markets | Short ITM Puts Alternative to Covered Calls | Why Hedging Works
John Hussman 12-year forward nominal return estimates chart https://www.hussmanfunds.com/comment/mc230724/
Cheap vs Expensive Options | Warren Buffett on Options | Fed Powell Presser
0DTE Options Analysis| Inflation Coming Back? | Strong US Dollar Impact https://podcasts.apple.com/us/podcast/0dte-options-analysis-inflation-coming-back-strong/id1432836154?i=1000628157831
Warren Buffett and Charlie Munger Berkshire Hathaway meeting discuss using and pricing options https://www.youtube.com/watch?v=SMkpou-YBGw
Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia
GameStop Short Squeeze by the Reddit Wall Street Bets Traders Explained
https://podcasts.apple.com/us/podcast/broken-pie-chart/id1432836154?i=1000507187446
The Big Short Movie and Credit Default Swaps Explained
https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6
Margin Call Movie and Understanding Value at Risk https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp
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]