Correction Territory | No Fear Yet in Markets? | When Does Capitulation Happen in Markets?
Release Date: 10/29/2023
GameStop Options Activity Prior to Roaring Kitty Reemergence | S&P 500 Makes New High | 90% of the Time No Recession or Stagflation | When Covered Calls Get Called Away Early
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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...
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Goldilocks Stock Market and What Could Derail It? | Interest Rates Aren’t Historically High | Cheap to Hedge the Downside Now with Options
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial discuss the idea that the stock market is in a Goldilocks period based on sustained higher margins and earnings growth. Then, they discuss how out of the headlines the Fed has already started easing by reducing their balance sheet runoff each month. Why reducing the Overnight Reverse Repo usage (RRP) isn’t restrictive but rather was a reaction to demand for short term treasuries by money markets. Later they talk about how interest rates are below long run averages despite what everyone tells you on CNBC and why high rates may not be a...
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Reinvesting High Dividends Deep Dive | Unemployment & the Fed | Option Time Value Explained | Shareholder Yield
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Derek Moore is back with Jay Pestrichelli, CEO of ZEGA Financial this week to discuss the Jay Powell Fed decision and the latest in employment and inflation. Then, they do a deep dive into dividend reinvestment. Specifically, analyzing the idea of acquiring more shares and can dividends reduce or eventually pay down your initial cost? They then do a deep dive into how the time premium works on options. Lowest year over year wages since 2021 Unemployment ticks up. High dividend stocks and dividend reinvestment deep dive Acquiring more shares through dividend reinvestment...
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Now Its 1 Fed Rate Cut? | Nvidia Options Volatility Implied Move at Earnings | Sell in May and Go Away in Election Years? | Inflation Higher Than 1970s?
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Derek Moore discusses the declining probabilities for Fed interest rate cuts in 2024. Plus, how PCE Supercore did not make the case for Fed rate cuts. Later, looking at the analyst’s expectations for earnings growth within the S&P 500 Index. Finally, comments on a paper showing how using the pre-1983 methods to compute CPI Consumer Price Index show we had higher inflation that the 1970s. Declining Fed Funds rate cut probabilities for 2024. Explaining how implied interest rates from Fed Funds futures are computed. The case against rate cuts seems to be buoyed by sticky US CPI...
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Market Correction | Mortgage Rates Higher | No Thanks 24-Hour Trading | Synthetic Options
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Derek Moore and Mike Puck from ZEGA Financial discuss Friday’s selloff. It’s official, we are in a 5% market correction. Looking back at other corrections greater than 5% from the highs. Mortgage rates move back up while 10-year treasury yields surge. Commodities are higher on the year but still down from all-time highs. Gold makes another all time high. Later they look at the value vs growth performance including the magnificent 7 stocks compared to the rest of the market. Finally, stocks and bonds are more correlated than people realize in higher inflation regimes. Futures selloff...
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Market Selloff | No Rate Cuts? | Bitcoin vs Gold | CPI Inflation Sticky | VIX Curve
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Friday’s selloff. So, was it all the readjustment of Fed rate cut expectations? Is CPI Inflation putting the Fed in a box? Michael Saylor says Bitcoin is better than Gold. The rally in Gold that everyone is sleeping on. CPI Supercore trending higher showing services not goods are the culprit. Later they examine the VIX Futures curve as the front months rise. Finally, they talk about the continued bear market due to higher rates on 10-to-30-year US Treasuries from the March 2020 all-time highs against the stock market and high...
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Buying At All-time Highs Better? | S&P 500 Returns After Last Hike | Developed International Beats the S&P | How To Tell Whether Options Are Expensive
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are back to explore surprising data about buying the market at all-time highs vs any other day. Plus, how do markets and bonds perform post the last fed hike? Later, while you were sleeping developed international markets outperform U.S. markets. And listener question “who do I know what a good price for an option is?” What is a high or low price for an option? Components that make up and drive option prices Market performance post last fed rate hike Bond market performance after last fed rate hike MSCI EAFE developed markets...
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Most Record Highs Since 2013 | The Fed No Rush to Cut? | VVIX and VIX Super Quiet | Value vs Growth | Cocoa More Valuable than Gold?
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Fed governor Waller (not Christopher Walkin) hinting the Fed should be in no rush to cut interest rates. Plus, we haven’t seen this many record stock market highs since Q1 of 2013. So, what does that mean if anything? Examining VVIX and VIX which both are really quiet and low right now. Growth has outperformed value by quite a bit, but do some relative value charts hint value may have its time in the sun? Later, corporate profit margins continue to be strong despite many saying they must revert to the mean. Finally, no Cocoa is...
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The Fed Gets Bullish? | Markets Don’t Go Down Just Because They Go Up | Yield Curve Inversion Record | Bitcoin Halving
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed getting bullish by reducing unemployment estimates, raising GDP growth estimates, and doing nothing else but the market liked it. All while the yield curve inversion sets a record for longest in history. What is Bitcoin halving and what does it do for supply and demand? Looking at the stock market after going up a lot, why historically it can continue going (or not) up. Looking at 1995-1999 post Fed cut bullish moves. Why media explanations of 2 or 3 interest rate cuts by the Fed based on the median interest rate aren’t...
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Michael Saylor is Right on Bitcoin? |Worst Crash Since 1929 Coming? | Semiconductors Get Big Flows | 0 DTE Option Stats
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, talk through some examples of options trading in 0 DTE options on the SPX and Nvidia. Plus, a hedge fund manager says the worst crash since 1929 is coming. Looking at huge inflows into the semiconductor ETFs. Derek actually agrees with Michael Saylor’s points on Bitcoin including whether it’s a currency or property. Media mentions of stock market bubble are rising but so are continued mentions of AI. Finally, PPI producer price index comes in hot especially services while real retail sales still hasn’t gone above its 2022 highs....
info_outlineDerek Moore and ZEGA Financial CEO Jay Pestrichelli to discuss how despite the correction territory (markets down 10% from top), the VIX index hasn’t shown any real fear. So, what will it take to see capitulation in the markets? Thus far high yield spreads haven’t reflected too much worry. Then Derek is tired of pundits talking about equal weighted market vs the “Magnificent 7” comparison as this is why you buy the index! Later, they discuss the new Fed survey showing how much net worth one needs to get into the top 10% plus median net worth by age range. All this and more plus some recommendations.
Is there enough fear in the stock market?
Why hasn’t the VIX spike more during a 10% stock market correction?
VVIX vs VIX
What would capitulation in the stock market look like right now?
What is a stock market correction vs a bear market?
Checking in the on High Yield bond spread
Is rebalancing traditional portfolios from stocks to bonds causes equity weakness?
The “Magnificent 7” Tesla Apple Google Meta Microsoft Nvidia Amazon
Equal weighted stock indexes vs the S&P 500 Index
Fed survey on household finances shows how much net worth to get into different percentiles.
What is the median net worth by age group?
How US median net worth has increased.
Fed Survey of Consumer Finances (SCF)
Mentioned in this Episode:
Fed Survey of Consumer Finances (SCF) showing median net worth and income by age https://www.federalreserve.gov/econres/scfindex.htm
Powell vs. Bond Traders | Option Volatility During Earnings | Mortgage Rate Spread to Treasuries https://podcasts.apple.com/us/podcast/powell-vs-bond-traders-option-volatility-during-earnings/id1432836154?i=1000632184399
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
Implied Volatility Deep Dive | Real Interest Rate Yields | The Big Short | Tesla vs Nvidia
The Big Short Movie and Credit Default Swaps Explained
https://open.spotify.com/episode/6FG0xHkxfhSXEtbJbFbDF6
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]