Broken Pie Chart
The Broken Pie Chart Podcast offers fresh looks at investment portfolio management, economics, markets, retirement planning, and more by simplifying and explaining important aspects of financial markets and the economy in easy to understand ways.
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MicroStrategy Market Cap vs Bitcoin | Valuations Getting Frothy ? | Yields vs Fed Cuts | Second Inflation Surge? | US Dollar Problem | Nvidia Options
11/18/2024
MicroStrategy Market Cap vs Bitcoin | Valuations Getting Frothy ? | Yields vs Fed Cuts | Second Inflation Surge? | US Dollar Problem | Nvidia Options
Derek Moore and Jay Pestrichelli talk through the latest market action including the forward PE ratio looking frothy, yields continue rising, probability of rate cuts dropping, and when and if the US Dollar strength will be a problem. Plus, talking about Barron’s article comparing the market cap of MicroStrategy vs the value of their Bitcoin holdings. S&P 500 Index earnings yield vs the 10-year Treasury yield. Then, they discuss why people are saying we are going to have a coming second surge for inflation. Later, they talk about volatility on Nvidia a week out from earnings and their options, 90+ days delinquent credit card debt rising, and comparing post-election rallies around close Presidential elections. MicroStrategy market cap value vs the value of their total Bitcoin holding Post election rallies around close Presidential elections 10-Year Treasury Yields acting different than normal post Fed cutting action US 2-year Treasury yield vs the Fed Funds target rate Probability of interest rate cut in December update US Inflation progress stalled in October? US Dollar Index pushing through resistance When the US Dollar strength matters and when it doesn’t Comparing where we are today with inflation against the 1970s chart S&P 500 Index risk premium (forward earnings yield minus 10-year treasury yield) Percentage of US credit card debt that is delinquent reaches highest level in over a decade S&P 500 Index forward EPS estimates Barron’s article evaluating MicroStrategy’s premium to its Bitcoin holdings Mentioned in this Episode Barron’s Article on Bitcoin vs MicroStrategy valuation Explanation of US sugar tariffs and the history of behind them Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s book on public speaking Effortless Public Speaking Contact Derek
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S&P 500 6000 | Bitcoin Strategic Reserve? | Why Bond Yields May Go Higher | Fed Rate Cuts Near All-Time Highs Bullish?
11/11/2024
S&P 500 6000 | Bitcoin Strategic Reserve? | Why Bond Yields May Go Higher | Fed Rate Cuts Near All-Time Highs Bullish?
Derek Moore and Jay Pestrichelli decide who got the S&P 500 Index 6000 prediction right. Then they talk about Bitcoin running to new highs and some theories about a Bitcoin strategic reserve now that Trump is the President Elect. Later, they review some data pointing to bond yields remaining high (or going higher). Then discussing how investment banks S&P targets rise to follow the markets. All that plus a listener email. Small Cap fund flows into IWM TLT ETF bond flows Bitcoin makes new highs and ETF fund flows surge Hussman 12-year forward estimate nonfinancial market cap divided by gross value-added Goldman Sachs 12-month S&P Price Target Markets 12-month forward performance after Fed cuts rates near all-time highs 10-Year Treasury Yield vs. Nominal GDP Growth Trump to stockpile Bitcoin in a strategic reserve? VIX and implied volatility collapse post-election Jay and Derek discuss who correctly called S&P 500 6000 by the end of the year Mentioned in this Episode Trump – Stockpile Bitcoin in strategic reserve Podcast where Jay and Derek predicted S&P 500 6000 back in mid June Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s book on public speaking Effortless Public Speaking Contact Derek
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Unemployment Bad News? | Markets After Elections | Earnings Beats | Trump vs. Harris Election Analysis
11/03/2024
Unemployment Bad News? | Markets After Elections | Earnings Beats | Trump vs. Harris Election Analysis
Derek Moore and Jay Pestrichelli go through the recent unemployment numbers to see whether it was as bad as reported. Plus, did the recent hurricane throw off the surveys? Then they look at next week’s prediction for interest rates for the Fed Meeting. Derek and Jay pull up the 30-year mortgage rate vs the 10-year treasury and talk about what’s happened since the first Fed cut. Later they look at housing starts vs completions and try to make sense of whether it's bullish or bearish, the market concentration of the top 10 stocks, seasonality in the S&P 500 index, and looking at earnings so far including whether companies are beating and what sectors are doing well. Then stay tuned as Spencer Wright joins Derek to review the data in the upcoming election. Are the polls accurate? How is Trump performing vs Biden and Clinton in previous races? The electoral college states that matter and even a potential election tie. Unemployment disappoints? How the predictions all missed except for Bloomberg survey that was closer Analyzing the jobs data and is it the bad news is good news again scenario ahead of the Fed? Earnings beats and evaluating the EPS and revenue by sector S&P 500 Index seasonality post elections and non-election years Housing starts minus completions and what it means if anything The stock markets current bullish streak Top 10 S&P stocks now 37% of the index US Federal government spending vs. tax revenue 30-year mortgage rates and the 10-year treasury go higher since 1st Fed cut What are fed funds futures predicting for rate cut at next week’s Fed meeting? Is bad weather to blame for low respondent rates to employment surveys? Trump vs. Harris based on the latest polling data Will the polls be accurate this time (correcting polling errors?) Predictions on who will win Comparing Trump’s numbers this year 2024 vs 2020 and 2016 in the swing states Mentioned in this Episode 2024 Presidential Election Interactive Map https://www.270towin.com/ BLS October Employment release https://www.bls.gov/news.release/empsit.nr0.htm 30 Year Fixed Rate Mortgage US Average https://fred.stlouisfed.org/series/MORTGAGE30US US Market Returns by Political Party Historical https://zegafinancial.com/blog/should-investors-be- worried-about-the-election-and-what-to-do-if-you-are 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]
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Goldman Makes News With 3% S&P Target | Markets Too Concentrated? | What If Mortgage Rates Don’t Fall? | Gold Returns Examined
10/27/2024
Goldman Makes News With 3% S&P Target | Markets Too Concentrated? | What If Mortgage Rates Don’t Fall? | Gold Returns Examined
Derek Moore and Jay Pestrichelli talk about everyone talking about Goldman’s 3% annual return target for next 10 years. What’s behind their analysis includes whether the S&P 500 Index has too much concentration. Then they discuss what is responsible in retrospect for markets going up or down including profit margins, sales, buybacks, dividends, and EPS. Later, they talk about gold and its huge jump in 2024. Finally, how underwhelming the small caps have been relative to past bull markets, S&P 500 Index constituent turnover, and Apple’s options volatility pre-earnings. Goldman Sachs base case of 3% annualized return next 10 years Vanguard’s June 2024 10 year forward annualized return estimates How market movement is attributed to EPS, Sales, Dividends, Margins, and Buybacks Historical 10-year constituent turnover for S&P 500 Index Touching on Meb Faber’s observation of both Gold and the S&P 500 above 25% return for year Small caps lowest bull market return covering 13 bull markets since 1949 Apple earnings and the option volatility Cost of the Apple straddle a week before earnings Uber’s implied volatility pre-earnings week Spread between the 30-year mortgage and the 10-year treasury yield What if mortgage rates and long bonds go up not down? MBS bonds (mortgage backed securities) nuances Mentioned in this Episode Goldman Sachs forward baseline 3% annual return forecast next 10 years full report Vanguard June 30th 2024 10 year forward returns forecast Mortgage Spreads and The Yield Curve Economic Brief Richmond Federal Reserve Bank Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s book on public speaking Effortless Public Speaking Contact Derek 296
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Small Caps Get Their Day | Buffett’s Apple Blunder? | Bull Market Length | Nvidia Cisco Comparison | Netflix Options Volatility
10/21/2024
Small Caps Get Their Day | Buffett’s Apple Blunder? | Bull Market Length | Nvidia Cisco Comparison | Netflix Options Volatility
Derek Moore and Jay Pestrichelli are discussing what segments of the market are now working on in October plus whether new auto loan delinquencies are something to worry about. Then, reacting to Barron’s headline saying Warren Buffett selling Apple shares may have resulted in leaving $25 billion on the table. Later, they get into whether the comparisons of Nvidia today to Cisco in the late nineties is a fare comparison and if Nvidia is as overvalued as Cisco was in retrospect. Finally, they delve into the options action on Netflix and earnings, S&P 500 Index changes, and whether this bull market is young or really young depending on how you gauge the start of one. Russell 2000 Index vs S&P 500 Index vs Nasdaq 100 Index performance in October Auto Loan Serious Delinquent by 90 days move up to 2011 highs The age of the bull market and length of previous bull markets When do bull markets begin? CSCO Cisco Systems vs NVDA Nvidia comparisons Forward PE ratio of Nvidia today vs CSCO in 1999 and 2000 Net profit margins comparing NVDA today to CSCO in late nineties early 2000’s Barron’s article saying Berkshire left $25 billion on the table by selling Apple shares Amentum AMTM joins the S&P 500 Index while BBWI Bath & Body Works exits Netflix option volatility at earnings Would the long or short straddle have worked after earnings on Netflix? Mentioned in this Episode Where Markets Go After All-Time Highs by VIX Level | Crazy Earnings Estimates | CPI is Rarely 2% | Latest Interest Rate Probabilities Guggenheim info on Historical cycle trend periods Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Where Markets Go After All-Time Highs by VIX Level | Crazy Earnings Estimates | CPI is Rarely 2% | Latest Interest Rate Probabilities
10/14/2024
Where Markets Go After All-Time Highs by VIX Level | Crazy Earnings Estimates | CPI is Rarely 2% | Latest Interest Rate Probabilities
Derek Moore and Jay Pestrichelli are back again to discuss whether the level of the VIX Index at all-time market highs is a predictor of future market moves. Then, with earnings season kicking off in earnest, reviewing the analyst lofty estimates including some very surprising numbers for Russell 2000 Index companies. Later, Derek goes through some data that basically says the CPI YoY % change isn’t around 2% too often despite the Feds “mandate” of 2% inflation target. Finally, they discuss NFLX earnings and what the options market is saying plus a few other companies including United Healthcare. The level of the VIX Index at all-time S&P 500 Index highs and the next 60 days, 3&6 months Does where the VIX Index is at all-time market highs really matter? The Fed’s elusive 2% target when looking at monthly data back to January of 2012 How often the year over year (YoY) percent change in CPI is at different levels VIX Index vs bond volatility seen via the MOVE Index Netflix (NFLX) and United Healthcare (UNH) options market pre-earnings check in Implied volatility of options prior to earnings releases Predictions for the November Fed meeting Quarterly earnings estimates for the S&P 500 Index over the next two years are bullish Reviewing the Russell 2000 Index earnings estimates and how lofty they are currently Looking at growth of next 12 months earnings estimates vs the S&P 500 Index itself Mentioned in this Episode VIX Too High at All-Time Market Highs? | Employment Surprises | Interest Rate Cut Expectations Drop| No More Port Strike | Technical Analysis on Markets Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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VIX Too High at All-Time Market Highs? | Employment Surprises | Interest Rate Cut Expectations Drop| No More Port Strike | Technical Analysis on Markets
10/06/2024
VIX Too High at All-Time Market Highs? | Employment Surprises | Interest Rate Cut Expectations Drop| No More Port Strike | Technical Analysis on Markets
Derek Moore and Jay Pestrichelli ask whether the VIX is too high given markets are at all-time highs and compare today to some previous periods. Then, they delve into the employment report which surprised in a positive way. Was good news good news for once? What this means for probabilities of future rate cuts by the Fed, the port strike that wrapped up, and a look at some individual tickers and markets from a technical analysis standpoint. Resistance, support, wedges and more on this week’s episode. Why is the VIX so high with the market at all-time highs VIX historically at market all-time highs Looking at 2000 and 2007 VIX at all-time market highs Dissecting the employment report Why good news is bad news for those wanting massive rate cuts Looking at bond yields since the first Fed rate cut The port strike wraps itself up which is good news for markets Technical analysis of the S&P 500 Index, Apple, Nvidia, and more Mentioned in this Episode S&P 500 Going to 7000? | NAV Erosion Myth | Fed HAS Cut Rates at All-Time Highs| China & Emerging Markets Surge | Answering Audience Questions Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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S&P 500 Going to 7000? | NAV Erosion Myth | Fed HAS Cut Rates at All-Time Highs| China & Emerging Markets Surge | Answering Audience Questions
09/29/2024
S&P 500 Going to 7000? | NAV Erosion Myth | Fed HAS Cut Rates at All-Time Highs| China & Emerging Markets Surge | Answering Audience Questions
Derek Moore and Jay Pestrichelli this week answer some audience questions plus comparing 1995 first Fed rate cut to today’s market and asking if the next year can be a repeat of the 1995-96 period. They also dispel the myth that the Fed has never cut rates when markets are at all-time highs. Later, they look at the China and Emerging markets surge after the Chinese government does a bunch of things to juice markets. In the questions Derek and Jay dispel some myths between NAV erosion and NAV decline. All this and more this week on the Broke Pie Chart Podcast. Similarities between 1995 and 2024 Fed rates cuts Why longer duration bond yields may go up not down post Fed rate cut Emerging market finally having its day in the sun? China markets go crazy after government stimulus announced. What does NAV (Net Asset Value) or price mean? NAV Erosion vs NAV Decline explained Interest rate changes effect on option prices The least popular option Greek Rho comes into play Fed cuts when markets are at all-time highs Recession or no recession determining next year’s market returns Oil prices, container shipping rates, Mentioned in this Episode Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions
09/22/2024
Fed Goes Big | Market Performance After Rate Cuts | Election Volatility in VIX Futures Is a Crowded Trade | Year End S&P 500 Predictions
Derek Moore and Jay Pestrichelli are back to do a post Fed 50 basis point cut analysis. What typically happens a year later in markets after the first interest rate cut? Maybe there isn’t election volatility priced into the VIX and it’s all to do with interest rates. Plus, looking back at the S&P 500 year end 2024 predictions top investment banks made in December of 2023. Hint, it didn’t go the way they expected. How many new all-time highs have we had this year and how does that compare with past years? More all-time highs All-time highs by month Will the market go to 6000? Jay Powell goes big but what does it mean for markets? Contrarian corner TIPS Bond ETFs and Gold VIX Futures over the next couple months Mentioned in this Episode Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Too Many Cuts Priced In? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Market Pricing in Too Many Cuts?
09/15/2024
Fed Decision Primer | CPI Disappoints? | Market Breakout or Breakdown? | Market Pricing in Too Many Cuts?
Derek Moore covers what you need to know going into the fed meeting. Plus, reviewing whether the Fed has ever cut rates with a forward price to earnings ratios this high? Then looking at potential technical analysis outcomes on the S&P 500 Index include a cup with handle, triple top, and more. Historical Forward PE ratios at Fed cuts VIX Index doesn’t go berserk during Wednesday’s CPI selloff and recovery Is the market pricing in too many future fed cuts Comparing CPI Supercore, CPI Core, and CPI from a month over month annualized basis Does CPI tell us anything about future Fed cuts? What is a cup and handle technical pattern? What is a triple top technical pattern? Mentioned in this Episode Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade
09/09/2024
Will There or Won’t There Be a Recession? | Size of First Fed Rate Cut?| Stocks Get Cheaper | Why VIX is Tough to Trade
Derek Moore and Jay Pestrichelli are back to talk employment, Fed cuts, recession (or not), forward earnings multiples, VIX, VVIX, crude oil recession sign, currencies, and more! Looking at 3 2024 stock market selloffs this year Crude oil as a recession indicator? Currencies and Commodities driving stocks right now? Why markets may be trading on technical VIX and VVIX goings on Why VIX is tough to trade S&P 500 Index forward earnings and multiples First rate cut isn’t always the biggest Response rates of employment surveys Non-farm payrolls Unemployment report breakdown and factors US Dollar Japanese Yen pair resumes Yen strengthening Mentioned in this Episode All the News is Out? | Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the long bond trade getting crowded? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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All the News is Out? |Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the Long Bond Trade Getting Crowded?
08/31/2024
All the News is Out? |Nvidia Earnings Breakdown | Implied Volatility and Earnings for Nvidia | Is the Long Bond Trade Getting Crowded?
Derek Moore is back to break down Nvidia’s beat, but not beat (whisper number), their growth year over year, their profit margins, and percent they beat on the top and bottom line. Then, looking at the implied volatility and expected move post earnings in Nvidia and how to calculate it. Understanding why sometimes a long straddle option position before earnings makes money and other times it doesn’t. Later, peeking in at the implied Fed Funds rate cut probabilities for the September meeting. Finally, “everyone” seems to be saying its time to buy longer maturity bonds. Is that view getting crowded and why will or won’t long rates move lower because the Fed lowers the Fed Funds rate. Nvidia earning beat but misses the “whisper” number After hours trading reaction to Nvidia earnings Difference between Gross profit and Net profit Nvidia’s massive profit margins compared to grocery stores Earning growth year over year Implied volatility pre-earnings to compute the implied expected stock move Why option premiums and volatility rise before earnings announcements How implied volatility gets sucked out of markets post earnings Long Straddles at the money before earnings characteristics and risks The Fed is expected to lower the front part of the interest rate curve What does that mean for the back half of the longer duration bond maturities? The spread between the 10-year treasury bond and the 30-year mortgage rate Hindenburg Research negative piece on Super Micro Computer SMCI Mentioned in this Episode Hindenburg negative research on Super Micro Computer Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down?
08/25/2024
Jay Powell & The “Good Ship Transitory” | Price Caps Proposed by Politicians | Huge Employment Revisions | US Dollar Breaking Down?
Derek Moore and Jay Pestrichelli once again are here to break down the Jay Powell Jackson Hole statement and the market reaction including latest interest rate projections. Then they comment on the idea proposed by politicians of price caps and whether companies are making record profits based on net profit margins. Later they discussed the huge revision lower in employment number in the establishment survey and whether it’s a big deal or now and why the difference between the monthly releases and the first preliminary annual revision. Finally, they discuss the positive of the US Dollar potentially breaking down for US companies and the latest in volatility markets. Jay Powell Fed signals the time is now to change policy The “Goodship Transitory” and Jay Powell Fed funds interest rate projections Whether the Fed raising or lowering interest rates made any impact Huge first preliminary revision by 800k in the establishment employment survey What Goldman Sachs cited for the reason in the revisions in data Difference between the monthly employment numbers and these annual revisions US Dollar index and how a lower dollar helps multinational US company earnings Politicians are talking price caps and why those never work Examining a few companies net profit margins to see if they are actually making record profits Volatility markets including the VIX and VVIX Mentioned in this Episode Fastest Correction Ever? | VIX Index Collapse Post Spike | Will the Fed Push Back on a 50 bps Interest Rate Cut? | Latest Inflation Analysis and Soft, Hard, or No Landing? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Fastest Correction Ever? | VIX Index Collapse Post Spike| Will Fed Push Back on 50 bps Interest Rate Cut? | Latest CPI Inflation Analysis and Soft, Hard, or No Landing?
08/18/2024
Fastest Correction Ever? | VIX Index Collapse Post Spike| Will Fed Push Back on 50 bps Interest Rate Cut? | Latest CPI Inflation Analysis and Soft, Hard, or No Landing?
Derek Moore and Jay Pestrichelli are back to discuss the surge and record collapse back below 17.6 in the VIX Index. Plus, Reviewing the difference between the VIX Index (not tradable) and VIX Futures relative spike levels. Then, they go into the latest CPI numbers including CPI Supercore to see what is sticky and what is negative. Finally, they discuss whether Chairman Jerome Powel is going to disappoint markets with only a 25-bps cut when everyone seems to want more. All that and more including the yield curve inversion, mentions of job cuts vs AI on earnings calls in Q2, expectations for a soft, hard, or no landing and what the heck that even means. VIX only takes 7 days to go back below 17.6 after spiking above 35 Comparing previous VIX Index surges and length to come back down Difference between hard , soft, and no landings Fed prepares for Jackson Hole meetings and sure to signal its interest rate intentions Will Powell and the Fed disappoint markets? Chance that Powel pushes back to not be bullied into rate cuts Mentions of AI on corporate earnings calls vs mentions of job cuts and employment Inverted yield curve and what the 2-year bond is predicting for rates in the future Fed balance sheet below the radar Will Fed stop letting treasury bonds and mortgage backed bonds run off the balance sheet? Comparing current and past VIX spikes against the relative spike level of the VIX futures Mentioned in this Episode Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades
08/09/2024
Panic Overdone? | VIX 3rd Highest Spike Ever | How the Strategies Held Up | Short Volatility Trades
Derek Moore and Jay Pestrichelli jumped on a special edition podcast to discuss whether the move in things like the VIX and VIX were warranted given the technical surroundings of the carry trade and where markets went. Looking back at previous VIX spikes and the high yield spread in times of crisis. Plus, discussing how some strategies held up and some insights into what went on. Finally, what a higher volatility regime would mean for strategies that sell options like covered calls or high probability credit spreads. VIX 3rd highest spike in history going back to 1992 VVIX 4th highest spike ever Comparing the VIX Index spike to the High Yield Spread There was no VIX Index back in 1987 but estimates say it would have been highest ever Are there currently structural problems showing in the US Economy? Unemployment rate up due to increase in population and size of labor force Explaining the VVIX Index Warren Buffet comment about whether you should be invested in stocks People don’t make good investment decisions when they panic Market performance historically after major VIX spikes Comparing the carry trade blowup to August 2015 drop due to the Chinese Yuan move Mentioned in this Episode Podcast Market Volatility | Yen Carry Trade Unwind Explained | High Yield Holds Up | Dissecting the Unemployment Rate Rise Causes Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Market Volatility | Yen Carry Trade Unwind to Blame? | High Yield Holds Up
08/04/2024
Market Volatility | Yen Carry Trade Unwind to Blame? | High Yield Holds Up
Derek Moore is back to talk through the latest market volatility as the VIX and VVIX both spiked this week. Markets had 2 greater than 2% pullbacks. Reading into the latest unemployment rate data. Plus, unpacking the unwinding of the carry trade involving the Japanese Yen and how this started before the recent market retracement. Finally, examining the high yield bond market as it has shown positive non-correlation with equities of late. What does a currency Carry Trade mean? What is the carry trade unwinding mean? Why carry trades may show leverage in the system that causes ripples in financial markets S&P 500 Index back to levels not seen since….June 7th Unpacking the unemployment rate and how the rate rose even though more people working Explaining the VVIX Index VIX and VVIX spike this week with the market volatility Comparing returns since the July 16th all-time high of equities vs high yield bonds Mentioned in this Episode Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Is Trump or Harris Better for the Stock Market? |Answering Options Questions | Why Do People Sell Covered Calls?
07/29/2024
Is Trump or Harris Better for the Stock Market? |Answering Options Questions | Why Do People Sell Covered Calls?
Derek Moore is back to take some listener questions on the political ramifications for the stock market, covered calls, and other general market and option questions. Also, he’ll cover the continued coverage of the market broadening out in its participation especially from small caps and the non-mag-7 companies. What about on the economic front? All this and more this week. What political party is better for the stock market? Does it matter who is in office? Google earnings announcement $1Billion in quarterly profit Richmond Fed Manufacturing Index shows weakness Shipping container rates continue rising What does the perception of lower rates and strong earnings mean for stocks? Why do people sell covered calls? Why are options more expensive around earnings announcements? Who is on the other side of my option trade and does it matter? Mentioned in this Episode Download white paper on concentrated stock management with options Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Mag 7 Pauses| Everything Else Takes Its Turn | VIX Seasonality | High Yield Spread
07/21/2024
Mag 7 Pauses| Everything Else Takes Its Turn | VIX Seasonality | High Yield Spread
Derek Moore looks beyond mega cap tech by examining while this month the S&P 500 Index is relatively flat, equal weight and extended markets catch a bid. Plus, talk of a tight high yield spread but what does that mean? Later, looking at the upcoming earnings including Tesla and Google. Finally, reviewing typical VIX seasonality patterns. Earnings including Tesla and Google this week Performance of the S&P 500 Index against extended markets and equal weight S&P 500 Index Comparing the S&P 500 against international developed markets and emerging markets Comparing the VXF etf and RSP etf against the S&P 500 Index Why protecting with buffers and/or hedges can help assuage short term market worries What is the high yield spread? Comparing the current high yield spread against recent history What does it mean when the high yield spread gets tight Largest companies in the Nasdaq 100 Index in March of 2000 VIX Seasonality patters What did the VIX and VVIX do this week? What have the EEM etf and EFA etf do this week on the international front? Mentioned in this Episode Where to find the High Yield Spread Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Market Returns After 1st Rate Cut? | AI Revolution Like 1990s Internet? | What If They’re Wrong on Rates?
07/15/2024
Market Returns After 1st Rate Cut? | AI Revolution Like 1990s Internet? | What If They’re Wrong on Rates?
Derek Moore and Jay Pestrichelli are back together to discuss what happens after the Fed makes its first rate cut historically in markets. Plus, what if everyone is wrong about rate cuts? Then, they look at the historical spread between inflation and the Fed Funds rate plus how would investors take the other side of rate cuts? Finally, they discuss the idea of this being the 1990s all over again with AI as a technological revolution like the internet boom? Earnings season is in full bloom Fed Funds rate vs the YoY CPI Inflation comparison Why historically Fed Funds does not have to equal annual inflation What is the Fed afraid of? Nasdaq Composite returns after major releases of new technologies Record call volume on the IWM ETF (Russell 2000) Total return for markets 12 months post 1st rate cut going back to 1974 Implied interest rate based on fed funds futures VIX and the market both go up? Mentioned in this Episode Podcast 1994-95 All Over Again in Markets? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Economy Weaking? | What Makes Markets Go Up or Down? | Tesla Goes Up and Option Volatility Up | Economic Surprise Index
07/07/2024
Economy Weaking? | What Makes Markets Go Up or Down? | Tesla Goes Up and Option Volatility Up | Economic Surprise Index
Derek Moore is back to discuss the recent talk from the “talking heads on TV” that the economy is weakening. What are they looking at and are they right? Then Derek explains using Tesla as an example of implied volatility going higher while a stock runs higher. Reviewing the latest nonfarm payrolls, unemployment rate, and initial jobless claims. Finally, Derek goes through what happens when markets go up from a fundamental standpoint including Forward PE multiples changing, earnings estimates, share buybacks, and dividend yield. All of this and more on this week’s episode. Tesla implied volatility surges along with its stock price Why volatility can go higher even when markets or stocks don’t go down Is the economy weakening? Reviewing the economic surprise index and what it measures Share buyback yield Share buybacks effect on EPS Dividend yields as a contribution to total return Forward PE multiples and effects on market prices Forward earnings estimate on the S&P 500 Index companies How companies joining and leaving the S&P 500 Index can affect earnings Looking at college bachelor’s degree and higher unemployment rate for clues Atlanta Fed GDP Now Mentioned in this Episode Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Is Nvidia in a Bubble? | Don’t Give Up on the Bull Market Yet? | French Election Implied Volatility | Shipping Containers
06/30/2024
Is Nvidia in a Bubble? | Don’t Give Up on the Bull Market Yet? | French Election Implied Volatility | Shipping Containers
Derek Moore is back to discuss the WSJ article comparing Nvidia to Cisco and Jim Cramer’s response. Is Nvidia in a bubble? Wall Street Journal Article on Cisco 2000 vs Nvidia 2024 Forward PE multiples then and now Cisco vs Nvidia Data showing bull markets often continue the second half of the year When markets are up 10% first half of the year what happens next? Don’t give up on the bull market yet based on data? Implied Volatility spikes in France compared to Germany What does 100% Moneyness mean in options speak? Explaining option moneyness at different levels How does July stack up against other months of the year for S&P 500 returns? August and July market returns in Election years Inflation PCE cools while PCE Services less housing still elevated YoY Container shipping rates rising again to highest level since September 2022 French CAC 40 Market near 10% drawdown from highs Mentioned in this Episode WSJ article comparing Cisco in 2000 vs Nvidia in 2024 Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Volatility Problem | Probability S&P 500 Goes Up or Down 9.8% | Cracks in Economy? | Earnings Estimates Rise
06/23/2024
Volatility Problem | Probability S&P 500 Goes Up or Down 9.8% | Cracks in Economy? | Earnings Estimates Rise
Derek Moore is back to go over some bullish and bearish economic and market items. Avocado prices are spiking while lumber prices are falling. Divergence between the Trucking Tonnage Index vs the S&P 500 Index. Later we discuss the lack of historical volatility in the market given we haven’t had a greater than 2.05% down day for over 375 days. Then taking listener questions around the probability a market goes up or down 9.8% and what goes into calculating option probabilities. Finally, Derek explains the “Volatility Problem” from a listener question comparing the difference between average returns and CAGR compounded annualized growth rate. What is the volatility problem? CAGR Compounded Annualized Growth Rate Average return vs CAGR return and why it matters Avocado vs Lumber prices Trucking Tonnage Index vs the S&P 500 Index EconPi median of coordinates showing decline quad for economy Economic surprise index explained Why hedging makes sense to manage volatility Mentioned in this Episode Econ PI site Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Market Crash? | Fed Meeting Dot Plots | Inflation Break | Apple’s AI Breakout |
06/14/2024
Market Crash? | Fed Meeting Dot Plots | Inflation Break | Apple’s AI Breakout |
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial are back with a Fed meeting day edition where they break down the new end of year interest rate dot plots and Jay Powell’s press conference. Plus, they riff on Harry Dent’s latest prediction saying Nvidia is going down 98% and why the doom and gloom crowd are harmful to investors. Later discussing Apple’s breakout after their AI announcement at WWDC conference and the reaction to the CPI inflation print. All this and more! Apple’s AI WWDC announcement reaction by the stock market Apple vs Nvidia vs Microsoft for the title of largest market cap Buy the Rumor Sell the News Buy the News on Apple Post Fed Meeting announcement reaction Fed newest Dot plots and what they say for the year end target for interest rates The fed funds futures moves intraday How to calculate the implied fed funds rate Inflation print comes in light but year over year numbers still above Fed’s target How the CPI Supercore is still running over 4.8% year over year Harry Dent says markets are going to crash but has said the same thing over and over again Why doom and gloom predictions are harmful for investors Reviewing some past Harry Dent prognostication Harry Dent says Nvidia may go down 98% while the Nasdaq will see a -92% crash Battle for the largest market cap between Apple, Nvidia, and Microsoft gets interesting Mentioned in this Episode Harry Dent predicts Nasdaq to crash 92% CBS News article “Harry Dent and the chamber of poor returns” GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages?
06/09/2024
GameStop Option Bets | S&P Too Top Heavy? | Nvidia Passes Apple | Upcoming Banking Problems from Mortgages?
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial look at some what seem like crazy options trades in GameStop. Plus, examining Nvidia passing Apple as the second largest stock in the S&P 500, and can it pass Microsoft for #1? They also talk about whether it’s a problem the top 4 stocks in the S&P 500 make up such a large percentage of the weighting and comparing it to the last time it was this high. Later they take some listener questions including whether the data shows cracks in the regional banks due to mortgage delinquencies, what happened in the unemployment report, and more. Unemployment reaches 4% Top 4 companies in the S&P 500 Index highest since the 1960’s Comparing the contribution to returns S&P 500 Index top 496 vs the top 3 and Nvidia Residential mortgage delinquencies and effect on regional banks FDIC quarterly data on the health of banks Nvidia passes Apple for #2 as its market cap exceeds Apples but will Microsoft be next? 1964 vs 2024 top 4 company weighting in the S&P 500 Index Now the top 4 companies today are a lot more diverse business GameStop options trading Looking at the 128 calls open interest, volume and probabilities next 2 weekly expirations Volatility in the GameStop option chain Mentioned in this Episode Mortgage Bankers Association data on residential mortgage delinquencies Delinquency rates on commercial real estate loans from FRED CNBC piece on potential cracks in the banking system Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE
06/02/2024
Crazy VIX Bets Due to Election? | Market Reversal | Home Ownership Affordability Today | Shiller PE
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial review some interesting VIX option trades around the election and around inauguration day in 2025 compared to the next few months options action. When young people say home ownership dreams are dead is that true? Surprising numbers to compare inflation adjusted costs. Plus, on Friday the market swung from down over 1% to up almost 1% as we continue to be in a buy the dip regime. Later discussing the evolving Fed rate cut expectations and why it shouldn’t be a surprise. Finally, they go bring up container shipping costs rising again and what that means for inflation, the Presidential election market cycle, history of interest rates, and more. Looking at VIX trades far out of the money around election and inauguration day Are retail investors making bets on a rise in volatility due to the election? Why trading VIX options can be frustrating and may be misused by retail traders Home ownership dreams dead for young people? Comparing a monthly mortgage payment today on an inflation adjusted basis to historical Home prices compared on an inflation adjusted basis History of interest rates over 5000 years Container shipping costs on the rise Share buybacks at highest level over the last couple years and what that means for earnings Friday’s huge market reversal going from down to up in the last hour Fed rate cut expectations through the end of 2024 down from 7 cuts to 1 cut 4th year of the Presidential cycle and the S&P 500 Index What Shiller Cape ratio means for returns over the next 10 years Cape PE ration and Price to Free Cash Flow Mentioned in this Episode History of Interest Rates book by Sidney Homer and Richard Sylla Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Nvidia Earnings Recap | Get Over It Rates are Staying Higher | Despite Rates Home Prices Up YoY | AI Mentions in Earnings Calls | What VVIX and VIX Did
05/27/2024
Nvidia Earnings Recap | Get Over It Rates are Staying Higher | Despite Rates Home Prices Up YoY | AI Mentions in Earnings Calls | What VVIX and VIX Did
Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial talk about Nvidia’s earnings report and how they are catching up to Apple in total market cap. Will they cash Microsoft? Then they note the percentage of companies mentioning AI on earnings calls. What does that mean for CAPEX spending on semiconductor chips? Later they look at how housing prices after a small drop are now growing YoY despite higher interest rates and higher payment per median home price. The gold rally now one is noticing in 2024. A little Japan 10-year bond talk as rates hit 1%. Finally, Jay and Derek talk about how rates are staying higher for longer and the market might need to get over it while the “threat” of lowering rates might help markets. Earnings mentions of AI on earnings conference calls surge Nvidia is catching up to Apple in market cap What is market cap and how to compute it? Surprising market cap size for one semiconductor company. Comparing S&P 500 Index market return paths since 1990 Is 2024 the new 1995 for S&P 500 returns? Nvidia stock price growth vs income and revenue growth last 10 years Now investors don’t thing there is a chance for a recession Investor sentiment or likelihood of recession being high might be contrarian indicator University of Michigan inflation expectations over next 5 years surges Historical asset class by year returns Gold still rallying but does anyone care? One family home sales median price year over year price change growth Charting monthly mortgage payment on purchasing a median priced home Japanese 10 year bonds hit 1% Why investing for longer means your win probability gets really high Mentioned in this Episode Roaring Kitty Tweets and Gamestop rises and falls Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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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
05/19/2024
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
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 insurance rates are soaring. What does this mean for the Fed and rates? Finally explanation of when covered calls get called away early. Roaring Kitty comes out of hibernation to tweet. Looking at GameStop options activity prior to Roaring Kitty’s tweet Did the options activity prior to the stock activity mean people knew the tweet was coming? Are we in for a GameStop meme stock part 2? Why retail investors should use caution in trading GameStop. Looking at the implied volatility on GameStop options to understand expected volatility. CPI Supercore continues to rise YoY and what that means for interest rates and the Fed Car insurance rates are surging 20%+ and rising How long it takes the S&P 500 to go up each 100 point increment According to a Bank of America graph 90% of the time since 1948 no recessions or stagflation Enough about the Fed and rates? When do covered calls get called away early and assigned? Understanding dividends vs time value in deciding when covered calls get assigned Early assignment for options What implied volatility says about what the options market expects a stock to move GameStop 300% implied volatility is massive and how expensive the ATM straddle is Mentioned in this Episode PPI comes in hotter than expected click below to read the PPI report release Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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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
05/12/2024
Goldilocks Stock Market and What Could Derail It? | Interest Rates Aren’t Historically High | Cheap to Hedge the Downside Now with Options
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 problem. Finally, they look at corporate earnings and profit margins for the S&P 500 Index and how they’ve growth over the years, gold prices vs oil prices as a predictive model, and yes some shipping container inflationary commentary. Growth in S&P 500 earnings per share analyst projections How net profit margins for the S&P 500 Index companies has growth over the years Why this might be a hated bull market despite some goldilocks market aspects What could derail this market? Why profit margins continue to be higher and why they do or don’t have to revert to the mean The Fed balance sheet explained How the Fed is going to be reducing the amount of bonds running off the balance sheet. How the Fed is restrictive and easing at the same time Explaining what the Overnight Reverse Repo Market (RRP) is Why the Fed reducing the balance of Overnight Reverse Repos isn’t restrictive policy The order of how the Fed may ease (hint, it may not start with interest rates) The 1990s bull run with higher interest rates and lower profit margins Maersk container shipping operating hints at higher costs due to capacity, fuel, and congestion What does higher container shipping costs mean for inflation and prices? Do Gold prices project out what oil prices will do in the next 19 months? Explaining the cost of hedging and how it is very cheap to put on downside hedges right now The cost of a 1 year 10% out of the money put option The cost of a 1 year ATM at-the-money put option Using low or no cost collars to hedge the downside Using long put spreads to hedge or buffer the downside Mentioned in this Episode Explaining High Dividend ETFs and Stocks and How Reinvesting Dividends Works to Build Share Count and Compound Returns Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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Reinvesting High Dividends Deep Dive | Unemployment & the Fed | Option Time Value Explained | Shareholder Yield
05/05/2024
Reinvesting High Dividends Deep Dive | Unemployment & the Fed | Option Time Value Explained | Shareholder Yield
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 Compounding dividends through dividend reinvestment and increasing share count. What is shareholder yield? What is buyback yield vs dividend yield? Fed higher for longer is now consensus. What is time value of an option Looking at option premium and time value through the market maker lens Exploring the SPX 6000 Call option expiring Dec 31st, 2024, premium and time value How options are priced How market makers taking the other side of customer orders have to hedge their positions Components of unemployment report labor force size vs employed and unemployed Selling option premium to create high dividends Mentioned in this Episode Is it 1994 All Over Again? 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? Derek Moore’s book Broken Pie Chart Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Contact Derek
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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?
04/28/2024
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?
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 Supercore measures. What is CPI Supercore and PCE Supercore compared to CPI Core and plain old CPI? Explaining how the US CPI Consumer Price Index used to compute inflation prior to 1983. How measuring housing inflation changed in 1983. Why did they change how CPI is measured to owners’ equivalent rent? Looking at the probabilities for rate cuts across different Fed FOMC meeting dates What about Sell in May and Go Away in election years? Explaining how to tell what the options market is implying for a 1-standard deviation move Implied volatility around Nvidia earnings date scheduled for May 22nd How to calculate the implied move in a stock based on the options market Examining the at the money ATM straddle on Nvidia options expiring 2 days after earnings Mentioned in this Episode Is it 1994 All Over Again? Podcast: Explaining How and Why Bonds Make or Lose Money Previous Week’s Podcast: Market Correction | Mortgage Rates Higher | No Thanks 24-Hour Trading | Synthetic Options Jay Pestrichelli’s book Buy and Hedge Derek’s new book on public speaking Effortless Public Speaking Derek Moore’s book Broken Pie Chart Contact Derek
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