Jay Pestrichelli, CEO of ZEGA Financial, joins Derek Moore again to discuss whether this current bear market is tracing the 2000/2001 bear market. Plus, they highlight how tight yield spreads are looking at what the 3-month treasury bill/ 2-year treasury note are yielding compared to high yield and investment grade bonds. Then Jay and Derek go through the looming US debt bomb in regard to where interest payments might go and whether there will be political pressure for the Fed to keep rates low....
Mar 05, 2023•36 min•Ep. 210
Derek Moore is back with Mike Puck, Director of Business Development at ZEGA Financial to talk underperformance of international stocks and how “everyone” is saying this is the year that trend gets reversed. Mike shares what people were talking about at the Miami ETF Conference around flows into international funds to start the year. Plus, they talk about what investors give up if they rotate out of S&P 500 US type investments and how you might already have international exposure in large US...
Feb 26, 2023•48 min•Ep. 209
Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss recent discussion on 0 DTE (zero days to expiration) options and potential for a new Volmageddon event due to them. Then, they again get into The Fed and the idea of hard landing, soft landing, or no landing (that’s a new one). Plus, they discuss some odds and ends within markets and the economy including some chart crimes, shipping container rates, next 12 month returns ONCE a bear market bottom is in, and why US Investment...
Feb 19, 2023•51 min•Ep. 208
Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss how AFTER the market ran up in January people are bullish according to the new AAII Individual Investor survey. Plus, updated numbers on the difference in hypothetical returns if you missed ONLY the 2 best day each year over a 10 or 20-year period. Then, we continue to get economic data that is telling different stories so what to believe? Then they give some recommendations. AAII Sentiment Poll Bulls minus Bears turns posit...
Feb 12, 2023•44 min•Ep. 207
Derek Moore is back to talk about the one thing no one seems to think is a possibility with interest rates. Plus, why the tightening of the triple BBB corporate bond spreads above 3-month Treasury Bills and Fed Funds is something to watch for markets. Then, Derek explains the 4 stock market scenarios people are watching. Disconnect between market expectations and the Fed Spread between corporate bonds and treasuries narrows BBB Corporate bond spread to Fed Funds smallest since 2007 What do inter...
Feb 05, 2023•28 min•Ep. 206
Derek Moore and Mike Puck discuss the upcoming Fed meeting and whether rates will stick around at higher levels for a while despite general estimates for lower rates in the back half of 2023 and early 2024. Mixed signals in the labor market as tech announces layoffs while other companies point to hiring. Why it’s tough to pick individual stocks using Tesla as an example. Does the Fed still want bad things to happen in the economy? Watch the Fed press conference Tech stocks see gains after layoff...
Jan 29, 2023•47 min•Ep. 205
Jay Pestrichelli, CEO of ZEGA Financial and Derek Moore are back to talk Netflix earnings, why earnings declines don’t necessarily mean falling stock prices, wide bid ask spread in housing, and volatility dropping in the currency and fixed income markets. Plus, the AAII investor survey points to record lows in bullish sentiment. Why margins are being overlooked in earnings estimates. Finally, is Japan an unknown, unknown and Derek (without any knowledge) predicts Amazon buys AMC and Apple buys N...
Jan 23, 2023•40 min•Ep. 204
Derek and Mike Puck, ZEGA Director of Business Development, discuss whether Value will have a period of outperforming Growth. How Value and Growth have experienced long regimes where one outperforms another. Where we are in the current cycle. Plus, how dividends historically have accounted for 40% of total returns in the S&P 500 Index. What makes a stock a “value stock”? Growth vs Value historically How growth has outperformed value for extended period of time Are we about to switch where va...
Jan 15, 2023•38 min•Ep. 203
Jay Pestrichelli, CEO of ZEGA Financial and Derek are back to talk about how there is conflicting bullish and bearish data in the economy. Jobs data vs manufacturing tells a different story. Plus, digging into the labor force participation rate conundrum. This week Campbell Harvey who came up with the 3 month over 10 year treasury yield curve inversion indicator said despite being right every time on recessions, this time may be different. Cambell Harvey yield curve inversion signals false this ...
Jan 08, 2023•42 min•Ep. 202
Derek is back with the first show of 2023. On this week’s episode, looking at successive negative market years frequency and returns by decade. Hint, we’re still positive decade to date by more than you think. Plus, examining frequency of T bills outperforming the S&P 500 Index. Review S&P 500 Index market returns by decade How frequent do markets have succussive down years? How can T-bills outperform the S&P 500 Index? Decade to date is still positive by more than people think. How ...
Jan 04, 2023•22 min•Ep. 201
Jay Pestrichelli, CEO of ZEGA Financial, is on a special 200th episode of the Broken Pie Chart Podcast to go over their predictions for 2023. Will we have a recession? What will the earnings be? What will be the highs, lows, and year end 2023 10 year yield, S&P 500 Index, gold, bitcoin, oil, fed funds rate, and more. Off course these should not be traded on, but instead hear some of our thought process in arriving at these numbers. Plus, as always, some recommendations. 2022 Saw 91% of days ...
Dec 22, 2022•58 min•Ep. 200
What’s the saying, history doesn’t repeat itself but often rhymes? In 1994 the Fed was raising rates all the way through the Feb 1995 meeting. How does that period compare to now? And does that mean we are in for a repeat of markets? Derek Moore explores that period and makes some comparisons. 1994 Fed interest rate hikes 1994-95 interest rate cycle and market returns The 1995 Fed pivot When did markets turn higher? Hint it’s before the last rate hike. Curious reasons Fed began raising rates in ...
Dec 21, 2022•19 min•Ep. 199
Every time you tune into CNBC you hear predictions about when the recession will hit. Then, when the Fed will pivot. But are people focused on the wrong things? Jay Pestrichelli is back with Derek Moore to discuss markets, earnings, and why the contrarian take is everyone can’t be right. Plus, the more the yield curve inverts, the harder it will be for a recession to arrive in 2023. 2023 Earnings EPS scenarios review Forward P/E ratios and where multiples will be Why the market goes up or down f...
Dec 12, 2022•48 min•Ep. 198
Last week the payroll and unemployment numbers came out. They surprised to the upside but does the Fed really want people to lose their jobs? How are the unemployment numbers calculated? And an under the radar demographic trend on working age population. Plus, the 2023-year end S&P 500 Index targets are coming out and they are bearish! What are investment banks 2023-year end S&P 500 Index price targets? How do the 2023 targets compare to last year’s year end 2022 targets? How wrong were ...
Dec 06, 2022•24 min•Ep. 197
Last week CNBC had some talk about 2022 likely to have the first ever decline in the M2 Money Supply. Is that really a big deal given 2020 record 25% growth followed by 2021 12% growth? Then, why velocity of money may not mean anything for inflation after all. What is the M2 money supply? What is the M1 money supply? Comparing M2 vs M1 money supply Discussing massive increase in money supply in 2020-2021 First ever decline in money supply in 2022? Review historical increases in the money supply ...
Nov 30, 2022•22 min•Ep. 196
Jay Pestrichelli, CEO of ZEGA Financial, is back with Derek this week where they talk FTX bankruptcy and whether it means the end for crypto? Then they discuss the 3-month treasury bond yield inverting with the 10-year treasury bond. Yes, every time that has happened there have been recessions, so what about this time? Earnings continue to be the thing to watch. A quick game of who is right after the Atlanta Fed GDP Nowcast is showing 4.3% growth compared to a measly 0.5% current estimate for Q4...
Nov 20, 2022•45 min•Ep. 195
Derek gives his thoughts on the FTX crypto collapse and bankruptcy. Why crypto are NOT currencies. Then, why everyone should be paying attention to the US Dollar. Why the US Dollar is so important for multi-national companies and their revenues. How those revenues are impacted when the dollar is strong (or weak). Then finally a check in on the Fed Funds probabilities for future rate hikes. Why crypto currencies have failed to be currencies How some crypto returns seem too good to be true There i...
Nov 13, 2022•21 min•Ep. 194
Derek is joined again by ZEGA CEO Jay Pestrichelli to discuss what market capitulation looks like and are we there yet? Plus, how markets tend to turn up prior to the economy bottoming historically. Before some recommendations they discuss why the VIX isn’t higher and what the VIX curve is telling us now and in the past. What is market capitulation? Historical examples of markets bottoming months ahead of the economy Are markets smarter than the economy? The VIX futures curve Why VIX isn’t highe...
Nov 06, 2022•52 min•Ep. 193
Derek is joined by Spencer Wright of Halbert Wealth to discuss historical impact on markets Plus, they discuss the house, senate, and the prevailing polls and other indicators to sift through the noise. Finally, they give their picks in the 5 senate races that matter. Market performance post midterm elections since 1962 Why markets might like split government What the polls and adjusted polls are saying What the past tells us about likelihood of change of power in the house during midterms What ...
Oct 30, 2022•55 min•Ep. 192
The Fed is paying out more in interest than it is taking in, resulting in an IOU to the US Treasury. Is this a big deal? Did the Fed believe this was possible? Understand why you may see in the news the Federal Reserve is running a deficit. Plus, is the Treasury about to do bond buybacks to increase liquidity in markets? What is a Federal Reserve deferred asset liability How much of a deficit is the Fed running? Why is the Fed paying out more in liabilities than its receiving in interest? Why ar...
Oct 23, 2022•24 min•Ep. 191
The Federal Reserve shows no sign of slowing down rate hikes in the near term. But are they doing anything? ZEGA CEO Jay Pestrichelli is back on the show with Derek Moore to debate. Plus, why we care about England’s BOE moves. Finally, some recommendations. What is the deal with the UK’s pensions and government bonds? Is the Fed doing it all wrong? Container shipping rates back to normal? The waiting is over at the Port of LA Inflation run rates and what we need to happen What would it take for ...
Oct 17, 2022•51 min•Ep. 190
As Q3 earnings season is about to kick off we’ll look at what the drivers of returns are for the S&P 500 Index and individual stocks. Annualized returns are a mix of sales growth, margin growth, dividends, share count, and PE multiple growth. See how to think about these levers in relation to price. What are the return attributions of the S&P 500 Index returns? PE multiple growth vs multiple contraction How share buybacks or issuance increase or decrease earnings Dividend yield as a perc...
Oct 07, 2022•21 min•Ep. 189
The rise of interest rates has been all over the news, but is there a silver lining? Yes, due to higher rates in short-term US treasuries hedged equity strategies now can further manage risk by substituting out short duration high yield to short term treasuries. ZEGA Financial CEO Jay Pestrichelli and Derek Moore are back to explain how a flagship strategy Buy and Hedge is leveraging the new environment. What are Buy and Hedge strategies? Comparing the risk profile of short-term US Treasuries vs...
Sep 29, 2022•39 min•Ep. 188
Does anyone who makes predictions in the financial news media know anything? Lots of headlines are making predictions so why not add some perspective from past bear markets (and bull markets) where many things’ people say never came true. Why investors make bad decisions due to news. How investors opt to stay in cash even as markets firm up. We’ll go through some past predictions to see how the mood sways at different points in cycles. What the financial media is saying New estimates and predict...
Sep 25, 2022•24 min•Ep. 187
Inflation surprised to the upside last week. Although it was close to the Cleveland Fed’s nowcast estimate. So, what would it take for inflation to get back to the 2% level and when? We’ll go through the numbers today to illustrate what rate of monthy inflation would be needed to get there buy the spring. Its just math, so here we see the Feds base rates come into plan. How is inflation month over month calculated? How is inflation year over year calculated? How do month to month and year over y...
Sep 18, 2022•21 min•Ep. 186
Do markets always go up after the midterm elections? What about market performance during the presidential cycle? Interesting data points to historical numbers being bullish for markets next year. What could go wrong? Plus, why it may not matter what political party is in power. Market performance before and after midterm elections When are midterm elections held? Significant swings in power during midterm election years Market performance and presidential cycles Which year of president’s term i...
Sep 11, 2022•22 min•Ep. 185
Why Hedging Is the Answer for Portfolios | Can Hedgers Buy Markets Lower? Show Summary: Rather than try to time markets or worry about whether there is a selloff around the corner, look to stay invested but be hedged. But what is hedged equity? What are the benefits for investors who may be barraged by various predictions and news? How do hedged equity strategies work? All this and more plus some new recommendations. Eliminate the need to time markets Reduce fear- but stay invested Who is hedged...
Sep 04, 2022•47 min•Ep. 184
Was Bed Bath and Beyond a Gamma Squeeze? How the options market can sometimes drive buying and selling. Plus, Jerome Powell does a short press conference talking tough about taming inflation. Ryan Cohen option positions in Bed Bath and Beyond What is a Gamma Squeeze? How market makers hedge their book to remain flat When gamma squeezes don’t move the markets Jerome Powell talks tough in his press conference trying to send right message Did markets not understand the fed before? Some recommendati...
Aug 29, 2022•44 min•Ep. 183
Jay Pestrichelli once again joins Derek Moore whether stocks never make new lows after retracing half a bear market drawdown. Plus, how many in the industry have never see a rising rate environment. Then, deconstructing earnings, profit margins, and revenues to go under the hood and how the US dollar strength plays into all of this. Have stocks ever went on to new lows after retracing half a bear market drawdown? Looking at the 2000-2002 bear market Reviewing the 2008-2009 great recession Chart ...
Aug 21, 2022•46 min•Ep. 182
Derek Moore is back to talk about the difference between diversifiable risk and systematic market risk. Diversification might fail the very time you want it most. The argument for diversification + hedging. Why bonds didn’t act as a diversifier this year. Diversifiable risk Systematic market risk 2007-2009 Period where diversification failed Why diversification is better than concentrated stock positions Comparing some individual companies vs indexes in 2008 Why bonds failed to diversify during ...
Aug 14, 2022•15 min•Ep. 181
