Derek Moore revisits the 1994-95 interest rate and market environment against the current backdrop regarding treasury yields and future S&P 500 Index returns. Plus, going through the case for higher for longer, whether that is good or bad for markets, and the adjustment the market would need to go through. Later, quantifying how sensitive the S&P 500 Index is to change in the forward PE ratio by putting into actual numbers and levels. Also, looking at Arista Networks and Alibaba before earnings and what the options market is saying their expected one standard deviation moves might be up or down. Finally, most people look at Real Inflation adjusted GDP, but Nominal GDP growth may be correlated to the 10-year yield and what that means if we go back to pre-GFC nominal growth rates. All this and more.

What is Nominal GDP Growth Rate?

What is Real GDP growth?

The US Dollar index and whether we are out of the zone of significance yet?

Inflation in services remains sticky

Why interest rates staying higher isn’t necessarily a problem for the stock market

Quantifying sensitivity of the S&P 500 Index to small changes in the forward PE multiple

1994-95 vs 2024-25 update around treasury yields, S&P 500 returns

Alibaba and Arista earnings this week and their option implied moves

How to calculate expected move around earnings based on implied volatility levels

Mentioned in this Episode

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

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

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

Contact Derek derek.moore@zegainvestments.com

Jay Pestrichelli is back with Derek Moore to react to the unemployment report. Was it good or bad for the markets and why? Plus, they review the last trade and tariff war from 2017-2018 and how the market actually did pretty well. Later, the latest survey on forward inflation expectations is now over 5%. Finally, they compare MicroStrategy’s implied volatility to Blackrock’s IBIT ETF and whether the options market is undervaluing MSTR’s IV. All that and more this week.

Markets performance back in 2017-2018 when tariffs were enacted

Inflation expectations shoot up due to tariffs

Stock market performance during the 2017-2018 trade and tariff war

MicroStrategy implied volatility

Comparing MicroStrategy volatility to Blackrock’s IBIT Bitcoin ETF

Looking at the breakeven on a long MSTR straddle and the risks

Reviewing the unemployment report

Will unemployment go down due to new government strategic focus?

AI mentions on S&P 500 earnings calls

83% of mortgage holders have an interest rate below 6%

US Non-Farm Payrolls consecutive positive months

BLS forgot to fill in the monthly change on unemployment report?

Mentioned in this Episode

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

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

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

Contact Derek derek.moore@zegainvestments.com

Derek Moore previews Palantir, Amazon, and Google earnings implied volatility expectations based on the option market. Plus, how currency movements may or may not mute new tariffs. Later, Derek answers a listener question on why mortgage rates (and bonds) have a spread between their rate and the 10 Year Treasury yield. Plus, digging into new data that shows analysts producing earnings estimates on the S&P 500 Index are pretty accurate as it turns out. Finally, what is market fragility and are we in a fragility period right now?

What is market fragility?

Analyst estimates vs actuals show analysts might know what they are doing

30-year mortgage rates vs the 10-year treasury

Why is there a spread above treasuries

What is reinvestment risk on mortgage bonds?

Tariffs impact on markets

How currency moves on the Canadian Dollar, Mexican Peso, and Chinese Yuan may blunt tariffs

Will tariffs cause more onshoring and manufacturing in the US?

Sentiment was tariffs would be used as a threat, then they’ll be short lived, so now what?

Mentioned in this Episode

Analysts are pretty good at predicting earnings from Sam Ro https://www.tker.co/p/analysts-earnings-estimates-accuracy

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 derek.moore@zegainvestments.com