Derek Moore explains how what sometimes seems obvious isn’t what happens as we can see with inflation numbers that continue to move lower despite consumer sentiment surveys expecting 6.6% inflation in the next year. Plus, NVDA had its earnings and the stock’ forward PE is lower due to the next 12-month analyst estimates being near all-time highs. Plus, sell in May would have been a mistake as markets recovered and are now back to within several percent of all-time highs.

PCE Inflation vs CPI Inflation

NVDA forward PE ratio and earnings EPS estimates

Calendar Spreads vs Diagonal spreads explained

Inflation continues to be lower

University of Michigan consumer sentiment survey says 1-year inflation 6.6%

Atlanta FED GDP Now

EconPi

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 talks about seeing stories of exploding 30-year yields but what if they are low compared to historical relationships between the fed funds rate? Then, looking at how correlated the 60/40 portfolio has been over the last 5 years begging the question, did it do anything for investors? Later, looking at NVidia implied volatility ahead of its big earnings release this week to see what the options market is pricing in for a potential one standard deviation move? All this and more this week.

S&P 500 Index net profit margins expected next 12 months

The US Dollar index breaks below its trendline

Nvidia earnings and the options market

Forecasting expected 1-standard deviation moves using implied volatility

Correlations between the S&P 500 Index and the 60/40 portfolio last 5 years

Historical average of the spread between the 30 Year Treasury and the Fed Funds Rate

Should the 30-year treasury yield be higher?

Japan bond yields normalize reaching highest levels going back to 2007

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 reflects on market reaction to the 2011 US debt downgrade and explains what S&P, Fitch, and Moody’s have for ratings. Plus, are markets poised for more positive returns based on several indicators? The bear case against the markets would be a reduction in profit margins. Later, Derek reviews some data of future 12-month returns when consumer confidence is low as a contrarian indicator. Finally, looking at several current indicators and random musing in markets for clues about the future. All that and more this week.

S&P 500 Index net profit margins for Q1 2025

Consumer confidence and consumer sentiment are low but is that a good thing?

Looking at how often intra year lows on average are -14% but often markets end higher

12-month inflation expectations are now 7.3% highest since 1981

Hard vs soft data

Velocity of M2 Money Stock

What has been working asset class wise in 2025 YTD

15 biggest rallies since 1950 and subsequent forward total returns

Atlanta Fed GDP Now

Investment banks starting to reduce recession probabilities

Attribution of earnings EPS growth

DeGraaf and Zweig Breadth Thrusts occurring within 1 month of each other

Explaining the difference between Moodys, Fitch, and S&P bond ratings

Moodys downgrades US Debt

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 discusses whether MSTR MicroStrategy will wind up in the S&P 500 Index and do we want that given it just holds bitcoin with some ratio between its intrinsic value and the MSTR market cap. Plus, where to look for upcoming prospects for the S&P 500 Index and why the index is actively not passively managed and changes can drive earnings growth. Later, Derek talks through what the Fed did (nothing) and whether they are wrong or not to keep rates steady.

MSTR MicroStrategy potential to join the S&P 500 Index?

Requirements for a company to enter the S&P 500 Index

Why companies entering and leaving helps the long-term growth of the index

Where to look for emerging candidates to enter the S&P 500 Index

Vanguard Extended Market ETF

Should the Fed have lowered rates?

What is the Trueflation index?

CPI inflation for April released this week

Cleveland Fed Inflation Nowcast

Trueflation vs CPI Inflation

Mentioned in this Episode

Cleveland Fed Inflation Nowcast https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting

Sam Ro article on S&P 500 Index company turnover https://www.tker.co/p/s-and-p-500-turnover-goldman-sachs-forecast?utm_source=substack&utm_medium=email

Vanguards Extended Market ETF https://investor.vanguard.com/investment-products/etfs/profile/vxf#portfolio-composition

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 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 is an almost bear market?

Unemployment review after Friday’s release

Will the Fed cut rates at the May meeting?

Scott Bessent says the 2-year treasury is telling the Fed to cut

Comparing various CPI inflation rates in March

AAII investors still mega bearish

Barrons polls market people who are most bearish in 30 years

Is the Barrons cover a contrarian signal?

Why the Fed didn’t end inflation in 2022, and their rate increases didn’t do anything

Sell in May and go away?

Best historical time periods for returns

Mentioned in this Episode

Scott Bessent US Treasury Secretary says the Fed needs to cut https://finance.yahoo.com/news/treasury-secretary-scott-bessent-says-225359048.html

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 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 the implied volatility expected earnings move for Apple

FMS manager survey shows fund managers were max bearish near recent bottom

Distance off the low is now +10% after being down -18.90%

All that said, the S&P is down -10% off the all-time high

Investment banks start downgrading their year end S&P 500 Index targets

Bear case for housing due to high mortgage rates

Earnings have been good so far but what about the future?

Comparing mortgage payments at low vs 7% rates

Sentiment and VIX readings near contrarian lows like prior periods

Container shipping container rates are down and that is not inflationary

Container shipping volume and capacity are all down

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 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 consider them? Finally, how fund managers were overly long US Equities in December but now after the selloff they are saying they may reduce US equities. A little late no and how even professionals may react, panic, or be influenced by prevailing sentiment.

Gold all-time high

US Dollar and US Treasuries get correlated with US equities and weren’t the safe havens

The airport crowdedness indicator of recessions?

Fundamental EPS estimates are down a little but not much so far so what are they waiting for?

Big earnings week including Tesla and Google (Alphabet)

Fund manager surveys show they were overly long US equities before the selloff

Fund manager surveys also show as equities are in drawdown, they are thinking of selling

High Yield spreads not showing recession levels of widening currently

Typical high yield spread during recessions is 1000 basis points plus

How economists tend to crowd together in their predicting recessions

VIX Index implied volatility (expected) vs actual volatility (historical)

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 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 tariff selloff today

Context on how much market moved in a day to a normal year

Intraday move was literally 2 ½ hours for a market to move 9%

Biggest up days cluster around the biggest down days

Bond yields surging is a problem

Treasury Secretary Scott Bessen gets when tariffs are paused for 90 days

The VIX Index wasn’t pricing the crazy daily moves we’ve seen in markets

Why investors shouldn’t panic sell

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