Too Focused on Fed Rates?| META Earnings Implied Volatility | NAV Erosion Myth

Broken Pie Chart

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed and Powell press conference market reaction. Plus, they look at META and Apple option’s implied volatilities did or didn’t predict the post earnings moves. 1994-95 experience in Fed rates and bond yields compared to today. Later, they set the record straight on what NAV erosion is, why the Shiller PE may not be predictive of markets, low response rates to economic surveys, and correlation between CPI and shipping container rates.

Fed Meeting Powell press conference roiled markets for all of 1 day

Who is right, the bond market or the stock market on rates?

Typical moves in bond yields around fed meetings and outside of fed meetings

The Fed Funds rate and the 10-year treasury bond yield aren’t as related as you think

Looking back at the 1994-95 Fed rate hiking and easing cycle

META blows out earnings and adds the most market cap ever in one day

Looking at META options implied volatility pre-earnings to see if it got it right

Reviewing Apple’s ATM straddle, implied volatility, and post earnings move

Confusion around what the meaning of NAV erosion is

Total return which includes dividends vs price return.

Correlation between CPI year over year change and container shipping rates

JOLTS Job Openings Less Turnover Survey response rates drop

How economic surveys sample small amounts to gauge total economy

Shiller PE CAPE Ratio and predictive power

Mentioned in this Episode:

1994-95 All Over Again in Markets? https://podcasts.apple.com/us/podcast/1994-95-all-over-again-in-markets/id1432836154?i=1000590865306

BLS Bureau of Labor Statistics January 2024 employment report https://www.bls.gov/news.release/pdf/empsit.pdf

Previous Week’s Podcast:

What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson?

https://podcasts.apple.com/us/podcast/what-option-volatility-means-for-markets-is-the/id1432836154?i=1000642385904

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://amzn.to/3S8ADNT

Contact Derek [e-mail]

www.zegafinancial.com