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Short Sellers Give Up? | The Case for Interest Rates to Stay High for Longer

By Derek Moore

Show Summary:

Derek Moore points out that no, the Fed doesn’t need to lower rates without some problem or a recession. Looking at the nineties when markets went up despite Fed Funds rate above 5%. Then looking at the net short positions of traders via the commitment of traders report. It shows recently at markets moved higher, short sellers covered causing a short squeeze? Finally, before a recommendation, some talk about the upcoming earnings season and a reminder in 2022 earnings did not go below those of 2021 and the market still sold off due to multiple contraction. 

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 Topics Include:

  • What is a short squeeze?
  • What is the commitment of trader’s report?
  • Bloomberg article pointing to bears (short positions) being closed the most since 2020.
  • How short sellers closing positions add fuel to market rallies.
  • Are large net short positions in the S&P 500 futures a good contrarian bullish signal?
  • How earnings still grew in 2022 a little bit but markets still sold off due to multiple contraction.
  • What is multiple contraction?
  • Earnings season is coming up and expectations are for a down quarter.
  • Comparing the Fed Funds rate in the nineties to today
  • How markets went up even with rates above 5% in the 1995 to 2000 bull run
  • What would make the Fed lower rates?
  • Bloomberg article hints that with less short positions outstanding the short squeeze effect drops?

 Mentioned in this Episode:

 Bloomberg article on bears covering their short positions 

 Nasdaq 100 Index Strong First Half Equals Strong Second Half? | Overbought or not? | Trying to Guess the Forward PE Multiple Is Hard!

 Fear and Greed Index | Volatility Surface | Put Call Ratio | Wall Street Gets Bullish | Homebuilders Surprise

Jay Pestrichelli’s book Buy and Hedge 

Derek’s new book on public speaking Effortless Public Speaking 

Derek Moore’s book Broken Pie Chart