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
Jay Pestrichelli’s book Buy and Hedge
Derek’s new book on public speaking Effortless Public Speaking
Derek Moore’s book Broken Pie Chart