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Why VIX Is Hard to Trade | SuperCore PCE High Again?| High Yield Bond Spreads | The Fed Is Not Cutting? | Semiconductors Surging (Again)

By Derek Moore

Show Summary:

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, explain why it’s so hard to trade the VIX via options or VIX futures given the nature of the products and how VIX works. Supercore PCE, yeah that’s a thing now, came in hot so what does that mean for the Fed and rates? Speaking of the Fed cutting rates, what if they don’t cut this year? Later they explore how High Yield Bonds aren’t showing any fear and comparing the High Yield spread, the long term annualized total return of the High Yield Bond Index, and how CCC Junk Bonds once were yielding a few years ago what short duration Treasury Bills are yielding now. Oh, and let’s not forget to look at the SOX Semiconductor Index which just surged again to new highs.

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 Topics Include:

  • What is PCE Supercore compared to CPI?
  • PCE Supercore comes in higher than expected.
  • What if the Fed doesn’t cut interest rates and why they would or wouldn’t cut this year?
  • What is the VIX Index
  • Explaining VIX Futures and VIX Options
  • Why it’s so hard to play the VIX using futures or options?
  • The VIX Futures curve
  • What the VIX Futures around the election are showing
  • What is the high yield spread?
  • Annualized returns for the High Yield Index since 1997 
  • Examining times when high yield spreads spiked
  • CCC rated bonds yield to worst
  • What is a Yield to Worst for bonds?
  • SOX Semiconductor Index and future projected earnings growth
  • Remember when Cisco was thought to be the picks and shovels of the internet?
  • Has Cisco ever eclipsed its 2000 dotcom era highs?
  • Super Micro Computer joins the S&P 500 Index replacing Whirlpool
  • Comparing Super Micro Computer’s revenues vs Whirlpool’s
  • Largest companies by market cap in each decade

Mentioned in this Episode:

Super Micro Computer joins the S&P 500 Index 

Jay Pestrichelli’s book Buy and Hedge 

Derek’s new book on public speaking Effortless Public Speaking 

Derek Moore’s book Broken Pie Chart 

Contact Derek derek.moore@zegafinancial.com 

Did you miss last week’s episode where Jay and Derek covered:

Nvidia To the Moon | Implied Volatility and Earnings | Earnings and Markets Have Low Correlations? | Nvidia Cheap?

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