Mar 5, 2023
Jay Pestrichelli, CEO of ZEGA Financial, joins Derek Moore again to discuss whether this current bear market is tracing the 2000/2001 bear market. Plus, they highlight how tight yield spreads are looking at what the 3-month treasury bill/ 2-year treasury note are yielding compared to high yield and investment grade bonds. Then Jay and Derek go through the looming US debt bomb in regard to where interest payments might go and whether there will be political pressure for the Fed to keep rates low. Finally, after going through the avocado vs bitcoin relationship, they give a few recommendations.
The US Federal Debt is growing but what if rates stay higher and net interest owed goes up?
What does the yield spread tell us about relationships of corporate bonds to treasuries?
Is the current bear market tracking the 2000-2001 bear market?
Does the price of Bitcoin and Avocados really track one another?
Tom Lee points to breakouts in Nasdaq stocks
Tom Lee Ex-FAANG forward PE ratios for the S&P 500 Index
US Federal Debt held by the public
Nominal GDP Growth vs US 10 Year Treasury Yield
Looking at John Hussman regression chart on 10-year trailing growth vs nominal GDP
US government spending next 10 years at WWII levels
Current net interest payments by US government
Average car price in the US hit new highs in 2022 while interest rates rising
Negative equity on used cars getting rolled into new car loans
Most home owners locked in really low interest rates
Corporations interest costs as percent of cash flows low because they locked in low bond rates
Comparing 3-Month Treasury Yields spread to high yield and investment grade bonds
Car loans are getting too long considering cars are a depreciating asset
Mentioned in this Episode:
Underperformance of International stocks for a long time and valuations still too high? https://podcasts.apple.com/us/podcast/underperformance-of-international-stocks-valuations/id1432836154?i=1000601650028
No Volmageddon 2.0 | No Landing for the Economy? https://podcasts.apple.com/us/podcast/no-volmageddon-2-0-no-landing-for-the-economy/id1432836154?i=1000600413796
2019 WSJ article on car owners rolling negative equity on long term car loans into their next car https://www.wsj.com/articles/the-seven-year-auto-loan-americas-middle-class-cant-afford-their-cars-11569941215
Nominal (not inflation adjusted) US GDP https://fred.stlouisfed.org/series/GDP
Federal government current expenditures net interest payments on debt https://fred.stlouisfed.org/series/A091RC1Q027SBEA
Words and Numbers Podcast where they talk about tax receipts (what government takes in) have gone up 50%+ since 2020 https://open.spotify.com/episode/2zjC18iPqIm0LUeDPF2nAP?si=o2wX9sn8SB25BMSMrk2xzw
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://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Contact Derek derek.moore@zegafinancial.com