Jay Pestrichelli, CEO ZEGA Financial, is back with Derek to say congratulations to our government debt reaching $30 Trillion! What are the ramifications of high debt levels? What the interest on that debt could be if rates rise? Does this put pressure on the Fed NOT to raise rates so much? Plus, interest in hedging at the highest levels since April of 2020. Is that a sign of contrarian optimism for the stock market? And contrarian corner is back where we each give some contrarian picks that go against the grain.

 

US Debt – debt held by the public vs. overall debt

How much of the budget do net interest payments make up?

Average interest rate US pays on Treasury bonds

Effect of rise of 1% in rates to interest payments on debt

Political pressure to keep rates down?

Treasury bonds do not have call provisions

Investors are buying put options

Hedging appetite highest since April of 2020

Contrarian Trades Emerging Market Value – Betting Against Too Many Rate Hikes

 

 

Mentioned in this Episode:

 

Contact Derek Moore derek.moore@zegafinancial.com

 

Derek Moore’s Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&

 

Jay Pestrichelli Book Buy and Hedge https://amzn.to/3uRbuMa

 

Average maturity of US Treasury debt https://data.nasdaq.com/data/USTREASURY/AVMAT-average-maturity-of-total-outstanding-treasury-marketable-securities

 

Average interest rate on US Treasuries https://www.treasurydirect.gov/govt/rates/avg/2022/2022_01.htm

 

Marcel Benjamin explains how TIPS bonds work https://podcasts.apple.com/us/podcast/tips-inflation-protected-bonds-explained-interest-rate/id1432836154?i=1000535445537

 

JP Morgan Guide to the markets https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/

 

Fed Rate Probability Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html