Fan-favorite Jermal Chandler of tastytrade returns to Schaeffer's Investment Research's podcast to plug his newest featured show:
Engineering the Trade. Jermal and Patrick discuss the seasonality trends
(6:00), how to play bond movement (9:08), bracing for a potential energy crisis
(13:30), and what to expect as we wrap up 2021 (18:30) on this week's episode of Schaeffer's Market Mashup.
Transcript of Schaeffer's Market Mashup Podcast: October 7, 2021
Patrick Martin 0:00
Hey folks, welcome back to the Schaeffer's Market Mashup. Patrick Martin here on October 6, Wednesday, with another fan favorite we've got Jamal Chandler of tasty trade back again. Jamal we haven't chatted since May so how was your summer what are the top three things that you did?
Jermal Chandler 0:29
Hey, Mart, what's happening man? Do people call you that?
Patrick Martin 0:34
in high school yeah that would P.Marty was one of them so yeah I'll allow it
Jermal Chandler 0:41
yeah man it's been a while since we talked good good to be on again for sure love love talking to you guys at shapers and as far as the summer man it feels like things just flew by. We we did you know my wife and I we we tried to do a bunch of things you know to get out right? Like, we've all been kind of locked away. So if I can recall I mean, we we went to we actually went to a Banksy exhibit, which was pretty cool. earlier. Actually, that was that was more recent. We did that a couple months ago. We also did like a van Gogh exhibit. So we had a little art thing going on throughout the summer. Definitely stuff with my kids. You know, my youngest is playing a bunch of sports right now he's playing flag football. He did baseball Actually, he won championship for his little baseball team. It was like coach pitch this year, so that was cool as well.
Patrick Martin 1:34
Congrats.
Jermal Chandler 1:37
It was pretty fun. It was pretty fun. And then my daughter just had her sweet 16 about a month ago and then my oldest who actually turns 18 on Friday he's playing football he caught a touchdown on senior night senior night was pretty nuts. It makes you feel a little old but it's pretty cool man so yeah, yeah lots going on lots going on person that's
Patrick Martin 1:58
awesome What is your son, a wide receiver or tight end?
Jermal Chandler 2:03
You got it, he's a he's a wide receiver it's actually his first year playing football he started playing during the pandemic and they had a you know mini season in the spring which you know a lot usually footballs fall right so they had a spring season in the spring and that was cool because he got his feet wet and so now he started off this season playing now he's like maybe the third second third off the second third as far as like wide receivers in the lineup so you know he's working to get time which I think is a great thing actually he learns that nothing is guaranteed everything is earned.
Patrick Martin 2:35
Yeah, I've got a lot of respect for any high school college athlete that just had to go through their seasons in the past what 18 months with the pandemic and everything and then balancing school on top of that I don't know how I would have done it kudos to them and hopefully you know that's like you said gives them some serious life skills going forward
Jermal Chandler 2:55
yeah for sure man I mean I don't know if I would have been able to handle it either all this freedom that they gave last year so I'm kind of glad there's a little more structure now as we're in the fall Yeah, knowing how I was in high school and to start college I needed as much structure as possible so
Patrick Martin 3:16
Yeah, I needed it. Anyway um you know, I heard you know through the grapevine that you guys have some new content going on well you're the content kings over there at tasty so tell me what you guys got working on.
Jermal Chandler 3:29
Like that man content kings almost sounds like a movie or something? Yeah, we got a bunch of new content actually. we've extended the network there's a little love through shows actions after the market close nowadays. And you know, we've got a couple of new people like we have you know, some some people that sort of aimed at the TikTok audience so they got a couple of shows and then you boy here has a new show. As of right now I have a show called engineering the trade actually comes on every day at 1:30 CT (2:30 ET) so been loving it, man. And the idea there is just you know, I think I've mentioned it before, but I was a chemist and an engineer, and that's my, that's what I went to college for. And so the idea of, you know, as engineers, I think there's a lot of engineers who are attracted to trading because you feel like it's a problem you can solve and the market has way too many random moves right? Almost like we're seeing the day and so I think it kind of laws a lot of engineering and science types into to the market. And so I think, you know, one of the my, my biggest things my approach to the market is always picking, you know, adding, finding little pieces of as to what's going on, I mean, there's never just one thing, right. As we'll discuss today, there's always a couple of different things that make up the market that we're seeing.
Patrick Martin 4:56
Yeah, that's that's a very good point, the technical side of things. It's really the same brain when you look at engineering and investing. Unfortunately, I can't say I'm with you there as a liberal arts major. It took a lot of long nights to get this stuff down. But a tick tock I mean, I wish I was good looking enough to be in front of a tic toc and do all that. But you know, I'm glad you guys are, you know, branching out. That sounds awesome.
Jermal Chandler 5:26
Yeah, it's pretty cool, man. I mean, they, you know, they are, you know, TikTok people, Kayla Kilbride and Errol Coleman, they have a couple of shows, they're also like shorter, as well, which makes sense, I guess, considering their audience. We got, you know, the Johnson gray show, which is one of the highlights of the post-market. programming with Victor Jones and Ryan gray. So we got a bunch of stuff going on, man.
Patrick Martin 5:51
Gotta get gotta capture those short attention spans, for sure. So my last episode, I talked with Adam Warner earlier in September, right around when the seasonality really started to rear its ugly head. And I'll ask you the same question that I asked him is this historical period of underperformance and choppiness this time around something more? Is there something greater at play? And like, why is it so volatile and choppy this time around?
Jermal Chandler 6:24
Yeah, you know, I noticed. And I guess, unsurprisingly, there's been a lot of that talk about the seasonality of September, of course, we're starting to talk about, I'm sure every, every October, we seem to get this more conversation about how the different moves we've seen historically, in October, of course, a sudden crash and some of the others and, you know, those are valid, but I mean, honestly, more than anything, I pay attention to what's in front of me, right. And what's in front of me is the volatility that you speak of that we have right now. And there's probably a little bit more to it. And I always look at, like what, like I just said earlier, the different pieces that add up. And that's usually the one thing that really sort of gives you an idea of how nervous we should be, there's a real wall of worry right now, if you will, I mean, you know, we Let's name them off, we got paper talk that's been going on, we got the rising rates that we've been seeing and yields more recently, which is affected tech, of course, because of that inverse relationship with 10. year and in tech. The energy crisis is hard to mess with, and we're gonna, you know, chat More on that later. Inflation Of course, I mean, that's just a real thing. We've seen it in the prices for everything that we buy, and we pay for more recently. And then, you know, the Evergreen crisis. I mean, that almost took us down. That was that was really interesting. But the truth is, is that it wasn't something that was systemic to any US equities that we know that there's a list of companies in the US that have bonds and evergrande You can find that list I think BlackRock is probably at the top but it's not a situation of like, I think for a while there was was being almost felt like it was a situation like in AIG during 2008 like, this is something that is so ingrained in the fabric of finance, that it's just gonna take everything down. And I think that's why the markets really reacted, right because it already had the dominoes of paper talk, rising rates, big price inflation, then evergrande it was like, Oh my god, and then everybody relaxed, calm down, because I realized like, this is not the thing. And then as soon as that, that that kind of washed away on the shore, the debt ceiling came up so what do you got to do?
Patrick Martin 8:35
The evergreen stuff was funny because I remember reading an article that was comparing it like you said to AIG and housing and everything and that just kind of that came and went as quick as it you know, arrived, but it just feels like there's just so much more going on now. And I do want to focus on the first one you said which was the you know, the taper talk. One of the more reactive moments was September 28. I think that was when the Fed said it was gonna you know, scale back its bond buying that said the 10 year note soaring, climbing again, I think it was as high as 1.55%. Today, when this bond yield choppiness happens in you know, we know it's super sensitive to the stock stock market, what vehicles or methods can an options trader use to take advantage of this volatility? Is it is it as simple as saying like, okay, looking into an ETF like TLT?
Jermal Chandler 9:34
Well, let's identify first the idea of bond prices and bond yields moving in different directions, right? And so TLT is the 20 I think it's the 20 year plus bond prices. So what's the prices versus yield on the I mean, I should say it's one a year plus on prices for 20 year bonds. Then you have other vehicles that you can play yield we add tasty we have, you know, one of our sister companies is the small exchange, which is a retail trader focused exchange, and we actually have 10 year yields that you can trade. So it's a little easier, I would say, to conceptualize, I don't know what you don't really know where 20 year bonds should be trading. I mean, right, like for TLT, but I haven't I know exactly where to yield to be trading. It's around 1.55, like you said, and so because we have that to your product at the smalls, I actually trade that a good bit. And then recently, I did this segment on our tastytrade live show, it's called options dive. My segment is every Friday, and we talked about the idea I the name of the segment was called Friends of the 10 year yield.
So just to get to exactly what you're talking about. And I identified some of the things that move with the 10 year yield in the same direction more recently, because the senior yield is kind of this this measure of global, I should say it's a measure of the US health right. And so at the 10 year yields going up theoretically, certain industries and areas should be should be going up. I'm one of them, and more recently has been airlines. Another one has been energy, we've seen oil kind of move up with tenure, you know, the yields moving up. financials, of course, is one of the bigger ones. So those are some of the ways that you can play you can play using a 10 year yield product like we have at the small exchange, you can also play using certain industries that move along with the 10 year yield. And you can play the opposite, which is for the last year has been Tet, which is you know, the Q's or any given tech name, those move opposite to 10 year yields, I think just the word itself bonds and yields that scares off a retail investor so quickly. So to know what is in adjacent impacting sector or area can help them you know, when they see that they know what, okay, now I need to look into this. And even if, like you said, the ratio is inverse, like it is to tech. Yeah.
And the truth is, you know, I've always, I've always appreciated the times where we have big market moves from beginning when I just was learning to mount because then you really see the relationships that make sense. And so despite the fact that we've had quite a bit of volatility recently, I mean, we've had, you know, for 1%, up or down days in the last week, you get to see how certain things are moving together or not. Together, we've seen the tech and the 10 year yield relationship that's played out consistently over the last 18 months. And we've seen energy more recently starting to move as the 10 year yield has begun to move. So we've seen a lot of relationships, because we've had, you know, oddly enough, the benefit of large moves in the plus or minus direction, we've been able to see a lot of these relationships play out. And it makes a lot more sense, I would say,
yeah, and from the Schaeffer's perspective, you know, these big moves more traffic for us, you know, because people are so interested in seeing Oh, wow, 400 point drop, what does this mean? rush over to tasty, rush to Schaeffer's! And, you know, here's where we have the products that help people understand this and take advantage of it.
Patrick Martin 13:04
No question. Yeah, have a great, you know, there's so much going on, like we've talked about often feels like, the energy situation is getting swept under the rug, especially as it pertains to Europe and the supply chain. And then now we've got natural gas, looking at what steepest loss one day loss in a year, I think today. What should forward thinking traders be looking at overseas as to how these things can impact, you know, the US market ecosystem.
Jermal Chandler 13:41
Number one, keep a close eye on your gas bills, good lord. I mean, it's kind of good, it might get a little crazy in the coming months, if we, we have, you know, a serious cold snap, we can see some surge in prices even more, because a lot of these companies, you know, who are not hedged themselves are going to have to go out and buy some prices. for natural gas, for example, right now, the biggest thing to pay attention to is what they call that, that Widowmaker spread. So if you pull up that gas, and you look at the different futures, if you look at the spread between March and April, which signifies the end of winter, that's what's called that Widowmaker spread and right now it's about you know, 1.6 I think $1.60 you know, bt use whatever, between the two. And to give you an indication of where how far it's moved in June, it was 40 cents. So it's like quadrupled in a certain amount of time. So that's one of the things that energy traders are watching big time. But when you look at the performances of key commodities over the last, you know, I should say it's from September like in September alone, that gas move 32% you know, another big one was, this is not energy, but cotton moved 14%. So, you can expect to maybe pay more for clothes at some point because that's how these things end playing out on the other end gold and silver had been down I mean golden and still Gold's down 3% Gold Silver was down for 8% in the month September So Matt gas has been really on the moon of course crude I mean croods up you know 10% in the month of September so you know energy prices have really skyrocket and more recently and I think the thing that really noticed is how many central banks I think I don't have quite many in Europe yet but you've seen central banks starting to raise rates in in not only anticipation of eventually us raising rates but also be cuts to counteract this situation that we're seeing with the energy prices so I think at some point, many in Europe we're gonna raise I mean, I think Russia raised more recently, who knows if they're gonna have to raise again, because natural gas really hits them? Of course, they have the biggest natural gas company and Gazprom out there but yeah, I mean it's it's, it's a real it's a real issue and it's something to pay attention to going forward.
Jermal Chandler 15:59
Well, if you really want to get deep in the weeds, you have Germany, which is working out an entirely new coalition. And that's a multi month process and that's one of Europe's leading countries when it comes to you know, their presence in the ECB so you almost have to kind of wait for their dust to settle before you see what they're going to do and it's it's all seems like it's kind of piling up into this perfect storm no pun intended in the winter. I love reading about the supply chain stuff because it's not It seems so real so real Yeah, that the supply chain is definitely another thing that's really super interesting my wife actually works in supply chain and we talk about different stuff all the time I mean, the the idea of I think the idea of the crunch around Christmas is going to be crazy what target and Walmart I think they're hiring probably 100,000 people each I think that's what I heard but they're gonna need it because you know that you have I think right now which is I can't remember if it's the largest part of the second largest port right outside of La there you know, like Long Beach whatever, it's you know, there's all kinds if you look at a map, you'll see all kinds of ships just just sort of waiting outside that port to drop off cargo so supply chain issues are a really big deal right now and it's real.
Jermal Chandler 17:22
Yeah, you mentioned target hiring a bunch of people in that in how it's all connected you know, you look at the ADP report today, which I think was its highest since June You know, that's that's a good sign going forward, but how much is that really going to impact the things that we're really looking at which is the inflation and the natural gas prices and the stuff that affects average Americans wallets on a day to day basis?
Patrick Martin 17:47
Yeah, man, I mean, these things are hitting our pockets dude, like, we need we gotta we need some action or we got to figure out how to hedge ourselves against these natural gas and air moves and prices and food.
Jermal Chandler 17:59
That's what I think you know, a retail trader has to look at a situation like this and say, okay, you can go to the grocery store and notice that they are you know, there are lots of products off the shelves, you will drive by and you see every other store saying they're hiring, you know, how can someone make money off of that? And I think that's an important question to ask. Well, I agree. So you know, as we're moving into the fourth quarter here and closing out 2021 beyond what we've already talked about, really we've bounced around all over the place. What are you looking for as far as storylines to end the year
Patrick Martin 18:39
well, you know, let's you know, it's we can look back at how our year started I mean, you know, the names that we saw moving early in the year which were you know, some of the game stops and amcs what's going on with that now seems to be a little bit muted. So you know, I you wonder how the what what's going on with the Wall Street bats, bats crowd, it's kind of quiet a downside, but there's still been, you know, evidence shows a large amount of trading from retail traders, we look at one not trades, and we still see that higher, not as high as it was last year, but definitely higher than it's ever been. So that's good. I think a lot of self directed investors continue to trade and, you know, who knows better how to trade your money than us. So I think that's pretty awesome. We see you know, cryptocurrencies are really really taking off and I think they're becoming they're not quite a force to reckon with yet but I don't think they're going away. I think you know, a lot of us myself included, you know, a year or two ago, we're just kind of like, Okay, this thing's gonna fade away, but it's not it's actually a big deal and they're they're, they're becoming more meaningful and they're being they're becoming less volatile. I would say, you know, bitcoins back over 50k. Now, we saw the big, big move in May to the downside that was kind of scary, but they seem to have calmed down in the way and as a matter of fact, our small exchange just created In a cryptocurrency product sec x so all that that's in the nascent stages of being a small exchange product so that's pretty cool you know overall I guess you know we got earnings coming up for the fourth quarter we'll see how things play out we already know earnings aren't going to be what they were a year ago but they're still going to be interesting nonetheless so that's kind of a lot of things I'll be looking at
Patrick Martin 20:22
Yeah, I think you covered it I can't really think of anything else. I have a theory it's completely unfounded by any technical analysis but this was a summer art you know our first summer you know reopening and everybody was out and about like you said catching up on life. I do think that when we retreat back inside for the winter I sense you know a lot of fatigue from activities and everything I think there will be a return to the okay let me hop on just see what the stock market is doing nothing else to do stay inside it's just a complete you know shot in the dark but I think there will be people that will revert to that stay at home mentality of just kind of make money my own way
Jermal Chandler 21:05
I think it's entirely possible and when they do you know tasty works is ready tastytrade is ready. I'm ready I'll be on engineering and trade talking to the people let's go man.
Patrick Martin 21:16
Yeah, so perfect timing I want you to replug your your new show and then you know, signing off with whatever else you want to close with.
Jermal Chandler 21:25
My name is Jermal Chandler and you can check me out on engineering the trade every day at 130 Central 230 Eastern come over and see how we look at things
Patrick Martin 21:36
couldn't have said or couldn't have said it any better myself. Jermal Chandler thanks for hopping on again. Let's try to not make it you know an entire season before you know before we chat again next time.
Jermal Chandler 21:48
Absolutely my friend Always a pleasure to talk to you and can't wait till the next time.
Patrick Martin 21:53
And best of luck to your kids. You sweet sixteens pitch you know baseball football Yeah, you guys got it all over there.
Jermal Chandler 22:02
No doubt Yeah, we definitely stay busy but some way to live life in my opinion.
Patrick Martin 22:07
There we go. Love it. Cheers, Jermal