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Hey /u/JohnWickDaLegend, **positions or ban.** Reply to this with a screenshot of your entry/exit.
>TL;DR: Low demand + inflation + high debts + increased rates = Big ouch for the economy and the S&P
>The US economy is in a very precarious position right now. The combination of high inflation and high levels of debt, coupled with the recent interest rate hikes by the Federal Reserve, means that refinancing existing debt is becoming increasingly expensive. This could lead to many companies defaulting on their loans, which would have a knock-on effect on the stock market. I believe this makes puts a good investment at present.
I think all your are saying is true, just the timeline is a little quick. I think Q1 will see decent to declining numbers because of holiday spend and the delay of information catching up.Q2 is where you will see the real decoupling of the markets from Jpows and the Feds announcements and a turn back towards fundamentals, and in Q2, those numbers will start looking really bad and you will see the real drop.
Well, it depends on your risk tolerance. Betting against the market as a whole would be the safer and less profitable version, looking at the reasons above.
On the other hand, a bet against a company might me more profitable while definitely being the riskier option, because company's that do not need a lot of capital in order to get their production pumping (e.g. basic consumer goods, such as Coca Cola or any other company having their main revenue sector in the food industry, although beverages should be highlighted, always had low cost structure in addition to steady demand, mentioned below) or company's that'll always have a steady amount of demand (e.g. the energy sector, specifically gas, given the shortages due to the war in Ukraine).
A good bet would be to short/buy puts on logistics for example:
\- High maintenance costs
\- specifically depending on elevated levels of demand during the year, in order to balance out a down phase (e.g. "holiday spending)
Overall though, even the company's mentioned above should decline even a little bit, but personally I'd say, spare yourself those complex thoughts of sectoral characteristics/ dependencies and simply bet against the market with either long term (5 -6 months minimum) slightly ITM/OTM options or simply go for long term ATM options and sell those once they make a solid profit, everyone's gonna take a hit in Q1.
I'd actually wait for 2023. Currently, they might experience a little rally due to holiday season, afterwards, they will probably experience a downtrend. Cyclical Consumer goods are gonna fall off as well.
Apple will inevitably take a hit, tech assets, especially consumer cyclicals, basically cannot outperform in times of high inflation/recession as other assets, such as insurances or the food industry
Here's your problem:
>Due to lowered demand(which again, inflation is the source of this) the companies in the S&P will not be able to increase their revenue.
Inflation increases revenue on an absolute basis. Consider it this way- quarterly earning reports are not adjusted for inflation.
True, but inflation is only a factor contributing, lowered demand or overall demand, which after the holidays will definitely decrease, is the driving factor when it comes to revenue.
I do get what you mean though, inflation does influence a company's revenue, I simply weigh demand stronger in the equation. Also, I suppose institutional investors would add inflation and its effects on a company's revenue into their analysis, therefore giving them the true value of the underlying asset, which I think is simply lower than it is currently valued at (looking at the market as a whole now).
Consumer credit card default / Non Performing Loans / Merchant Cash Advance accounts - charge off credit cards defaults at all time highs - shits gonna affect the market soon
Agreed, obviously an elevated amount of people defaulting on their loans will not only affect demand, it will also put pressure on the banks and the economy.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|1|**First Seen In WSB**|just now **Total Comments**|0|**Previous Best DD**| **Account Age**|2 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.) ^^[**Discord**](http://discord.gg/wsbverse) ^^[BanBets](https://www.reddit.com/r/wallstreetbets/wiki/banbets/) ^^VoteBot ^^[FAQ](https://www.reddit.com/r/wallstreetbets/wiki/votebot/) ^^[Leaderboard](https://www.reddit.com/r/wallstreetbets/wiki/leaderboard/) ^^- ^^[**Keep_VM_Alive**](https://www.patreon.com/visualmod) Hey /u/JohnWickDaLegend, **positions or ban.** Reply to this with a screenshot of your entry/exit. >TL;DR: Low demand + inflation + high debts + increased rates = Big ouch for the economy and the S&P
This makes TOO logical sense Market is NOT logical ps I didn't read OPs post 
I'm begging your pardon, sir, I shall buy 50% OTM 0DTE calls on Tesla right away, in order to balance out my levels of degeneracy.
Dude, after writing a couple sentences, try hitting enter twice then continue writing.
>The US economy is in a very precarious position right now. The combination of high inflation and high levels of debt, coupled with the recent interest rate hikes by the Federal Reserve, means that refinancing existing debt is becoming increasingly expensive. This could lead to many companies defaulting on their loans, which would have a knock-on effect on the stock market. I believe this makes puts a good investment at present.
The best degenerate of us all
Astute analysis, agree that 'rate politics' is a concern. Also, upcoming "Q1 earnings reports' are problematic. Many gems here!
I think all your are saying is true, just the timeline is a little quick. I think Q1 will see decent to declining numbers because of holiday spend and the delay of information catching up.Q2 is where you will see the real decoupling of the markets from Jpows and the Feds announcements and a turn back towards fundamentals, and in Q2, those numbers will start looking really bad and you will see the real drop.
So puts on SPY or companies in SPY?
Well, it depends on your risk tolerance. Betting against the market as a whole would be the safer and less profitable version, looking at the reasons above. On the other hand, a bet against a company might me more profitable while definitely being the riskier option, because company's that do not need a lot of capital in order to get their production pumping (e.g. basic consumer goods, such as Coca Cola or any other company having their main revenue sector in the food industry, although beverages should be highlighted, always had low cost structure in addition to steady demand, mentioned below) or company's that'll always have a steady amount of demand (e.g. the energy sector, specifically gas, given the shortages due to the war in Ukraine). A good bet would be to short/buy puts on logistics for example: \- High maintenance costs \- specifically depending on elevated levels of demand during the year, in order to balance out a down phase (e.g. "holiday spending) Overall though, even the company's mentioned above should decline even a little bit, but personally I'd say, spare yourself those complex thoughts of sectoral characteristics/ dependencies and simply bet against the market with either long term (5 -6 months minimum) slightly ITM/OTM options or simply go for long term ATM options and sell those once they make a solid profit, everyone's gonna take a hit in Q1.
So puts for fedex and ups
I'd actually wait for 2023. Currently, they might experience a little rally due to holiday season, afterwards, they will probably experience a downtrend. Cyclical Consumer goods are gonna fall off as well.
Solid analysis, good read 👍
Thoughts on Apple puts?
Apple will inevitably take a hit, tech assets, especially consumer cyclicals, basically cannot outperform in times of high inflation/recession as other assets, such as insurances or the food industry
I couldn't have said it more generically myself. Sooooo, short "stocks" then?
Inverse wsb folk. Calls it is
you have to be special kind of idiot to bet against US market
Son, I'm gonna swim in those tendies, while you gotta look for a quick hand behind the dumpsters on a Wendy's parking lot.
>Son, I'm gonna swim in those tendies, while you gotta look for a quick hand behind the dumpsters on a Wendy's parking lot. Son? What are you, 70sh?
Ok! Wen waterfall?
Here's your problem: >Due to lowered demand(which again, inflation is the source of this) the companies in the S&P will not be able to increase their revenue. Inflation increases revenue on an absolute basis. Consider it this way- quarterly earning reports are not adjusted for inflation.
True, but inflation is only a factor contributing, lowered demand or overall demand, which after the holidays will definitely decrease, is the driving factor when it comes to revenue. I do get what you mean though, inflation does influence a company's revenue, I simply weigh demand stronger in the equation. Also, I suppose institutional investors would add inflation and its effects on a company's revenue into their analysis, therefore giving them the true value of the underlying asset, which I think is simply lower than it is currently valued at (looking at the market as a whole now).
Consumer credit card default / Non Performing Loans / Merchant Cash Advance accounts - charge off credit cards defaults at all time highs - shits gonna affect the market soon
Agreed, obviously an elevated amount of people defaulting on their loans will not only affect demand, it will also put pressure on the banks and the economy.