Yah sorry i forgot to thank you for that. 😅 Thank you again sir. Have a great April 2023. 😉

Yah i totally forgot we have a new bull market so who cares about valuations and what regime we are in. It doesnt matter! 😂

But interest rates were 0% at that time. I doubt he would have ever thought that we would be here at 5% in 2023.

Well its been the trend since last yr.Tuesday rug pulls and then buy on thursday or friday.

Make sure you diversify it across jd and baba just like burry did.

Crush the SPY ballon man.😂

I think you don't even read newsletter these days and i mean its not really your fault. What i said was Wyckoff like structure i.e. the bottoming pattern in Q1 where the low of Jan will be same to as March but the diff will be not much. In case you have forgotten its called selling climax in Jan and DT/BT in march. This is called Q1 disaster theory where low PE multiple will meet EPS 210-200.

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Now this is what i said back in may - June. So i will not change even a thing from this just because you want me to do a new analysis. If i be wrong so i be wrong. Why in the world should i change anything i said back from may-june. I admitted i was wrong about Jan high Vix in Ws-s02e06. Now lets see we get a Q1 disaster or not. If i will be wrong so i be wrong. Nowhere i have said i am changing my prediction to 1H 2023 and why should i. I am just trying to avoid being flip flopper. That's it!

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Thank you

Have a nice day!

All the best for today's session.

Link to the video :

https://youtu.be/Z4jmfSePM3c

I used to trade crypto. Longed the 30k dip and then shorted 60k. And then utilized the profits to long at 33-34k again and then shorted the 48k. Then like a poker addict i went all in at 33-34k hoping for a 100k "The dream". But got rekt holding Elon bags.

Then i switched to stock market. Rode all the rally up with crypto stocks and other high betas and then bought the inverse etf for the way down. Rinse and repeat until nov 2nd week.

Then there were many naked option plays here in my country nifty stock market as an arbitrage for usa-india play using timezone. Also tried to play legendary 7yr shmita cycle and Yen carry trade.

Wbu sir ? What were your best plays?

Sure i would definitely love to.

And yah i totally get it. It's about ideas and not who knows more and then its rest upto the markets to decide whether it agrees or not.

It's been a pleasure to talk you sir. Thank you. ✌️

Wow 20yrs. I cannot even imagine the craziness you went through dotcom when Erp went below 0 towards negative.

And yes i agree. Market can remain irrational. I thought the top in SPX was done around $4k back in Nov. But god it went sideways and then to $4.2k. Lot of my friends who trusted on my Jan high Vix got rekt coz they had puts not etfs like me. I still feel sad because of it.

And yah you're right. Ukraine war just dragged the inflation higher due to supply shocks. Otherwise fed funds of 3.4% would have been sufficient enough with QT. Enter Zoltan pozsar. Had i not come across his newsletters about structural inflation due to multipolar world i would have been left holding bonds. He was the only one suggested back in summer that we need fed funds at 5-6% and mortgage loans 9-10% and hold them for entirety of 2023.

Just like you, i did research as well back in summer. I was putting like over 10+hrs and learning all sorts of stuff. Everything was new to me at that time considering i had no economic background. I had to learn from watching podcasts and interviews heck even news and process how can i use this or that. And then every single sat-sun with a can of beer i was writing these crazy eternity long letters so that later i can come back and check what was my thought process.

And yah i totally get why you thought SPX $3200 looked more likely at that time around in sept-oct.

So yes i kinda get what you're trying to teach me. There's a high possibility that $3200 aka Q1 disaster does not happen and we could pretty much rally up here. So like whats my backup plan in case this doesn't play out. But i am being arrogant like nah no back up. It's like knowing there's a possibility you're car could end up in accident somewhere in the future but still not trying to get a car insurance.

Tbh i don't know what to do. I will think about it and write such newsletter.

So thank you for educating me and giving your precious time. And yes this was all helpful sir. 😃

Have a great week!

p.s. Why do i feel like i had this conversation with you before or maybe its just a Dejavu.

Sir in all of this part 1, part 2 , part 3 series why do you think that i just randomly made things up like 1-2 months ago and said SPX will go $3200. This thesis is basically my stagflationary thesis back from summer of 2022 when i said :

March 16 bottom -> April top -> June 15 bottom ( turned out to be June 16 swiss franc bottom ) -> Aug 15/16 top ( nailed this one ) -> Oct 2nd week bottom -> Nov 2nd week top ([Nov 4th week) and then we have a Q1 disaster where Jan will be high Vix and bottom by March. It turned out to be a giant mistake in my calculations but i am still optimistic for some kind of lower lows in Q1.

That's it. Now fundamentally you can debate with me no this has changed or that. Or how Fed will never let markets crash. Or how there are sufficient bank reserves. I totally get it. I might agree with most of your pts just because i am not really from the economics side. I am just a simple Flutter developer who just fell in love with stocks and crypto. I never read a book on economics nor did i learned any trading skills although i may have taken just one class on Ecom but i totally fell asleep. So of course you know better than me.

Everything i learned about finance is from watching interviews of Peter lynch, Warren buffet, Soros, Napier, Minerd, Drunckenmiller, Templeton, Eisman, Grantham, Dalio, Chanos, Ichan, Tepper, Paulson, PTJ, Ackman, Einhorn and so many other legendary investors. I even made a compilation video of them speaking about economic slowdown and how everyone should just follow it instead of watching some Yt or Twitter expert or anyone else.

Legendary Investors

So whenever i say Q1 disaster its just because i am biased. I cannot change my stance because that would be a huge disrespect to all of the people who have faithfully watched this series since last yr. So if i am wrong so i be wrong but i will try everything in my power to atleast make an attempt for lower lows in Q1 itself. No matter how bad the odds are. My recession playbook will be shared when i see lower lows in SPX. Only then will i decide should we go to ATH and then crash -50% with stag route or should we go deflationary bust route to $2500 and lower. Right now if you ask me i will take the stag route to S&P5000 and then crash -50% for recession 2024 but again before it happens i want Q1 disaster.

So good luck to you sir! Have a great trading week. Regards Desmond

You're welcome sir.

Well bond yields in Japan go up in two ways.

-> Manually : Boj will widen the gap from 50bps to 75bps on 10yr JGB. Still doing QE+ i.e. buying bonds to keep it from rising further above 75bps.

-> Automatically : Boj will remove Ycc causing 10yr JGB to rise on its own and let free markets decide. Boj will stop their QE+ now.

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Note : YCC began in 2016. The objective was to make inflation go over 2% and not casue a deflationary bust. So they started infinite money printer. Now things have changed. Japan has inflation. So maybe they give up on Ycc but it won't be that easily considering its Ueda-san soon in the helm.

Wen will the "Dragon breathing fire" pattern start.😩

Glad you enjoyed it!

Thanks man.✌

Thanks man. Sorry i don't know the guy. But ofc i know about this. I was the one who started invalidation cases saying "Disinflation trade of Stagflation" leads to ATH in no time. S&P5000 here we come and then a whooping -50% drop to $2500.🤣

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But there is a huge problem with this. Major component of CPI is housing which wont come down in 1H 2023. It's in the second half it can fall off the cliff if inflation isn't sticky. That means inflation can potentially stay here or start its mini uptrend in 1H 23. This will panic Fed and force them to go 5.5%. This is what i am trading. A 5.5% rates with 100bps Erp ( currently 15bps ) = PE 15-16. Current E = 225. This will mean testing of Oct lows.

>Thinking of getting some VIX 50 calls for May….OI seems huge on that.

That is because of 50 cents. He is predicting Volmageddon in 1H 2023 just like in Feb 2018 he made $250m+ in Vix 50+ trade.

Sorry for giving you a response you don't wanna hear. I like the idea of you destroying my model and banker's model as well which is used by pretty much everyone on street by saying what if the model is wrong. I like this approach.

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So let me first explain the chart you sent me for PE ratio. First pt that is a multpl model. Meaning it does not align with bankers/ hfs and inst model. Your chart says PE ratio must be at 22-23x. But bankers model says it's at 18 PE. This is the first point. I am not trying to throw a shade. It's just a misconception even i made during my beginning yrs. Second pt let's say you really wanna dig that multpl model upside and down. So the way i look at is.

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From 1900 - 1990. PE ratio used to trade in range 10-20 range. So anytime you want to assess what might be the appropriate PE to pay. You would simply subtract a High PE - Current inflation rate. So let's say you're in 1974 where inflation went 12%. PE you would pay acc to multpl model is basically a High PE over 90yrs - Inflation rate. Therefore PE was 8 in 1974. Same was the case in 1980 when 14.x% inflation and 6.y PE. Okay so now we understood stagflationary decade,

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Let's understand supply shock decade i.e. WW1 and WW2.

WW2 : High PE : 22 and inflation rate 3%. So yah total 25 seems fine. But then due to supply shocks inflation came 20%. Now the PE just got cut in half to 10. And then when later inflation came down to below -ve PE ratio fell as well. Now this is an anomaly compared to stagflation of 70s. In that period of stagflation low PE with high inflation rate was the bottom. But in post Ww2 unless the inflation went -ve we did not achieved bottom.

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WW1 : Around 1915, High PE : 11 and inflation -1%. Fed started lowering rates and basically printing money for war time financing. Inflation soared to 20% and again PE got chopped in half to around 6. Markets then went sideways for yrs and did no bottomed until inflation went below -ve and Fed had to cut rates again.

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I think there is a lot more factors involved here. 10yr bond yields and interest rate matter as well. I already did this analysis in this season.

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https://docs.google.com/document/d/1tAX3x-RJTPdKmJ2C7D9wgjTLhDvfAUgIfbhCb0UxGmM/edit?usp=sharing

You can read S02E03 where i explained these two periods in depth.

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So what can we take away from it is. Inflation usually comes in cycle and when it appears market usually go sideways and does not go for ATH if it is supply shock driven and go ATH but then crashes in stagflationary environment. Reason being the debt/gdp ratio. But you need to remember one important thing. This is not 70's, 40s or 20s where manufacturing came and saved us with their earnings boost. This is tech driven markets and it does not like rates at 5% meanwhile inflation at 5% as well. Meaning Fed will push towards crushing inflation and bringing it back below 2% even if it means causing recession.

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So lets do modern 1990s- 2010 analysis. High PE of 25 and low of 15 again combined with low inflation of 2% was the perfect recipe for economic boom. But whenever PE went above 30 it was a bubble. So Fed starts hiking again to stop people animal spirits behavior. PE came down to 25 and also inflation headed down. But soon companies made no earnings. It was just like a crypto bubble. So the yields of tech stocks fell, Erp exploded higher coz why shouldn't i buy bonds. Hence PE exploded higher as well. Hence that's why it was the bottom. Same goes for 2008 as well. Rise in Erp with banks failing, companies having no yields, bond looking more juicy all led to PE exploding higher just before recession.

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So now it's upto you to decide which story will play out this time around. I personally like the idea of lost decade i.e. a sideways markets. Play tactically and you will make money. If you're a long term investor you wait for that pain in markets around 2023-24 moments before recession and by then just simply be in bonds and eat yields. As a short term investor it's tricky. You have to use tactical strategies and hope it works out using technical + macro env + fundamentals. You could hit or miss it. It's a 50-50.

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So yes i agree my model is flawed otherwise everybody can make money. But one thing is certain you're not having a new bull market. It's gonna be a sideways chop for a very long time atleast till 2024-25 minimum or it just crashes -50% and make us all bears happy. But seeing PE ratio of russell at 45 and nasdaq at 25 makes me kinda optimistic for crash.

>As your friend Steve said " Paradigm shift takes time. People don't easily give up on their principles of investing " Hence i believe that one day market will come up to their senses that rates are actually at 5% (could go 6% if sticky inflation theory is correct) not 0%. That means something for equities valuations.

Using my indicator on myself Dr Burry. 😂

I don't really use it on daily tf. I just use it on weekly time frame and waiting for when US10 and SPX to go from +0.66 to -0.5 or below. That will mean US10 i.e. bond price and SPX i.e stock price will have -ve correlation somewhere down the line. So if inflation falls off the cliff below 4% in back half of 2023 bond prices will go up i.e. yields down and stock prices will go down.

But yah i think you're right. This was the reason on daily tf why bond prices fell but stocks didn't coz it became -ve correlated by going from +0.5 or higher to -0.4. Thanks for giving me a lesson man. ✌

Note : It will go up on +ve correlation on daily time frame soon.😜

Yah man there is a recession lurking around which will get priced in stock market in 2023-24. Timing it will be so hard. No machine or technical analysis can ever tell you that coz then otherwise everybody will be so rich.

As for your arguments yah i completely agree with you. Also you can add refinancing in that list. A lot of companies financed in low interest rate so how deep the rabbit hole runs will all shall be revealed by 2024. Don't forget the Fed selling MBS and housing market getting weak by 2024.