system
A chat on subreddit /r/wallstreetbets
human
ElI12 

What does this mean
gpt
Okay in plain English :

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Market has went up either due to "January effect" or which some experts of Wallstreet claim is increase in Net liquidity ( Fed Bal sheet - ( Tga + Rrp ) ) which is also called as "Stealth QE" Not my words but from God father of liq i.e. Michael Howell from Cross border capital.

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So Why did net liq went up is the question ?

Well it went up due to Tga drawdown. Check the chart for yourself or my pinned tweet. It went down and down and then

Now it has finally double bottomed and started to creep up again. That means net liquidity will now finally move down which is clearly visible from the net liq chart.

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So what it means for financial markets ?

It means liquidity will now finally come out from the financial markets. Also the stock market technicals looks overbought and the fundamental analysis on SPX is kinda putting a cap on the rally at $4100 due to PE 18 ( 3.5% Rfr + 190-230 bps Erp )  times 225.

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Let's talk CDS :

But the main important thing to observe is CDS. They are seeing some danger even worse than Sept-Oct and that's why it has broken its prev high of 28-30 and is trading at 35. If it breaches 40 it is going to be pain for the bulls.

But boi oh boi you don't want CDS beyond 50. All hell will break loose if it happens. Now what is CDS sensing that we don't. Well it looks like HFs and institutions are either hedging for credit spread blow ups due to Credit downgrade risk or they are seeing something else. Could be Boj abandonment of YCC on 10yr JGB as well. Then there is subprime auto which is contained for now according to the eyes of media.

And then the final death sickle meme if you remember was a "Housing crash" but that will only happen if CDS goes past 50 and then ultimately shoot up to 100. But tbh i don't think its gonna happen that fast. But i could be wrong.

Tldr : Q1 disaster will happen. That i am sure coz i calculated everything back in May-June 2022. You can read the Wall Street newsletter S01E10 and S01E11 for yourself. How bad it could happen. I don't know coz i don't claim to be an expert. I just watch tv shows and animes man. Maybe you should consult some other guys in finance from yt as well or some legendary investors like Burry, Ichan, Howard,  Druncken Miller, Roubini , Napier, Grantham, Dalio. Also ask around why did Tepper switched bullish.

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Invalidation : Powell will be so dovish and push for cutting for rates in back half for 2023 in this coming Fomc. And that will cause expansion in PE multiples. So if earnings hold up at 225 for next quarter earnings estimates which will get priced in early around march we could go back to 20 X 225 and so it happens will also be the day i quit investing and trading and never ever post on Wsb again.