Thread by @QTRResearch

WHY WE'RE FUCKED, 2023 EDITION: While the market had a nice *hour* there to end '22 (golf clap), once tax loss selling dried up & people tried to get ahead of the new year bounce - and while it may continue next week - I don't see markets any less volatile in 23 (1/x)

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The funny thing is that mathematics are a certainty - but when rates are at 0%, that certainty is temporarily cast aside while the QE money printer usurps the place of economic reality. This means that all stocks - including flaming bags of dog shit - move higher. (2/x)

Access to cheap money is what allows zombie co's to continue "doing business", herein after referred to as "operating at a perverse loss", or as my friend would say "groping for growth" (overpaying for M&A, etc.) under the guise of actual productivity. (3/x)

It then becomes free to borrow money which the market can use to defile the corpse of a dead company a million times over. Even funnier is that in 2022, this game came to a screeching halt for the first time in <checks calendar>...holy fuck, like 15 years. (4/x).

We have hiked rates at the fastest pace in recent history - and the market still hasn't felt the worst of it. The cab of the 18 wheeler that is the economy is just starting to smash into the wall of rate hikes now (they're on a lag). The trailer (2023) will follow. (5/x)

Compounding that these effects are on a lag, enough to confuse "experts" like Tom Lee (5,100 target on the S&P for 2022) & give false hope to lobotomized automatons who have been psychologically conditioned for 15 yrs to buy every dip (see: Wood, Catherine, pgs. 1 - ∞)... (6/x)

...is the idea a soft landing is possible with record debt. The aforementioned maths are put back into place during a hiking phase - like cops breaking up a frat party - instantly shocking mkts - first by a little, slowly (now) then by a lot, quickly (coming in 23 IMO). (7/x)

Also "faking" the idea that we're in the midst of a soft landing have been noxious financial shenanigans like doubling up on car loans, draining all of our savings and taking on nosebleed debt levels. The American consumer is officially tapped out... (8/x) quoththeraven.substack.com/p/tapped-out

On top of this is the false notion that if the market wrecks, the Fed can ride to the rescue immediately, but as my friend @WallStCynic points out, the lag goes for hiking AND easing. He notes Lehman went tits up well *after* the Fed started easing Again, that pesky lag. (9/x).

Compounding what can only be described as a universal misunderstanding of the plumbing of the system is the fact that the U.S. now faces geopolitical and global economic headwinds the likes of which it has never faced before. (10/x)

The true royal fuck deluxe on rye could still be lying in wait - it appears (clearer by the day) that the BRICS nations are going to challenge the U.S. dollar and the West's financial system in general. (11/x)

This may have been in the works with China and Russia de-dollarizing over the last decade but has likely been sped way up by sanctions the West has put on Russia over the Ukraine war. (12/x)

This matters because a potential challenge to the U.S. dollar as global reserve currency (which I believe will come in the form of petrogold or gold back currencies from Saudis, Russia, China, et. al) would instantly give shaky knees to our one remaining "tool" to try... (13/x)

...and "fake fix" our economy as we've done over the last 40 years - by printing money. Our reliance on being able to export dollars is the sole key pillar maintaining our quality of life in the U.S. - and it's at major risk. Such a challenge would also... (14/x)

...likely result in a Cold (or Hot) War, plans for which appear to be more and more of a reality by the day, as China taunts us with Taiwan, helps enable Russia's economy and the U.S. continues to support Ukraine and NATO (15/x). quoththeraven.substack.com/p/the-new-cold…

In short, the stage is set for an absolutely unprecedented coming year(s). Despite the fact that U.S. stocks plunged in 22, they remain about 40% above historical recession/bear mkt means and basically where they were pre-Covid. (16/x)

I'm hopeful that none of these worst case scenarios take place, but I'm also a realist. Media is rolling out the same people who got literally everything wrong about 2022 to tell us that 2023 is going to be fine. But the problem is... (17/x)

...that just *wishing* something will happen based on the alternate reality of QE-days is a psychological fool's errand. The playing field has shifted monstrously and still, no one even notices. (18/x)

I hope I'm wrong, but as @KennyPolcari would say "it's just math". In the case of the BRICS nations challenging the U.S., it's just common sense. It's literally happening before our eyes in headlines every day. (19/end)

More thoughts here: quoththeraven.substack.com