Sup my favorite casino goers,
Throwaway account because reasons.
My positions are currently as follows:
5x SPY Put @ 540 January 17, 2025
10x QQQ Put @ 450 January 17, 2025
10x SPY Put @ 500 June 20, 2025
10x Spy Put @ 450 December 19, 2025
I believe that the US Labor market and US consumer are currently much weaker than what is being indicated by the media/FEDs at this time. Interest rates are going to fall very rapidly over the next year in attempt to prop up the labor market, and influence greater consumer credit spending. I do not believe this will work because of the present state of the average US consumer. Lowering interest rates can't help consumers who already don't have any sheckles.
The American consumer is completely broke and over levered, and additionally we are trending towards a tightening labor market, as corporations have been laying off more frequently due to over hiring during the pandemic, job openings are trending down, and unemployment is on the rise. I believe in the next 12-24 months we are going to bear witness to a Consumer Led Recession. For those of you that have made it this far, allow me to explain with some graphs.
Saving Rates
"Personal saving is equal to personal income less personal outlays and personal taxes; it may generally be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences"
US savings rates are at the same levels we experienced in the 2008 financial crisis, currently last reported at 2.9%. This means the American consumer has only been able to save 2.9% of their earnings towards their retirement, or to buy houses. In the second graph we can see this is trending downwards even still since COVID, as wages have not kept up with the high levels of inflation.
YoY Household Expenditure
Year-over-year household expenditures have up-ticked dramatically since the COVID bucks were printed. The average increase YoY change in Household Expenditures has historically been 3.074% since 1984 (close the average inflation rate in the US of 3.25% since 1973). The problem here arises in the second picture below. Household expenditures rose by 8.361% in 2021 and 8.276% in 2022, which is back-to-back years outside of 1 standard deviation away from the mean, highlighted as 5.693%. Tomorrow at 10:00 AM the Bureau of Labor Statistics will release their 2023 Household Expenditures data, it would not be shocking that 2023 was another above-average year, as the average inflation rate for that year was 4.1%.
Unemployment
Not much to say here, except the graph has begun moving upwards in the last 12-months.
Job Openings
Not much to say here, other than again Job Openings are trending downwards, albeit still above the average Job Openings rate (orange).
Delinquency Rates Consumer Loans
Here's where we get interesting again, Consumer Loan Delinquency rates are now currently above levels in 2011 and have continued to trend upwards in our heightened interest rate environment. This may infer two things: consumers have not changed their spending habits, or have become over levered. Orange line indicates the average since 1987.
Delinquency Rates Credit Cards
Delinquency rates on Credit cards are saying the exact same thing as consumer loans. Trending upwards, and above levels since 2011 in the era of low interest rates and lessened inflation.
What I WILL say is that delinquencies on mortgages have not risen much, but that is an indicator than I am aggressively watching QoQ.
US Deposits
Deposits on checking, time and savings accounts for households are all going down and are currently all BELOW levels in 2019. This is indicating that consumers are currently being forced to draw on their savings previously established from the pandemic to survive, or keep up with their perceived levels of consumer spending. This is also inline with what you can hear from retailers, like Amazon, Walmart or fast-food businesses. Customers are becoming more "value-orientated", as they look for ways for their dollars to go further. https://www.nytimes.com/2024/08/07/business/economy/recession-consumer-spending.html is a great read from multiple earnings calls that highlight this.
All data I've presented is publicly available from the US FED or BLS. DYOD.
tl;dr US Consumer is broke. GDP may continue to grow but at a snails pace since consumers have no money to spend lavishly. Savings are going down and delinquencies are going up. Large credit risk, liquidity risks, and geopolitical risks are present.
Hedge your bets gentlemen.
Consumers are broke, and maybe your SPY/QQQ Calls wont print
byu/No_Alps5102 inwallstreetbets
Posted by No_Alps5102
33 Comments
Thank you for this inverse wsb post OP
alot of people are predicting a recession within the next 5 to 12 months some as early as 3 motnhs from now so next year
honestly betting on something like this is a gamble but a major one at that but i think its possible and will likley happen all the indicators pretty much say it wil
despite what the fed and media is saying
The market doesn’t make sense for a while now.
Nobody wanted to acknowledge textbook recession with two negative quarters of negative growth. “Further analyses where required”, until numbers got in good shape. What do you think the market would look like if recession was formally acknowledged?
Numbers aren’t looking great, yet market doesn’t care. Why? Because this casino attracts money and everybody is pouring money into it, because they don’t know where else to place it. So the price goes up.
Every day someone works for a paycheck, they put some money into their pension fund and a part of that pension money ends up here.
All numbers are based on forward guidance, and market behaves like there’s no limit to growth each year.
Inflation target hasn’t been reached, but we got a rate cut that could increase inflation again.
Nobody wants to say the emperor has no clothes, but I was surprised to see JP Morgans target for S&P. They were one of very few to correctly guess .50 points reduction, and if they’re right about this one too, we’re in for turbulent times before the end of year.
🌈🐻
Market is not the economy anymore, its riches bank accounts
Check out home prices in FL on zillow. Seeliing ALOT of price reductions. Saw a home in Palm Beach that reduced their price by $5,000,000
Consumer confidence data was really bad. NVDA CEO stops offloading almost a billion dollars worth of stock and it moonshots 5%+ and SPY does a V shape recovery. SPY has been making new ATHs almost everyday now, with V shape recoveries to match.
The forces that be are clearly manipulating the market. I wonder how much longer they can do it. Probably forever, tbh.
I’m not saying you’re wrong, but being too early is not much different. I’d buy puts expiring much later.
Shit I think I’m a gay bear now
I agree with you 100% and I’d add multiple geopolitical crises that we are heading towards. However, politicians, media, the FED, and the like are known to find a way to portray everything as “we are doing great” and keeping the market trending up. I’m thinking about buying some cheap put butterflies but I’m not ready to buy expensive put LEAPS. I’d rather play the down market in the moment instead of parking a lot of cash in LEAPS. Selling call spreads is another strategy I’m playing with
Hey man, i ordered my meal to go.
RemindMe! 90 days
Great explanation!! I may roll over my puts further in the expiration date and join you for 2025
I think there’s a couple key things you neglected to help make your bear case:
**1. SPY and QQQ Valuations.** In all the charts you posted, I was hoping to see charts showing the sky-high valuations of the overall S&P500 (CAPE Ratio, Buffett Indicator) as well as the big companies within it (such as NVDA, AAPL, MSFT, GOOG, AMZN, META, TSLA, LLY, COST, WMT, among others) that have lead it up – the companies that actually make up the SPY and QQQ that you are buying puts on. Show that your thesis isn’t already priced into stocks.
**2. Tie your macro thesis into how it affects the companies in SPY and QQQ.** Tie your thesis of the decline in the US Labor market and US consumer to what impact you think it would have on the earnings of the mega-cap companies that are the big weights in the SPY and QQQ. Otherwise, you’re just ranting about lower and middle class people struggling, while the top 500 companies that make up the SPY may not give a shit and continue to have great earnings on their mostly business-to-business sales.
Otherwise, good effort.
You don’t mention the upcoming elections — not a factor?
Haha, they are going to stimulate the shit out of the economy by March, mark my words!
RemindMe! 6 months
This has me horny but I was already horny cuz I’m a 🐻
Can see hedging with the SPY 540 and maybe the 500. But 450 would be a huge correction, that’s like 21%.
There have been 3 -20% years for the S&P since 1940 (83 years)
1974 @ -26%
2002 @ -22%
2008 @ -37%
The following years were
1975 @ +37%
2003 @ +29%
2009 @ +26% (followed by 2010 @ +15%, nine up years in a row)
Hoping those don’t print, but if they do, hoping I have enough money to buy hard.
I think this is pretty correct, and I’ve felt that way for about 9 months. Also, my game now is to try and stuff as much cash in a pillowcase as possible while markets are stupid hot and not just sit on the sidelines for a buying opportunity. If and when the bottom drops out, it won’t completely erase the gains I’ve made along the way. At least, that’s what I’m telling myself. Cheers
12 more months of rip your face off rally confirmed 
So my SPY 11/15 575 calls are cooked. 
https://preview.redd.it/9b01rwtopvqd1.jpeg?width=640&format=pjpg&auto=webp&s=893eefe1979e4f7522d4143cbf30a38be6f97b84
Ok calls it is
People are broke, but not the whales. Whales will pump bags to lure in the shrimp
this stuff doesn’t work when the rich are getting 5% risk free and the poor are paying 20% to borrow, it’s a tale of two economies now
Throwaway account because reasons?
Nah bro, throwaway account because you’re afraid you would look like a freaking clown.
If you talk about individual stocks that mostly tie to spendings, fair enough, but overall the market will continue to go up because the big boys need it to go up in the long term as history has shown again again and again.
I work in the tech, e-commerce focused industry and see an overall trend of average purchase value decline as well as larger items being deleted from the checkout before purchase. I’ve also noted myself always thinking twice before making frugal purchases and ending up not buying a bunch of stuff I’d usually do. Fuel is cheaper but the recession has been here for a while, it might take longer until private, small to mid business bills and debt reached the breaking point and a sharper decline is seen
Nice job putting this all together. Really great work.
My take is that these trends are why they lowered rates by 50 basis points and it seems certain that there will be some sort of economic slowdown over the next few quarters. But, it’s far from clear that it will be an actual recession, though I suppose that depends to an extent on definitions. If you’re the one that lost his job, it’s a recession for you even if your neighbors are all doing fine.
There’s no catalyst though, is the thing. So it doesn’t seem like a real crash is on the way. There’s some possibility that the data center spending by Microsoft, Amazon, Google, etc. is a bubble and I would say it’s very possible, maybe even likely, that they are overbuilding to an extent. But those dollars are in the hundreds of billions, which is significant, but a slowdown in that spend won’t crash the economy.
Global financial leaders have made Recessions no longer possible, they will never say it and admit it. If china can fudge numbers, so can the rest of the world. good bye puts. Stocks only go up.
I commend you for picking DTEs that actually give you breathing room. Far too often people on here will post some valid macro analysis only to end it with a position expiring in a week or two. If you’re new to trading, take notes because this is how it’s done. When you are doing anything macro you must pick DTEs wisely. Being right is only one part of the equation. It’s a completely different (and in my opinion much more difficult) game. I personally never trade anything macro, in fact I have a calendar with a bunch of days blocked off with a message that says “too much news to trade”. JOLTs, fed meetings ofc, inflation data, stuff like that. I always feel more clever when I try and predict macro shit, but I make way more money just sticking to the chart, trading 7-14 DTE debit verticals and avoiding big news days.
One random idea for another play based off your thesis: IWM calls. If interest rates do plummet at the rate you suggest (or even if the market starts suspecting it), small caps will rally like crazy. IWM is slept on a lot but it’s really a great way to play rate bets. Very liquid and moves like a motherfucker the instant rate cut expectations change.
I did hedge but my puts knocked out so I’m just poor now, I guess.
But you know… Europe is in shit(Germany industrial PMI has been declining for 2 years now) Asia is in a shit… So it might as well be bullish at this point. Who cares about numbers anyway. My 0 is a new million!
Yeah…. you’re fucked lol
Everyone is bearish for the next year so I’m be bullish. We been on a recession but every time I go out, I scratch my head saying what recession? I truly believe the federal reserve is good at playing wack a mole on financial stress in the system. If anything I’m just concerned war and Taiwan tension.
market for sure going green now. spy 600.