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KobeissiLetter
Posted - March 3, 2026 at 3:42 PM
Saved - March 9, 2026 at 8:37 PM
reSee.it AI Summary
The article offers a detailed, step-by-step framework that outlines a purported pattern in President Trump’s geopolitical and economic confrontations, with Iran as the focal point. It argues that this pattern has shaped investor behavior and market reactions in ways that can be anticipated and potentially exploited by financial strategists. The central claim is that Trump follows a repeatable sequence—beginning with pressure and verbal signaling, moving through strategic positioning, and culminating in negotiated settlements or conditional de-escalations that preserve leverage for future leverage. The piece ties these steps to specific past episodes, including Venezuela, tariffs, and trade talks, and presents a market-focused narrative about how investors can read and respond to the sequence. At the core, the article contends that Trump negotiates through a discernible playbook designed to prod adversaries toward concessions while sustaining the political optics of strength and the economically favorable outcomes of dealmaking. It asserts that the Iran issue, like earlier episodes, began not with an initial strike but with a period of warnings and signals aimed at pressuring the target to concede. The text grounds this claim in examples such as Trump’s public warnings about a “massive Armada” heading to Iran and his exhortations to “make a deal,” which it presents as precursors to the escalation pattern rather than indicators of imminent military action. Step 1 identifies the initial phase as verbal pressure intended to force a deal. The article cites specific social-media posts and public remarks that allegedly press Iran to negotiate under the shadow of a credible threat. Step 2 emphasizes strategic posturing and visible preparations that reinforce credibility without triggering full-scale engagement. The discussion references the deployment of a naval armada and regional alignment signals as evidence of this preparatory phase, along with examples from Venezuela and prior tariff actions that followed similar prelude patterns. Step 3 introduces the moment of a potential “Friday night strike,” a timing device the author argues Trump favors to reduce market disruption by deferring a full market response until after the weekend. The piece enumerates examples of past actions that coincided with late-week timing. When a rapid initial strike fails to secure a deal, Step 4 describes the expansion of risk premia across asset classes as markets price in a longer, more uncertain conflict. The author highlights rapid moves in oil, equities, and other assets to illustrate how markets shift under perceived extended risk, even as the underlying objective remains to pressure for a settlement. Step 5 covers Trump’s alleged use of “forever” war rhetoric as a strategic tease: after initial pressures, he purportedly signals that while he does not seek perpetual conflict, he can sustain it if needed. This is framed as another negotiation tactic designed to compel concessions while preserving leverage. Step 6 describes the market’s pricing-in of a prolonged conflict, with citations to rising Brent crude prices and stock indices that illustrate a shift from initial gains to renewed losses as duration risk and supply-chain concerns gain prominence. The narrative maintains that this stage is deliberately engineered to move markets beyond short-term disruption and toward a more sustained period of volatility. In Step 7, the article notes a tipping point toward conditional de-escalation signals. According to the author, after risk premia have expanded, Trump historically introduces calibrated de-escalation language that signals the possibility of a deal without appearing to retreat. The piece cites examples from prior deals—tariffs with China, a Greenland agreement with the EU, and a trade deal with India—as demonstrations of this pattern, arguing that escalation cycles are often followed by negotiated outcomes framed as strategic victories. Step 8 draws attention to a feedback loop between markets and policy: financial markets themselves influence the negotiation environment, as policy timing is intertwined with energy prices, inflation expectations, and overall investor sentiment. The article emphasizes how elevated energy costs and inflation considerations could affect political optics and electoral dynamics, referencing JP Morgan estimates about potential oil-price shocks from a hypothetical blockade of Hormuz to illustrate the risk-management tension faced by policymakers and markets alike. Step 9 outlines the deal-and-narrative-framing phase. If Iran’s government collapses, the piece argues, the outcome would be framed as a success of the pressure campaign. If not, negotiations would proceed, with agreements typically presenting the escalation as a concession-driven win for the side pressuring for change. The narrative’s emphasis is on the form and timing of such settlements, rather than on the substantive technicalities of the accords themselves. Step 10 describes the final stage: violent repricing followed by a victory lap. The author argues that once a framework for resolution is introduced, markets reprice abruptly as risk premia collapse and positions are unwound, even if the underlying issues remain unresolved. The piece points to historical patterns where equity markets rally when suspensions or framework agreements are announced or when shipping disruptions ease, as evidence of this dramatic repricing dynamic. The article closes by presenting three scenarios for the coming weeks: a temporary escalation with a sharp but brief spike in oil and a rapid reversal; a persistent but controlled escalation with heightened volatility and a delayed resolution; or a broader regional escalation with more severe supply-chain impacts and potential triple-digit oil prices, though the latter is deemed lower probability given the midterm election context. The overarching conclusion is that every conflict involving Trump since his inauguration has allegedly ended in a deal, and that following these patterns and the associated market signals can yield trading opportunities. The authors present their analysis as objective, process-driven, and historically grounded, inviting readers to engage with their premium daily analysis for deeper insights and demonstrations of past performance relative to benchmarks.

@KobeissiLetter - The Kobeissi Letter

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President Trump's CONFLICT Playbook, An Investor's Step-by-Step Guide:

The Iran war is escalating. We have spent the last 12 months analyzing EVERY geopolitical conflict involving President Trump. What's coming next? Here is our CLEAR guide to what is coming next and what it means for investors and financial markets. Before we begin, Bookmark this Article, it will be your guide to the next 2-4 weeks in the market.

On January 17th, we published our first "playbook," which we titled the Tariff Playbook as President Trump ramped up tariff pressures on the European Union amid his push for an acquisition of Greenland. This article ended up predicting the outcome of President Trump's latest tariff war down to the day. So, how did we know?

Since President Trump's inauguration on January 20th, 2025, we have spent hundreds of hours analyzing President Trump's geopolitical and trade war headlines. As a result of our research, we were able to identify a clear pattern in the way President Trump negotiates and exerts pressure on both US enemies and allies when he is attempting to accomplish an economic or military objective.

We utilized this series of pattern recognition throughout 2025 and early-2026 as a core part of our investment strategy. Today, we felt sharing this strategy with X and the world was appropriate. We hope this can serve as your guide to the volatility.

Step #1: Every Conflict Starts In The Same Way:

First, we must look at how the Iran war started. It didn't start with the first strike on Iran on February 28th, it started over 2 months ago. In the lead up to this war, President Trump posted several messages saying "a massive Armada is heading to Iran" and continuously urged Iran to "make a deal."

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The Iran war is the biggest war President Trump has entered in his second term. But, if you really look at the last 6-8 weeks, the strategy President Trump has employed is completely identical to that of his trade wars and even the capture of President Maduro. How so? It's not literally identical as far as US military operations go, but the underlying negotiation tactic is following the historical pattern.

For example, take a look at the post below from November 29th, when President Trump "closed in its entirety" the airspace around Venezuela. Keep in mind, this was over ONE MONTH before the US captured President Maduro.

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Next, take a look at the Truth Social post from President Trump below. We saw several posts like this from President Trump between January 1st and January 18th. Trump said "it is time" to acquire Greenland and constantly threatened Denmark. Days later, President Trump imposed widespread tariffs on the EU.

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It's clear: Step #1 of President Trump's War Playbook is effectively verbal pressure on the target in an effort to "make a deal."

Step #2: Strategic Posturing and Physical Positioning

The second step involves visible strategic preparation that reinforces credibility without yet triggering full scale engagement. In Iran’s case, this included military repositioning, public alliance coordination, and the "Armada" President Trump sent to the Middle East.

This pattern was visible in Venezuela when airspace closures and regional military positioning occurred well before action was taken against President Maduro. It was also seen in trade wars, where investigations, executive reviews, and public notices preceded actual tariff implementation.

For example, take a look at the below headline from August 11th, 2025, when President Trump met with Intel CEO Lip-Bu Tan. Days prior, Trump posted that Tan "is highly CONFLICTED and must resign, immediately. There is no other solution to this problem."

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Days later, the Trump Administration announced they had reached a "deal" with Intel to acquire 10% of the Company. This investment ended up yielding over 80% in profit in under two months, as we outline below.

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Once again, President Trump's goal is almost always to make a DEAL. This is a case where the initial "buildup" or threats resolve and the conflict simply resolves here, at Step #2. When it doesn't, move to Step #3 next:

Step #3: The Friday Night "Strike"

Now that the initial pressures President Trump has imposed did not work, President Trump progresses to physical force or economic warfare.

One of the more consistent tactical elements in President Trump’s escalation pattern is timing. Major announcements, decisive strikes, or sudden policy shifts have frequently occurred late on Friday evenings, after equity markets have closed and before futures liquidity fully develops. Why? Because President Trump is highly responsive to drastic moves in financial markets.

Below is a list of some conflicts President Trump has moved on during Friday nights/Saturday mornings:

  1. US and Israeli Airstrikes on Iran Nuclear Sites - June 21st
  2. US Military Strikes on Caribbean Drug Boats - September 1st
  3. 100% Tariff Threat on China - October 10th
  4. Venezuela Airspace Closure - November 29th
  5. Military Action in Nigeria - December 25th
  6. US Airstrikes on Iran - February 28th

When a major geopolitical event breaks during active market hours, price discovery becomes disorderly. Liquidity thins immediately, algorithms amplify volatility, and intraday swings can create panic that feeds on itself. By contrast, a Friday night announcement provides a buffer. Investors, institutions, and governments have an entire weekend to digest information, assess risk, consult advisors, and model scenarios before markets reopen.

For Iran, this moment was February 28th. Often, President Trump begins teasing a "deal" before futures open on Sunday of that same week.

This time around, that clearly did not happen, which leads us to Step #4:

Step #4: Risk Premium Expansion Across Asset Classes

Following the shock event of Step #3, futures markets open with a violent move across asset prices on Sunday at 6 PM ET. However, markets will continue to doubt the longevity of the conflict. Why? Because everyone knows President Trump likes to make a deal.

As a result, the initial move in stocks, commodities and bonds is frequently undone, at least partially, by the time stock markets open on Monday. For example, take a look at crude oil prices and the S&P 500 on March 2nd (one day prior to where we are as we are writing this article).

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WTI Crude Oil prices initially reversed ~70% of their gains and the S&P 500 actually turned green yesterday. Today, those moves are being undone and new highs in oil prices and lows in stocks have arrived.

This is because President Trump knows that everyone knows he likes to make deals. So, this usually means the conflict will continue to escalate, even as markets price-in a brief conflict.

We are now set for Step #5.

Step #5: President Trump Teases A "Forever" Conflict

After investors quickly buy the dip in anticipation of President Trump "backing down," the market is typically blindsided. As headlines get worse, people expect that President Trump will begin removing some of the pressure on the target. However, the exact opposite happens.

As seen on March 2nd, President Trump is now stating that "wars can be fought forever" and the US has "unlimited mid to upper tier weaponry." Keep in mind how the word "forever" is put in quotation marks. This is tactical verbiage by President Trump. It's his way of saying he doesn't want to fight forever, but he can if needed. It's another negotiation tactic.

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Since the start of the war between the US/Israel and Iran, and even prior to its start, our view has been that President Trump would NOT benefit from a prolonged war. This continues to be our view despite the references to a "forever" war.

Why? Because three of President Trump's top policy priorities are to be the "peace president," eliminate inflation, and lower US gas prices to $2.00 per gallon.

A prolonged war with Iran would work in the opposite direction of these key initiatives, particularly in the short-term during a crucial midterm election year.

Step #6: Markets Begin Pricing-In A Prolonged Conflict

As of today, March 3rd, Step #6 of our playbook appears to have commenced. Take a look at the quotes below. Brent crude oil prices are rising above $85/barrel for the first time in nearly two years, US equity markets have erased their gains and hit new weekly lows, and a rush to the sidelines has accelerated. The Dow is now down -1,100 points on the day.

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At this stage, the market is no longer assuming a short, symbolic engagement.

Oil above $85 per barrel is not pricing in a weekend flare up. It is pricing in risk to supply chains, tanker insurance costs, and a partial closure of the Strait of Hormuz. Equity markets breaking to new weekly lows are not reacting to a headline they are reacting to duration risk.

This is the exact psychological shift President Trump’s strategy is designed to produce.

The first dip gets bought because investors assume a deal is coming. The second dip gets bought because investors assume escalation is temporary. The third dip is when positioning begins to change structurally.

SMART money has been able to consistently identify when polarity in sentiment has gone too far, particularly with increased retail participation in capital markets.

Throughout 2025, our strategy was largely hinged on exactly that: how can we use historical patterns in President Trump's economic conflicts to get ahead of the next shift in markets.

As shown below, our investment strategy has returned nearly five times the S&P 500 since 2020. In 2025, our S&P 500 investment setups yielded +21.8%, well ahead of the S&P 500's return, because we were able to identify these clear shifts in equity markets in advance.

If you are interested in receiving our premium analysis, you" target="_blank">https://www.thekobeissiletter.com/pricing">you may do so by joining our service here.

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This brings us to Step #7.

Step #7: Conditional De-Escalation Signals Appear

Before we explain this step, we must first state that the time between Step #6 and Step #7 is HIGHLY variable. In the case of the trade war in early-2025, this took multiple months before leading into the April 9th tariff "pause," largely pressured by rapidly surging yields, as shown below. There is typically some sort of catalyst, whether it is the target of attacks asking for a "deal" or something breaking in the market, that prompts Trump to pull back.

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After risk premia have expanded meaningfully across equities, commodities, and fixed income markets, President Trump historically introduces carefully calibrated de-escalation language. Importantly, this does not resemble a retreat.

In the case of the Iran war, this will either be a fall of the Iranian government or something "breaking" which is structural in nature for the US and global economies.

Language shifts toward conditional resolution. Statements begin to emphasize that negotiations are possible if certain criteria are met. References to talks, discussions, or frameworks quietly enter the narrative. This phase is designed to test both the opposing party and the financial markets without relinquishing strategic positioning.

Recent examples include President Trump's October 2025 tariff deal with China, January 2026 Greenland deal with the EU, and February 9th trade deal with India.

All of these deals began with a threat, proceeded to an action, a double-down of that action, and eventual de-escalation.

Step #8: The Market And Political Feedback Loop

One of the most overlooked elements of this strategy is the degree to which financial markets themselves become part of the negotiation environment. President Trump has consistently demonstrated awareness of equity market performance, energy prices, and inflation expectations as components of broader political optics.

A prolonged conflict that drives oil prices sharply higher would directly conflict with three core policy priorities that have been repeatedly emphasized: positioning himself as a peace-focused leader, reducing inflationary pressures, and lowering gasoline prices. Elevated energy costs feed directly into consumer sentiment and inflation data, which in turn influence electoral dynamics during a midterm cycle.

According to JP Morgan estimates, a closure of the Strait of Hormuz could send oil prices to $120-$130/barrel. This would imply a spike in US CPI inflation to ~5%. The last time we saw US inflation at 5% was in March 2023, when the Fed was aggressively hiking rates.

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In the current environment, several indicators deserve close monitoring. Sustained Brent crude above $90 per barrel would intensify inflation concerns. Equity markets falling -5% or more would shift investor sentiment. And, gas prices rising over +10% would crush consumer sentiment.

When these thresholds are approached, the probability of negotiation headlines increases substantially.

IMPORTANT: This is exactly when the smart money begins buying; when retail sentiment has collapsed.

Step #9: The Deal And Narrative Framing

In the case of the Iran war, Step #9 is conditional. If the Iranian government collapses, the US and Israel will say that the mission was a success and military objectives have been reached. This would immediately end the tariff playbook before Step #9 commences. If not, proceed below:

Every major confrontation within this framework ultimately concludes with a negotiated outcome that is framed as a strategic victory. The structure of the agreement varies by context, but the narrative remains consistent: maximum pressure produced concessions.

In prior trade wars, agreements were presented as proof that escalation yielded economic advantage (China, EU, India, Vietnam, Japan trade deals). In corporate confrontations, public pressure preceded negotiated equity stakes or structural adjustments (Intel, Rare Earths deals). In geopolitical disputes, ceasefires or framework agreements were framed as evidence that strength compelled compromise (Various Wars/Conflicts Trump Ended in 2025).

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If the Iran conflict follows the established pattern, resolution will likely occur only after sufficient leverage has been demonstrated.

That may involve a ceasefire tied to nuclear concessions, a regional security arrangement with enforcement mechanisms, or a sanctions adjustment package contingent on compliance benchmarks.

The specific architecture matters less than the timing and framing.

Step #10: The Violent Repricing And Political Victory Lap

The final stage of President Trump’s conflict playbook does not end with the announcement of a deal. It ends with the market reaction to that deal and the narrative that follows.

Historically, once a resolution framework is introduced, the repricing across financial markets is not gradual, it is abrupt, largely due to positioning. By the time negotiations become credible, investors are typically defensively allocated. Energy exposure is elevated, equity risk has been reduced, and volatility is elevated due to the implicit uncertainty.

When uncertainty suddenly collapses, those positions unwind quickly, as seen in April 2025, August 2025, October 2025, and January 2026, as seen below:

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In prior trade war episodes, equity markets rallied sharply once tariff suspensions or framework agreements were announced, even if the underlying structural issues remained unresolved. During geopolitical flare-ups, oil fell sharply once it became clear that shipping lanes would reopen and escalation would not broaden regionally.

The repricing is often violent because it is driven less by improving fundamentals and more by collapsing risk premia. Markets move not because conditions are perfect, but because worst-case probabilities fall dramatically.

Again, pricing-in the "worst case scenario," even briefly, is an integral part of President Trump's negotiation strategy.

We remain adamant that if US/Israeli military action does not end in a collapse in the Iranian government in the coming days or weeks, a deal will return to the table.

President Trump does NOT want a forever war; it accomplishes NONE of his economic objectives.

What Happens Over The Next 2–4 Weeks

At present, we appear to be transitioning between peak escalation rhetoric and the early stages of conditional signaling. Markets are pricing a more prolonged engagement than they were at the initial strike. Oil has broken higher, equity markets have surrendered short-lived stabilization rallies, and defensive flows have accelerated.

Historically, this is the stage at which pessimism becomes broadly embedded in positioning. However, it is also the stage at which negotiation probability quietly increases beneath the surface and smart money begins searching for deals.

This is largely evidenced by the current price action we are seeing in silver and gold. Both commodities are down sharply, with silver now down -20% in 24 hours, even as risk premiums are being priced-in across the board. This is a clear signal that a rush to the sidelines has begun and holding cash is being viewed as the clear safe haven trade. Again, smart money watches these flows.

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Lastly: Don't Forget The Objective

There are three primary scenarios over the coming weeks.

In the first scenario, escalation intensifies briefly, pushing oil higher and equities lower, before a sudden shift in language introduces negotiation headlines. In this outcome, markets reverse sharply as positioning proves overly defensive.

In the second scenario, the conflict continues in a controlled but persistent manner. Oil remains elevated but does not spike dramatically. Equity markets trade with elevated volatility while awaiting clarity. Resolution arrives later in the month after extended pressure.

In the third scenario, regional escalation broadens significantly, including material disruption to shipping lanes or direct confrontation involving additional state actors. This would drive oil toward triple-digit levels and force deeper repricing across global risk assets. Based on historical precedents and the fact that it is a crucial mid-term election year, we view this outcome as lower probability, but not impossible.

Ultimately, do not forget that EVERY conflict involving President Trump since his inauguration nearly 13 months ago has ended with a deal.

President Trump is a dealmaker, follow the patterns and you will be rewarded.

More about our strategy:

Those who are able to remain objective and follow a process during the current times of disruption are realizing some of the best trading conditions ever.

An objective and systematic approach is what has led to our outperformance of market benchmarks. As shown below, our investment strategy has returned nearly five times the S&P 500 since 2020.

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If you are interested in receiving our premium daily analysis, you" target="_blank">https://www.thekobeissiletter.com/pricing">you may do so by joining our service here.

Follow us @KobeissiLetter" target="_blank">https://x.com/@KobeissiLetter">@KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - February 24, 2026 at 2:41 AM
Saved - February 24, 2026 at 3:43 AM
reSee.it AI Summary
The article argues that the dominant market narrative of AI as a looming macroeconomic destabilizer—driven by the belief that AI will automate large swaths of cognitive labor and trigger a relentless downward spiral in demand and inflation—is overly simplistic and sometimes doom-driven. It offers an alternative framework in which AI acts as a broad-based productivity and price-reducing shock that can expand demand, lower costs, and sustain a period of growth, sometimes called “Abundance GDP,” in contrast to a “Ghost GDP” scenario in which productivity gains fail to translate into household benefits. A central claim is that the doomsday view—widely amplified by headlines about AI “taking over the world” and manifesting in rapid layoffs and shrinking margins—underestimates the complexity with which markets price disruption. The narrative notes that AI, unlike a mere software upgrade, is a general-purpose capability touching nearly every white-collar workflow and improving across a broad range of cognitive tasks. The article cites real-time market reactions to Anthropic’s Claude updates as an example: when Claude announces a new capability such as “Claude Code Security,” certain tech stocks experienced immediate reversals and sharp declines, seemingly illustrating first-order AI-enabled margin compression as demand shifts to buyers who can leverage automation. These examples emphasize that price discovery and market capitalization shifts reflect the compression of cognitive labor costs, not only layoffs. In defending an optimistic path, the article argues that the negative scenario rests on three assumptions: demand is fixed, productivity gains do not expand markets, and the system cannot adapt quickly enough to disruption. The counterargument rests on historical patterns wherein price declines in production or delivery technologies unleash larger demand that surpasses the initial impetus for cost-cutting. For instance, the piece highlights the historical reduction in the cost of personal computing from 1980 to the present, noting that massive price declines did not merely substitute for existing demand but expanded it, enabling new industries and higher aggregate consumption. A visual reference is provided to illustrate how PC prices have fallen dramatically over decades, reinforcing the thesis that falling costs can drive expansion, not collapse. A key element of the bullish scenario is that AI reduces the marginal cost of knowledge work, thereby increasing households’ purchasing power and enabling broader consumption. The article stresses that the U.S. services sector—responsible for roughly 80% of GDP—stands to experience meaningful price compression as AI automates administrative, legal, healthcare, marketing, and education-related tasks. The argument is that price reductions in essential services translate into real gains for households, even if wage growth lags, and that collaboration between lower costs and expanding demand can sustain overall growth. The concept of Abundance GDP is introduced to describe a regime where output growth coincides with falling prices, allowing real purchasing power to rise even without sharp wage increases. The piece also contends that labor markets may restructure rather than collapse. While acknowledging legitimate concerns about white-collar job displacement and wealth concentration, it asserts that AI is likely to complement and reconfigure many roles—particularly in skilled trades and hands-on industries that require physical interaction or human tacit knowledge—where demand remains robust. Importantly, AI is framed as lowering barriers to entrepreneurship: individuals can automate multiple tasks such as accounting, marketing, support, and coding, enabling self-employment and small-business creation. The argument further posits that AI-driven efficiency can reduce service inflation and widen access to services, which could, in turn, mitigate the wealth divide by enabling more households to participate in economic activity. Beyond productivity, the article addresses the SaaS model and the broader software ecosystem. It concedes that AI challenges traditional profit models tied to long-standing software procurement but contends that the next generation of software will be adaptive, agent-driven, and deeply integrated, with winners likely being those who can manage data, trust, compute, energy, and verification—rather than those who merely sell static tools. In this view, margin compression in one layer signals a transition rather than a collapse of the digital economy. The discussion extends to the broader macroeconomic and geopolitical implications of AI-driven abundance. If AI lowers production costs globally, energy management improves, and supply chains become more resilient through automation, nations may become less vulnerable to economic shocks and geopolitical conflicts associated with scarcity. The article posits that abundance could reduce incentives for protectionism and wars, contributing to more peaceful international dynamics over time. It suggests that history shows periods of rapid technological acceleration often align with reduced global conflict, a pattern the author ties to AI-enabled productivity gains. In conclusion, the article emphasizes that AI can amplify either fragility or prosperity, depending on institutional adaptability and policy responses. The most underappreciated possibility, according to the piece, is not a dystopian collapse but an era of abundance driven by price compression and broad-based productivity gains. The author cautions that the Anthropics takedowns serve as signals of repricing and disruption, not foregone conclusions of catastrophe. The world’s ability to adapt, the article asserts, will determine whether AI leads to a Global Intelligence Crisis or a Global Intelligence Boom. The final message is that disciplined, objective, and systematic analysis—rather than alarmism—has historically correlated with identifying favorable investment opportunities, and the author invites readers to monitor developments as evidence accumulates over the ensuing year.

@KobeissiLetter - The Kobeissi Letter

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It's Too Obvious. What If AI Doesn't Actually End The World?

The stock market just erased -$800 BILLION in market cap because AI "taking over the world" is becoming the consensus view. That view is too obvious. And the "obvious" trade never actually wins.

The doomsday scenario went viral because it captured something visceral. It framed AI not as a productivity tool, but as a macroeconomic destabilizer capable of triggering a negative feedback loop: layoffs lead to weaker consumption, weaker consumption leads to more automation, and automation accelerates layoffs.

What's obviously true: AI is not another software feature or efficiency gain. It is a general-purpose capability shock that touches every white-collar workflow simultaneously. Unlikely any revolution in history, AI is getting better at EVERYTHING simultaneously.

But, what if the doomsday scenario is false? It assumes demand is fixed, that productivity gains don’t expand markets, and that the system cannot adapt faster than the disruption.

We believe there is a second path that is being dramatically underpriced. The same Anthropic “takedowns” that look like early signs of systemic collapse may ultimately be the start of the largest productivity expansion EVER.

Before we begin, BOOKMARK this article and refer back to it over the next 12 months. While the below analysis is not a certain outcome, it is important to remember that humanity has ALWAYS prevailed; and the free market ALWAYS works itself out.

THE ANTHROPIC TAKEDOWNS ARE REAL

Let's start by saying we cannot ignore the market. Anthropic is disrupting the world through Claude, with Fortune 500 companies shedding hundreds of billions of market cap as a result.

It's a story we have seen several times already in 2026: Anthropic releases a new AI tool, Claude gets materially better at coding and workflow automation, and within hours the market collapses for the targeted industry.

If you haven't been paying attention, below are some examples:

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  1. IBM stock, $IBM, just posted its worst day since October 2000 after Anthropic announced that Claude can streamline COBOL code
  2. Adobe, $ADBE, falls -30% YTD as generative capabilities compress creative workflows
  3. Cybersecurity names collapse on "Claude Code Security" release
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In the above example, the crash in CrowdStrike stock, $CRWD, was literally seen the minute Claude announced "Claude Code Security."

On February 20th, at 1 PM ET, Claude announced "Claude Code Security." This is an automated AI tool that scans codebases for vulnerabilities.

Just two trading days later, CrowdStrike stock, $CRWD, erased -$20 BILLION of market cap on the news.

These reactions are not irrational. Markets try to price real time margin compression. When AI replicates what workers do, pricing power shifts to the buyer. That is the first-order impact, and it is very real.

Commoditization is not collapse. Rather, it is how technology lowers costs and expands access. The personal computer commoditized computing, the internet commoditized distribution, cloud commoditized infrastructure, and AI is commoditizing cognition.

There is no question that some legacy workflows will experience compression of margins. The question is, do lower cognitive costs collapse the economy or do they allow it to expand dramatically?

THE DOOM LOOP ASSUMES DEMAND IS FIXED

The bearish loop creates a simplified linear model: AI gets better, businesses reduce headcount and wages, then buying drops, businesses invest in AI again to defend their margins, and the downward cycle repeats. This assumes a completely stagnant economy.

History suggests otherwise. When the cost of producing something collapses, demand rarely stays flat, it expands. When compute costs fell, we did not consume the same amount of compute more cheaply. We consumed orders of magnitude more of it and built entirely new industries on top.

As shown below, the price of personal computers are now 99.9% cheaper today than they were in 1980.

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AI decreases costs in every sector and when service costs go down, purchasing power increases with or without wage growth.

The doom loop becomes dominant only if AI replaces labor without materially expanding demand. The optimistic scenario emerges if cheaper compute and productivity yields entirely new categories of consumption and economic activity.

THE REAL SHOCK IS PRICE COLLAPSE, NOT LAYOFFS

The observable layoffs are an easier story for investors to sell, but services undergoing price compression is the bigger story. Work that involves knowledge has always been expensive because of the scarcity of knowledge, as simple as it sounds, it's true. An abundant knowledge supply leads to a reduction in the price of knowledge work.

Consider healthcare administration, legal documentation, tax preparation, compliance, marketing production, basic coding, customer service, and educational tutoring. These services consume massive economic resources largely because they require trained human attention. AI reduces the marginal cost of that attention.

In fact, as shown below, the US Services Sector contributes close to 80% of US GDP.

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If the cost of running a business falls, small businesses become more attainable and if the cost of accessing services falls, more households participate. In a way, AI advancements can function as an "invisible" tax cut.

The companies whose margins depend on high-cost cognitive labor may suffer, but the broader economy benefits from lower service inflation and higher real purchasing power.

FROM “GHOST GDP” TO “ABUNDANCE GDP”

The bear case relies on "Ghost GDP," which is output that shows up in data but does not benefit households. The optimistic counter is what we are calling “Abundance GDP," which is output growth combined with falling costs of living.

Abundance GDP does not require nominal incomes to surge, it requires prices to fall faster than incomes. If AI reduces the cost of services which are essential to many, households experience real gains even if their wage growth slows. As a result, productivity gains do not disappear, rather they are transmitted through lower prices.

Perhaps this is why productivity has outperformed wage growth over the last 70+ years:

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The internet, electricity, mass manufacturing, and antibiotics each provided new ways to expand output and reduce cost which still being disruptive and volatile. However, in retrospect, those changes increased the standard of living permanently.

A society that wastes fewer hours navigating systems and paying for redundant services is, functionally, wealthier.

LABOR MARKETS RESTRUCTURE, NOT VANISH

A key concern is that AI disproportionately affects white-collar employment, which drives discretionary consumption and housing demand. This is true, and a legitimate concern, particularly as the wealth divide is already so massive.

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However, AI struggles more with physical-world dexterity and human identity. Skilled trades, hands-on healthcare, advanced manufacturing, and experience-driven industries retain structural demand. In many cases, AI complements these roles rather than replaces them.

More importantly, AI lowers the barrier to entrepreneurship. When one individual can automate accounting, marketing, support, and coding tasks, small-scale business formation becomes easier. We are BULLISH on small businesses.

In fact, the removal of barriers to entry through AI may be the solution to flatten the wealth divide that we currently face.

The internet killed certain job categories but created entirely new ones. AI may follow a similar pattern, compressing some white-collar functions while expanding self-directed economic participation elsewhere.

THE SaaS “DEATH” STORY

AI clearly pressures the traditional SaaS business model. Procurement teams are negotiating harder and some long-tail software products face structural headwinds. But SaaS is a delivery mechanism, not the endpoint of value creation.

The next generation of software is adaptive, agent-driven, outcome-based, and deeply integrated. The winners will not be static tool providers, they will be those who can best adapt to change.

Every technological shift reorders the stack and the companies pricing static workflows WILL struggle. The companies owning data, trust, compute, energy, and verification may thrive.

Margin compression in one layer does not imply collapse of the entire digital economy. It signals transition.

AI COMMERCE RESRUCTURES MARKETS

The bearish narrative argues that agentic commerce destroys intermediation and eliminates fees. In part, it does. When friction declines, fee extraction becomes harder.

As shown below, Stablecoin transaction volumes are already skyrocketing, even before AI became with it is today. Why? Because the market always favors efficiency.

Article image

Lower systemic friction also expands transaction volume. When price discovery improves and transaction costs fall, more economic activity occurs. This is a BULLISH trend.

Agents acting on behalf of consumers may compress margins for platforms built on habit. Yet, they can simultaneously increase total demand by lowering search costs and improving efficiency.

PRODUCTIVITY IS THE CORE VARIABLE

The ultimate determinant of the optimistic outcome is productivity. If AI delivers sustained productivity gains across healthcare, government administration, logistics, manufacturing, and energy optimization, then the result is abundance and increased access for all.

Even a sustained 1–2% incremental productivity boost compounds dramatically over a decade.

The shifts we are seeing in the macroeconomy as a result of AI have resulted in some of the best investment opportunities in history. This is something we have spent countless hours on and continue to get ahead of. If you are interested in receiving our premium analysis and seeing how we are positioned in these times of disruption, see thekobeissiletter.com for more of our research.

As shown below, productivity is already growing at a rapid pace as a result of AI. US labor productivity accelerated Q3 2025 to its strongest pace in two years:

Article image

The pessimistic view assumes productivity gains accrue exclusively to those who build the AI models and do not translate into broader benefits. The optimistic view assumes price compression and new market formation transmit gains more widely.

ABUNDANCE REDUCES CONFLICT, NOT JUST COSTS

One of the most under-discussed implications of AI-driven abundance is geopolitical. For most of modern history, wars have been fought over scarcity: energy, food, trade routes, industrial capacity, labor, and technology. Nations compete when resources are constrained and growth feels zero-sum. But abundance changes EVERYTHING.

If AI materially lowers the cost of production across energy, manufacturing design, logistics, and services, the global pie expands. When productivity rises and marginal costs fall, economic growth becomes less dependent on extracting advantage from others. This will end wars, and potential result in some of the most peaceful times in human history.

The same goes with economic warfare, such as the year-long trade war we are in now.

Tariffs are tools of protection in a world where domestic industries struggle to compete on cost. But if AI collapses production costs everywhere, why would we need tariffs anymore? In a high-abundance environment, protectionism becomes economically inefficient.

History shows that periods of technological acceleration often reduce global conflict in the long run. Post-World War II industrial expansion reduced incentives for direct confrontation among major powers.

Article image

AI-driven abundance could accelerate that dynamic. If energy becomes more efficiently managed, supply chains more resilient, and production more localized through automation, nations become less vulnerable. When economic security rises, geopolitical aggression becomes less rational.

The most optimistic AI outcome is not just higher productivity or higher equity indices. It is a world where economic growth is less zero-sum.

CONCLUSION: WHAT IF THE WORLD DOESN'T END?

AI amplifies outcomes. It can amplify fragility if institutions fail to adapt and it ca also amplify prosperity if productivity outpaces disruption.

The Anthropic takedowns are signals that workflows are being repriced and cognitive labor is becoming cheaper, a clear transition.

But transition is not the same as collapse as every major technological revolution has looked destabilizing at the start.

The most underpriced possibility today is not dystopia, it's abundance. AI may compress rents, reduce friction, and restructure labor markets, but it may also deliver the largest real productivity expansion in modern history.

The difference between “Global Intelligence Crisis” and “Global Intelligence Boom” is not capability, it is adaptation.

And the world has always found a way to adapt.

Lastly, those who are able to remain objective and follow a process during the current times of disruption are realizing some of the best trading conditions ever.

An objective and systematic approach is what has led to our outperformance of market benchmarks. As shown below, our investment strategy has returned nearly five times the S&P 500 since 2020.

Article image

If you are interested in receiving our premium daily analysis, you" target="_blank">https://www.thekobeissiletter.com/pricing">you may do so by joining our service here.

Follow us @KobeissiLetter" target="_blank">https://x.com/@KobeissiLetter">@KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - January 5, 2026 at 12:58 AM
Saved - January 5, 2026 at 10:54 PM

@KobeissiLetter - The Kobeissi Letter

PRESIDENT TRUMP JUST NOW: Trump: "Colombia is run by a sick man, he's not going to be doing it for very long." Reporter: "So there will be an operation by the US in Colombia?" Trump: "Sounds good to me." https://t.co/66fQM7cEIY

Video Transcript AI Summary
Speaker 0 states that Colombia is very sick, run by a sick man who likes making cocaine and selling it to The United States. He says the man "is not gonna be doing it very long" and repeats that "he's not gonna be doing it very long," noting that "he has cocaine mills and cocaine factories." The speaker asserts it "will be an operation by The US" and concludes, "It sounds good to me."
AI Similar Videos
Full Transcript
Speaker 0: Columbia is very sick too, run by a sick man who likes making cocaine and selling it to The United States, and he's not gonna be doing it very long, let me tell you. What does that mean? He's not gonna be doing it very long. He's not doing it very long. He has cocaine mills and cocaine factories. He's not gonna be doing it very will be an operation by The US in It sounds good to me.
KobeissiLetter
Posted - January 4, 2026 at 2:34 PM
Saved - January 4, 2026 at 6:38 PM
reSee.it AI Summary
A discussion on Venezuela’s oil: its enormous heavy crude reserves and aging infrastructure due to US sanctions, plus historical decline in Venezuelan production vs. the US. Points cover US reliance on heavy crude, rising Canadian imports, stalled Venezuelan exports, and a proposed US takeover of Venezuela’s oil infrastructure. The thread links geopolitics: bolstering US oil interests, pressuring Russia, and affecting China’s oil purchases, with Venezuela’s huge gas reserves also noted.

@KobeissiLetter - The Kobeissi Letter

The Venezuela plot thickens: While Venezuela holds 303 BILLION barrels of oil reserves, much of this is HEAVY crude oil. Texas and Louisiana also *happen* to have 6 of the LARGEST HEAVY crude oil refineries in the world. What does this mean? Let us explain. (a thread) https://t.co/klfm4Lv2sy

@KobeissiLetter - The Kobeissi Letter

In the early 2000s, Venezuela was a MUCH larger oil producer than the US. In fact, Venezuela produced 3 TIMES as much oil, at nearly 3.3 million barrels per day. By 2020, Venezuela's production had declined to just 900K/day, while the US hit 5 million/day. This is key. https://t.co/eHlQNMPWZe

@KobeissiLetter - The Kobeissi Letter

First, Venezuela has been heavily sanctioned by the US for years. This resulted in old infrastructure, hindering the ability to extract HEAVY crude oil. Heavy oil is far more expensive to extract than light crude. This requires advanced techniques like steam injection. https://t.co/8EpSxHbUhs

@KobeissiLetter - The Kobeissi Letter

The image below helps to better understand. The leftmost vial shows heavy crude oil which is often a goo-like mixture. As you move to the right, the crude oil becomes lighter and much easier to process. But, here's exactly why this is a crucial point for the US. https://t.co/YPdDWvoG6o

@KobeissiLetter - The Kobeissi Letter

The US has become incredibly dependent on heavy crude oil. In 1980, just 10-20% of US crude oil imports were heavy crude oil. Today, the MAJORITY of US crude oil imports are heavy crude oil, at ~70%. The US wants more heavy crude and Venezuela has BILLIONS of barrels of it. https://t.co/oigdZDbEY4

@KobeissiLetter - The Kobeissi Letter

Now, take a look at crude oil imports to the US: Canada's share of imports has surged from ~15% to ~60% of US imports. Meanwhile, Venezuela's imports to the US have effectively stalled. If the US can restore these imports, it would be HIGHLY profitable for the US government. https://t.co/ysUIcu7Pxv

@KobeissiLetter - The Kobeissi Letter

Currently, Venezuela holds more oil reserves than any other country in the world. They even hold 20% more oil reserves than Saudi Arabia. What's the "best" way to restore these massive heavy crude oil imports to the US? Take control of the country's oil reserves. https://t.co/TofmxE9wD0

@KobeissiLetter - The Kobeissi Letter

Yesterday, President Trump explicitly said it: "We are going to have our very large US oil companies go in, spend billions of dollars, fix the broken oil infrastructure and start making money." Trump also said the US will "sell large amounts of oil" pumped from Venezuela. https://t.co/SEmvqTBWEg

@KobeissiLetter - The Kobeissi Letter

And, it becomes even more strategic for the US. Aside from Venezuela, Russia has some of the largest HEAVY crude oil reserves in the world. Tapping into Venezuela's heavy crude oil reserves effectively further weakens Russia's influence. This is also a geopolitical move. https://t.co/jZGt0W4HwG

@KobeissiLetter - The Kobeissi Letter

To top it all off, China is the largest buyer of Venezuelan oil. This accounts for ~5% of China's total annual oil imports. As the US gains control of Venezuela, this gives President Trump even more control over China. Trump said he would sell some of this oil to China. https://t.co/j1v90OWWuD

@KobeissiLetter - The Kobeissi Letter

This weekend's events in Venezuela will have major effects on the global economy. The macroeconomy is shifting and stocks, commodities, bonds, and crypto will move. Want to receive our premium analysis? Subscribe to access our premium analysis below: thekobeissiletter.com/subscribe

@KobeissiLetter - The Kobeissi Letter

Lastly, Venezuela's economic impact goes well beyond oil. They hold 200 TRILLION cubic feet of natural gas reserves, and many are unexplored. The economic implications of this weekend's events are massive. Follow us @KobeissiLetter for real time analysis as this develops. https://t.co/1NeQyIqjV9

KobeissiLetter
Posted - June 16, 2025 at 12:19 PM
Saved - June 16, 2025 at 2:46 PM

@KobeissiLetter - The Kobeissi Letter

Minutes after we made this post, news came out that Iran is considering halting uranium enrichment. It appears the market knew this was coming. We continue to believe this conflict will be short-lived. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - May 16, 2025 at 12:18 AM
Saved - May 16, 2025 at 11:50 AM
reSee.it AI Summary
This is wild: President Trump's recent 4-day trip to the Middle East resulted in a staggering $2.5 trillion in capital for the US, with the UAE contributing $1.4 trillion, Saudi Arabia $600 billion, and Qatar $500 billion. This investment surpasses the market cap of all but three public companies, marking the largest foreign investment commitment by a President in US history. Additionally, Saudi Arabia has signed an agreement with Nvidia to acquire hundreds of thousands of AI chips, signaling significant tech expansion in the region.

@KobeissiLetter - The Kobeissi Letter

This is wild: President Trump's 4-day trip to the Middle East just raised $2.5 TRILLION in capital for the US. 1. United Arab Emirates: $1.4 trillion 2. Saudi Arabia: $600 billion 3. Qatar: $500 billion The combined value of these investments is larger than the market cap of all but 3 public companies in the world. This marks the largest foreign investment commitment ever raised by a President in US history.

@KobeissiLetter - The Kobeissi Letter

On top of this, Saudi Arabia signed an agreement with Nvidia to purchase several hundred thousand of its AI chips. Large cap tech is expanding to the Middle East and Trump is looking to capitalize on it. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - April 9, 2025 at 12:35 AM
Saved - April 11, 2025 at 12:42 AM
reSee.it AI Summary
A discussion highlights a concerning economic situation where Treasury yields have risen by 10% since April 3rd, while the S&P 500 has fallen by 10%. The 10-year note yield increased by 55 basis points in just 48 hours, indicating higher rates amid recession fears. One participant argues that the issues are not new, attributing them to long-standing government financial mismanagement that costs taxpayers $1 trillion annually. This perspective suggests that significant changes are inevitable in response to these economic challenges.

@KobeissiLetter - The Kobeissi Letter

This is what you call a nightmare situation: Treasury yields are now up +10% since April 3rd while the S&P 500 is down -10%. The 10-year note yield is currently up 55 basis points in 48 HOURS. In other words, we now have HIGHER rates with stocks pricing-in a recession. Something broke this week.

@GeorgeO37605552 - George Orwell

@KobeissiLetter Nothing broke this week. It was broken long ago. Wake-up. The US federal government was defrauding the taxpayers by $1 trillion a year. Taking that out of the economy, it’s going to change alot of shit. You think you can fix this without upheaval?

KobeissiLetter
Posted - April 9, 2025 at 12:35 AM
Saved - April 10, 2025 at 11:42 PM
reSee.it AI Summary
Treasury yields have risen by 10% since April 3rd, while the S&P 500 has dropped by 10%. The 10-year note yield increased by 55 basis points in just 48 hours, indicating higher rates amid recession concerns. A user provided a 12-month data perspective on the situation.

@KobeissiLetter - The Kobeissi Letter

This is what you call a nightmare situation: Treasury yields are now up +10% since April 3rd while the S&P 500 is down -10%. The 10-year note yield is currently up 55 basis points in 48 HOURS. In other words, we now have HIGHER rates with stocks pricing-in a recession. Something broke this week.

@expatassassin - TW@

@KobeissiLetter For perspective. This is 12 months of data https://t.co/oztRKqh59h

KobeissiLetter
Posted - April 9, 2025 at 12:35 AM
Saved - April 9, 2025 at 4:42 PM
reSee.it AI Summary
A discussion highlights rising Treasury yields, which increased by 10% since April 3, while the S&P 500 fell by 10%. One participant criticizes financial experts for being disconnected from average Americans, arguing that wealth has shifted to the top 1% over decades, exacerbating inflation's impact on the middle class. They assert that conventional economic policies are failing. Another participant suggests that the repercussions of past policies will lead to a recession, while a third emphasizes the unsustainable nature of high prices and interest rates for stocks.

@KobeissiLetter - The Kobeissi Letter

This is what you call a nightmare situation: Treasury yields are now up +10% since April 3rd while the S&P 500 is down -10%. The 10-year note yield is currently up 55 basis points in 48 HOURS. In other words, we now have HIGHER rates with stocks pricing-in a recession. Something broke this week.

@neilsm77 - Khaos

All of you financial experts have become actually the ones disconnected with the average Americans and all think in terms that are not in the greatest value for society but the top 10%. You have no argument. 88% of the market is owned by the top 10% who cause these selloffs to squeeze retail investors and wipe their wealth and buy back in cheap. The offshoring wave + financialization of the U.S. economy has transferred staggering wealth from the working and middle class to the top 1% over the last 50 years. I wish you cared about the effects of inflation over the last 50 years and how it’s wiped 10% of the middle class since the 70s as much as you care about tariffs that have cause a small correction. Your “conventional” economic polices do not work and are widening the wealth gap. Assets prices can’t go up forever without a strong consumer and labor force. We have transitioned from a manufacturing economy to a service economy that’s about to get wiped by AI and automation. 😂 Everyone think there’s an expert and has no courage to do what’s right long term. You think we can consumer forever? The boomers wealth is transferring and young people are all in debt with a great job outlook 😂

@dasf1242weraf - Eugenio Rico

@neilsm77 @KobeissiLetter The average american will get a recession for nothing, in 4 years trump is gone and all his retarded policies are gone, so the PAIN will be for nothing, you absolute idiot

@neilsm77 - Khaos

Hey absolute idiot go scale out from 2020 and tell me how the market is so far down. Also tell me how stocks and real estate sky rocket to record levels at the same time interest rates sky rocket up!!!! It’s all inflation!!!! You are literally quite insane thinking that this was all gonna stick forever with no rocky turbulence. Listen to my words. HIGH PRICES and HIGH RATES don’t go well for stocks.

KobeissiLetter
Posted - June 13, 2024 at 3:57 PM
Saved - June 13, 2024 at 7:24 PM

@KobeissiLetter - The Kobeissi Letter

BREAKING: GameStop, $GME, has postponed their shareholder meeting due to technical difficulties. The website crashed multiple times with rumors of possible DDoS attacks. Is $GME being targeted? https://t.co/2tuYfvyXjC

KobeissiLetter
Posted - May 16, 2024 at 7:49 PM
Saved - May 16, 2024 at 8:29 PM

@KobeissiLetter - The Kobeissi Letter

BREAKING: Citron Research, one of the largest equity research firms in the world, announces they are short GameStop, $GME. https://t.co/apVreE4V6Y

KobeissiLetter
Posted - May 14, 2024 at 4:17 PM
Saved - May 14, 2024 at 5:11 PM

@KobeissiLetter - The Kobeissi Letter

JUST IN: Former SEC Chair Jay Clayton on $GME and $AMC, "Is this something we should be tolerating in our markets? Whether it is legal or illegal, I don't think so." He calls on "Roaring Kitty" to "tell people why he did this." Why do you think "Roaring Kitty" did this? https://t.co/mdPYGjICPr

Video Transcript AI Summary
It's not insider trading unless trading on personal information. Market manipulation is the concern, like promoting a stock. The distinction is unclear. Discuss the tweet's impact on markets and investing. Join the program to explain your actions.
AI Similar Videos
Full Transcript
Speaker 0: It's not insider trading. That's clear. Unless he and he's trading on his own information. That's why it's not insider trading. But is this is this something that we should be tolerating in our markets? You know, whether it's legal or legal, I don't think so. And that's why I say, why doesn't it, you know What Speaker 1: does that mean? It's not to tell it. So the idea, I would think, is you look at this more in the context of market manipulation. Mhmm. Right? And the question is, are you allowed to manipulate the market? People, by the way, publish things all the time and they say, hey, I like this stack and they, you know, hope that other folks follow them. Is that market manipulation? Speaker 0: Generally not. Speaker 1: Maybe maybe not. So what is the distinction in your mind as somebody who ran this we Speaker 0: can discuss the publication of this tweet and the like. But in but in the meantime, if you care about the markets and you care about investing, come on this program. Speaker 1: Right. Tell Speaker 0: people tell people why you did this. Speaker 1: From your lips, God bless you. We hope he does.
KobeissiLetter
Posted - May 13, 2024 at 3:13 PM
Saved - May 13, 2024 at 3:32 PM

@KobeissiLetter - The Kobeissi Letter

Volatility is officially back and this market has become even more profitable. We continue to see larger swings with more technical price action. Since 2020, our calls are up over 340%. Subscribe at the link below to see our real-time trades: thekobeissiletter.com/subscribe

KobeissiLetter
Posted - May 13, 2024 at 2:22 PM
Saved - May 13, 2024 at 3:32 PM

@KobeissiLetter - The Kobeissi Letter

BREAKING: Gamestop, $GME, short sellers have lost $1 billion in the first hour of trading today. https://t.co/Zc3EOovqTN

KobeissiLetter
Posted - December 17, 2023 at 6:28 PM
Saved - December 17, 2023 at 6:45 PM
reSee.it AI Summary
The average home payment in the US has reached a record $3,322/month, making it the least affordable time in history to buy a home. Renting is also at a record high of $2,184/month. Rising interest rates and median home prices are contributing to this crisis. The median new home is now worth less than existing homes, and affordability is worsening. The median age of first-time homebuyers has hit a record 36 years old. Lower rates or increased housing supply are needed to address the situation. The Fed's projected rate cuts for 2024 suggest higher rates are here to stay, but a sudden drop could impact the housing market.

@KobeissiLetter - The Kobeissi Letter

BREAKING: Average home payment for a homebuyer hits a record $3,322/month, according to WSJ. Meanwhile, the average cost to rent a home is at a record $2,184/month. It is now less affordable than any time in history to buy a home in the US. This is a crisis. (a thread) 1/11

@KobeissiLetter - The Kobeissi Letter

Here's a chart showing the monthly payment on a new mortgage versus renting. At $3,322/month, a homebuyer would be spending ~$40,000/year on home payments. That's ~67% of the median POST-TAX household income. Renting costs ~$26,000/year or ~43% of median post-tax income. 2/11 https://t.co/0u151v6R8w

@KobeissiLetter - The Kobeissi Letter

The main issue is that the median home price is RISING with interest rates. Historically speaking, periods with rising rates came with lower real housing prices. Currently, the median home is selling for ~$400,000 while mortgage rates are at ~7%. This is unsustainable. 3/11 https://t.co/b78YbupymR

@KobeissiLetter - The Kobeissi Letter

This can be explained by the sudden rise from historically low rates to high rates in a matter of months. Currently, ~22% of homeowners have a mortgage rate below 3%. Only 9% of borrowers have a rate above 6%. Why move if your mortgage rate will more than double? 4/11 https://t.co/aZzZufTYGI

@KobeissiLetter - The Kobeissi Letter

As a result, the median NEW home is set to sell for LESS than the median existing home. In other words, new homes are now almost worth less than old homes. The last time this happened? In 2005, before the largest housing bubble in history. Something must change here. 5/11 https://t.co/dVyV4R7VYJ

@KobeissiLetter - The Kobeissi Letter

Put this all together and affordability is only getting worse. Buying a $400,000 home with an 8% mortgage will cost you $925,000. In other words, the interest paid on your mortgage is 131% of the principal paid. At a 3% mortgage rate, it's just 41% of the principal paid. 6/11 https://t.co/0jil4Xxo26

@KobeissiLetter - The Kobeissi Letter

This leads us to the ongoing crisis we are in today. New homebuyers are getting older and older due to declining affordability. The median first-time homebuyer just hit a record 36 years old. The median age for all homebuyers is now at 49 years old. 7/11 https://t.co/HFLg0dLZZd

@KobeissiLetter - The Kobeissi Letter

Ironically, it seems like we are going to need lower rates for lower prices. Alternatively, we need an external factor such as unemployment to spike in order for housing supply to return. Housing supply is the issue right now as it stands 37% below the long-term average. 8/11 https://t.co/uSGyxMynAa

@KobeissiLetter - The Kobeissi Letter

How do we know that prices will fall with a return of supply? Largely because mortgage demand is at 30-year lows. Higher prices are not being fueled by abundant demand, but rather by a lack of supply. A sudden return of supply would quickly send prices lower. 9/11 https://t.co/8al5zOyCgO

@KobeissiLetter - The Kobeissi Letter

Therefore, as we head into 2024, supply is just about all that matters for the housing market. We would need either lower rates or an external factor to pressure housing prices. The Fed only sees 3 rate cuts in 2024 which means higher rates are here to stay. 10/11

@KobeissiLetter - The Kobeissi Letter

The Fed is therefore navigating a housing market that is far more fragile than it seems. A sudden drop in rates would likely resurface supply and send home prices lower. This should get interesting. Follow us @KobeissiLetter for real time analysis as this develops. 11/11

@KobeissiLetter - The Kobeissi Letter

Beyond housing market insights, we actively trade stocks, commodities, Bitcoin, bonds, options and more. Every week, we post our trade setups for subscribers. If you enjoy our work on X, consider subscribing to our premium analysis at the link below: thekobeissiletter.com/subscribe

KobeissiLetter
Posted - October 14, 2023 at 5:53 PM
Saved - October 14, 2023 at 5:58 PM
reSee.it AI Summary
The S&P 7 dominates the stock market, representing a record 29.7% of the index's market cap. This surge from 20% in 2023 has propelled the market by over 50%. In contrast, the remaining 493 stocks in the S&P 500 have only seen a 3% increase. These tech-focused stocks are single-handedly driving market direction.

@KobeissiLetter - The Kobeissi Letter

The S&P 7, now reflects a record 29.7% of the entire index by market cap. This is up sharply from 20% at the beginning of 2023 and above the 29.1% high in 2021. Meanwhile, the S&P 7 is up over 50% and continues to drive market direction. The remaining 493 stocks in the S&P 500 are currently up just 3% in 2023. Never has market direction been so driven by just a few stocks which are all technology focused. 7 stocks are holding up the entire stock market.

KobeissiLetter
Posted - October 8, 2023 at 1:35 PM
Saved - October 9, 2023 at 3:38 AM
reSee.it AI Summary
The median monthly home payment in the US has skyrocketed to a record high of $2,839, a staggering 87% increase since the pandemic began. Mortgage rates have hit their highest since 2000, standing at 7.93%. This alarming trend has pushed housing affordability to its lowest levels in US history. The question remains: how will this situation unfold?

@KobeissiLetter - The Kobeissi Letter

BREAKING: Median monthly home payment in the US rises to an all-time high of $2,839/month. According to Reventure Consulting, the median home payment has now gone from $1,035/month to $2,839/month in just 10 years. Since the pandemic, the median home payment is up ~$1,300/month, an 87% increase. Meanwhile, mortgage rates just hit their highest since 2000, at 7.93%. Housing affordability is now officially at its lowest levels in US history. How can this end well?

KobeissiLetter
Posted - October 8, 2023 at 4:08 PM
Saved - October 9, 2023 at 2:37 AM
reSee.it AI Summary
Personal savings rates in the US have plummeted to 3.9%, half of the long-run average and just above the record low of 1.4% in 2008. Even a few months ago, it dropped to 2.7% and is declining further. Inflation is at its highest since the 1980s, yet savings rates were four times higher back then. This highlights the growing unaffordability of goods. As prices rise and wage growth slows, personal savings rates continue to decline. The question arises: what happens when Americans exhaust their savings?

@KobeissiLetter - The Kobeissi Letter

Personal savings rates in the US are down to 3.9% which is HALF of the long-run average. This is also just above the 2008 low of 1.4% which marks the lowest level on record. Just a few months ago, the personal savings rate dropped to 2.7% and it is falling yet again. Also, the last time inflation was this high in the 1980s, savings rates were 4x as high. This is another testament to how unaffordable things have become. As prices continue to rise and wage growth slows, personal savings rates are heading lower. What happens when Americans run out of savings?

KobeissiLetter
Posted - October 8, 2023 at 7:30 PM
Saved - October 8, 2023 at 9:58 PM
reSee.it AI Summary
The cost of living is soaring. New home payments hit a record $2,900/month, while rent for the average house is at $1,900/month. Car payments are also skyrocketing, with new cars averaging $740/month and used cars at $530/month. Student loan payments add to the burden at $500/month. Gas prices are nearing $4.00/gallon, and credit card balances are at a record $7,300. By the end of this quarter, the average household will have no excess savings. How can people afford to live?

@KobeissiLetter - The Kobeissi Letter

The average payment on a new home is now at a record $2,900/month. The average house is now renting for a record $1,900/month. The average new car payment is now at a record $740/month. The average used car payment is now at a record $530/month. The average student loan payment is now $500/month. The average gallon of gas is now nearing $4.00 again. The average household credit card balance is now at a record $7,300. The average household will have $0 of excess savings by the end of this quarter. How can the average person afford to live?

KobeissiLetter
Posted - October 7, 2023 at 8:57 PM
Saved - October 8, 2023 at 2:43 AM
reSee.it AI Summary
In a perplexing market, the correlation between US Treasuries and equities has broken down. Despite rising treasury yields and falling bond prices, stocks remain resilient. This unusual situation calls for either a correction in equity valuations or a rise in bond prices. Truly unprecedented times.

@KobeissiLetter - The Kobeissi Letter

This remains, by far, one of the most puzzling charts in the market. Despite the huge run higher in treasury yields and simultaneous drop in bonds, equities remain strong. Historically speaking, US Treasuries and equities have traded with near-perfect correlation. Now, the gap between US Treasuries has become massive. Either equity valuations need to fall or bond prices need to rise. Truly unusual times.

KobeissiLetter
Posted - October 7, 2023 at 6:53 PM
Saved - October 7, 2023 at 9:40 PM
reSee.it AI Summary
Total US debt has surged by $500 billion in just 18 days, reaching $33.513 trillion. This means an average increase of $28.5 billion per day, $1.2 billion per hour. At this rate, the US is on track to accumulate another $1 trillion in debt within 1.5 months. The debt ceiling bill has effectively removed any limit until 2025. It's possible that by 2024, the debt could reach $35 trillion. Deficit spending remains a growing concern. Stay updated @KobeissiLetter.

@KobeissiLetter - The Kobeissi Letter

JUST IN: Total US debt jumped by $500 billion in just 18 days after hitting $33 trillion, according to Zerohedge. To be exact, total US debt is now at $33.513 trillion. This means the US has added $28.5 billion in debt PER DAY for 18 consecutive days. That's $1.2 billion per hour and puts the US on track to add another $1 trillion in debt in just 1.5 months. Under the debt ceiling bill, the US debt limit is effectivity UNCAPPED until 2025. How high can this go?

@KobeissiLetter - The Kobeissi Letter

It is very possible that we are at $35 trillion in debt by 2024. The debt ceiling “crisis” was not the real crisis. The real crisis started in 2020 and is only getting worse as deficit spending skyrockets. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - October 7, 2023 at 12:52 PM
Saved - October 7, 2023 at 4:40 PM
reSee.it AI Summary
The US added 336k jobs in September, but the drop in full-time employment is concerning. Over the past 3 months, full-time employment decreased by 692k, similar to recessions in 2020, 2008, and 2001. Part-time employment, however, surged by 1.2 million since June. This may indicate people taking on multiple jobs to combat inflation. The data reveals underlying weakness despite strong headline numbers. Stay tuned for real-time analysis @KobeissiLetter.

@KobeissiLetter - The Kobeissi Letter

All the headlines about the jobs report highlight how the US added 336,000 jobs in September. But, what they don't highlight is the DROP in full-time employment. Over the last 3 months, full-time employment in the United States is down 692,000. The last 3 times this happened over the last 25 years were in 2020, 2008 and 2001. Meanwhile, part-time employment jumped by nearly 1.2 MILLION since June. Full-time employment is falling at levels last seen in recessions while part-time employment is soaring. Are people taking on multiple jobs to fight inflation?

@KobeissiLetter - The Kobeissi Letter

Here's what the chart in part-time employment looks like. This is likely the product of individuals taking on multiple jobs. While the headline numbers are strong, there is some weakness deeper in the data. Follow us @KobeissiLetter for real time analysis as this develops. https://t.co/RWG1Ti3UJ6

KobeissiLetter
Posted - October 6, 2023 at 3:24 PM
Saved - October 7, 2023 at 2:34 AM
reSee.it AI Summary
Home value to income ratios have surpassed the 2006 peak, reaching 4.50%. This ratio hasn't been this high since 1955. Additionally, mortgage rates have hit 7.9%, leading to house payments nearing $3,000/mo. This housing market is now the least affordable globally. Concerns arise about the potential consequences.

@KobeissiLetter - The Kobeissi Letter

Home value to income ratios just ticked higher again and are now above 4.50%. To put this in perspective, even in the 2006 peak home value to income ratios topped out at 4.34%. The last time we saw home value to income ratio this high was in 1955. Meanwhile, mortgage rates just hit 7.9% for the first time since 2000 and house payments are nearing $3,000/mo. This is officially the least affordable housing market in the world. How can this end well?

KobeissiLetter
Posted - October 5, 2023 at 7:08 PM
Saved - October 6, 2023 at 12:13 AM
reSee.it AI Summary
Mortgage demand plummets to lowest since '95 as rates surge. 30-year mortgage interest rate hits highest since Aug '00 at 7.88%. Demand even below '08 crisis levels. Housing market grinds to a halt, but the real issue is the lack of supply.

@KobeissiLetter - The Kobeissi Letter

Mortgage demand is now at its lowest since 1995 as rates continues to skyrocket. The average interest rate on 30-year mortgage just hit its highest since August 2000, at 7.88%. Mortgage demand is even below the average levels seen in the 2008 crisis, as shown in red below. Demand in the housing market is coming to a complete halt. The craziest part? It doesn't matter because there's no supply.

KobeissiLetter
Posted - October 1, 2023 at 7:12 PM
Saved - October 1, 2023 at 9:52 PM
reSee.it AI Summary
Unrealized losses on investment securities for banks are surging, reaching nearly 550 billion in Q2 2023. This represents around 25% of all banks' equity capital. As interest rates rise and persist, this trend intensifies. The realization of these losses poses a significant concern. Recently, unrealized losses accounted for 33% of bank equity capital, making it a crucial trend to monitor in 2024. Stay updated with real-time analysis at KobeissiLetter.

@KobeissiLetter - The Kobeissi Letter

Unrealized losses on investment securities for banks are skyrocketing. For Q2 2023, there are nearly $550 billion in unrealized losses. To put this in perspective, that’s nearly 25% of all banks’ equity capital. As interest rates rise and remain higher for longer, this trend is becoming more prominent. What happens if banks realize these losses?

@KobeissiLetter - The Kobeissi Letter

Unrealized losses on investment securities have skyrocketed recently Recently, unrealized losses accounted for 33% of all bank equity capital. This is a very important trend to watch into 2024. Follow us @KobeissiLetter for real time analysis as this develops. https://t.co/2WocDoJFJn

KobeissiLetter
Posted - September 30, 2023 at 3:42 PM
Saved - September 30, 2023 at 5:18 PM
reSee.it AI Summary
Nearly one-third of US debt is set to mature in the next 12 months, with 52% maturing in the next 36 months. Refinancing this debt is crucial, but servicing costs have doubled from 15% to 30%. As rates rise, maintaining this debt will become even more expensive. The headlines of US interest expense hitting $1 trillion will soon be replaced by $2 trillion annually. Rising US debt is a growing concern, as decades of near-zero rate policy come to an end. Stay updated with KobeissiLetter for real-time analysis.

@KobeissiLetter - The Kobeissi Letter

Here's a topic that needs much more attention: Nearly one-third of all outstanding US debt is set to mature over the next 12 months. 52% is set to mature over the next 36 months, meaning this debt needs to be refinanced. However, since this debt was last financed, debt service costs have doubled from 1.5% to 3.0%. This means that maintain this debt is now 2x as expensive and it will soon be 3x as expense as rates rise. Headlines of US interest expense hitting $1 trillion will be gone soon. $2 trillion in annual interest expense is coming quickly.

@KobeissiLetter - The Kobeissi Letter

Rising US debt has been a problem for a few years now. However, the cost of that debt is becoming much more material. Decades of near-zero rate policy have come to an end and we are now paying the price for it. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 30, 2023 at 3:44 PM
Saved - September 30, 2023 at 5:13 PM

@KobeissiLetter - The Kobeissi Letter

Rising US debt has been a problem for a few years now. However, the cost of that debt is becoming much more material. Decades of near-zero rate policy have come to an end and we are now paying the price for it. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 20, 2023 at 9:19 PM
Saved - September 20, 2023 at 9:37 PM
reSee.it AI Summary
The Fed's predictions since 2020 have been consistently off the mark. They initially downplayed inflation, then called it transitory. They postponed interest rate hikes and claimed a recession was necessary to lower inflation. Now they're aiming for a soft landing. However, their credibility is in question as none of their statements have proven accurate. Recently, they even removed a recession from their forecast. Stay updated for real-time analysis.

@KobeissiLetter - The Kobeissi Letter

The Fed Since 2020: 1. Mar 2020: Inflation won’t be a problem 2. Jan 2021: Inflation is “transitory” 3. Sept 2021: Interest rates won’t rise until 2024 4. Jan 2022: Recession is needed to lower inflation 5. Dec 2022: Disinflation has begun 6. Feb 2023: A “soft landing” is possible 7. Mar 2023: Banking system is “stable” 8. Sept 2023: Inflation won't hit 2% until 2025 Not a single statement was correct. Has the Fed lost their credibility?

@KobeissiLetter - The Kobeissi Letter

Most recently, the Fed changed their view that a recession is needed to tame inflation. In fact, the Fed removed a recession from their forecast. Now, they are hoping to pave the path for a "soft landing." Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 19, 2023 at 4:20 PM
Saved - September 19, 2023 at 7:02 PM
reSee.it AI Summary
The recent debt ceiling crisis has left the US grappling with alarming figures. In just a day, the country added $33 billion in debt while paying $3 billion in interest expenses. Debt service costs reached their highest level since 2009, with an additional $150 billion paid in interest. The deficit surged by over $300 billion, and federal tax receipts are down 84% on a 12-month basis. This mounting debt, issued at higher interest rates, poses a significant challenge as interest expenses become our largest expenditure. The game plan remains unclear as spending continues to skyrocket.

@KobeissiLetter - The Kobeissi Letter

Since the debt ceiling "crisis" came to an end: 1. US has added $33 billion in debt PER DAY 2. US paid nearly $3 billion PER DAY of interest expense 3. Debt service cost hit its highest level since 2009 4. The US has paid an additional $150 billion of interest 5. US deficit has jumped by over $300 billion 6. US Federal tax receipts now down 8.4% on a 12-month basis Trillions of Dollars of debt are being issued at 5%+ interest rates, nearly double the recent low. Interest expense will soon be our biggest expenditure. Is the debt ceiling "crisis" really over?

@KobeissiLetter - The Kobeissi Letter

Even in real terms, interest on US debt is rising at its fastest pace in history. As more debt is issued at higher rates, it's only getting worse. All as spending is skyrocketing. What's the game plan here? Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 19, 2023 at 12:48 PM
Saved - September 19, 2023 at 6:05 PM
reSee.it AI Summary
Interest rates on deposits at major US banks like Wells Fargo, Citibank, Chase, Bank of America, and US Bank are extremely low. As a result, people are withdrawing their deposits at a historic pace, with $1 trillion leaving banks in the past year. This trend is forcing banks to raise interest rates or risk losing more capital. On the other hand, money market funds are experiencing historic inflows, with $900 billion invested this year. Cash is now providing a solid yield, offering an alternative to traditional bank deposits. Stay updated with KobeissiLetter for real-time analysis.

@KobeissiLetter - The Kobeissi Letter

Interest Rates on Deposits, by Bank: 1. Wells Fargo: 0.15% 2. Citibank: 0.05% 3. Chase: 0.01% 4. Bank of America: 0.01% 5. US Bank: 0.01% Rates on Alternatives to Bank Deposits: 1. CDs: 5.0% 2. Money Market: 4.5% 3. Treasury Bonds: 4.0% Deposits continue to flow out of banks at a historic pace with $1 trillion+ withdrawn over the last year. The era of "free" money for large US banks is coming to an end. They must raise interest paid on deposits or capital will continue to leave.

@KobeissiLetter - The Kobeissi Letter

While banks have seen historic outflows, money market funds have seen historic inflows. ~$900 billion has gone into money market funds this year. For the first time in decades, cash can provide a solid yield. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 18, 2023 at 4:13 PM
Saved - September 19, 2023 at 6:06 AM
reSee.it AI Summary
California sues Chevron, Exxon, Shell, BP, and ConocoPhillips for deceiving the public on climate change. The 135-page lawsuit alleges a long-running disinformation campaign, a significant case against major oil companies. They're accused of concealing the link between fossil fuel production and climate change. Is the battle against big oil escalating?

@KobeissiLetter - The Kobeissi Letter

BREAKING: California is suing Chevron, Exxon, Shell, BP and ConocoPhillips for "public deception on climate change." The 135 page lawsuit claims these oil companies orchestrated a decades-long disinformation campaign. It is being called one of the most significant cases against major oil companies in the US. The campaign is said to "hide the correlation between fossil fuel production and climate change." Has the war against big oil gotten worse?

KobeissiLetter
Posted - September 18, 2023 at 8:57 PM
Saved - September 19, 2023 at 6:06 AM
reSee.it AI Summary
US Federal debt has reached a historic milestone, surpassing 33 trillion dollars. Since the debt ceiling crisis, the country has been accumulating debt at an alarming rate of 1 trillion dollars per month. In the past five years alone, the US has added a staggering 115 trillion dollars to its debt. This trajectory puts the nation on track to exceed 50 trillion dollars in debt well before 2023. With the debt ceiling now uncapped until January 2025, the situation raises concerns about the sustainability of such massive debt. Additionally, the interest expense is projected to reach 1 trillion dollars annually, becoming the government's largest expenditure. The implications of this escalating debt are worrisome.

@KobeissiLetter - The Kobeissi Letter

BREAKING: For the first time in history, total US Federal debt crosses $33 trillion. Since the debt ceiling “crisis” the US has added $1 trillion in debt PER MONTH. Over the last 5 years, the US has added a total of $11.5 trillion in debt. At the same time, we are on track for $1 trillion in annual interest expense. Interest will soon be the US government’s biggest expense. How can this end well?

@KobeissiLetter - The Kobeissi Letter

These numbers are so large, they’re hard to comprehend. At the current pace, the US will pass $50 trillion in debt well before the projected year of 2023. The debt ceiling is now UNCAPPED until January 2025. Follow us @KobeissiLetter for real time analysis as this develops.

KobeissiLetter
Posted - September 10, 2023 at 5:40 PM
Saved - September 10, 2023 at 7:31 PM
reSee.it AI Summary
Student loan payments resume in Oct. 45M Americans owe $16T in student loans. Average monthly payment is $200. $9B monthly spending will be subtracted. $100B annually will impact younger consumers. Brace for a significant shift in consumer spending.

@KobeissiLetter - The Kobeissi Letter

Student loan payments are set to resume in October for the first time since 2020. There are now a total of 45 million people in the US with student loans and $1.6 trillion of student loans outstanding. The average monthly student loan payment is ~$200. This means roughly $9 billion in consumer spending will be subtracted every month. Roughly $100 billion per YEAR will be substracted from consumer spending, mainly with an impact on younger consumers. Another large shift in consumer spending is coming.

KobeissiLetter
Posted - September 3, 2023 at 7:18 PM
Saved - September 3, 2023 at 9:41 PM
reSee.it AI Summary
Excess US household savings have fallen for 23 consecutive months, dropping by an average of $100 billion per month since 2022. The San Francisco Fed predicts savings will be depleted this quarter. In just over 2 years, Americans went from having a record $21 trillion in excess savings to a mere $190 billion. Debt will become the solution for many.

@KobeissiLetter - The Kobeissi Letter

Excess household savings in the US have fallen for 23 STRAIGHT months. Since 2022, excess savings in the US have been falling by $100 billion per MONTH on average. The San Francisco Fed estimates that remaining household savings will be depleted this quarter. Just over 2 years ago, Americans had a record $2.1 TRILLION in excess savings. Current estimates put savings at a mere $190 billion. Debt will soon be the answer for many more people.

KobeissiLetter
Posted - August 25, 2023 at 9:40 PM
Saved - August 26, 2023 at 2:29 AM
reSee.it AI Summary
The cost of buying a house has hit a new record, soaring 90% since 2020. This means that purchasing a house today costs around $33,000 per year, which is 46% of the median pre-tax household income in the US. Post-tax homebuyers are spending nearly 70% of their income on home payments. In comparison, the median monthly apartment rent has also reached a fresh record of $1,859. Affordability is becoming increasingly challenging, surpassing the levels seen during the 2008 housing bubble. If the Fed continues to raise rates, the situation will worsen.

@KobeissiLetter - The Kobeissi Letter

BREAKING: Median cost to buy a house hits a new record of $2,748/mo, up a MASSIVE 90% since 2020. In other words, buying a house today costs nearly $33,000 per year. This is 46% of the median PRE-TAX household income in the US. Post-tax, homebuyers in the US are spending nearly 70% of their income on home payments. Meanwhile, the median monthly apartment rent just hit a fresh record of $1,859/mo. How has it become to difficult to have a place to live?

@KobeissiLetter - The Kobeissi Letter

Even in the 2008 housing bubble, the median cost to buy a house peaked at $1,500/mo. We are at nearly DOUBLE that level and quickly rising. If the Fed continues raising rates, affordability will only get worse. Follow us @KobeissiLetter for real time analysis as this develops.

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