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The Kobeissi Letter

Nov 30

JUST IN: Users on X are reporting mass cancellations of Disney+, $DIS, subscriptions after Elon Musk interview.

Within just hours of Elon Musk's interview, thousands of users have posted screenshots of cancelled Disney+ subscriptions.

In addition to Disney+, users are reporting cancellations of Paramount Plus and others.

This comes after Elon Musk accused some advertisers of blackmailing X with advertising money.

Disney's CEO, Bob Iger, was specifically called out.

Since its 2021 high, Disney, $DIS, is down ~53% and has erased ~$180 billion in value.

As streaming becomes more competitive Disney+ has been facing pressure.

Disney's next earnings call should be interesting.

Follow us @KobeissiLetter for real time analysis as this develops.

POLL: Are you cancelling your Disney+ subscription because of Elon Musk's interview yesterday?

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The Kobeissi Letter

@KobeissiLetter

Nov 11

In May, we saw credit default swaps spike sharply as fears of a US default increased.

The swaps jumped ~120% in 2 months and then fell ~70% after the debt ceiling crisis "ended."

Here's the chart for these same credit default swaps.

The swaps are now up ~60% since June even as we continue to hear that the debt ceiling crisis is over.

On Friday, Moody's cut their US credit outlook from stable to negative.

This comes just a couple months after S&P cut their US credit rating for the first time since 2011.

Deficit spending is out of control.

Since the debt ceiling "crisis" ended, total US debt is up over $2 trillion.

Since 2020, total US debt is officially up more than $10 TRILLION.

In 2024, we will have the first ever year with $1 trillion+ in US interest expense.

Interest is now our second largest expense.

In 2023, the US posted its 3rd largest deficit on record, at $1.7 TRILLION.

This was a $300 billion increase when compared to 2022.

The US is now spending 44% of GDP per year, the same levels as World War 2.

We are spending at recession levels and calling for a "soft landing."

Read 4 tweets

The Kobeissi Letter

@KobeissiLetter

Oct 24

Something is happening in the San Francisco real estate market.

Take a look at this house listed for sale.

In 2015, the owner purchased the property for $1.4 million, 27% ABOVE the asking price.

Now, 8 years later, the property is listed for $1.1 million, 22% BELOW what the owner paid for it.

This homeowner now has "negative equity" which is a growing trending impact 1.2 MILLION homeowners in the US.

Could this be the beginning of a bubble bursting?

According to Corelogic, 1.2 million mortgages are now "underwater."

Homeowners with mortgages (63% of all properties) saw equity decrease by of $108.4 billion over the last year.

In California, the average home lost $60,000 in equity in just 1 year.

This is not sustainable.

Here's a look at home prices growth rates in San Francisco specifically.

While they had years of robust growth, home prices are now down 5% YoY.

Home prices in San Francisco are falling at their fastest pace since 2011.

Supply is hitting the market rapidly in SF.

Read 6 tweets

The Kobeissi Letter

@KobeissiLetter

Sep 5

BREAKING: Crude oil prices rise above $87.00 for the first time since November 2022.

Saudi Arabia just announced they will be extending production cuts of 1 million barrels per day until January 2024.

In less than 3 months, oil prices have gained a massive ~31%.

The last time oil neared $90, the US Strategic Petroleum Reserve (SPR) had 250 MILLION more barrels of crude oil.

What happened to refilling the SPR?

In October 2022, the Biden administration announced its intent to refill the SPR.

A statement from the White House said they plan to make purchases when oil prices are " at or below $67 to $72 per barrel."

Since then, the SPR remains at its lowest levels since 1983.

Earlier this summer, the US announced they would begin refilling the SPR.

Then, on August 2nd they delayed it claiming "market conditions" made it "too expensive."

Since then oil prices are up another ~10%.

We are now ~25% above the price level the US wants to refill the SPR.

Read 5 tweets

The Kobeissi Letter

@KobeissiLetter

Aug 23

JUST IN: US New Home Sales jump 4.4% in July, now up a MASSIVE 31.5% over the last year.

Meanwhile, existing home sales are down 16.6% over the last year, biggest drop since 2010.

High rates made it too expensive to sell.

People are "trapped" in their houses.

(a thread)

1/9

New home sales are skyrocketed as interest rates jump to a 23-year high of 7.5%.

The 4.4% jump in July was well above expectations of 1.0%.

As rates rise, people do not want to sell their homes.

Many people have locked in historically-low mortgage rates.

2/9

While mortgage rates have skyrocketed to a 20-year high of 7.5%, just 3.7% of borrowers have a rate of 6% or higher.

Meanwhile, a massive 26% of borrowers have a rate below 3%.

91% of ALL borrowers have a mortgage rate below 5%.

Why move if your mortgage rate doubles?

3/9

Read 9 tweets

The Kobeissi Letter

@KobeissiLetter

Aug 22

Existing home sales just fell 2.2% in July, putting existing sales down 16.6% over the last year.

Now, existing homes sales are at their lowest since 2010.

We are about to see new home prices drop BELOW existing home prices for the first time since 2005.

Truly historic.

(1/7)

According to Zerohedge, this puts the Seasonally Adjusted Annual Rate (SAAR) at its lowest since 2010.

To put this in perspective, even during the pandemic lockdowns, existing home sales did not drop this low.

This housing market truly is making some historic moves.

(2/7)

At current rates, new home prices are set to drop below existing home prices.

This will be the first time such a shift occurs since 2005, exactly when the last housing bubble peaked.

With existing home sales down 16.6% YoY, affordability is quickly following.

(3/7)

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