The Kobeissi Letter Profile picture
Dec 19, 2024 12 tweets 5 min read Read on X
Apollo with another HUGE call today:

Not only does Apollo see less rate cuts in 2025, but they are now calling for potential rate HIKES.

Today, Apollo officially said they see a 40% chance of rate HIKES returning in 2025.

Has the "Fed pivot" been canceled again?

(a thread)
The Fed officially made their 3rd interest rate cut of 2024 for 25 basis points.

This marks a total of 100 basis points of rate cuts in 2024 as inflation reaccelerates.

With all key metrics of inflation nearing or above 3%, a new question arises.

Are rate hikes coming back? Image
Apollo makes the case that the economy is strong and growth has been robust.

Over the past 2 quarters, US GDP growth has been 3.0% and 2.8%.

The Atlanta Fed expects GDP growth in the fourth quarter to be 3.2%, well above the CBO’s 2% estimate of long-run US growth. Image
Apollo notes that the strong economy, combined with the potential for lower taxes, higher tariffs, and restrictions on immigration, could spark inflation.

PCE inflation could rise by over 140 basis points due to tariffs, according to Deutsche Bank.

Higher prices are coming. Image
Recent data shows that inflation is already heading higher again.

3-month annualized core CPI inflation is now back up to an alarming 4%.

6-month annualized core CPI fell to 2.5% before rebounding back toward 3% now.

This is BEFORE tariffs and tax cuts are imposed. Image
PCE inflation, the Fed's preferred inflation measure, is trending sharply higher.

1-month annualized core PCE inflation is now at 3.5%+.

1-month, 3-month, and 6-month annualized core PCE inflation are ALL back on the rise here.

Tomorrow's data will show November's numbers. Image
Meanwhile, bond markets are trading like rate hikes already started.

In what Fed Chair Powell has called normal market "fluctuations," something does not add up.

The 10-year note yield is now up ~90 basis points since rate cuts began in September.

Markets are not convinced. Image
Meanwhile, oil prices are surging adding to the case for higher inflation in 2025.

Our premium clients bought the dip into $67, as shown in our alert below.

With inflation rebounding, we are trading.

Subscribe at the link below to access our analysis:

thekobeissiletter.com/subscribeImage
All while the US now has a record $36.2 TRILLION of Federal Debt.

Deficit spending has been highly inflationary and this is coupled with a potential government shutdown.

Treasury yields are rising as the US government is forced to issue trillions in bonds for deficit spending. Image
The Fed is clearly concerned despite the calm image they are trying to paint.

They raised their PCE inflation target from 2.1% up to 2.5% by the end of 2025.

15 out of 19 Fed officials view inflation risks weighted to the upside.

In September, just 3 officials felt this way. Image
So, what does this all mean for investors and for your portfolio?

As we have been forecasting, we expect more volatility in 2025.

These swings will be tradable.

Subscribe now at the link below to gain instant access to our alerts and analysis:

thekobeissiletter.com/subscribe
Lastly, the million Dollar question is if the labor market
can hold up with tighter financial conditions in 2025.

If not, we risk stagflation, the Fed's nightmare.

In fact, stagflation may already be here.

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

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More from @KobeissiLetter

Jul 18
Ethereum is making HISTORY:

We are currently witnessing one of the LARGEST short squeezes in crypto history.

Ethereum has added +$150 BILLION in market cap since July 1st, days after net SHORT exposure hit record highs.

What's happening? Let us explain.

(a thread) Image
Take a look at the chart below:

Heading into July, net leverage shorts on Ethereum hit a record high, per Zerohedge.

In fact, net short exposure was ~25% ABOVE levels seen in February 2025.

As a result, Ethereum has surged +70% in less than one month.

But that's not all. Image
President Trump's World Liberty Financial has been buying Ethereum.

In fact, less than 24 hours ago, transaction logs showed a $5 million purchase.

This has added fuel to the already raging short-squeeze fire.

Much of these shorts were institutional capital. Image
Read 13 tweets
Jul 15
What is happening in Japan?

Treasury yields in Japan have silently surged to new RECORD highs, with the 30Y Yield hitting 3.20% today.

Japan's 30Y government bonds have LOST -45% of their value since 2019.

Is it too late for Japan to rescue its economy?

(a thread) Image
The collapse of Japan's bond market has been incredibly telling.

In fact, we are beginning to see some similarities in the US as deficit spending accelerates.

It almost seems like investors have lost confidence in the Japanese government's ability to pay down debt. Image
Over the last year, Japan’s 30Y bond yield has surged 100 basis points.

This created massive unrealized losses for financial institutions.

Unrealized losses on domestic bonds for 4 of Japan’s largest life insurers QUADRUPLED in 12 months, to a record $60 billion in Q1 2025. Image
Read 13 tweets
Jul 14
This is not a "normal."

We have reached a point where Bitcoin is moving in a literal STRAIGHT-LINE higher.

Rates are rising, the USD is down -11% in 6 months, and crypto is up +$1 TRILLION in 3 months.

What's happening? Bitcoin has entered "crisis mode."

(a thread) Image
Bitcoin has reached a point where it is quite literally making new all time highs multiple times a day.

Since the US House passed President Trump's "Big Beautiful Bill" on July 3rd, Bitcoin is up +$15,000.

If the surge in gold prices didn't alert you, Bitcoin should. Image
Does it get any more obvious than this?

Take a look at the YTD performance of Bitcoin and the US Dollar Index, $DXY.

There were two distinct points of divergence:

April 9th after the 90-day tariff pause and July 1st as the "Big Beautiful Bill" was passed.

It's beyond clear. Image
Read 13 tweets
Jul 10
Are you paying attention?

Bitcoin is now up +55% since its April 2025 low, hitting a RECORD $115,000.

Meanwhile, the US Dollar just had its WORST start to a year since 1973, falling nearly -11% in 6 months.

This is not a coincidence. Let us explain.

(a thread) Image
Heading into April 2025, Bitcoin was moving in a straight-line lower on trade war fears.

On April 9th, tariffs were delayed for 90 days and Bitcoin bottomed.

On April 20th, the real rally began, without any major news, days after the delay.

So, what really happened here? Image
It's clear that the story for crypto has become much more than just being a decentralized currency.

Rather, it has become the hedge (along with gold) against the biggest crisis in the US:

Deficit spending.

Crypto and gold are telling a clear story: the crisis worsening.
Read 13 tweets
Jul 10
The crisis continues:

Since the debt ceiling was raised on July 3rd, US debt is now up $410 BILLION in 2 days.

This comes after the US Treasury ended "extraordinary measures," raising the debt ceiling by $5 trillion.

We are in the midst of the US' largest crisis.

(a thread) Image
After hitting the debt limit of $36.1 trillion in January 2025, the Treasury began “extraordinary measures” to conserve cash.

Then, last week, President Trump's "Big Beautiful Bill" was signed into law.

This raised the debt ceiling from $36.1 trillion to $41.1 trillion. Image
US debt rising by $410 billion in 2 days after the ceiling is raised is due to a technical process.

This includes refilling the Treasury General Account (TGA), settling delayed obligations, and reversing deferrals.

These were all suspended due to "extraordinary measures."
Read 15 tweets
Jul 9
It's official:

President Trump is now calling for the first 300+ basis point interest rate cut in US history.

This would be 3 TIMES larger than the 100 bps cut on March 15th, 2020, the largest in history.

So, what happens if the Fed does this? Let us explain.

(a thread) Image
First, President Trump mentions that higher rates are costing the US more money on interest expense.

At a high level, this is true.

Annual interest expense on US debt has reached $1.2 TRILLION over the last 12 months.

The US is now paying $3.3 BILLION in interest per day. Image
Now, let's examine the benefits.

President Trump claims a 300 bps rate cut would save $360B/point per year, or $1.08T/year.

It seems Trump computed the $360B/year figure from 1% x $36 trillion in US debt.

However, only publicly held debt matters, which stands at ~$29B. Image
Read 15 tweets

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