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The Kobeissi Letter Profile picture
@KobeissiLetter
Mar 13 • 15 tweets • 6 min read • Read on X
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It's very clear what's happening:

President Trump now believes "short term pain" is his ONLY option to lower inflation and refinance $9+ trillion of US debt.

We have seen over -$5 TRILLION erased from US stocks with the goal of LOWERING rates.

Will it work?

(a thread) Image
Based on our research, President Trump made this conclusion BEFORE inauguration.

However, he began formally articulating it on March 6th.

Below is the headline that destroyed investor confidence in 2025.

President Trump is no longer the "stock market's President" (for now). Image
On March 9th, President Trump further confirmed this shift in mentality.

He acknowledged we are in a "period of transition" and it will "take a little time."

This was the next piece of evidence that President Trump is truly not concerned about a crash in asset prices.
And, President Trump's Cabinet is also onboard with this plan.

Commerce Secretary Lutnick on March 6th: "Stock market not driving outcomes for this admin."

Treasury Secretary Bessent TODAY: "Not concerned about a little volatility."

The sentiment is unanimous. Image
Furthermore, it's also clear that @DOGE and Elon Musk are on board here.

Even after Tesla, $TSLA, saw its 7th largest drop in history on March 10th, Elon made the below post:

"It will be fine long-term" regarding $TSLA stock.

So, why did this seemingly sudden shift happen? Image
First, as we have previously noted, the US is facing a massive refinancing task.

In 2025, $9.2 TRILLION of US debt will either mature or need to be refinanced.

The quickest way to LOWER rates ahead of this colossal refinancing would be a recession.

Rates have been stubborn. Image
For the last 2-3 years, the Fed believed they could obtain a "soft landing."

This was a scenario where inflation falls to 2% and unemployment remains relatively contained.

As inflation began to rebound into Trump's inauguration, he decided a new strategy was needed. Image
Yesterday, data showed the US Government's YTD deficit in FY2025 hit a record $1.15 trillion in February, a new year-to-date record.

The deficit is now $318 billion above 2024 levels for the same time period, or ~38% higher.

This worsened the crisis for @DOGE and Trump. Image
Furthermore, a clearly defined part of President Trump's strategy has been to LOWER oil prices.

Oil prices are down 20%+ since Trump took office.

This morning, Citigroup said oil prices falling to $53 would lower inflation to 2%.

What would lower oil prices? A recession. Image
Simultaneously, President Trump wants to reduce the US trade deficit.

This is the whole point behind his global trade war.

Trump's strategy of levying tariffs on almost ALL US trade partners is lowering GDP growth estimates.

This also sounds like a recessionary case. Image
On top of this, @DOGE and Trump are attempting to cut TONS of government jobs.

These are the same jobs that have accounted for much of the recent job "growth" in the US.

Government jobs have risen by 2 million over the last 4.5 years.

Cutting these jobs will spur a recession. Image
Sum this all up, and here's what Trump wants:

1. Lower inflation
2. Lower oil prices (for #1)
3. Lower interest rates
4. Less deficit spending
5. Reduced US trade deficit
6. Less government inefficiency

ALL of these can be obtained by, or are a byproduct of, economic weakness.
To top it off, President Trump's first month of inflation data came in weaker than expected.

Both headline and core CPI/PPI inflation FELL by more than expected in February.

This gives Trump the "green light" to continue doing what he is doing.

At least for the next month. Image
These changes in the macroeconomic backdrop will have market-wide implications.

We are trading it and will continue to capitalize on it.

Want to see how we are trading the market?

Subscribe to our premium analysis and alerts at the link below:

thekobeissiletter.com/subscribe
The question is, will this strategy work?

The 10-year note yield recently fell ~50 basis points from its high.

Is the "short term pain" worth the "long term gain" in President Trump's economic strategy?

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

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More from @KobeissiLetter

The Kobeissi Letter Profile picture
Mar 12
Gold prices are SURGING:

As the S&P 500 has erased $5+ trillion, gold is now set to cross above a record $20 TRILLION in market cap.

Gold has more than QUADRUPLED the S&P 500's return over the last 12 months.

Gold is telling us something. Let us explain.

(a thread) Image
Gold has CRUSHED most asset classes over the last 12 months.

In fact, while the S&P 500 has risen +11% since March 2024, gold is up nearly +44%.

And, while the S&P 500 is down -5% YTD, gold is officially up over +10% YTD.

Is this the strongest gold market in history? Image
Historically speaking, gold prices are viewed as a safe haven that rises with a weaker Dollar and lower rates.

However, for MONTHS now, gold has risen with high rates, a historically strong US Dollar, and a strong stock market.

This defies just about ALL historical trends. Image
Read 12 tweets
The Kobeissi Letter Profile picture
Mar 11
The case for a SHORT SQUEEZE:

Since February 19th, the S&P 500 has erased -$5 TRILLION in its most one-sided move since the 2022 bear market.

Total PUT option volumes have surged to a record 30+ MILLION contracts over the last 5 days.

Is a short squeeze coming?

(a thread) Image
In just 14 trading days, the Nasdaq 100 has now fallen a whopping -12.5%.

The S&P 500 was trading at all time highs less than 3 weeks ago.

The recent one-sided nature of the stock market's decline is rarely sustainable over the long-term.

We think the SHORT trade is crowded. Image
Take a look at institutional positioning in the lead up to this decline.

Heading into 2025, hedge fund exposure to Magnificent 7 stocks fell to a 22-month low.

We saw a colossal divergence between the Nasdaq 100 and fund positioning for the first time since the 2022 drop. Image
Read 16 tweets
The Kobeissi Letter Profile picture
Mar 11
Morgan Stanley with a MASSIVE call:

As Tesla's stock, $TSLA, falls below its November 5th low, MS is calling for a HISTORIC rally to $800 next.

This would imply a +300% rally which they say can happen within 12 MONTHS.

Here's how they see it happening.

(a thread) Image
Let's begin with some context:

Between November 5th and December 17th, Tesla, $TSLA, rallied a massive +91%.

The stock hit a record market cap of $1.5 trillion before falling below $400/share as the trade war began.

In 1 month, $TSLA is down -33% to pre-election levels. Image
Morgan Stanley thinks this is a huge buying opportunity.

They specifically note that this is an AI play as Tesla is an "embodied AI compounder."

MS believes that the recent drop is due to negative brand sentiment just as much as fundamental sales data and market de-grossing. Image
Read 11 tweets
The Kobeissi Letter Profile picture
Mar 10
The interview that BROKE the market:

24 hours ago, President Trump joined Fox News and acknowledged a recession MAY be coming.

This marked a CLEAR shift in sentiment today, with the S&P 500 now down -$5 TRILLION in 13 trading days.

Here's exactly what happened.

(a thread) Image
Today's decline in technology stocks puts the Nasdaq 100 closer to a bear market than all time highs.

It's down ~12.4% in 13 trading days in one of the fastest downturns since the March 2020 crash.

Technology stocks have gone from being loved to hated within a matter of days. Image
Today's decline puts crypto down $1.3 trillion since its December 17th peak.

Not only does this mean crypto's bear market has BEGUN, its also down -35% in 3 months.

The post-US Reserve announcement rally has been erased.

Crypto is the number 1 indicator of risk appetite now. Image
Read 16 tweets
The Kobeissi Letter Profile picture
Mar 10
The REAL reason markets are crashing:

Over the last 2 months, the S&P 500 and crypto have erased a combined -$5.5 TRILLION of market cap.

We have just witnessed one of the most SUDDEN shifts in sentiment since 2020.

What's happening? Let us explain.

(a thread) Image
Let's begin with a timeline:

Markets have known the trade war was coming since as early as mid-2024.

In December, tariff threats ramped up, and we saw many all time highs in the S&P 500 after that.

Even after the trade war began on February 1st, we saw MORE all time highs. Image
Since February 20th, the S&P 500 has erased a whopping -$4.5 TRILLION in market cap.

That's ~$350 billion in market cap PER DAY over the last 13 days straight.

The Nasdaq is now just 8% away from entering a bear market for the first time since 2022.

What changed so quickly? Image
Read 18 tweets
The Kobeissi Letter Profile picture
Mar 9
Does the US government WANT a recession?

In 2025, $9.2 TRILLION of US debt will either mature or need to be refinanced.

The quickest way to LOWER rates ahead of this colossal refinancing would be a recession.

Could the US benefit from a market crash?

(a thread) Image
Over the last 2 months, the 10-year note yield has fallen ~60 basis points.

This is partially due to anticipation of DOGE deficit spending cuts.

But, it's also due to increased uncertainty and rising odds of a US recession.

A recession would almost guarantee rate cuts. Image
Why would a recession guarantee lower rates?

Every US recession dating back to the 1980s followed a peak in the Fed Funds Rate.

When economic growth stalls, the Fed "stimulates" the economy.

This means lowering interest rates to lower cost of capital and promote spending. Image
Read 16 tweets

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