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The Kobeissi Letter
@KobeissiLetter
Official X account for The Kobeissi Letter, an industry leading commentary on the global capital markets. Email us: support@thekobeissiletter.com
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May 25
•
15 tweets
•
6 min read
What is happening in Japan?
In 45 days, Japan's 30Y Government Bond Yield rose a MASSIVE +100 basis points, to a record 3.20%.
Over $500 BILLION worth of "safe" 40Y Japanese Government Bonds have lost 20%+ in 6 weeks.
Is Japan's bond market imploding?
(a thread)
What's happening in Japan is not "normal."
Japan's 40Y government bond that was yielding ~1.3% two years ago is now yielding 3.5%.
As yields continue to surge, inflation has begun to rebound and Japan's economy is decline.
It appears Japan is entering a recession.
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May 23
•
13 tweets
•
6 min read
The trade war is back:
After a brief pause, Trump just threatened 50% tariffs on the EU beginning June 1st and 25% tariffs on Apple.
In 5 days, the S&P 500 has erased -$1.5 trillion of market cap.
What's next? Here's why you NEED to watch the bond market.
(a thread)
First, at 7:19 AM ET today, President Trump made the below post.
As Apple, $AAPL, has moved iPhone production to India, Trump said this was not acceptable.
Trump says iPhones must be made in the USA or face tariffs of at least 25%.
The S&P 500 to 5820 on this news.
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May 21
•
14 tweets
•
5 min read
What just happened?
At 1:00 PM ET, the S&P 500 fell nearly -80 points in 30 minutes without any major "news."
What actually happened was a weak 20Y Bond Auction which sent US Treasury Yields soaring.
Investors MUST watch yields here. Let us explain.
(a thread)
The US frequently conducts bond auctions, where investors can buy US Treasuries (debt).
Today, the US conducted a $16B auction of 20Y Bonds.
Typically, these auctions happen with minimal impact on markets.
However, today was different which sent yields soaring.
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May 17
•
13 tweets
•
5 min read
It's official:
For the first time in history, Moody's has downgraded the United States' credit rating.
Moody's cites concerns over soaring US debt levels with interest on US debt set to hit 30% of REVENUE by 2035.
What does it all mean? Let us explain.
(a thread)
This isn't the first time the US has seen a credit rating downgrade.
In 2011, S&P downgraded the US' credit rating from AAA to AA+.
As seen below, the downgrade came with an ~8% drop in the S&P 500 in 2 months.
The 10Y Yield fell as much as ~35% within the first 2 months.
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May 5
•
12 tweets
•
5 min read
Gold won't stop.
Gold is surging again, now trading above $3,300/oz, even as the S&P 500 is up +17% from its April 7th low.
Since 2020, the gold ETF, $GLD, has now OUTPERFORMED the S&P 500 by 35 percentage points.
Are you still watching gold?
(a thread)
Heading into 2025, $GLD was underperforming the S&P 500 since 2020 by ~10%.
However, as uncertainty has risen, $GLD is now up +109% since 2020 compared to +74% in the S&P 500.
But, why are gold prices surging even as the market recovers?
Uncertainty remains the answer.
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May 3
•
12 tweets
•
5 min read
This is insane:
Warren Buffett's Berkshire Hathaway just announced they now hold a record $348 BILLION in cash.
Since 2022, Buffett's cash balance is up $239 BILLION and he has net SOLD stocks for 10-straight quarters.
What does Warren Buffett see here?
(a thread)
Below is Berkshire Hathaway's balance sheet:
They now hold $305.5 BILLION of US Treasury Bills and $36.9 billion of cash in their insurance and other business.
In their Railroad, Utilities and Energy business, they hold another ~$5.3 billion of cash.
This is unprecedented.
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Apr 30
•
13 tweets
•
5 min read
The Fed's worst nightmare just got worse:
New data showed that US GDP CONTRATCTED by -0.3% in Q1 2025, while +0.3% growth was expected.
To make things worse, the GDP Price Index surged to +3.7%, its highest since August 2023.
What does Powell do now?
(a thread)
Annualized US GDP growth came in at -0.3% this morning, below expectations of +0.3%.
This marks the first negative reading since Q2 2022.
Just 4 months ago, GDP was expected to grow by over 3% in Q1 2025.
We have seen a MASSIVE shift in US economic output.
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Apr 21
•
14 tweets
•
6 min read
Where are the trade deals?
The S&P 500 has now erased -$2.5 TRILLION since the April 9th high after the 90-day tariff "pause."
While markets await trade deals, Japan just said they "won't just keep conceding" in US tariff talks.
Here's what's happening.
(a thread)
On April 16th, Bloomberg published the below article claiming that trade negotiations with Japan are underway.
Trump Administration officials claimed trade deals were being discussed with 50+ countries.
Markets rallied sharply on this news over the last 5-10 days.
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Apr 16
•
13 tweets
•
5 min read
What just happened?
After rising +2,400 points since its April 7th low, the Nasdaq is now down nearly -900 points since Monday's high.
Today, Fed Chair Powell made it clear that the "Fed put" is NOT saving the market any time soon.
Here's what happened.
(a thread)
First, selling pressure began mounting yesterday at around 6 PM ET.
Nvidia, $NVDA, said the US banned them from selling H20 chips to China "for the indefinite future."
Nvidia says this will come with a $5.5 billion charge to Q1 earnings.
$NVDA fell over -10% intraday today.
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Apr 16
•
13 tweets
•
6 min read
Gold is trading like we are in a depression:
Over the last 20 years, gold is now OUTPERFORMING stocks, up +620% compared to a +580% gain in the S&P 500.
Over the last 9 months, gold has officially surged by over +$1,000/oz.
What is gold telling us?
(a thread)
Beginning in 2020, stocks widened their performance gap against gold.
However, as equities have entered a bear market, capital has rushed into gold.
As we have been writing for the last 12+ months, gold is the ONLY global safe haven asset now.
US bonds are not as desired.
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Apr 10
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12 tweets
•
5 min read
We now know Trump's TOP economic priority:
For weeks, President Trump said there would be NO tariff delay, even as stocks erased $12+ TRILLION.
Then, the bond market BROKE and a 90-day tariff pause was implemented 12 hours later.
Keep watching bonds.
(a thread)
Prior to the April 2nd "reciprocal tariffs," the 10-year note yield was falling in a straight line lower.
This meant the trade war could continue because rates were falling.
However, as the basis trade unwound due to volatility, the 10-year note yield surged +65 bps to 4.50%.
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Apr 9
•
13 tweets
•
5 min read
The bond market just BROKE:
In just 3 days, the 10Y Note Yield surged 60 basis points while the S&P 500 fell -8%.
This marks the LARGEST 3-day increase since 1982 and one of the largest divergences in history.
What happened? The basis trade broke.
(a thread)
More specifically, something broke last night.
Between 7 PM ET and 12 AM ET, the 10-year note yield surged ANOTHER +25 basis points.
The 30-year note yield jumped above 5.00% even as stock market futures collapsed.
This is extremely unusual price action, something broke.
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Apr 8
•
13 tweets
•
6 min read
The BULL trap:
We just witnessed the biggest bull trap of 2025 with the S&P 500 erasing a ~4.5% rally in ~3 hours.
Between 10:30 AM ET and 3:15 PM ET, the S&P 500 erased -$2.3 TRILLION of market cap.
Bull traps are TEXTBOOK signs of a bear market.
(a thread)
The day began with an ALL GREEN heat map pushing the S&P 500 toward 5300.
This put the index nearly +450 points ABOVE levels seen at yesterday's low.
However, we continued to reiterate that it simply did NOT make sense.
The trade war only got worse, but stocks were rising.
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Apr 7
•
13 tweets
•
5 min read
The LESSON investors learned today:
At 10:15 AM ET, US stocks swung $7 TRILLION in 30 minutes on a "fake" tariff deal headline.
While the move was undone, we obtained KEY information about the current state of the market.
Here's what you need to know.
(a thread)
Beginning with some background:
At around 10:15 AM ET, it was reported that Trump was considering a 90-day pause on tariffs.
The S&P 500 rose +400 POINTS in a matter of minutes before the White House called this "fake news."
Then, the S&P 500 erased -300 points of that rally.
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Apr 6
•
15 tweets
•
5 min read
The free fall continues:
Today's drop in US stock market futures puts S&P 500 futures down -22% and in bear market territory.
The US stock market has now erased an average of $400 billion PER TRADING DAY for 32-straight days.
Is it time to BUY stocks yet?
(a thread)
Exactly 32 trading days ago, the S&P 500 hit a new all time high of 6147.
In the below timeline, we explain how the S&P 500 has erased over 1,300 points in 32 trading days.
This is a March 2020-style decline and sentiment has reach some of its most bearish levels in history.
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Apr 6
•
15 tweets
•
6 min read
Did the White House compute "reciprocal tariffs" incorrectly?
New Trump tariffs are claiming to raise $3+ trillion over 10 years.
According to AEI, the formula used to calculate tariffs levied on the US was INFLATED by up to 400%.
Here's the breakdown.
(a thread)
At the April 2nd "Liberation Day" announcement, President Trump held up a poster with reciprocal tariffs.
The formula used to compute these tariffs seemed rather simple.
Trump said the US was simply charging foreign countries 50% of what they are charging the US.
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Apr 6
•
15 tweets
•
6 min read
It's "reciprocal tariffs on reciprocal tariffs" week:
After imposing tariffs on 185 countries at ONCE, we expect retaliation this week.
The US stock market has lost $11.1 TRILLION in 44 trading days, equivalent to ~38% of US GDP.
Here's what you need to know.
(a thread)
Below is a full breakdown of the "reciprocal tariffs" announced by President Trump on April 2nd.
Goldman Sachs sees an 18.8 percentage point increase in tariffs after the April 2nd announcement.
This includes at 47.5 percentage point increase on China.
This is historic.
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Apr 5
•
13 tweets
•
5 min read
This is truly insane:
On February 20, JP Morgan CEO Jamie Dimon sold $234 million worth of $JPM stock.
On February 22, Warren Buffett disclosed a record $334 BILLION cash balance.
30 trading days later, the Nasdaq 100 crashed -24%.
How did they know?
(a thread)
Jamie Dimon's purchases and sales of $JPM have been widely watched over the years.
They are also generally regarded as a "leading indicator" for the broader market.
Since Dimon sold, $JPM has fallen over -25% in the sharpest drop since 2022.
How did he know yet again?
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Apr 5
•
14 tweets
•
6 min read
The hedge fund MASS exodus:
On Thursday ALONE, hedge funds sold $40 BILLION of stocks in their largest daily selling spree since 2010.
Short sales exceeded longs by 3 TIMES, with North American stocks accounting for 75% of volume.
Is "capitulation" near?
(a thread)
While hedge funds ran to the exit, retail investors bought like never before.
According to JP Morgan, retail investors bought $4.7 billion of stocks on Thursday.
This is the largest daily purchase by retail investors since 2015.
Positioning has rarely been this polarized.
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Apr 4
•
13 tweets
•
5 min read
It's official:
The Nasdaq 100 is in a bear market following a -6% drop today, the largest drop since March 2020.
US stocks have now erased a massive -$11 TRILLION since February 19th with recession odds ABOVE 60%.
What does it all mean? Let us explain.
(a thread)
As of today's close, we now have multiple major market indices in bear market territory, including:
1.
Nasdaq 100
2.
Russell 2000
3.
Nikkei 225
4.
Magnificent 7
The S&P 500 fell over 10% in 2 days for the 7th time in history.
This was last seen in 2020, 2008, and 1997.
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Apr 4
•
16 tweets
•
7 min read
The "World War 3" of Trade Wars Has Begun:
Americans are waking up to the first MAJOR tariff retaliation against President Trump.
China has announced 34% tariffs on ALL US goods with the S&P 500's 2-day losses now at -$3.5 TRILLION.
Here's what just happened.
(a thread)
This was the move that we all knew was coming, but wanted to pretend it wasn't.
China has announced that ALL US imports will be subject to this 34% tariff.
And, they added 11 American companies to their list of "unreliable entities" and 16 to their "export control" list.