The Kobeissi Letter

The decline is accelerating:

Nasdaq 100 futures are now down -330 POINTS since the market opened just hours ago as DeepSeek takes #1 on the App Store.

This is how you know DeepSeek has become a major threat to US large cap tech.

The stock market does not lie.

(a thread) 

For some background, DeepSeek is a Chinese AI startup that appears to have spawned out of nowhere.

It competes with ChatGPT and cost less than $10 million to develop.

It was developed with chips that are considered to be FAR less advanced than those used by US AI companies. 

Users have run multiple benchmarks between DeepSeek and ChatGPT.

In many categories, DeepSeek is actually outperforming ChatGPT.

For a product that was developed in a matter of months, this is incredible.

Is large cap tech in the US losing its dominance? 

To put this into perspective, OpenAI, the parent company of ChatGPT, has raised $17.9 BILLION in capital over 10 rounds.

The company was valued at ~$157 BILLION in October 2024.

OpenAI has ~22 TIMES more employees than DeepSeek.

This is why markets have been blindsided. 

As seen below, DeepSeek is now a top performer in AIME, MATH-500, and GPQA benchmarks.

ChatGPT still excels in coding benchmarks, but the gap is narrowing.

The speed at which DeepSeek was developed has proven that US AI dominance is at risk. 

On top of this, DeepSeek has become the #1 downloaded free app on the App Store.

Users are reporting that API experience is user-friendly, rate limits are not an issue, and it is likely to be integrated in agentic AI.

Agentic AI is what Nvidia said is the next big thing. 

It gets even better; DeepSeek is ~96% CHEAPER than ChatGPT.

- Cost of OpenAI o1: $60.00 per 1M output tokens

- Cost of DeepSeek R1: $2.19 per 1M output tokens

DeepSeek R1 is 100% Opensource and a fraction of the cost of ChatGPT. 

Needless to say, investors in large-cap US tech are worried.

The Magnificent 7 stocks are trading ~2 standard deviations above levels seen in 2001 compared to global equities.

Much of the bull market over the last 2 years has been on the basis of AI hardware and software. 

On Friday, we posted the below alert for our premium members.

We took shorts as the S&amp;P 500 hit 6122 and called for a sharp reversal.

Now, those shorts are up nearly +70 POINTS in hours.

This market is incredible.

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This explains the severe underperformance seen in Nasdaq futures at the open just 2 hours ago.

The Nasdaq is currently down DOUBLE as much as the S&amp;P 500.

US equity markets are on track to erase over $1 trillion of market cap during Monday's session. 

This all comes as the Magnificent 7 now reflects a record 34% of the S&amp;P 500.

These companies have added $5 TRILLION in market value since the beginning of last year.

These 5 stocks are worth now nearly as much as China and Hong Kong's stock markets COMBINED. 

On top of the threat to US tech dominance, we are seeing trade wars escalate with new tariffs beginning.

As volatility spikes, we are trading the swings in the market.

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This all comes after President Trump announced The Stargate Project, a $500 BILLION investment in AI in the US.

If DeepSeek is able to develop AI at less than 1% of the cost, is $500 billion even needed?

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

Interest rates are SKYROCKETING:

The 10-year note yield is nearing 4.70% with mortgage rates on their way to 8%+.

Since the "Fed pivot" began just 111 days ago, interest rates are up more than +110 basis points.

This has NEVER happened before. So, what's next?

(a thread)

It has now been 111 days since Fed rate cuts began on September 18th.

Meanwhile, the 10-year note yield is up 110 basis points.

In almost all instances, other than 1998, interest rates FALL when the Fed cuts rates.

Yet another similarity to the Dot-com bubble is seen now. 

Here's a chart showing long rates since the "Fed pivot" began compared to the average in past cycles.

Rates typically fall by ~25 basis points at this point in a Fed interest rate cut cycle.

111 days later, and we are up +110 points, or a +135 POINT divergence from the mean. 

Effectively, the market is FIGHTING the Fed at a historic pace.

For all investors, this move in long run rates cannot be ignored.

As we have said multiple times since November, we believe inflation is back on the rise.

We also believe that the US is experiencing stagflation.

Not convinced? Take a look at both Gold and the US Dollar, $DXY.

While $DXY hits its highest level since November 2022, gold prices are RISING, now up 29% since March.

Gold and the US Dollar almost never rise together on a long-term basis.

Inflation is being priced-in. 

Our premium members got ahead of this trend and bought gold in 2024.

The relative strength of gold in this market is as if the market is trading in an economic crisis.

Recently, we alerted a buy at $2600 as seen below.

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Meanwhile, Core CPI is back to 3.3% and headline CPI is at 2.7% and rising in the US.

All 3 major inflation metrics, CPI, PPI, and PCE, are rising.

1-month, 3-month, and 6-month annualized inflation metrics are rising even faster.

The market is not buying the "Fed pivot." 

Take a look at Germany where CPI inflation just jumped from 2.2% to 2.8% in December.

Core inflation in Germany is now back above 3.0% as well.

We expect a rebound in inflation not only in the US, but also in Europe, and bond markets are pricing this in. 

Even more alarming:

As the US deals with a rebound in inflation, China now has its worst wave of deflation since the 1990s.

As a result, the Chinese Yuan is now traded at its weakest level against the US Dollar since September 2023.

The fight against inflation is not over. 

The different economic backdrops across different markets will result in more volatility in 2025.

Apollo estimates a 40% chance that rate HIKES return this year.

How are we trading this?

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It has now been 61 days since this clip.

Fed Chair Powell said that the rising 10-year note yield is unlikely a "material change in financial conditions that [will] last."

If inflation rises again in the upcoming CPI, PPI and PCE data, the Fed will be in a bad spot. 

Buying a home 2021 with a 30Y mortgage meant you spent a total of $473K in principle and interest. 

As rates rebound, you now spend a total of $873K.

That's $300K MORE, or 63%, in a ~4 year time difference.

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

The housing market is frozen:

Mortgage demand in the US has fallen to its lowest level since 1995, according to Reventure.

Since the peak seen less than 4 years ago, US mortgage applications are down a MASSIVE -63%.

Homebuyers are officially giving up.

(a thread) 

US housing affordability has never been worse:

The annual income needed to buy the median-value home in the US risen to a record $109,564.

This value has DOUBLED in just 4 years.

Currently, the median US household income is $83,431, or $26,133 less than required. 

To put this into perspective, at the 2006 housing bubble peak this difference was ~$10,000, or 2.6x less.

The gap between income needed to buy a home and annual income has never been larger.

This means that housing payments as a % of median income are now HIGHER than 2006. 

Further emphasizing the halt in the housing market is existing home sales.

US existing home sales closed 2024 at ~ 4.04 million in 2024, marking the worst year since 1995.

This also aligns with the sharp drop in mortgage demand.

Sales came in below 2008 levels. 

High interest rates and record prices have been a lethal combination.

The median age of all homebuyers is now 49 years old, up from 31 in 1981.

Furthermore, 40% of US homes don’t have a mortgage.

In other words, cash buyers are winning and long-time homeowners won't sell. 

In June 2024, the housing market made history again.

As seen in 2005, it became CHEAPER to buy a new house than an existing house.

The median new home sold for $417,400 while the median existing house sold for $419,300.

Something is wrong when new is cheaper than old. 

As a result of high inflation and high interest rates, homebuyers are making smaller houses.

The size of new homes being built has declined by 12% since 2016.

The median new home is now ~2,175 square feet after nearing as high as 2,500 square feet in 2016. 

Despite evaportaing demand and persistent inflation, asset prices keep rising.

Home prices are now officially up over 50% since May 2020.

The S&amp;P 500 extended its run to over +100% since the pandemic.

Historic run is an understatement. 

Our premium members got ahead of this trend and bought market dips in 2024.

Below are some alerts we posted recently.

Since August 1st, subs are up ~2,000 POINTS on S&amp;P 500 trades.

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Even as the "Fed pivot" began, homebuyers are not seeing any relief.

Since September, the Fed has cut interest rates by 100 basis points.

Over this same timeframe, 30-year mortgage rates are up from 6.10% to 7.26%.

Homeownership costs have risen materially in 4 months. 

To put this all in perspective:

Buying a home 2021 with a 30Y mortgage meant you spent a total of $473K in principle and interest. 

As prices rise and rates rebound, you now spend a total of $873K on the median priced home.

That's $300K MORE, or 63%, in ~4 years. 

These drastic moves in interest rates and inflation have clearly spread well beyond the housing market.

We are already seeing the Fed backtrack on the "Fed pivot."

We are trading this.

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Today's CPI inflation data showed that shelter inflation is still elevated, at 4.6%.

This includes rent inflation of 4.3% and homeowner inflation of 4.8%.

It will be a while before affordability improves.

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

What is happening here?

The US government's balance sheet now holds a massive $45.5 TRILLION in liabilities.

At the same time, the US has just $5.7 trillion in assets.

How did we end up with a $39.8 TRILLION gap between assets and liabilities?

(a thread) 

Let's pretend the US government was a public company.

Typically speaking, investors are happy with a total debt to total asset ratio of ~0.3x to ~0.6x.

In other words, investors would like to see total debt levels at most around HALF of total assets.

Now, what about the US? 

As of February 20th, the US government now has ~$36.2 TRILLION worth of debt.

The debt is split into 2 categories.

Total debt held by the public, as seen in the balance sheet above, is currently up to ~$28.9 trillion.

Intragovernmental debt is currently at ~$7.3 trillion. 

Now, if we compute the debt to asset ratio of the US Govt we get a whopping 6.4 TIMES.

In other words, the US now has a debt to asset ratio that is more than 10 TIMES as large as an "acceptable" ratio for a public company.

Describing this as a crisis is an understatement. 

And, it gets even worse.

The US government had $2.4 TRILLION of net operating costs in 2024.

This is equal to ~43% of the US government's total assets.

Since 2020, the US government has averaged a $2.2 trillion annual deficit.

That's ~$10.8 trillion in 5 years. 

Keep in mind, net operating costs are NET of tax and other revenue received.

Take a look at 2023 and 2022 below.

In 2023, the US government had total costs of $7.7 trillion but only had revenue of $4.5 trillion.

If this were a public company, it would be on bankruptcy watch. 

This also explains why Gold is rising and US bond prices are falling.

Foreign countries' share of US sovereign debt has reached ~33%, near the lowest in 25 years.

This percentage has dropped by ~22 points since the 2008 Financial Crisis.

Foreigners are selling US Treasuries. 

The historical relationship between US bonds, gold and the US Dollar is BROKEN.

Since late-July, gold prices are up ~24% while the US Dollar is up ~2% and the 10-year note yield is up ~8%.

This is largely due to markets pricing-in prolonged deficit spending and inflation. 

Our premium members have been buying gold for months.

We bought the dip into January and called for $2,850+.

Once $2,850 was broken, we began calling for $2,950 which was just crossed.

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In FY 2024, the US government saw $7.8 TRILLION in gross costs and just ~$5.0 trillion in revenue.

That's $1.56 of cost of every $1.00 of revenue that the US generates.

This explains why total US debt is officially up more than $13 trillion since the start of 2020. 

And, here's the worst part:

The US Treasury "justifies" this massive gap in assets and liabilities with  this statement.

"The Balance Sheet does not include the financial value of the government’s sovereign powers to tax, regulate commerce, or set monetary policy or value." 

This net position is only growing and set to cross $40 trillion for the first time in history in FY 2025.

Between 2023 and 2024, the net liability position grew by 6.4%, nearly DOUBLING inflation.

The "other" category of liabilities nearly doubles the total US cash balance. 

For years, the growing deficit and balance sheet issues were "too distant" to matter.

Now, we are finally seeing material effects on markets.

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Sum this all up and the US now has a public debt net interest to GDP ratio of 4.6%.

This is almost DOUBLE the 2nd highest among the world's largest economies.

We need a more sustainable solution.

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

DeepSeek is CRUSHING US stocks:

Nasdaq 100 futures are down -1,000 POINTS, set for their BIGGEST drop since Sept 2022.

Nvidia is set to erase $400+ BILLION of market cap today, the biggest 1-day loss in a stock in HISTORY.

What is happening? Let us explain.

(a thread)

For some background, DeepSeek is a Chinese competitor to ChatGPT.

It was reportedly developed in UNDER 2 months.

In many categories, DeepSeek is actually outperforming ChatGPT.

DeepSeek is now a top performer in AIME, MATH-500, and GPQA benchmarks compared to ChatGPT. 

DeepSeek has officially become the #1 app in the App Store in BOTH the US and China.

Less than 1 month ago, this app did not even make the top 100 list.

Search interest in DeepSeek is now nearly TRIPLE the levels seen in ChatGPT and Gemini. 

In a benchmarking test, AIME accuracy of DeepSeek was compared to ChatGPT.

As seen below, int ~8,500 steps, DeepSeek is able to outperform ChatGPT's o1 model.

Of course, competition is normal and should be expected.

So, why are markets devasted by this development? 

DeepSeek was developed for a FRACTION of the cost of ChatGPT.

To train the model, it cost ~$5.8 million, according to DeepSeek.

There is debate about the total cost to develop it.

However, let's just assume it cost $2 BILLION to develop, or 350x their stated training cost. 

Compare this to OpenAI which just raised $6.6 billion in their latest round ALONE.

OpenAI has ~4,500 employees compared to just ~200 at DeepSeek, or ~22 TIMES more people.

And, the chips used by DeepSeek are far less advanced.

Markets can't figure out how they did this. 

This morning, Nasdaq 100 futures fell nearly -1,100 POINTS, the biggest drop in over 2 years.

Roughly 350,000 Nasdaq 100 futures contracts have been traded pre-market so far.

This is TRIPLE the 30-day average for pre-market trade.

Volume is very telling here. 

So, why is Nvidia falling if Nvidia makes AI chips which will now be in even higher demand?

Markets are concerned over DeepSeek's ability to develop STRONGER AI with WEAKER chips.

Does this mean that AI hardware advancement is less necessary?

We're skeptical on this front. 

Last week, we posted the below alert for our premium members.

We took more SHORTS as the S&amp;P 500 hit 6120 and called for a drop.

Now, those shorts are up +170 POINTS in hours. This market is VERY tradable.

Access our alerts at the link below:

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It gets even better; DeepSeek is ~96% CHEAPER than ChatGPT.

- Cost of OpenAI o1: $60.00 per 1M output tokens

- Cost of DeepSeek R1: $2.19 per 1M output tokens

DeepSeek R1 is 100% Opensource and a fraction of the cost of ChatGPT.

Cheaper AND better is a lethal combo. 

Still not convinced?

As US stocks fall sharply, Chinese stocks are rising today.

The Hong Kong 50 is up 1.6% while the Shanghai Composite is FLAT.

This marks some of the strongest outperformance of Chinese to US stocks in over 2 years.

China is stealing the spotlight. 

This is particularly concerning as the semiconductor sector has become HUGE in the US.

It now accounts for a record ~5% of the entire US market.

This exceeds the previous peak posted at the 2000 Dot-Com Bubble by 1.2 percentage points.

Semiconductor stocks are crashing today. 

This also comes as President Trump announced the $500 BILLION Stargate project to develop AI.

Meanwhile, Meta is investing $60 billion in a datacenter the size of Manhattan.

DeepSeek has investors questioning the development costs of ANYTHING related to AI this morning. 

Is today's crash in stocks a buying opportunity or the start of another major bear market in the US?

As volatility spikes, we are trading the swings in the market.

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Over the last few days, the DeepSeek news story count has exceeded 1,700.

As seen in the chart below, news and search interest in DeepSeek has gone parabolic this weekend.

What will US big tech do now?

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

What just happened?

At 9:44 PM ET on a casual Friday night, president-elect Trump launched the biggest memecoin in history, $TRUMP.

Since then, the coin is up 9,500% with $2.2 BILLION of volume traded in under 12 hours.

What does this all mean? Let us explain.

(a thread)

The initial launch of the coin was so hard to believe, it came with skepticism.

Traders figured Donald Trump's account was hacked.

However, no statement on a hack surfaced so the coin kept rising.

At 12:45 AM ET, $TRUMP broke above $10.00 and the rally accelerated rapidly. 

In fact, not even Elon Musk was sure that Donald Trump's X account had not been hacked.

Nearly 12 hours later, it is clear that this coin is legitimately launched by Trump.

Donald Trump is now the first president in history to launch a memecoin. 

In the early hours, traders were making unprecedented returns on the swings.

In the first 2 hours, one trader made $50,000 into nearly $1.1 MILLION.

The coin, $TRUMP, outperformed the S&amp;P 500's last 30-year return in the first 2 hours.

And, it's still rising as we speak. 

For example, $100 invested in the S&amp;P 500 in 1994 would be worth $2,250 today.

That's a 2,150% return over the last 3 decades in the index.

Trump's memecoin, $TRUMP, returned +4,000%+ in under 4 hours after it launched last night.

The million Dollar question: Can it hold? 

First, it's important to note that only 20% of MAXIMUM supply is currently on the market.

This means that supply currently stands at 200 million coins.

Over the next 36 months, the remaining 800 million coins can enter supply.

It is believed that Trump holds those 800 million. 

This explains Market Cap versus the Fully Diluted Valuation (FDV) of the coin.

If total supply of 1 billion was circulating now, total market cap would be ~$21 billion.

But since only 200 million out of 1 billion coins are circulating (20%), the market cap is ~$4.2 billion. 

The question is:

Can demand keep up when the remaining 80% of supply hits the market?

Here's the $TRUMP coin emission schedule which shows how maximum supply will be reached.

Skeptics say this will send the coin to $0, bulls say its a gradual emission schedule. 

Here's a potential interpretation of this emissions curve.

In the first 3 months, likely 0 tokens are released due to cliffs.

From there, token supply increases from 16.7 million per month to 33.3 million per month after year 1.

Can the market handle this supply? 

We are now beginning to see some WILD trades.

One trader invested $1.1 million into the $TRUMP coin around launch time.

This morning, that position was worth $120.3 MILLION, for ~$119 million in profit.

Another trader reportedly turned $800 into $300,000+. 

Google Search interest in "Trump Coin" continues to stand at a record high as Americans see the news.

The timing was strange as launching the coin on a Friday night resulted in many missing the initial news.

Could this be the coin that spurs mainstream adoption of crypto? 

It will be interesting to see how this all unfolds as the coin is still under 1 day old.

Millions of dollars of volume are flowing per minute with hundreds of trades at $1M+.

Are you buying the $TRUMP coin?

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

The Fed's worst nightmare just got worse:

ALL 3 major metrics of inflation in the US are rising and rate HIKES recently became more likely.

Meanwhile, President Trump just said that he will "DEMAND that interest rates drop immediately."

What will the Fed do now?

(a thread)

It is clear that inflation is HOT, even with the unexpected drop in Core CPI, to 3.2%.

1-month annualized core PCE inflation is at 3.5%+ and and core CPI is 120 basis points above the Fed's target.

1-month, 3-month, and 6-month annualized core PCE inflation are rising. 

When the Fed "pivoted" in Sept 2024, they noted that the labor market was weakening.

They felt inflation was falling to 2% and the labor market needed support.

Instead, inflation is now rising and the December jobs report CRUSHED expectations.

Unemployment is down to 4.1%. 

Meanwhile, ISM Services Price Paid data is coming in HOT.

This is considered a leading indicator for PCE inflation, the Fed's preferred inflation metric.

We now have PCE rising again as Prices Paid rebound, this should also put PCE above 3.0%.

2% inflation is distant now. 

The Fed still felt like they had everything under control, they just needed to PAUSE rate cuts.

Bond markets were already trading as if rate hikes returned, helping righten financial conditions.

This led yields on 10 year rates to their highest against 2 year rates since 2022. 

Also, the equity market remained fairly unfazed even with the rapid spike in yields.

Even as the 10-year note yield neared 5%, the S&amp;P 500 and Nasdaq kept pushing higher.

The Fed could become LESS dovish without worrying about markets as much.

This gave the Fed some relief. 

We bought the dip in $SPX into 2025 along with our premium members.

As alerted below, our members just cashed in 200+ POINTS in 1 week.

Identifying this trend EARLY in 2024 was extremely profitable for us.

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However, the Fed is now dealing with another major hurdle.

President Trump is calling on the Fed to cut rates even as inflation rebounds.

His plan is that lower oil prices will help offset the effects of lower interest rates on inflation.

Will this idea actually work? 

Since inauguration, oil prices have traded lower on his promises of higher production.

Offsetting the effects of lower rates would require VASTLY lower prices, if even possible.

Let us know if you'd like a thread on this concept.

Oil prices will be highly volatile in 2025. 

Heading into inauguration, we posted this alert for our premium members.

We called for oil prices to fall back below $75.00 as Trump took office.

Our shorts are up sharply as the thesis came to fruition.

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Since rate cuts began in September 2024, the 10-year note yield is up ~110 basis points.

In almost all instances, other than 1998, interest rates FALL when the Fed cuts rates.

Yields dropped slightly after Trump's statement today, but they remain strong.

What will the Fed do? 

We now have the Fed vs market vs Trump.

Rate expectations have shifted HIGHER, from the blue to white line.

Markets see less rate cuts, the Fed will pause, and Trump wants lower rates.

Who will win?

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

This keeps getting worse:

Hayden Davis, an insider behind the memecoin endorsed by Javier Milei, $LIBRA, said they made "more or less $110 MILLION."

Some insiders were reimbursed $5+ million while retail saw -$4.4 BILLION of market cap erased.

What is happening here?

(a thread)

An exclusive interview with Hayden Davis, the lead insider behind $LIBRA, was just released by Coffeezilla.

As seen in the clip below, Hayden says he now has:

1. More or less $100 million cash
2. $11 million in tokens
3. $13 million in fees

Total cash is ~$113 MILLION. 

But, it gets even worse.

Hayden admits that he was a part of the launch of Melania Trump's memecoin.

After the launch of $LIRBA, wallet P5tb4 sent $2.4M of profits to 0xcEA, a $MELANIA insider's wallet, per @Bubblemaps.

The same insiders cashed-in MILLIONS on $MELANIA. 

Now that we know 0xcEA is likely both a $MELANIA and $LIBRA insider's wallet, this makes more sense.

0xcEA is also linked to wallet DEfcyK, an insider that cashed out $87.4 MILLION on $LIBRA's launch day.

In fact, not only is DEfcyK an insider, it's the creator of $LIBRA. 

Hayden admits insiders traded on nonpublic information, which is a violation of securities law.

He also said they used insider access to "snipe" price, control liquidity, and influence price action.

This is a clear confession of market manipulation (also illegal). 

And, it keeps getting worse.

Dave Portnoy, @stoolpresidente, revealed that Hayden "refunded" $5 million of his losses on $LIBRA.

Hayden claims this is his "personal money" and not related to the $110M from $LIBRA.

Where did the money come from? Likely $MELANIA and other rugs. 

In a separate post, @stoolpresidente says his friend "Elio" is behind wallets that have bought multiple coins Portnoy promoted.

He says there "are advantages to being one of my best friends staying in my house when I'm trenching."

This is another case of insider trading. 

To put this into perspective, this admission is like Jeff Bezos telling a friend what Amazon's earnings will be before they are posted.

Sharing material non-public information with a friend who then trades on it is the DEFINITION of insider trading.

Incredible. 

Coffeezilla then asks if its unfair for Hayden to snipe $LIBRA if he launched it.

His answer: "So, I would say no."

His rationale? If he doesn't "snipe" it then someone else will.

In other words, Hayden believes $LIBRA creators' insider trading is completely justified. 

As seen in our chart below, the $87.4 million "snipe" by $LIRBA insiders marked the near EXACT top.

This is the same $87.4 million linked to the creator's wallet.

Insiders cashing out ~$110 million resulted in a -$4.4 BILLION crash due to lack of liquidity in the market. 

Hayden goes on to say that he is using the $110M+ from $LIBRA as leverage in negotiations.

Not only is this Misappropriation of Funds (Potential Fraud), but he is also using those funds as a bargaining chip.

Hayden admitted to at least 7 felonies throughout the interview.

Hayden proposed 3 solutions with the $110M in cash he holds:

1. Give the $110M to an Argentina non-profit  

2. Give the $110M back as a refund

3. “Inject” the $110M back into the chart

He is leaning towards option #3, likely because it's allows him to keep the most money.

Lastly, the most ironic part is that $LIBRA jumped 100% on hopes of the capital "injection."

This means investors could be rugged AGAIN if he doesn't follow through.

Did Milei just destroy the memecoin market?

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

What just happened?

Melania Trump, the First Lady of the US, just launched her own memecoin, $MELANIA.

Less than 48 hours ago, Donald Trump launched $TRUMP which just erased $7.5 BILLION in market cap in 10 MINUTES.

Wondering what happened? Let us explain.

(a thread)

At 4:13 PM ET, Melania Trump made the below post launching her memecoin.

Just minutes later, Donald Trump reposted the post himself, while at his Victory Rally.

All of a sudden, buyer demand collapsed in Donald Trump's memecoin, $TRUMP, and supply surged. 

Moments later, we posted on X that the coin had launched.

Prior to Donald Trump reposting her announcement, $TRUMP was little changed.

After the repost and our breaking news post, $TRUMP fell -55% in minutes.

Consider turning on @KobeissiLetter notifications. 

Prior to the launch of $MELANIA, buyers had FAR outweighed sellers in $TRUMP.

Leading into the Melania launch, there had been ~38,500 sellers for every ~13,300 buyers.

That's effectively ~3 sellers for every buyer in this market.

This is why price kept on rising. 

In the moments after the launch of $MELANIA, we saw seller volume FAR outweigh buying volume.

In 1 hour, there was $352 million of seller volume for just $245 million of buyer volume.

The ratio of buyers to sellers fell to just 1.3x which led to a massive crash in price. 

Here's where it gets even more interesting:

In the minutes around the launch of Melania Trump's token, we saw MASSIVE sell orders in $TRUMP.

As seen in the flow log below, there were multiple $1+ million and $5+ million single sales in $TRUMP

Did someone know? 

The selling pressure was so strong that Solana, $SOL, the cryptocurrency itself, fell nearly 20% in minutes.

The trade went from a rush to the entrance to a rush to the exit.

Across all memecoins, well over $10 billion in market cap was erased in the minutes after launch. 

Currently, there are a record 824,017 holders of Donald Trump's memecoin, $TRUMP.

The question becomes, will these memecoin investors hold on?

Over the last 24 hours, we have now seen well over $2 billion in volume in this coin.

Momentum is a key component in these coins. 

Donald Trump's 800 million $TRUMP coins lost ~$25 billion in value after the announcement.

Since then, it has rebounded slightly with his coins worth ~$39 billion.

These coins are locked on a vesting schedule that will take 3 years to fully vest.

Trump needs prices to hold. 

This image will go down in history.

On the day before inauguration, the launch of Melania Trump's memecoin has shocked the market.

We are bracing for severe volatility in all financial markets ahead.

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

Many are asking where $TRUMP can be traded.

The coin was launched on "Moonshot," which President-elect Trump mentioned.

These investments are highly risky, exercise caution, this is NOT an endorsement.

Access Moonshot at the link below:

http://bit.ly/42lEQDu

What's the next memecoin that's launching?

Physical gold BUYING has gone apocalyptic:

Gold inventories in the 3 largest COMEX gold vaults just surged by 15 MILLION ounces in 2 months.

That's a +115% increase, putting physical gold holdings ABOVE 2020 pandemic levels.

What is happening? Let us explain.

(a thread) 

For some background:

These are secure gold storage facilities approved by the Commodity Exchange (COMEX).

They are literally located under and around Manhattan, NY.

January ALONE saw 19+ THOUSAND contracts delivered.

Never in HISTORY have we seen buying like this. 

COMEX is a subsidiary of CME Group which publishes daily data on these vaults.

They outline total registered, pledged and eligible inventories by the ounce.

As seen in the below excel sheet, combined total just hit ~35.5 MILLION troy ounces.

What is happening here? 

And it gets even more strange.

As COMEX inventories surge, London vault inventories are being depleted.

Withdrawal times in London are rising toward 8 WEEKS.

Meanwhile, the US has switched from being a net gold exporter to a net gold importer in November 2024. 

Clearly, US gold markets and physical gold demand is signaling a major pivot from the norm.

Gold prices are now up +40% in 12 months as the US Dollar and interest rates are up sharply.

Not even a 10% pullback seems to be attainable.

This has never happened in history. 

Our premium members have been buying gold for months.

We bought the dip into January and called for $2,850+.

On Friday, we posted the last updated in the image below and called the all time high.

Subscribe at the link below to access these alerts:

http://thekobeissiletter.com/subscribe 

Here is a chart showing CFTC Net Futures positioning:

Net long positioning is set to break above it s2024 high and the long gold trade has SURGED. 

Short positioning is at its lowest level since the pandemic in 2020.

Again, this doesn't happen in "normal" environments. 

China has also joined the gold buying party.

China’s central bank bought 5 tonnes of gold in January, its 3rd consecutive monthly purchase.

Assets in Chinese Gold ETFs have TRIPLED in just 18 months.

There are now $9.5 BILLION of assets in Chinese gold ETFs alone. 

What's even more unusual is gold has DOUBLED the S&amp;P 500's +22% return over the last 12 months.

Usually gold prices are a hedge against equity market volatility.

As stocks have posted a historic rally, gold has posted an even more historic rally.

Truly unusual. 

Our premium members got ahead of this trend, buying BOTH $SPX and Gold.

Even after the DeepSeek drop, the S&amp;P 500 and Gold have traded +4% off of their recent lows.

Want to see our next move?

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The beginning of President Trump's trade war has only accelerated this trend.

While precious metals are not currently a part of these tariffs, they are serving as the GLOBAL hedge.

We expect gold to continue to serve as the global hedge against inflation AND uncertainty. 

And this is particularly the case as US Deficit spending is out of control.

The US has borrowed $838 BILLION in the first 4 months of FY 2025.

This is crushing bond prices as treasury yields are driven higher.

Gold's position as the global hedge has only grown as a result. 

To top it off, the US Money Supply grew 3.9% YoY, its biggest increase since 2022.

After reaching its deepest contraction in 65 years, money printing is back.

Gold is painting a picture worth a thousand words.

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

The market feels broken:

This morning, between 4:40 AM and 6:20 AM ET, S&amp;P 500 futures erased -$600 BILLION of market cap without any major headlines.

These sudden "flash crashes" are being seen in ALL risky asset classes.

What is happening? Let us explain.

(a thread) 

There was only one "major" headline last night:

The Swiss National Bank cut interest rates to their lowest since September 2022.

However, this was a widely anticipated move which makes the drop in futures unusual.

Something deeper is happening under the hood of this market. 

The trend of markets "flash crashing" is spreading beyond just equities.

We have seen multiple flash crashes in crypto over the last 2 months.

On February 25th, crypto markets erased -$300 BILLION in 24 hours without a single major bearish headline.

This is a similar theme. 

Furthermore, on February 2nd, we saw Ethereum fall -37% in 60 hours as trade war headlines ramped up.

However, most of the trade war headlines were priced-in prior to February 2nd.

Yet still, liquidity was drained from Ethereum at a historic pace.

So, why is this happening? 

Much of this comes down to SENTIMENT and EMOTION.

In recent months, we have seen consumer confidence plummet and recession fears skyrocket.

This seems to have come with a decline in investor confidence as well.

Investors are worried to take on more risk in this market. 

AAII data shows that bearish levels in this market are now at 58.1%.

This marks 4 straight weeks with bearish sentiment above 55%.

Heading into 2025, bearish sentiment was below 30% for months.

The sudden shift in investor sentiment has been catastrophic for stocks. 

And, let's put this into perspective.

The historical average shows bearish levels at ~31%.

This means we investors are nearly DOUBLE as bearish as average.

Meanwhile, the S&amp;P 500 is down just 7% from its all time high.

Sentiment is as if we are in a major bear market. 

Our members have capitalized on the polarization of sentiment.

Heading into the Fed yesterday, we posted this alert calling for the S&amp;P 500 to rise above 5700.

Members cashed out +75 points in 4 hours as we expected the rally to be sold.

Join us:

http://thekobeissiletter.com/subscribe 

Positioning is the next big driver here.

Over the last 4 weeks, hedge funds have dumped technology stocks as their fastest pace since January 2021.

Just weeks prior, hedge funds were buying tech stocks at the fastest pace since the 2022 bear market.

Positioning is polarized. 

In fact, hedge funds just rotated out of US stocks at the fastest pace in history.

Commodities like gold and silver have seen non-stop upside amid the uncertainty.

However, the exact opposite trend has been seen in retail.

Retail thinks the market dip will be brief. 

Retail investors are pouring money into equities.

Retail net inflows into Nasdaq 100 stocks as a % of market cap hit 0.1%, a 1-year high.

JPM’s retail investor sentiment score hit a record 4 points.

This is ~1 point higher than the peak of the meme stock mania in 2021. 

The same exact trend is being seen in crypto.

Short positioning in Ethereum surged +40% in early-February and +500% since November 2024.

Never in history has Wall Street been so short of Ethereum, and it's not even close.

However, retail investors continue to buy the dip. 

The result is a market that is increasingly full of "air pockets."

When sentiment shifts, large institutional investors have a major impact on price.

The abundance of retail capital makes these shifts more turbulent.

No one wants to be the "last one in" or "last one out." 

As we have said previously, market conditions like these are HIGHLY profitable.

We are seeing $500B+ swings in the S&amp;P 500 on a near-daily basis.

Want to see how we are trading it?

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

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Lastly, keep an eye on shifts in liquidity in the market.

After a complete collapse since January 1st, CTAs are beginning to increase liquidity again.

Eliminate the NOISE and invest OBJECTIVELY here.

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

The collapse of US consumers:

Unemployment expectations in the US are now ABOVE 2020 levels and at their highest since 2008.

In 2024, a poll showed that a whopping 56% of Americans thought the US was in a recession.

Is the US set to enter a recession?

(a thread) 

Below is a Harris poll conducted in May 2024, in the lead up to the election.

56% of Americans thought we were in a recession and 49% thought the S&amp;P 500 was down YTD at the time.

In reality, GDP growth was "strong" and the S&amp;P 500 was up 12% YTD at the time of the poll. 

Fast forward to now, and consumers are even more pessimistic.

The median expected change in household income over the next 12 months has collapsed.

In fact, expectations are now at their lowest level since the global economic lockdowns in March 2020. 

Inflation is making it even worse:

US consumers believe inflation will rise to 6.0% over the next 12 months, the highest since May 2023.

Americans see annual inflation at 3.9% over the next 5-10 years, a 30-year high.

We now effectively have years of compounding inflation. 

Long-term inflation expectations in the US are officially at their highest level since 1993.

As President Trump rolls out widespread tariffs and economic uncertainty rises, so are inflation expectations.

The result is a massive collapse in consumer sentiment. 

A RECORD ~60% of US consumers expect business conditions to worsen over the next 12 months.

Even at the worst part of the 2008 housing crash, this metric peaked at ~42%.

It is safe to say that consumers are the most pessimistic they have ever been in recent US history. 

And, the market is pricing-in a recession:

The S&amp;P 500 has decreased -2% since Fed rate cuts begin in September 2024.

In the case of rate cuts during a recession, the S&amp;P 500 declined -6% in 6 months -10% within 12 months.

The AVERAGE post-pivot return is +1% in 6 months. 

Furthermore, it's not just Main Street.

In the March CNBC Fed Survey, which includes fund managers, strategists and analysts, recessions odds jumped.

The probability of recession rose 36% from 23% in January.

Institutional sentiment has shifted sharply bearish. 

In last week's The Economist/YouGov Poll, Americans were asked about their perception of the economy.

37% currently believe that we are in a recession and 31% are not sure.

Just 32% believe that we are currently NOT in a recession.

This is why rate cut odds have spiked. 

This time, white-collar jobs are also feeling the pain.

The US professional and business services sector has lost 248,000 jobs since May 2023.

Jobs in the sector have contracted for 17 straight months, marking the longest streak since 2008.

The labor market is softening. 

Lastly, one of the most telling signs of the economy has been gold.

Between the US debt crisis, inflation, trade uncertainty, and recession fears, gold prices are soaring.

We expect major change ahead.

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

This is devastating:

The Los Angeles wildfires have now burned ~38,000 acres of land, or ~2.5 TIMES the size of Manhattan, NY.

Estimated damages now exceed $150 BILLION in the costliest wildfire in US history.

This fire will impact the US economy for decades.

(a thread) 

Just over 24 hours ago, the WSJ said that damages would exceed $50 billion from these fires.

Now, AccuWeather estimates damages will be THREE TIMES that, at $150 billion.

Over 10,000 structures have been destroyed which is estimated to take 10+ years to rebuild. 

To put this in perspective, the Camp Fire in Paradise, California, in 2018 was the previous costliest wildfire.

In 2025 dollars, this fire caused $12.5 billion in damages.

At $150 billion, the LA wildfires are set to be 12 TIMES more expensive than the previous record. 

A total of $150 billion in damages exceeds the GDP of all but 58 countries in the world.

This is also more than HALF of the GDP of Finland and one third of the GDP of Singapore.

Keep in mind, the $150 billion number is still a preliminary estimate and it could rise further. 

This stat is mind blowing:

A whopping 69% of homeowners in Pacific Palisades lost their home owners insurance before the fire.

Pacific Palisades led the list where about 1,600 policies were dropped by State Farm in July.

Many insurance companies saw this from a mile away. 

Still, insured damages are expected to top a massive $20 BILLION according to JP Morgan.

And while many insurance companies exited the market, many others underestimated the risk.

This is going to be one of the biggest tests for US home insurance companies in history. 

And as insurance companies exited, homeowners became HIGHLY reliant on the California FAIR Plan.

The FAIR Plan provides basic fire insurance coverage for high-risk properties when traditional insurance companies will not.

Losses to California's FAIR plan are set to exceed $24 billion.

Reliance on the FAIR Plan skyrocketed in 2024, jumping 85% in Pacific Palisades.

This compares to a 40% jump in all California ZIP codes.

The state of California is now facing a massive financial burden that will take years to resolve. 

A major part of the economic problem is the fires are burning some of California's most expensive areas.

The Palisades fire is in an area with a ZIP Code that has an average home price of $3 million+.

Same goes with the Eaton fire, both of which are major losses for insurers. 

Just 24 hours ago, the total estimated damages were $52 billion.

Now, estimates are rising to $150 billion, or just $50 billion less than Hurricane Katrina in 2005.

By the time the fires are contained, it could top the most expensive natural disaster in US history. 

Our thoughts and prayers are with the victims of these devastating fires.

In 2023, the US faced 28 climate disasters, causing over $93 billion in damage.

This single fire could double the entire 2023 total.

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

CLARIFICATION: The comment on "climate disaster" is not declaring these fires as a climate disaster.

Rather, it was more for the sake of comparison to show the magnitude of the damage.

Javier Milei just DESTROYED the memecoin market:

Hours ago, Argentinian President Milei launched a memecoin, $LIBRA, for "the growth of their economy."

Within 5 hours, over -$4.4 BILLION of market cap was erased.

Is this the biggest rug pull in history?

(a thread) 

It all began with this post at 5:01 PM ET from Javier Milei.

As seen during President Trump's memecoin launch, the first hour was full of speculation:

Was this a hack or a real launch?

It turned out to be real as multiple other Argentinian politicians posted the news. 

Right off the bat, something seemed off about this project.

The website says the purpose of this launch is "to boost the Argentine economy by funding small projects."

The icing on the cake?

The website literally links to a Google Form to "apply for funding." Strange. 

But it gets worse.

The website was created hours before launch, as shown below.

The domain was registered for a 1-year registration period.

There is no public owner information and there are multiple restricted domain statuses.

Was this project literally created overnight? 

Within 3 hours of the launch, insiders in $LIBRA began cashing out.

According to Bubblemaps, $87.4 MILLION was cashed out within the first 3 hours.

Furthermore, 82% of $LIBRA was held in one cluster and no tokenomics were shared with the public.

But it gets even worse. 

As Bubblemaps notes below, insiders were adding one-sided liquidity pools on Meteora with only $LIBRA.

They were removing USD and SOL and used these liquidity pools instead of selling on the market.

$LIBRA fell 90%+ as the $87.4M in sales absorbed all buy pressure at the top. 

Within minutes of the launch, multiple large holders began liquidating MILLIONS of USD worth of $LIBRA.

This included gains of +$4 million or more as $LIBRA rose to $4.6 billion in market cap.

After the top was set at 5:40 PM ET, the coin fell in a literal straight-line. 

In fact, these insiders controlled so much of the market that only ~27% of transactions were sales.

This means that LARGE sale transactions were filled by smaller buys, likely to retail traders.

For every seller, there were 2 buyers and over $1.1 BILLION of volume was traded. 

Now, Javier Milei has posted that he was "not aware of the details of the project."

He says that after becoming aware of the details, he decided to stop spreading the word and delete the post.

$LIBRA just fell to a new low of $200 million in market cap, erasing $4.4 BILLION. 

The launch of this coin took so much liquidity out of the market that even $TRUMP coin fell sharply.

We saw over $500 MILLION in market cap erased from $TRUMP after the launch.

More than 50,000 wallets became holders of $LIBRA within the first 2 hours of launch. 

This entire event has completely destroyed the majority of liquidity in the memecoin market.

$6+ billion of market cap has been erased over the last 3 hours across the market.

Are memecoins officially dead?

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

This is not the first and it won’t be the last mainstream memecoin launch to rug retail investors.

Early signs of these scams have become increasingly easy to spot.

Be sure to turn on @KobeissiLetter post notifications to stay ahead of the game.

Iran's response has begun:

After US strikes on Iranian nuclear facilities, Iran just attacked US military bases in Qatar and Iraq.

Meanwhile, oil prices just CRASHED over -6% on the news.

Why? Markets are saying EVERYTHING you need to know. Let us explain.

(a thread) 

Iranian media just announced that Iran has launched operation "Annunciation of Victory."

Iran's Armed Forces said they will not leave any attack on Iran unanswered.

This was Iran's first response to the US since the 3 strikes conducted by the US Airforce this weekend. 

The initial reaction by markets was a selloff in stocks and a jump in oil prices.

The most common thought process here is than an Iranian response is escalatory.

But, this did NOT last long.

In fact, the market is painting the EXACT OPPOSITE situation right now.

Take a look at the S&amp;P 500.

At 12:10 PM ET, the index began its decline, falling nearly -45 points on the news.

Since then, just one hour later, the market has recovered all of its losses.

In fact, stocks are on track to close the daily in the GREEN despite all of the chaos. 

Furthermore, oil prices are getting crushed, nearing the key $70/barrel level.

Even as Iran threatens to close the Strait of Hormuz, the US bombs Iran, and Iran bombs US bases, oil prices are down.

The market has been painting a consistent picture:

This is NOT World War 3. 

On Sunday, we posted the below note on our "bull case" about this situation.

This is one where Israel, Iran, and the US ALL claim victory.

Today, that exact scenario is coming to fruition, with Iran now saying they dealt "devastating" blows to the US.

https://x.com/KobeissiLetter/status/1936866811179405346

Here's where it gets even more interesting:

The NYT reports that Iran COORDINATED the attacks on US bases with Qatari officials.

This was to "minimize casualties" according to Iranian officials.

Again, this is a way for ALL parties to appear "strong" in a de-escalatory way. 

On Friday, we posted the below alert for our premium members.

We took SHORTS in oil at $74.10 and called for a "sell the news" event.

These shorts are now DEEP green as oil prices fall into $70.00.

Subscribe to access our alerts below:

http://thekobeissiletter.com/subscribe 

As we have been writing since the start of this war, markets have been clear:

The market sees a SHORT-LIVED conflict and dips are being bought.

If WW3 was truly likely, oil prices would be at $130+ and the S&amp;P 500 would be down -30% or more.

The exact opposite is the case. 

Furthermore, even as Iran's Parliament voted to close the Strait of Hormuz, this is seeming unlikely.

We believe Iran's top security body will NOT approve the closure.

This was more of a symbolic move, and we see a higher chance of the US de-escalating after today's events. 

Volatility has been the common denominator of 2025, but it's great for investors.

The technicals remain strong and we continue to trade the swings in both directions. 

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

http://thekobeissiletter.com/subscribe

Overall, this is nowhere near a market pricing-in a prolonged conflict between global powers.

Iran has responded in a calculated and de-escalatory way, in our view.

Ignore the noise and follow the markets.

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

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. 

Treasury Yields are surging, with the 10Y Note Yield up almost 10 bps from its pre-data release low.

Why are rates rising in an economy that is shrinking?

The market knows that stagflation has arrived.

The Fed is facing the lose-lose situation they thought would never arrive. 

And, it gets even worse.

Take a look at the PCE Price Index which surged +3.7% in Q1 2025.

This is above expectations of 3.1% and up from 2.6% in the previous release.

The PCE Price Index is now at its highest reading since July 2024, before the "Fed pivot" began. 

Stocks are falling sharply after the data and we were SHORT going into this week.

As posted below for our premium members, we took shorts as the S&amp;P 500 rallied into 5500+.

S&amp;P 500 futures now down -1.5%.

Subscribe to access these alerts below:

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Minutes before the GDP data this morning, ADP Employment data was released.

According to ADP, the US economy added just 62,000 jobs in April, the lowest since July 2024, as shown below per ZeroHedge.

Yields initially sold off on this data as the economy is clearly weakening. 

This also explains recent price action in oil markets.

While the S&amp;P 500 and other risky assets rebounded, oil prices have fallen sharply, to below $60.00.

Why did this happen?

Because oil markets have been pricing-in a recession and decline in demand for months now. 

Our premium members took SHORTS in oil as it neared $65.00 earlier this month.

These shorts are now up sharply as oil falls into $59.00.

Commodities have been clearly pricing-in a recession for months now.

Subscribe to access our alerts below:

http://thekobeissiletter.com/subscribe 

One month ago, we posted that Goldman's basket of stocks that thrive in a "Stagflation Scenario" are soaring.

Today, it we received confirmation that stagflation is worsening.

We have rising inflation with a weakening economy.

The Fed is officially in a lose-lose situation. 