This is incredible:
Interest rates were literally at 5,000 year lows over the last decade, according to Bank of America.
Now, we are right around the historical average.
However, rates have been rising near the fastest pace in history.
Many people have not experienced inflation this high and interest rates at these levels in their adult lives.
This is why rising rates are coming as a shock to consumers.
The era of low rates and "free" money is officially over.
Higher rates are the new (and old) normal.
Interest rates were literally at 5,000 year lows over the last decade, according to Bank of America.
Now, we are right around the historical average.
However, rates have been rising near the fastest pace in history.
Many people have not experienced inflation this high and interest rates at these levels in their adult lives.
This is why rising rates are coming as a shock to consumers.
The era of low rates and "free" money is officially over.
Higher rates are the new (and old) normal.
BREAKING: Average interest rate on a 30-year mortgage rises to 7.95%, its highest since July 2000.
Mortgage demand also just fell to its lowest level since 1995.
Mortgage rates have moved in a straight-line higher since the July Fed meeting.
Even without additional rate hikes over the last 2 months, rates continue to rise.
We can see higher rates without rate hikes, a concept that many investors often overlook.
8% mortgages are the new normal.
Mortgage demand also just fell to its lowest level since 1995.
Mortgage rates have moved in a straight-line higher since the July Fed meeting.
Even without additional rate hikes over the last 2 months, rates continue to rise.
We can see higher rates without rate hikes, a concept that many investors often overlook.
8% mortgages are the new normal.
420,000 workers are now on strike in the United States, according to Bank of America.
Estimates show that up to 545,000 workers are likely to be on strike by the end of 2023.
This would be the most workers on strike since 1983, which also happens to be the last time inflation was an issue.
Meanwhile, a record 447,000 people now hold 2 full-time jobs in the US.
Consumers are feeling the pain of inflation.
https://t.me/KobeissiLetter
Estimates show that up to 545,000 workers are likely to be on strike by the end of 2023.
This would be the most workers on strike since 1983, which also happens to be the last time inflation was an issue.
Meanwhile, a record 447,000 people now hold 2 full-time jobs in the US.
Consumers are feeling the pain of inflation.
https://t.me/KobeissiLetter
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In China, the Housing sector makes up 25% of the entire country's GDP.
In September, Country Garden, a real estate developer in China, failed to make a debt payment after apartment sales slumped.
Country Garden said its sales have come under “remarkable pressure" and are down 44% this year.
This comes right after the Chapter 15 bankruptcy of Evergrande, China's largest real estate developer.
All while China is cutting rates on ~$6 trillion of mortgages.
Meanwhile, the Chinese HY Real Estate index is down ~85% from its high.
Is China bracing for a recession?
https://t.me/KobeissiLetter
In September, Country Garden, a real estate developer in China, failed to make a debt payment after apartment sales slumped.
Country Garden said its sales have come under “remarkable pressure" and are down 44% this year.
This comes right after the Chapter 15 bankruptcy of Evergrande, China's largest real estate developer.
All while China is cutting rates on ~$6 trillion of mortgages.
Meanwhile, the Chinese HY Real Estate index is down ~85% from its high.
Is China bracing for a recession?
https://t.me/KobeissiLetter
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China continues to dump US Treasuries by the amount of tens of billions per month.
In August, China unloaded another $16.4 billion of US Treasuries.
Since their peak roughly a decade ago, China has unloaded nearly $500 billion of US Treasuries.
All as the Fed raises rates and US deficit spending is now above World War 2 levels.
The flight away from US Treasuries is historic.
https://t.me/KobeissiLetter
In August, China unloaded another $16.4 billion of US Treasuries.
Since their peak roughly a decade ago, China has unloaded nearly $500 billion of US Treasuries.
All as the Fed raises rates and US deficit spending is now above World War 2 levels.
The flight away from US Treasuries is historic.
https://t.me/KobeissiLetter
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JUST IN: Percentage of subprime auto borrowers 60+ days past due on loans hits a record 6.1% in September.
This is the highest delinquency rate of all time, even above the 6.0% peak in 1994 and 5.0% in 2008.
The return of student loan payments has added pressure to many of these borrowers.
Average student loan payments are at $500/month and the average new car payment is at $740/month.
This means just to buy a car and pay off your student loans, the average American is spending $1,240/month.
Delinquency rates will continue to rise.
https://t.me/KobeissiLetter
This is the highest delinquency rate of all time, even above the 6.0% peak in 1994 and 5.0% in 2008.
The return of student loan payments has added pressure to many of these borrowers.
Average student loan payments are at $500/month and the average new car payment is at $740/month.
This means just to buy a car and pay off your student loans, the average American is spending $1,240/month.
Delinquency rates will continue to rise.
https://t.me/KobeissiLetter
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Oil prices are now up $10 per barrel, or 12%, since the war erupted on October 7th.
We are back to ~$95 crude oil and rising rather quickly.
As fears of escalation spread, the risk of a supply disruption is growing.
Even the US lifting sanctions of Venezuela, a major development, did not weaken oil prices.
Furthermore, the US may even begin refilling the SPR at higher prices as geopolitical tensions rise.
Energy inflation is getting worse.
https://t.me/KobeissiLetter
We are back to ~$95 crude oil and rising rather quickly.
As fears of escalation spread, the risk of a supply disruption is growing.
Even the US lifting sanctions of Venezuela, a major development, did not weaken oil prices.
Furthermore, the US may even begin refilling the SPR at higher prices as geopolitical tensions rise.
Energy inflation is getting worse.
https://t.me/KobeissiLetter
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Housing Market Update:
1. Median homebuyer payment is a record $2,900/month
2. Median rent payment is a record $1,900/month
3. Mortgage rates now 8% for first time in 23 years
4. Housing affordability index at all-time low
5. Existing home sales at lowest since 2010
6. Mortgage demand at its lowest since 1995
Owning a home has become a luxury.
https://t.me/KobeissiLetter
1. Median homebuyer payment is a record $2,900/month
2. Median rent payment is a record $1,900/month
3. Mortgage rates now 8% for first time in 23 years
4. Housing affordability index at all-time low
5. Existing home sales at lowest since 2010
6. Mortgage demand at its lowest since 1995
Owning a home has become a luxury.
https://t.me/KobeissiLetter
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China’s central bank injected $100.2 BILLION into their lending market on Friday.
On Monday, China made the largest injection on record of one-year policy loans on Monday.
This comes after China unexpectedly implemented their biggest rate cut since 2020.
China also cut rates on $6 trillion of mortgages.
All as a bank run began at the Bank of Cangzhou on fears that the collapse of Evergrande made them insolvent.
What is happening in China?
https://t.me/KobeissiLetter
On Monday, China made the largest injection on record of one-year policy loans on Monday.
This comes after China unexpectedly implemented their biggest rate cut since 2020.
China also cut rates on $6 trillion of mortgages.
All as a bank run began at the Bank of Cangzhou on fears that the collapse of Evergrande made them insolvent.
What is happening in China?
https://t.me/KobeissiLetter
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Key Events This Week:
1. Building Permits - Wednesday
2. New Home Sales - Wednesday
3. Fed Chair Powell Speaks - Wednesday
4. Q3 2023 GDP - Thursday
5. Pending Home Sales - Thursday
6. September PCE Inflation data - Friday
We are 1 week out from the November Fed meeting.
https://t.me/KobeissiLetter
1. Building Permits - Wednesday
2. New Home Sales - Wednesday
3. Fed Chair Powell Speaks - Wednesday
4. Q3 2023 GDP - Thursday
5. Pending Home Sales - Thursday
6. September PCE Inflation data - Friday
We are 1 week out from the November Fed meeting.
https://t.me/KobeissiLetter
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Americans now need $114,000 in annual income to afford the typical house in the US.
This is up a massive 90% from $60,000/year of income required to buy a typical house in 2020.
To put this in perspective, the median American HOUSEHOLD makes $75,000/year.
In other words, the median household income is now 52% BELOW the income needed to afford a typical home.
Mortgage rates have gone from 2.6% to 8.0% in the same time that home prices are up 30%+.
Want to be able to afford a home in the US?
You now need to be in the six-figure club.
https://t.me/KobeissiLetter
This is up a massive 90% from $60,000/year of income required to buy a typical house in 2020.
To put this in perspective, the median American HOUSEHOLD makes $75,000/year.
In other words, the median household income is now 52% BELOW the income needed to afford a typical home.
Mortgage rates have gone from 2.6% to 8.0% in the same time that home prices are up 30%+.
Want to be able to afford a home in the US?
You now need to be in the six-figure club.
https://t.me/KobeissiLetter
Fastest Declining US Housing Markets (1-Year Drop):
1. Austin, TX: -11.6%
2. Boise, ID: -8.6%
3. New Orleans, LA: -8.0%
4. Lake Charles, LA: -8.0%
5. Phoenix, AZ: -7.0%
6. Las Vegas, NV: -7.0%
7. Provo, UT: -6.7%
8. Reno, NV: -5.7%
9. Chico, CA: -5.7%
10. San Jose, CA: -5.5%
Many of these markets were heavily investor driven over the last few years.
According to the latest data, investor home purchases are down nearly 50% this year.
All as tons of Airbnb properties in major cities are hitting the market.
The return of supply would break this market.
https://t.me/KobeissiLetter
1. Austin, TX: -11.6%
2. Boise, ID: -8.6%
3. New Orleans, LA: -8.0%
4. Lake Charles, LA: -8.0%
5. Phoenix, AZ: -7.0%
6. Las Vegas, NV: -7.0%
7. Provo, UT: -6.7%
8. Reno, NV: -5.7%
9. Chico, CA: -5.7%
10. San Jose, CA: -5.5%
Many of these markets were heavily investor driven over the last few years.
According to the latest data, investor home purchases are down nearly 50% this year.
All as tons of Airbnb properties in major cities are hitting the market.
The return of supply would break this market.
https://t.me/KobeissiLetter
As mortgage rates hit 8% for the first time in 23 years, affordability continues to fall off a cliff.
The Housing Affordability Index just hit a fresh record low, at ~90.
This means that housing affordability is officially down 50% since 2021.
Since then peak in 2012, housing affordability is down nearly 70%.
Buying a home has become a luxury.
https://t.me/KobeissiLetter
The Housing Affordability Index just hit a fresh record low, at ~90.
This means that housing affordability is officially down 50% since 2021.
Since then peak in 2012, housing affordability is down nearly 70%.
Buying a home has become a luxury.
https://t.me/KobeissiLetter
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In fiscal year 2023, the US ran a deficit of $1.7 trillion.
If you add back the student loan forgiveness program adjustment, the deficit was actually $2 trillion.
To put this in perspective, the annual US deficit is roughly equal to total individual income tax collected.
It also means that the 2023 deficit is nearly 5 TIMES as large as corporate income taxes.
The 2023 deficit as reported is ~25% larger than total Social Security outlays.
Net interest was $659 billion and should soon pass the national defense budget.
What's the long-term plan here?
https://t.me/KobeissiLetter
If you add back the student loan forgiveness program adjustment, the deficit was actually $2 trillion.
To put this in perspective, the annual US deficit is roughly equal to total individual income tax collected.
It also means that the 2023 deficit is nearly 5 TIMES as large as corporate income taxes.
The 2023 deficit as reported is ~25% larger than total Social Security outlays.
Net interest was $659 billion and should soon pass the national defense budget.
What's the long-term plan here?
https://t.me/KobeissiLetter
This is incredible:
At 9:45 AM ET today, Bill Ackman posted that he covered his bond shorts.
4 hours later, the 10-year note yield is down 15 basis points, on track for its biggest daily drop in 2 weeks.
This comes nearly 2 months after he publicly took a large bond short position.
Ackman said there is too much risk in the world to continue shorting bonds.
He also said that the economy is slowing faster than recent data suggests.
Bond markets continue to make history.
https://t.me/KobeissiLetter
At 9:45 AM ET today, Bill Ackman posted that he covered his bond shorts.
4 hours later, the 10-year note yield is down 15 basis points, on track for its biggest daily drop in 2 weeks.
This comes nearly 2 months after he publicly took a large bond short position.
Ackman said there is too much risk in the world to continue shorting bonds.
He also said that the economy is slowing faster than recent data suggests.
Bond markets continue to make history.
https://t.me/KobeissiLetter
China's real estate index is officially back to 2009 levels, down ~80% from its all time high.
Today, Chinese President Xi visited the Chinese central bank for the first time ever.
Shortly after, China raised its fiscal deficit ratio from 3.0% to 3.8%.
China also just approved a 1 trillion Yuan sovereign bond issuance.
This comes amid large rate cuts, ongoing stimulus and severe weakness in Chinese real estate.
Many signs continue to suggest that recession risks are rising in China.
https://t.me/KobeissiLetter
Today, Chinese President Xi visited the Chinese central bank for the first time ever.
Shortly after, China raised its fiscal deficit ratio from 3.0% to 3.8%.
China also just approved a 1 trillion Yuan sovereign bond issuance.
This comes amid large rate cuts, ongoing stimulus and severe weakness in Chinese real estate.
Many signs continue to suggest that recession risks are rising in China.
https://t.me/KobeissiLetter
October was the first month of student loan payments resuming since 2020.
Already, we are seeing a large jump in the share of households having difficulties paying expenses.
More specifically, difficulties in paying are concentrated among households with a college degree, making between $50,000 and $150,000.
~37% of households are now having difficulties paying expenses, up from 32% in September.
This is the highest reading since October 2022.
Monthly payments are skyrocketing for Americans.
https://t.me/KobeissiLetter
Already, we are seeing a large jump in the share of households having difficulties paying expenses.
More specifically, difficulties in paying are concentrated among households with a college degree, making between $50,000 and $150,000.
~37% of households are now having difficulties paying expenses, up from 32% in September.
This is the highest reading since October 2022.
Monthly payments are skyrocketing for Americans.
https://t.me/KobeissiLetter
The S&P 500 is down ~10% from its recent high and has erased $4 trillion in market cap in 3 months.
Meanwhile, the S&P 7, which reflects 7 tech stocks in the S&P 500, has lost ~$500 billion in market cap.
Currently, the S&P 7 reflects a record 29.6% of the entire S&P 500.
As these 7 stocks turned sharply lower this week, so did the entire stock market.
The remaining 493 stocks in the S&P?
They are almost flat this year despite the S&P 500 being up ~9%.
This is the product of a few stocks supporting the entire market.
The pillars of the market are breaking.
https://t.me/KobeissiLetter
Meanwhile, the S&P 7, which reflects 7 tech stocks in the S&P 500, has lost ~$500 billion in market cap.
Currently, the S&P 7 reflects a record 29.6% of the entire S&P 500.
As these 7 stocks turned sharply lower this week, so did the entire stock market.
The remaining 493 stocks in the S&P?
They are almost flat this year despite the S&P 500 being up ~9%.
This is the product of a few stocks supporting the entire market.
The pillars of the market are breaking.
https://t.me/KobeissiLetter
BREAKING: Average interest rate on a 30-year mortgage rises to 8.09%, its highest since July 2000.
Mortgage rates are now up for 7 straight weeks in their historic run higher.
Currently, 9.5% of all mortgage applications are for ARMs, the highest since November 2022.
The surge in ARMs means many homebuyers are betting on lower rates in the future.
Just over 2 years ago, mortgage rates hit a historic low of 2.6%.
Now, rates are over 3 times higher and continue to rise sharply.
Affordability is only getting worse.
https://t.me/KobeissiLetter
Mortgage rates are now up for 7 straight weeks in their historic run higher.
Currently, 9.5% of all mortgage applications are for ARMs, the highest since November 2022.
The surge in ARMs means many homebuyers are betting on lower rates in the future.
Just over 2 years ago, mortgage rates hit a historic low of 2.6%.
Now, rates are over 3 times higher and continue to rise sharply.
Affordability is only getting worse.
https://t.me/KobeissiLetter
BREAKING: Moody’s cuts U.S. credit outlook from stable to negative.
Reasons for the cut:
1. Downside risks to U.S. fiscal strength have increased
2. Fiscal deficits to remain very large
3. Debt affordability to be significantly weakened
Since the debt ceiling crisis “ended” S&P has downgraded US credit ratings and now Moody’s cut their outlook.
All as interest rates are soaring and the U.S. issues trillions of Dollars in debt.
Warning signs are everywhere, but no one is listening.
Whats the long term plan here?
https://t.me/KobeissiLetter
Reasons for the cut:
1. Downside risks to U.S. fiscal strength have increased
2. Fiscal deficits to remain very large
3. Debt affordability to be significantly weakened
Since the debt ceiling crisis “ended” S&P has downgraded US credit ratings and now Moody’s cut their outlook.
All as interest rates are soaring and the U.S. issues trillions of Dollars in debt.
Warning signs are everywhere, but no one is listening.
Whats the long term plan here?
https://t.me/KobeissiLetter