The Kobeissi Letter

JUST IN: Former SEC Chair Jay Clayton on $GME and $AMC, "Is this something we should be tolerating in our markets? Whether it is legal or illegal, I don't think so."

He calls on "Roaring Kitty" to "tell people why he did this."

Why do you think "Roaring Kitty" did this?

https://t.me/KobeissiLetter

JUST IN: Former SEC Chair Jay Clayton says Gamestop, $GME, craze "bothers me and it's certainly not investing."

He questions weather the government should be allowed to intervene right now.

Is the government getting ready to intervene here?

https://t.me/KobeissiLetter

Shocking stat of the day:

Families in the top 5 most expensive states need over $270,000 annually to live comfortably in the US.

Massachusetts is the most expensive state where a family with 2 working parents and 2 children needs an income of $301,000.

Next are Hawaii, Connecticut, New York, and California with required income ranging from $277,000 to $295,000.

On the other hand, Mississippi is the least expensive, where a family needs $177,798 to live comfortably in a year.

Meanwhile, the median household income was just $75,000 in 2023.

Living comfortably in the US is now considered a luxury.

https://t.me/KobeissiLetter

BREAKING: AMC Entertainment stock, $AMC, is now up a massive 60% today adding $600 million of market cap.

AMC has traded its ENTIRE free float today and the market hasn’t even closed yet.

In other words, $AMC has traded 300 MILLION shares today.

That’s equivalent to 18 TIMES the stock’s average daily volume.

Meme stocks have officially added more than $10 BILLION in market cap today.

Short covering is an understatement.

https://t.me/KobeissiLetter

BREAKING: Gamestop stock, $GME, surges another 20% in overnight trading as "Roaring Kitty" returns to X.

"Roaring Kitty" is the user than initially started the "meme stock" run in 2021.

For the first time since June 2021, "Roaring Kitty" has just posted on X.

This comes as $GME is already up more than 70% over the last 3 weeks.

Are "meme stocks" back?

https://t.me/KobeissiLetter

BREAKING: The median monthly mortgage payment in the US hits a new record high of $2,894/mo in May 2024.

This is a 14% jump from 2023 and a 23% surge from the same period in 2022.

The median monthly mortgage payment is up by a whopping 78% since 2021.

If you factor in other home ownership costs such as maintenance, insurance, and taxes, the median payment is well over $3,000/month.

Meanwhile, the median home sale price just hit a new record of $385,000 in May, according to Redfin.

Buying a home has never been less affordable.

https://t.me/KobeissiLetter

Key Events This Week:

1. April PPI Inflation data - Tuesday

2. Fed Chair Powell Speaks - Tuesday

3. April CPI Inflation data - Wednesday

4. April Retail Sales data - Wednesday

5. Philadelphia Fed Manufacturing data - Thursday

6. Total of 12 Fed speaker events this week

Very busy week ahead!

https://t.me/KobeissiLetter

This is unusual:

The US BLS has announced that coffee prices will no longer be factored into CPI inflation data.

In fact, the April 2024 CPI inflation report this week will be the first to NOT include coffee price inflation.

Well, the obvious next step is to see what happened to coffee prices over the last few months.

Since September 2023, coffee prices are up a MASSIVE 78%.

From January 1st of this year through the high in April when this change was announced, coffee prices gained 35%.

All as Starbucks, $SBUX, just reported a 6% decline in traffic as higher prices deter consumers.

What is happening here?

https://t.me/KobeissiLetter

JUST IN: Users on X are reporting mass cancellations of Disney+, $DIS, subscriptions after Elon Musk interview.

Within just hours of Elon Musk's interview, thousands of users have posted screenshots of cancelled Disney+ subscriptions.

In addition to Disney+, users are reporting cancellations of Paramount Plus and others.

This comes after Elon Musk accused some advertisers of blackmailing X with advertising money.

Disney's CEO, Bob Iger, was specifically called out.

https://t.me/KobeissiLetter

Microsoft just pulled off one of the greatest "acquisitions" of all time:

Prior to the firing of Sam Altman, OpenAI was worth ~$90 billion.

This weekend, Microsoft was able to hire Sam Altman and Greg Brockman after having no advance notice that they would be fired.

Then, as Microsoft announced a new AI team lead by Altman, 660 OpenAI employees said they might follow.

In other words, Microsoft just hired Sam Altman, Greg Brockman, and potentially 85% of OpenAI without spending a Dollar yet.

All leading to a $70 billion jump in Microsoft's, $MSFT, market value today.

We are witnessing history.

https://t.me/KobeissiLetter

BREAKING: The S&P 500 is now up 400 points since its low less than 3 weeks ago, on October 27th.

That's a +10% move in just 11 trading days with today's CPI report sending the S&P 500 to 4500.

The Nasdaq is now up 13% from its October lows and just 6% away from a new all time high.

As of this morning, markets have shifted to expecting 4 interest rate CUTS in 2024.

Treasury yields are down sharply and widespread short covering continues in stocks.

Is the bull market back?

https://t.me/KobeissiLetter

BREAKING: October CPI inflation rate falls to 3.2%, below expectations of 3.3%.

Core CPI inflation fell to 4.0%, below expectations of 4.1%.

This is the 31st consecutive month with inflation above 3%.

But, inflation seems to be back on the DECLINE.

What does the Fed do now?

https://t.me/KobeissiLetter

Annualized interest expense on US debt is now at $1.027 trillion and is quickly rising.

Just 2 years ago, annual interest expense on US debt was at $450 billion.

That's a 128% jump in interest expense and we didn't even enter a recession yet.

Since 2020, total US debt is up ~$10 trillion and set to hit $35 trillion in 2024.

That's a ~45% jump in US debt and the Fed is still calling for a "soft landing."

Something is not adding up here.

https://t.me/KobeissiLetter

Housing market inventory has recovered slightly, but remains a major issue.

Currently, housing inventory is still 37% below the long-term average, according to Reventure.

In 2021, inventory levels fell as low as 70% below the historical average.

Even with inventory levels more than doubling from their lows, we are still at historically low levels.

All while mortgage demand just hit a fresh 29-year low.

A return in housing supply would send prices sharply lower.

https://t.me/KobeissiLetter

The median list price on US homes has declined for 4 consecutive months, according to Reventure.

However, even with these declines, prices are still only down ~6% from their all time high.

The median house in the US is now selling for a whopping $425,000.

All as mortgage rates just crossed above 8% for the first time in 23 years.

Housing affordability is still getting worse.

https://t.me/KobeissiLetter

Key Events This Week:

1. October CPI Inflation data - Tuesday

2. October PPI Inflation data - Wednesday

3. Retail Sales data - Wednesday

4. Philly Fed Manufacturing data - Thursday

5. Building Permits data - Friday

6. Total of 14 Fed speaker events

Important week for inflation and the Fed.

https://t.me/KobeissiLetter

20% of US offices are vacant and WeWork's, $WE, bankruptcy is going to make this crisis worse.

WeWork just announced that they will be vacating 70 office leases in New York City.

But it gets worse.

WeWork has 600+ locations in major cities which are now under question.

Offices in NYC, San Francisco and Boston will be hit hardest.

Around 42% of WeWork’s occupancies are in those three cities.

They have already planned to close 1.9 million square feet of office building in those three cities.

The CRE crisis is worsening.

https://t.me/KobeissiLetter

The U.S. Now Has:

1. Record $17.29 trillion in household debt

2. Record $12.14 trillion in mortgages

3. Record $1.60 trillion in auto loans

4. Record $1.08 trillion in credit card debt

Total mortgage debt is now more than double the 2006 peak and mortgage rates are nearly 1.5% higher than the 2008 peak.

Meanwhile, student loan payments just resumed for the first time since the pandemic with an average payment of $500/month.

This is all while new car loan rates are at a record 10% and credit card debt rates hit a record 25%.

What's the long-term plan here?

https://t.me/KobeissiLetter

JUST IN: Lawyers who won $1.8 billion lawsuit against the National Association of Realtors file new suit for anyone who has sold a home over the last 5 years.

The original lawsuit was filed in 2019 on behalf of 500,000 home sellers in Missouri.

Now, lawyers are saying that Americans have paid $60 BILLION in extra real estate commissions.

This lawsuit is quickly changing the way realtors are compensated.

It also comes at a particularly fragile time for the real estate market.

Tens of billions of Dollars in commissions are at stake.

https://t.me/KobeissiLetter

Very interesting trend shift in the housing market:

Active listings on the US housing market jumped by nearly 36,000 in October 2023, according to Reventure.

This was the highest reported jump in October inventory levels in over 10 years.

Furthermore, October is historically known for sharp decreases in inventory.

A month which is historically tight for housing inventory just saw a historic jump.

All while mortgage rates hit 8% for the first time since 2000.

A trend worth watching.

https://t.me/KobeissiLetter