Does the US government WANT a recession?
In 2025, $9.2 TRILLION of US debt will either mature or need to be refinanced. The quickest way to LOWER rates ahead of this colossal refinancing would be a recession.
Could the US benefit from a market crash? https://x.com/KobeissiLetter/status/1898859119408451670
Over the last 2 months, the 10-year note yield has fallen ~60 basis points.
This is partially due to anticipation of DOGE deficit spending cuts.
But, it's also due to increased uncertainty and rising odds of a US recession.
A recession would almost guarantee rate cuts. https://x.com/KobeissiLetter/status/1898859121811636438
Why would a recession guarantee lower rates?
Every US recession dating back to the 1980s followed a peak in the Fed Funds Rate.
When economic growth stalls, the Fed "stimulates" the economy.
This means lowering interest rates to lower cost of capital and promote spending. https://x.com/KobeissiLetter/status/1898859124282290416
Since the trade war began, economic growth forecasts in the US have cratered.
Oil prices have also cratered to a fresh 6-month low.
Here's where it gets even more interesting: President Trump has said MULTIPLE times he wants lower oil prices for lower inflation. https://x.com/KobeissiLetter/status/1898859126668603447
On January 25th, President Trump claimed to have a solution to the Fed's 3+ year battle against inflation.
He demanded the OPEC lower oil prices and the world drop interest rates.
However, the QUICKEST way to lower oil prices would be a recession which reduces demand. https://x.com/KobeissiLetter/status/1898859128820490327
Take a look at President Trump's most recent interview with Fox News. He comments on his priority of getting interest rates down. "Interest rates are going down... and I'd love to see energy go down," he says, per @amitisinvesting
. Now, take a look at the inflation data next.
US consumers believe inflation will rise to +6.0% over the next 12 months, the highest since May 2023.
This marks the 3rd consecutive monthly increase in expectations.
Inflation is RISING, rate cuts were DELAYED, but rates are FALLING. Markets are pricing-in a recession. https://x.com/KobeissiLetter/status/1898859133190697287
In a trade war with surging inflation, drastically lower rates are almost impossible without a recession. And, to top it off, President Trump said on March 6th that he's not even watching the stock market.
As we saw in his first term, Trump is ALWAYS watching the market.
President Trump's statement on "not watching the market" was telling.
While he clearly is watching the market, it was his way of telling Wall Street a message.
He is willing to do whatever it takes to lower rates and reduce the trade deficit.
Even if it involves a recession.
Amid all the trade war chaos, we have seen economic growth expectations crash sharply.
The Atlanta Fed reduced their Q1 2025 GDP growth estimate to as low as -2.8% last week.
As a result, we saw interest rate cut expectations move up SHARPLY last week.
Was this intentional? https://x.com/KobeissiLetter/status/1898859139339563316
High interest rates are the US government's biggest problem: Debt service costs have soared with the surge in interest rates. The average interest rate on $36.2 trillion of Treasury debt is now 3.2%, the highest since 2010.
The US government needs rate cuts more than anyone. https://x.com/KobeissiLetter/status/1898859141252121044
And, it's urgent rates drop soon: The maturity schedule for the $9.2 trillion of US debt is heavily weighted to the front-half of 2025.
Between January and June 2025, 70% of it will need to be refinanced.
The average rate on this debt is set to jump by ~1 percentage point. https://x.com/KobeissiLetter/status/1898859143097733512
Furthermore, DOGE efforts to reduce deficit spending won't happen overnight.
In FY 2024, the US 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.
The debt crisis will take years to fix. https://x.com/KobeissiLetter/status/1898859144691482789
Lastly, this brings us back to 2023 when the Fed almost began calling for a recession to lower inflation.
In February 2023, many studies indicated a recession may be the only solution.
The Fed then ran with the "soft landing" narrative which is STILL failing to lower rates. https://x.com/KobeissiLetter/status/1898859148168827282
The reality is that the US debt crisis is the biggest crisis with the least attention.
President Trump has realized this, but it may be too late.
A recession may be the only solution for lower rates. https://x.com/KobeissiLetter/status/1898859150828069028
...Trump not watching the market = He does not care if the market falls = He wants the market to fall
...Position themselves with put options and bonds while engineering the slow market train wreck
...Financial conditions tightened, spending contracts, and economic slows down considerably forcing the Fed to cut rates
...Equities correct and rates drop = gains on put options and bonds
...After equities correct significantly, make policy decisions to improve recovery, and start vulture buying cheap assets
...Team Trump comes out looking rosy (for themselves) while all others suffer wealth loss and a bad recession.
....Great Plan isn't it? Make America Great (for Team Trump).
