It's very clear what's happening: President Trump now believes "short term pain" is his ONLY option to lower inflation and refinance $9+ trillion of US debt. We have seen over -$5 TRILLION erased from US stocks with the goal of LOWERING rates. Will it work? https://x.com/KobeissiLetter/status/1900207083418419641
Based on our research, President Trump made this conclusion BEFORE inauguration. However, he began formally articulating it on March 6th. Below is the headline that destroyed investor confidence in 2025. President Trump is no longer the "stock market's President" (for now). https://x.com/KobeissiLetter/status/1900207085628850629
On March 9th, President Trump further confirmed this shift in mentality. He acknowledged we are in a "period of transition" and it will "take a little time." This was the next piece of evidence that President Trump is truly not concerned about a crash in asset prices. https://x.com/KobeissiLetter/status/1900207087868649957
And, President Trump's Cabinet is also onboard with this plan. Commerce Secretary Lutnick on March 6th: "Stock market not driving outcomes for this admin." Treasury Secretary Bessent TODAY: "Not concerned about a little volatility." The sentiment is unanimous. https://x.com/KobeissiLetter/status/1900207089965740485
Furthermore, it's also clear that @DOGE
and Elon Musk are on board here. Even after Tesla, $TSLA, saw its 7th largest drop in history on March 10th, Elon made the below post: "It will be fine long-term" regarding $TSLA stock. So, why did this seemingly sudden shift happen? https://x.com/KobeissiLetter/status/1900207092079771698
First, as we have previously noted, the US is facing a massive refinancing task. 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. Rates have been stubborn. https://x.com/KobeissiLetter/status/1900207094436917424
For the last 2-3 years, the Fed believed they could obtain a "soft landing." This was a scenario where inflation falls to 2% and unemployment remains relatively contained. As inflation began to rebound into Trump's inauguration, he decided a new strategy was needed. https://x.com/KobeissiLetter/status/1900207096525705698
Yesterday, data showed the US Government's YTD deficit in FY2025 hit a record $1.15 trillion in February, a new year-to-date record. The deficit is now $318 billion above 2024 levels for the same time period, or ~38% higher. This worsened the crisis for @DOGE and Trump https://x.com/KobeissiLetter/status/1900207098971251070
Furthermore, a clearly defined part of President Trump's strategy has been to LOWER oil prices. Oil prices are down 20%+ since Trump took office. This morning, Citigroup said oil prices falling to $53 would lower inflation to 2%. What would lower oil prices? A recession. https://x.com/KobeissiLetter/status/1900207101663699248
Simultaneously, President Trump wants to reduce the US trade deficit. This is the whole point behind his global trade war. Trump's strategy of levying tariffs on almost ALL US trade partners is lowering GDP growth estimates. This also sounds like a recessionary case. https://x.com/KobeissiLetter/status/1900207103836307584
On top of this, @DOGE
and Trump are attempting to cut TONS of government jobs. These are the same jobs that have accounted for much of the recent job "growth" in the US. Government jobs have risen by 2 million over the last 4.5 years. Cutting these jobs will spur a recession. https://x.com/KobeissiLetter/status/1900207105937752280
Sum this all up, and here's what Trump wants:
1. Lower inflation
2. Lower oil prices (for #1)
3. Lower interest rates
4. Less deficit spending
5. Reduced US trade deficit
6. Less government inefficiency
ALL of these can be obtained by, or are a byproduct of, economic weakness. https://x.com/KobeissiLetter/status/1900207107510558888
To top it off, President Trump's first month of inflation data came in weaker than expected. Both headline and core CPI/PPI inflation FELL by more than expected in February. This gives Trump the "green light" to continue doing what he is doing. At least for the next month. https://x.com/KobeissiLetter/status/1900207109754507520
These changes in the macroeconomic backdrop will have market-wide implications
...so if Trump is engineering a recession in order to bail out the maturity of its large debt, look back at what I mentioned about what a Recession brings to the equity market
...it won't stop at a garden variety correction, it would deliver a BEAR MARKET, and at worse even trigger a Financial Crisis GFC 2.0 possibly way larger than the 2008 GFC.
...Trump has the resolve to GO ALL THE WAY, he has nothing to lose as he can't be President after this term but wants to leave a legacy to 'save America' as he sees it.
....the problem is he is using FLOOD to douse an INFERNO, there will be casualties, just make sure you won't be one.
