The Kobeissi Letter Something is not adding up… how are people bullish with oil at $109 a barrel?

Inflation and real rates continue to be the biggest risk in the market… 10Y real down slightly from recent highs but continue to compress stock valuations. 5y breakeven is showing increased short term inflation expectations, forecasting a 2.57% average rate of inflation.

Midas Only down 5% from all time highs… only 9% at the low. With oil at $113 lol

Today was the lowest trading volume on $SPY over the past month, even despite war news hitting all day. With oil prices climbing aggressively and spy mildly up, one of these is due for a correction. Pressure is building, tomorrow’s move will be larger and show which way the

We are only 5% off of all-time highs in $SPY. The market is not pricing in the long-term effect of elevated oil prices on the economy. There will be second order effects on inflation, industry, and agriculture that will go on longer than the war itself…

Everyone’s chasing energy on Hormuz risk. But the second-order trade seem to have better risk/reward. Ag commodities are still 40-60% off 2022 highs. Fertilizer & crop input stocks are priced for permanent depression. If energy stays elevated → input costs rise → food prices

Even if oil does shoot back down there is a credit-based reason to be cautious: The 2s10s curve has dropped 20bps in two months. HY spreads haven’t followed suit. One of these is wrong. Historically, when the curve leads and credit lags, credit catches up. Spreads at 3.5%

The Kobeissi Letter The curves as showing elevated chance of recession

Our $XLU trade is up again today, steadily beating the broader market.

The Kobeissi Letter Stocks might be improving but there’s still underlying factors in the market… oil at $100, short term, inflation expectations, and real rates at 2% make it hard to get too confident

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BREAKING: $ETH crosses $2,300 for the first time in a month. Crypto rising 2% on Saturday morning amidst ongoing peace talks with Iran.

$ORCL is up 9% today and fighting to break through its 50MA. The last time it did, it would shoot up 30% in the following month. $ORCL is down more than 50% from its highs but is seen as a play on AI. Is this a name that is ready to rebound?