According to The Kobeissi Letter, prediction market Kalshi has shifted its Q1 2025 US GDP growth expectations to -0.4%, marking the first projected contraction since Q2 2022 (source: @KobeissiLetter, Apr 29, 2025). This negative outlook may increase volatility across US indices such as S&P 500 and Nasdaq, potentially triggering risk-off sentiment among traders. Sectors sensitive to macro downturns, including banking and consumer discretionary, could experience increased selling pressure. Crypto traders should monitor for correlated downside in Bitcoin and other major digital assets, as macroeconomic contraction tends to reduce overall market risk appetite (source: Kalshi, @KobeissiLetter).

According to The Kobeissi Letter, the new tariffs announced by Trump, combined with expected retaliatory measures, are projected to contract GDP by between -3% and -4% if these tariffs persist long-term. Additionally, PCE inflation is anticipated to rise toward 4% in the coming months as price increases take effect. This outlook suggests a cautious approach for traders, particularly in sectors vulnerable to tariff impacts.

According to @KobeissiLetter, prolonged economic uncertainty historically poses significant downside risks, with five quarters typically resulting in a 1.5% GDP contraction. The current trade war has already entered its first quarter, indicating potential continued economic pressure if uncertainty persists. This situation could be a critical factor for traders to monitor closely.

According to The Kobeissi Letter, the Federal Reserve's strategy of maintaining 'higher rates for longer' is challenged by the current economic conditions of slowing growth and rising inflation. This situation suggests a period of stagflation, impacting financial markets as GDP contracts and inflation rises, placing the Federal Reserve in a difficult position. This analysis is crucial for traders as it indicates potential volatility in interest rates and inflation-sensitive assets.

According to The Kobeissi Letter, the Atlanta Fed has updated their Q1 2025 GDP estimate to -0.5%, or -2.8% when considering gold imports and exports, marking the first expected contraction since 2022.