According to The Kobeissi Letter, the Federal Reserve now considers stagflation—characterized by stagnant growth and persistent inflation—as its base economic scenario for 2025 (source: The Kobeissi Letter, May 9, 2025). For traders, this shift signals increased market volatility and risk-off sentiment, with potential downward pressure on equities. Historically, stagflation has driven institutional interest toward alternative assets such as Bitcoin and gold, as investors seek hedges against fiat currency weakness. Crypto traders should monitor macroeconomic data and Fed policy updates closely, as stagflationary pressures could spur demand for decentralized assets and drive speculative momentum in major cryptocurrencies.

According to The Kobeissi Letter, stagflation has become the base case even for the Federal Reserve as of May 2025 (source: The Kobeissi Letter, Twitter, May 9, 2025). This shift signals persistent inflation combined with slow economic growth, which historically weighs on traditional equities but often boosts interest in alternative assets like Bitcoin and Ethereum as inflation hedges. Traders should note that sustained stagflation typically increases volatility and risk appetite in the cryptocurrency market, as investors seek to diversify away from fiat-exposed assets.

According to The Kobeissi Letter, following this morning's data, the probability of the Federal Reserve implementing rate cuts beginning in June 2024 has increased to 61%. However, markets do not anticipate immediate cuts, signaling persistent stagflation risks and heightened uncertainty over the Fed's policy direction. This macroeconomic ambiguity has led to short-term volatility in major cryptocurrencies, as traders reassess risk exposure and await further signals from the Fed’s dual mandate. Source: The Kobeissi Letter on Twitter, April 30, 2025.

According to The Kobeissi Letter on Twitter, stagflation is effectively illustrated through two impactful charts, reflecting its influence on market dynamics. These visuals underscore the challenges traders face with stagnant economic growth coupled with inflationary pressures. The charts provide a clear depiction of current economic conditions, crucial for informed trading decisions.

According to @KobeissiLetter, the threatened tariffs on the EU are set to impact approximately $600 billion of imports, which could potentially reduce US GDP by 70 basis points and add 40 basis points to inflation. This information suggests that stagflation may have already begun, affecting trading strategies that rely on economic stability. The potential economic impacts should be considered by traders when evaluating market positions, particularly in sectors sensitive to import costs and inflationary pressures.

According to @KobeissiLetter, tariffs threatened on the EU, totaling approximately $600 billion of imports, could significantly impact the US economy. These tariffs are projected to reduce US GDP by about 70 basis points and contribute an additional 40 basis points to inflation. The analysis highlights the risk of stagflation, indicating potential challenges for traders in adjusting strategies accordingly.

According to The Kobeissi Letter, Goldman's basket of stocks, which perform well in a 'Stagflation Scenario,' are experiencing significant gains. This development complicates the Federal Reserve's strategy, as higher interest rates might trigger a recession, while lower rates could exacerbate inflation. The current economic environment poses a dilemma for interest rate policy, impacting trading strategies in equity markets.

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 Federal Reserve's current strategy of maintaining higher interest rates may no longer be viable as the US economy faces potential stagflation, characterized by slowing GDP and rising inflation. This situation poses a significant challenge for the Fed's economic policy, making it critical for traders to monitor potential shifts in monetary policy.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months and a collapse in consumer sentiment. Such economic conditions are critical for traders to monitor as they may signal potential stagflation, impacting market volatility.

According to The Kobeissi Letter, long-term US inflation expectations have surged to 4.1%, the highest since 1993, leading to a significant impact on trading strategies. This surge has been accompanied by a $300+ billion trade deficit in just two months and a collapse in consumer sentiment, factors crucial for traders to consider. These developments suggest potential stagflation concerns, which could influence market volatility and trading decisions.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This significant rise is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months. These developments have also led to a collapse in consumer sentiment, raising concerns about potential stagflation. Traders should consider the implications of these inflationary pressures on market dynamics.

According to @KobeissiLetter, US long-term inflation expectations have surged to 4.1%, marking the highest level since 1993. This surge is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months, contributing to a collapse in consumer sentiment. These developments are crucial for traders as they indicate potential stagflation, necessitating adjustments in trading strategies to mitigate risks associated with inflationary pressure and economic stagnation.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This significant rise is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months. Additionally, consumer sentiment has sharply declined. These factors are crucial for traders monitoring inflation impacts on market conditions and potential stagflation risks.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase is attributed to tariff front-running, resulting in a $300+ billion trade deficit over two months, significantly impacting consumer sentiment. These factors may indicate a potential rise in stagflation, which could influence trading strategies and market positions.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months, impacting consumer sentiment negatively. Traders should consider the potential implications of stagflation on market volatility and investment strategies, as these economic indicators suggest increased economic pressure.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This rise is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months, significantly impacting consumer sentiment. Traders should note the potential for stagflation, which could influence market dynamics and require strategic adjustments to portfolios.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase has significant implications for traders, as it may influence monetary policy and interest rate decisions, potentially impacting cryptocurrency and broader financial markets. The recent surge is attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over two months, coupled with a decline in consumer sentiment. These factors could signal the onset of stagflation, a challenging environment for market participants.

According to @KobeissiLetter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase has been attributed to tariff front-running, which has resulted in a $300+ billion trade deficit over the past two months. This development has severely impacted consumer sentiment, raising concerns about potential stagflation. Traders should monitor these economic indicators closely as they can have significant implications for market dynamics.

According to The Kobeissi Letter, there has been a significant increase in mentions of 'stagflation' in Bloomberg News, reaching approximately 1,500 mentions in recent weeks, the highest since May 2024. This indicates a growing concern among traders about persistent high inflation combined with slow economic growth and elevated unemployment. Such conditions could impact cryptocurrency markets by affecting investor sentiment and potentially driving demand for inflation-hedged assets like Bitcoin.