The Kobeissi Letter

The Kobeissi Letter

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Official X account for The Kobeissi Letter, an industry leading commentary on the global capital markets. Email us: support@thekobeissiletter.com

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The Kobeissi Letter

China is outpacing the world in patent filings: China now accounts for ~27% of global patent applications, the highest of any other country in the world. This percentage has DOUBLED over the last 11 years. Over the same period, the US' contribution has fallen -9 percentage points, to 20%, the lowest since at least the 1980s. At the same time, Germany’s percentage has declined -3 points, to 6%, also the lowest since at least the 1980s. Japan’s percentage has held steady at ~18%, the world’s 3rd-largest. China is leading the global patent race.

The Kobeissi Letter

Bitcoin ETFs are suffering historic losses: The largest Bitcoin ETF, $IBIT, posted -$244 million in net outflows last week, marking the 2nd-consecutive weekly withdrawal. $IBIT has now experienced outflows in 8 of the last 10 weeks, with a total of just 20 weekly outflows since its introduction in January 2024. As a result, its assets under management (AUM) are down to $67.6 billion, near the lowest since June 2025. $IBIT's AUM has now declined -$32.0 billion, or -32%, since its October 2025 peak. Overall, crypto funds recorded -$446 million in outflows last week, marking the 6th weekly withdrawal over the last 9 weeks. Crypto is searching for a bottom.

The Kobeissi Letter

US housing affordability is near historic lows: The US home price to median household income ratio is now at 7.0x, near an all-time high. In other words, it would now take 7 years of median household income to buy the average single-family home in the US. This ratio now even exceeds the 2006 housing bubble peak of 6.8x. By comparison, in 2000, home prices were 4.3x higher than the median annual household income. As a result, the average first-time homebuyer is now a record 40 years old. Homeownership is becoming increasingly out of reach.

The Kobeissi Letter

The percentage of older Americans who are working is declining: The employment-to-population ratio for those aged 55 and over is down to 36.8%, the lowest since 2021. Excluding the 2020 pandemic, this is the lowest percentage in 18 years. Before 2020, this metric was at ~39.6%, or 2.6 percentage points higher. This comes as the 55+ population is expanding rapidly, with the Baby Boomer generation aging into this group. As a result, the aging population is putting growing pressure on Social Security and Medicare, driving federal spending higher. The US labor market is changing.

The Kobeissi Letter

US households are becoming more pessimistic about their finances: Only 26.4% of American households expect their financial situation to improve over the next year, the lowest since August 2023. This percentage also matches May 2025 levels following Trump's Liberation Day. By comparison, this figure was ~10 percentage points higher in January, at 36.6%. To put this into perspective, the pre-pandemic average in 2017–2019 was ~42.0%. Last month, just 17.6% of consumers said they feel better off financially, the 2nd-lowest reading since December 2022. Consumer sentiment is weak.

The Kobeissi Letter

US housing market activity may be resurging: Pending-home sales jumped +3.3% MoM in November, well above expectations of +0.9% increase. This marks the 4th-consecutive monthly gain, matching the longest streak seen during the 2020 pandemic. Contract signings improved across every US region last month to their highest levels of 2025. The West posted the largest increase, followed by the South, the nation’s largest home-selling region. As a result, the Pending Home Sales Index is up to 79.2 points, the highest since February 2023. Homebuyer activity is regaining traction.

The Kobeissi Letter

Japanese government bonds have recorded historic losses: Japan’s 7 to 10-year bonds are down -32% in US Dollars over the last 7 years, the worst performance among any major bond market. This is followed by Germany’s government bonds, which are down -8% over the same period. Bond prices began to decline in 2021, with losses accelerating in 2022 as inflation surged and major global central banks began hiking rates. Meanwhile, 7 to 10-year US Treasuries are up +13% since November 2018, despite falling in 2021 and 2022. At the same time, China's government bonds are up +35%, as yields declined amid rising deflationary pressures across the economy. Global bond markets are moving in opposite directions.

The Kobeissi Letter

Global M&A recorded a historic year: There were 68 global M&A deals valued above $10 billion in 2025. This nearly doubled from the prior year and exceeded the combined total for 2023 and 2024. By comparison, the previous all-time high was set in 2015 at 62 deals. These large transactions drove broader M&A activity higher, pushing the average annual deal size up +62% YoY, to a record $227 million, surpassing the high seen in 1999 of $225 million. This also marks the 2nd annual increase in average M&A deal size. Corporate dealmaking is hotter than ever.

The Kobeissi Letter

The federal government is facing a massive spending problem: Government spending is up to $7.0 trillion over the last 12 months, near the highest in history. This is only below the ~$7.8 trillion on a 12-month rolling period seen during the 2020 Pandemic and 2021 recovery. By comparison, before 2020, federal spending was running between $3.5 trillion and $4.5 trillion for 10 years. Meanwhile, government revenue is up to a record $5.4 trillion over the last 12 months, rising nearly +$1.0 trillion since 2023. Overall, the gap between federal spending and revenue has persisted for 23 consecutive years. What’s the long-term plan here?

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