What exactly is the U.S. stock market declining?
The core reason is the panic of liquidity tightening under recession expectations: on one hand, Trump's "recession" guidance coincides with the weakening of economic data; on the other hand, behind the concerns about liquidity, there is not only the discomfort of the Federal Reserve's balance sheet reduction nearing its end, but also the "diversion" from China and Europe, as well as the "shadow" of further tightening by the Bank of Japan
The views in this article are sourced from Minsheng Securities
The core reason is the panic of liquidity tightening under recession expectations: on one hand, Trump's "recession" guidance coincides with the weakening of economic data; on the other hand, behind the concerns about liquidity, there is not only the discomfort from the end of the Federal Reserve's balance sheet reduction but also the "diversion" from China and Europe, as well as the "shadow" of further tightening by the Bank of Japan.
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Concerns about a significant economic slowdown: especially consumption and trade deficits may drag down first-quarter GDP; behind this are both cyclical reasons and the exacerbation from Trump's policies.
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Trump's "expectation guidance" intentionally releases negative expectations: "For the sake of medium- to long-term structural transformation, short-term economic discomfort can be tolerated," refusing to rule out the risk of recession and stating that one should not focus excessively on the stock market.
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The pressure of liquidity (expectations) in the U.S. stock market: in addition to the Federal Reserve pausing interest rate cuts + continuing balance sheet reduction; Chinese technology and European fiscal policies are causing funds to "divert"; Japan's wage growth has reached a new high, casting a "shadow" of tightening by the Bank of Japan