U.S. stocks, U.S. bonds, and Bitcoin have rebounded strongly, but skeptics are closely watching for signs of an "economic collapse" in the United States

As U.S. stocks rebound significantly, corporate borrowing costs decline, and the U.S. Treasury market stabilizes, a group of seasoned investors on Wall Street who excel in data analysis have chosen to stay on the sidelines.

For example, Michael Mullaney, research director at Boston Partners, which manages $110 billion in assets, has not joined the rally in risk assets. Instead, he is repeatedly reviewing various economic data, concerned that these figures show early signs of damage caused by the Trump trade war.

Despite the S&P 500 index being less than 3% lower than before the announcement of Trump's tariff policies and Bitcoin breaking through $95,000 leading the risk assets, these analysts are focusing on less conspicuous but potentially indicative high-frequency indicators of long-term economic pain: shrinking shipping volumes in Los Angeles, reduced travel-related outings, and declining credit card revenues in key consumer sectors.

"This impact will not disappear in 90 days," Mullaney calmly analyzed, "regardless of what level the tariffs ultimately settle at, there will be a significant impact on economic activity." He has chosen to hold cash, acknowledging that missing out on this rebound could be costly, but he worries that the effects of trade hostility may have already penetrated deeply and are difficult to avoid.

Risk assets are warming up, market optimism returns

In the past few weeks, the overall sentiment in the U.S. financial markets seems to have warmed.

The benchmark 10-year U.S. Treasury yield has fallen by more than 20 basis points in the past two weeks, alleviating concerns about large-scale foreign capital outflows, while the dollar exchange rate has stabilized. The risk premium on high-yield bonds has recorded the largest narrowing since 2023, and credit volatility indicators have significantly retreated.

Bullish leveraged ETFs have attracted about $7 billion in inflows over the past month, with the dollar, U.S. stocks, and U.S. Treasuries rising together, creating the best coordinated performance of the year, indicating that most investors are re-embracing risk assets.

High-frequency data signals red lights, economic activity slows significantly

However, Torsten Slok, chief economist at Apollo Global Management, warned in a report that the number of container ships sailing from China to the U.S. is "collapsing," and consumers are expected to face higher inflation, with large-scale layoffs in trucking, logistics, and retail JP Morgan's Chief U.S. Economist Michael Feroli noted that high-frequency data has shown a decline in international tourist numbers, which will drag down economic growth.

Jake Schurmeier, Portfolio Manager at Harbor Capital Advisors, stated:

"The economy before March showed almost no substantial impact from tariffs, but in April and May, we should start to see the actual impact of tariffs on prices and quantities."

Rising Recession Risks and Increasing Financial Pressure on Households

A Bloomberg economist survey shows that the median probability of the U.S. economy falling into recession in the next 12 months has risen from 30% in March to 45%. Data released on Friday indicated that U.S. consumer confidence has dropped to one of its lowest levels in recent times, and long-term inflation expectations have surged back to decades-high levels. Corporate earnings reports have been mixed, and companies remain uncertain about the impact of tariffs.

An index tracked by Danielle DiMartino Booth, Chief Strategist at QI Research, shows that the number of households consulting bankruptcy lawyers has reached its highest level since the pandemic. "Loan standards are tightening, mortgage applications are being denied, refinancing requests are being rejected, and there are no fiscal stimulus measures," she explained.

Trump's Policy Fluctuations Increase Market Uncertainty, Investors Lean Towards Defensive Positions While Waiting for Economic Signals

Signals recently sent by Trump and Treasury Secretary Yellen indicate that the White House may soften its hardline stance towards major economic partners, becoming an important factor driving the market rebound.

On Tuesday, Trump stated he had no intention of firing Federal Reserve Chairman Powell and was willing to "significantly" cut the 145% tariffs on China.

However, the optimism was quickly tempered—Trump subsequently sent mixed signals regarding the negotiation status, and Yellen clarified that the U.S. is not seeking to unilaterally reduce tariffs on China, which has exacerbated market volatility.

In the face of an increasingly divergent market outlook, investors are adjusting their strategies. Cliff Hodge from Huntersville, North Carolina, is using the rebound to reduce equity risk exposure while maintaining a defensive stance in fixed income. The Chief Investment Officer at Cornerstone Wealth stated:

"Our high-frequency data points to an economic slowdown, but it is still too early to assert a full-blown recession."