Capital schemes under negative GDP growth! Three major anomalies expose the recession lie!
When the Nasdaq index rose against the backdrop of a 0.3% contraction in GDP, Wall Street traders were executing an epic short squeeze. This data collapse triggered by the 301 tariffs is, in fact, a perfect trap for capital to harvest the cognitive shortcomings of retail investors.
The seemingly dismal -0.3% GDP growth rate is actually a statistical distortion caused by businesses hoarding goods ahead of time, with a surge in imports dragging down GDP by 5.03 percentage points. A 4.8% surge in durable goods orders in March confirms that manufacturers are frantically stocking up before the tariff cliff. Excluding trade disturbances, the terminal sales growth rate is 3.0%, and a 4.4% increase in hourly wages supports the continuous roar of the consumer engine. The manufacturing PMI new export orders plummeted to 48.2, exposing the pulse-like impact of supply chain reorganization on the data.
Beneath the surface of a 3.7% quarterly core PCE, there lies undeniable evidence of structural inflation cooling. The super core CPI's month-on-month growth rate dropped sharply from 0.5% to 0.1%, cracks appeared in service inflation's stickiness, and commodity deflation is making a comeback. Second-hand car prices fell by 1.1% month-on-month, and furniture and appliance prices have seen negative growth for six consecutive months. The growth rate of real disposable income at 2.4% outpaced inflation, and the consumer debt ratio has counterintuitively decreased to a ten-year low of 9.7%.
CME interest rate futures reveal the true capital expectations, with the probability of a rate cut in June falling below 35%, down from 42% before the data release. The pace of balance sheet reduction may decrease from $95 billion/month to $60 billion, and the overnight reverse repurchase account balance has fallen below $400 billion. The tightening liquidity expectations accelerate the migration of capital to U.S. stocks, with corporate bond spreads narrowing to 123 basis points, and the credit market is voting against the recession narrative.
The 10-year U.S. Treasury yield is experiencing violent fluctuations around the 4.6% mark. Hedge funds are positioning through volatility derivatives ahead of the non-farm payroll data explosion. If the unemployment rate exceeds 3.9% and hourly wage growth falls below 4.0% on Friday, capital's scythe will strike the last bullish belief.
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