Everything points to a crisis of the ''shock + stimulus'' type:
1. Strong slowdown in the global economy continues
– AI data shows a decline in global growth of ~300 basis points since December 2024.
2. Geopolitical chaos: trade wars, tensions between China and the USA, elections
– Markets fear sudden political decisions (e.g., tariffs) - sudden shocks.
3. Massive withdrawal of investors from risk
– Investor positioning at one of the lowest levels since 1978.
– Behavior typical of a sharp shock, not of a controlled economic cooling.
4. Fiscal stimulus has already started (China, Germany, India)
– China is increasing spending and easing policy.
– Germany is suspending the “debt brake.”
5. Global liquidity is beginning to rise
– Dollar weakness supports capital availability.
6. Increasing tensions in the repo market → pressure on the Fed to react
– We are approaching a situation where the Fed may start to respond.
7. Strong growth in the gold market
– Historically, it reacts to expected monetary expansions and inflationary policies.
– Investors are expecting easing.
8. Interest rates are starting to be priced lower by the market
– Investor expectations indicate significant rate cuts in the coming months.
9. Lack of classic signals of monetary tightening
– The Fed is not raising rates, not starting QT – on the contrary, it is considering stopping the cycle.
Additional signals that have elements of crisis
(deliberate tightening)
The Fed has still not launched new QE programs nor expanded its balance sheet, despite weak data → possible deliberate delay in assistance.
(bubble and delayed reaction)
Commercial real estate and corporate bonds markets are heavily indebted. Central banks have long ignored risks and inflation, which may mean they will react too late.
Additionally, we see how the market reacted to fake news related to the 90-day tariff pause (as soon as uncertainty regarding tariffs disappears, investors are ready for a stronger market entry) #Write2Earn