Following the CPI, and after predictions were below expectations; the PPI has also started to fall significantly below expectations.
Please note that the April data was released under the expectation of a trade war, fully overdrawing the anticipated demand. Surprisingly, it has all come in below expectations. Therefore, I boldly present a conclusion that no one in the entire network has mentioned: that is, the demand side in the United States has shrunk, and the U.S. may soon or may have already entered a deflationary trap caused by insufficient demand!
So at this time, we need to pay attention to the Fed, especially to Powell's change in attitude. I can only hope Powell quickly notices this issue on the demand side and takes preemptive action to cut interest rates. Otherwise, the problem on the demand side is a true depression; the insufficiency of demand is scarier than inflation coming from the supply side!
Then the core game in the market will be whether Powell can take advantage of the situation and preemptively cut interest rates before the job market deteriorates, rather than falling into the deflationary trap of insufficient demand!
Currently, the market gives me a very dangerous feeling, and we need to be more vigilant at this time. All information will be communicated to the small circle at the earliest opportunity.
