#打榜优质内容

The current stock market is maintaining near historical highs, making the notion of an economic recession hard to believe. This apparent strength is merely a reflection of the deep economic divergence. The top 10% of income earners contribute over 60% of consumption. Their wealth continues to grow primarily through the wealth effect of accumulated assets in stocks and real estate, thereby supporting strong GDP performance. Meanwhile, persistent inflation is continually eroding the purchasing power of low- to middle-income families. This widening gap explains why the economy is re-accelerating on one hand, while the job market is showing weakness and the cost of living crisis persists on the other. For investors, this means that one cannot simply expect a broad market rally.

We must be prepared to face the drastic fluctuations in policy. The Federal Reserve is caught in a delicate dilemma. Strong GDP growth and resilient consumer spending support the Fed's decision to slow the pace of interest rate cuts. Market valuations are excessively high, inflation remains stubborn, and delaying rate cuts could trigger sudden panic in the market over concerns about future growth. Historical experience has been able to extend bull markets, but this time is different. Currently, the market is driven by the impressive earnings of the seven major U.S. tech companies, while the remaining 493 companies in the S&P 500 are performing mediocrely. The uncertainty in policy creates conditions for seizing opportunities, but it also means that once market expectations change, the risk of a downturn could suddenly arise.

The US dollar is a key factor affecting the global landscape. Its trajectory will determine whether this cycle continues or is interrupted. A significant risk that the market has overlooked is the potential supply contraction and short-squeeze scenario of the US dollar. Tariff policies have reduced the trade deficit, limiting the scale of dollar repatriation to US assets. The fiscal deficit is high, but foreign buyers' interest in US Treasury bonds has weakened, which could trigger liquidity issues. Current futures market data shows that short positions on the dollar have reached historical highs. This extreme bearish sentiment could trigger a violent short squeeze on the dollar at any time, thereby undermining the stability of risk assets and the rhythm of the current bull market. If the global economy weakens while the dollar suddenly strengthens, more vulnerable markets may experience problems before the US.

If the real estate market and the stock market weaken simultaneously, the wealth effect that supports high-income consumer spending will be severely impacted, thereby threatening the overall resilience of the economy. The real estate market may experience a brief rebound when interest rates are slightly lowered. Structural inequalities such as supply-demand imbalances caused by demographic changes, rising default rates due to the end of student loan and mortgage grace periods, and the concentration of wealth among the elderly will fuel populist pressures and may force policy adjustments in areas like housing and education.

We are in the late stage of a financialization cycle. Policymakers strive to maintain the situation until important political milestones have passed. Just like from 1998 to 2000, the bull market may continue for a while, but volatility will become more severe, with reflexive funds in the market highly concentrated in seven large-cap stocks, which both support valuations and sow the seeds of fragility. In the coming period, it is unlikely that there will be a broad-based prosperity in the market; localized bull markets will become the norm. Investors must remain vigilant, focus on high-certainty scarce assets, and closely monitor the movements of the dollar to ensure they remain unscathed during this complex cycle.