The market has entered the "expected disorder" phase, focusing on defense while waiting for opportunities.

I. Core Judgment

1. Non-linear policy path: Tariff policies show internal divergence and short-term fluctuations, making it difficult to form long-term consistency. Repeated policy changes disrupt market confidence and reinforce the "noise-driven" characteristics of asset prices.

2. Hard and soft data divergence: Although hard data such as retail is strong in the short term, soft data like consumer confidence has weakened overall. This lagging effect resonates with policy disturbances, making it difficult for the market to accurately grasp the direction of the macroeconomic fundamentals.

3. Pressure on Federal Reserve's expectations management intensifies: Powell's remarks maintain a neutral to hawkish tone to prevent the market from prematurely pricing in easing. The Federal Reserve currently faces the dilemma of unstable inflation while being pressured by fiscal policies to cut interest rates, with the core conflict becoming increasingly acute.

2. Major Risk Outlook

1. Confusion in policy expectations: The biggest risk is not "how much the tariffs will increase," but rather the loss of policy credibility caused by "nobody knows what the next step will be."

2. Market expectations become unanchored: If the market believes that the Federal Reserve will be "forced to ease" under high inflation/recession, it may lead to a "mismatch market" characterized by widening credit spreads and rising long-term interest rates.

3. The economy is on the brink of stagflation: Hard data is temporarily masked by a buying effect, and the risk of slowing real consumption is accelerating.

3. Strategic Recommendations

1. Maintain defensive structure: Currently, there is a lack of systematic reasons to go long, it is recommended to avoid chasing highs and heavily investing in aggressive assets.

2. Focus on the structure of the yield curve: once there is a mismatch with the short end declining and the long end rising, it will create dual pressure on high valuations and credit assets.

3. Maintain a bottom-line thinking and moderately reverse allocation: Volatility repricing will bring structural opportunities, but the premise is to control positions and pace well.

4. Macroeconomic Review of This Week

1. Market Overview

This week's trading days are only 4, as the US stock market is closed due to holidays. The overall market remains in a state of fluctuation and a fragile structure.

The three major U.S. stock indices continued to fluctuate downward, with trade conflicts and the Federal Reserve reiterating a wait-and-see attitude, leading to weak market performance. The Dow fell 1.3% on Thursday, the S&P 500 index dropped about 2.24% over the week, and the Nasdaq index declined by more than 3%.

In terms of safe-haven assets, gold continued to rise above $3300/oz, reaching a historic high of $3345.35/oz on Friday.

In terms of commodities, Brent crude oil has stopped falling and rebounded around 66 dollars, while copper prices have slightly warmed up to above 9200 dollars/ton.

In terms of cryptocurrency, Bitcoin continues to fluctuate within a narrow range of $83,000 to $85,000, while other coins are generally weak.

2. Economic Data Analysis

2.1 Tariff Progress and Analysis

Trump once again claimed that a trade agreement with the EU "will definitely be reached", but there are significant internal differences in policy: the Treasury and business sectors tend to be more moderate, while the White House's core hawks still insist on a tough stance. This means that the tariff policy lacks consistency, and the execution path will show non-linear and short-cycle rebound characteristics.

Trump's tariff policy goals have internal conflicts, resembling more of a political narrative tool than a sustainable macroeconomic control measure. Even if the tariff plan ultimately "falls through", it does not mean its impact will fade. The greatest risk lies in the inability of the policy to stabilize and persist, leading to a loss of trust in the market.

This may lead to short-term decision-making by enterprises, with market pricing becoming more dependent on emotions rather than fundamentals, thus entering the "disorder of expectations" stage: expectations themselves become a source of risk, pricing cycles shorten, and asset volatility intensifies.

2.2 Inflation Expectations and Retail Data

The New York Fed's inflation expectations survey shows that the 5-year expectation has dropped to 2.9%, a new low since January; the 3-year expectation remains largely unchanged; and the 1-year expectation has risen sharply. The data indicates that despite signs of stagflation, the risks are not significantly exposed. However, consumer pricing of the threats of economic slowdown and recession has increased, while expectations for unemployment and income growth have worsened.

The retail consumption data for March is impressive, with seasonally adjusted sales increasing by 1.4% month-on-month and 4.6% year-on-year. Motor vehicles and daily necessities saw a significant increase month-on-month, possibly influenced by the rush to avoid tariffs.

The structural divergence between hard and soft data typically occurs during periods of intense policy competition and rising market sensitivity cycles. The retail data for March looks impressive on the surface, but the strong contrast is formed by short-term overdrafts, tariff effect rushes, and deteriorating consumer confidence, which may represent a transitional phase before stagflation/recession.

3. Liquidity and Interest Rates

The Federal Reserve's liquidity remains around 6.2 trillion. The U.S. Treasury yield curve reflects:

1. Expectations for interest rate cuts strengthen ( Mid-term yields decline ), indicating a more cautious outlook on the economic prospects;
2. Inflation risk repricing ( Long-term interest rates are rising ), related to the rebound in commodity prices, tariff threats, etc. The market has switched from "full-year interest rate cuts + soft landing" to a new pricing path of "slowing interest rate cuts + long-term inflation risk resurgence."

Powell's hawkish remarks may be to maintain inflation expectations anchored. Trump is urgently hoping for interest rate cuts due to fiscal pressure.

5. Outlook for Next Week

The publicization of policy differences signals that a "high-profile hardline - brief easing" cycle may frequently occur in the future, which will continue to disrupt market expectations.

The resilience of hard data has led to marginal revisions in interest rate cut expectations in the market. Federal Reserve officials may continue a "neutral-to-hawkish" tone, maintaining the anchoring of inflation expectations.

The gap between hard and soft data is widening, and policy is constrained by the political cycle and fiscal limitations, which may lead to volatility reacting first. Suggestion:

1. Maintain defensive structure: avoid excessive offense, keep a neutral to defensive position.

2. Monitoring "expected disorder" signals: Beware of the mismatch between weakening short-term interest rates and high long-term rates.

3. Bottom-line thinking vs. trend game: Emphasize position control and fund diversification, while maintaining a moderate reverse position to seize opportunities.

We are currently entering a transitional period dominated by policy noise, with lagging economic signals and unstable expectations. Controlling risks and delaying bets may be more important than aggressive strategies.

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