The market is beginning to realize that causing a recession in the United States is something that Trump must do.

Recently, the volatility in the US financial markets has intensified, with major US stock indices all falling in February, and bond yields dropping significantly. Cryptocurrency has also suffered a bloodbath. At the same time, economic data continues to deteriorate, growth expectations are plummeting, and inflation pressures remain high. In this context, the market is gradually realizing that Trump's 2.0 policy combination may not be the traditional engine for economic growth, but rather a potential "drag on growth." Nomura Securities' analysis points out that the Trump administration intends to trigger a "mild recession" by reducing government spending and employment, as well as implementing tariff policies, to facilitate the structural transformation of the economy from government dependence to the private sector. While this strategy may intensify short-term economic downward pressure, its long-term goal is to reshape the growth model of the US economy. Structural adjustments in Trump's policies: Shifting from government dependence to private sector drive Nomura Securities' Charlie McElligott analysis states that the core of Trump's policies is to break the long-term reliance of the US economy on government spending and promote the private sector as the dominant force for growth. Specific measures, as mentioned in previous articles, include substantial spending cuts and layoffs - such as the million federal job cuts plan led by the Musk-led US Government Efficiency Department (DOGE), as well as tariffs. These policies are aimed at reshaping trade dynamics and stimulating the vitality of the private sector. McElligott states: "For the 'market status,' this is very dangerous. In order to achieve the long-term goal of 'reprivatizing the US economy,' theoretically, the government knows that they will have to hit the brakes on the 'perpetual motion machine' of government spending and employment, and that some deadlocks need to be broken... Especially through hypothetical cuts in government spending and federal job cuts, as well as substantial tariffs." However, in the short term, these policies will inevitably suppress economic growth and may even pose risks of recession. McElligott believes that by reducing government spending and employment, as well as imposing tariffs, deflationary effects may be brought about, leading to lower interest rates and a weaker dollar, paving the way for private sector growth and sparking business vitality. However, this transformation must first weather the short-term turbulence. The market trends in February clearly reflect concerns about Trump's policies. Currently, major US stock indices have fallen below key technical levels; meme stocks have seen the largest monthly decline since April last year; the "Lagnificent 7" has evaporated $2.2 trillion in market value, falling near the 200-day moving average. The bond market is also volatile, with the 2-year Treasury yield falling below 4.00%, and the yield curve inversion intensifying, implying policy errors or stagflation risks. Cryptocurrency markets have also generally declined. Employment and the economy are under short-term pressure, with the "Riyadh Agreement" providing some relief? The effects of Trump's policies are already evident. As mentioned in previous articles, federal layoffs directly impact the job market, with the Washington, D.C. area and surrounding areas hit the hardest, leading to a surge in unemployment benefit claims, a 25% increase in active real estate listings, and increased downward pressure on housing prices. BofA analyst Michael Hartnett warns that an economic recession in the Washington, D.C. area is already showing signs. With the title of "Wall Street's most accurate analyst," Hartnett also warns that the US government is slipping into a recession and may drag the entire US economy into one. However, Hartnett also raises an interesting point that the so-called "Riyadh Agreement" may provide some cushion for the US economy. He predicts that Trump may reach an agreement with OPEC+ to increase oil production in exchange for policy support, easing inflation pressures. If the agreement is reached, Brent crude prices could fall below $70, potentially aiding Trump's inflation reduction goals. However, the uncertainty of this assumption remains high, and the market needs to closely monitor the implementation of policies. This article is adapted from "Wall Street Horizons," author: Gao Zhimou, GMTEight editor: Zhang Jinliang.