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Market Overview

The latest US employment data allayed concerns about the economic recession. The continued decline in the yen also curbed the volatility brought about by the closing of arbitrage trades. The S&P 500 index rose more than 2%, the biggest increase since November 2022. The NASDAQ rose nearly 2.9%, the Dow rose more than 680 points, the small-cap stock index rose 2.4%, the China Securities Index rose 2.8%, and the chip stock index rose about 7%.

Nvidia rose more than 6%, breaking away from its two-and-a-half-month low. Apple rose for two days, Tesla rose 3.7%, Meta rose more than 4%, NIO rose about 4%, and Alibaba, Pinduoduo, and Tencent's ADR rose more than 3%. Diet pills were good for earnings. Lilly closed up more than 9% after rising more than 13%, and Novo Nordisk US stocks rose 7.5%.

US stocks survived poor demand for 30-year US bond auctions. However, the sell-off of US bonds intensified. The yield on 10-year US bonds rose above 4% again, and the yield on short-term bonds rose 10 basis points at one point.

Oil prices rose for three consecutive days due to favorable demand and tension in the Middle East. US oil rose more than 1%, surpassing 76 US dollars, and oil rising above 79 US dollars to a new high during the month. Safe haven demand and the Federal Reserve's interest rate cut bets to raise the price of gold, stopping a five-day decline. Spot gold rose as high as 1.8% and rose above $2,420. Most metals in London closed higher, and copper left its lowest level in five months.

The US dollar recovered its decline since last Friday. The yen fell for three consecutive days, and the offshore renminbi fell by more than 110 points and fell below 7.18. Bitcoin rose 8% to break above $0.059 million, while Ethereum rose 10%.

During the Asian session, the three major A-share indices collectively turned red, brokerage and liquor stocks surged, and long-term treasury bonds fell across the board in the afternoon.

Key news

The number of people applying for unemployment benefits in the US for the first time last week was 0.233 million, lower than expectations and previous values, and the biggest drop in a year. The number of renewed jobless claims rose to a 33-month high.

Financial reports from Disney, Airbnb, Hilton, and energy drink giant Monster warned that US consumption “definitely weakens”; weak consumption impacted US credit; America's “re-industrialization” was weak, and Rockwell and Emerson both lowered their guidelines.

Asian copper inventories surged to their highest level since mid-2018.

Trump: My instincts are stronger than Powell's. The president should have some say in the Fed's policies.

A summary of opinions from the Bank of Japan's July meeting showed that officials did not consider the 15 basis point rate hike to be an austerity. Analysts say that if the Bank of Japan stops raising interest rates, Japanese yen arbitrage trading will make a comeback. After the sharp fall in Japanese stocks, there is now a good opportunity to “cut the bottom”. The market is concerned about whether Buffett will take steps to increase his holdings.

Kweichow Moutai's net profit for the first half of the year was 41.696 billion yuan, an increase of 15.88% over the previous year. SMIC's second-quarter net profit of $0.1646 billion surpassed expectations, down nearly 60% year over year.

Eli Lilly's revenue and profit for the second quarter both greatly exceeded expectations. The annual results guide was raised, and the stock price once surged 13%.

Market Closing Report

US stocks: The Dow rose 1.76%, the S&P 500 index rose 2.3%, and the NASDAQ rose 2.87%.

European stocks: The European STOXX 600 Index closed up 0.08%. Germany's DAX 30 closed up 0.37%. France's CAC 40 closed down 0.26%. The UK FTSE 100 closed down 0.27%.

A shares: The Shanghai Index closed flat, the Shenzhen Index fell 0.04%, and the GEM Index fell 0.54%.

Bond market: The yield on the US 10-year benchmark treasury bond rose 5.04 basis points to 3.9935%. The two-year US Treasury yield rose 7.59 basis points to 4.0380%.

Commodities: WTI crude oil futures for September closed up $0.96, or 1.28%, to $76.19 per barrel. Brent crude oil futures for October closed up $0.83, or 1.06%, to $79.16 per barrel. COMEX gold futures rose 1.43% to $2467.20 per ounce. COMEX silver futures rose 2.45% to $27.605 per ounce. Lunzinc closed up about 2.5%, Lunxi rose about 1.7%, and Lunnickel fell more than 0.9%.

News details

Global heavyweight

The number of people applying for unemployment benefits in the US for the first time last week was 0.233 million, lower than expected and previous values, the biggest drop in a year! The number of renewed jobless claims rose to 1.875 million, soaring to a 33-month high.

Disney, Airbnb, Hilton, and energy drink giant Monster's earnings report warns that US consumption is “definitely weakening”; weak consumption impacts US credit; US “re-industrialization” is weak, and Rockwell and Emerson both lowered their guidelines

• Financial reports from Disney, Airbnb, Hilton, and energy drink giant Monster warn that US consumption is “definitely weakening.” Due to rising prices and a decrease in residents' savings, Americans have reduced their spending on food, drink, travel, etc., and have become more cautious. America's consumer and hotel giants are shouting that life is not going well.

• Weak consumption impacted US credit, interest rates hit record highs, and credit card debt “rarely fell.” US credit card debt unexpectedly fell by $1.7 billion in June, the biggest drop since the pandemic. And every time there has been such a sharp decline in history, an economic disaster of some kind has either followed or begun.

• America's “re-industrialization” is weak, and Rockwell and Emerson both lowered their guidelines. This is another sign that the manufacturing economy is slowing down and companies are cutting back on spending. Rockwell's CEO said the company pointed to weak consumer demand, high interest rates, and uncertainty about taxes, tariffs, and stimulus policies as the main reasons for delaying investment plans.

Asian copper inventories surged to their highest level since mid-2018. Currently, the total amount of visible copper stocks in the world has reached 0.794 million tons, while it was only 0.262 million tons on January 1 of this year. Goldman Sachs said that the copper oversupply situation has intensified, and copper prices will continue to decline.

Trump: My instincts are stronger than Powell's. The president should have some say in the Fed's policies. Trump criticized Powell this Thursday, saying “it's either a little too early, or a little too late” when it comes to adjusting interest rates. Last month, he said that if elected, Powell will be allowed to complete his term as chairman of the Federal Reserve, especially when he thinks Powell is doing the right thing. Last week Trump said he would cut interest rates drastically after being elected.

The Bank of Japan has “surrendered”, can the market relax?

• A summary of opinions from the Bank of Japan's July 31 meeting shows that officials expect monetary policy to continue to be relaxed, and said that even if they raise interest rates, they don't think this move will be enough to disrupt the global market. However, the meeting decided to raise interest rates, which then set off a collapse in the global market.

• Analysts believe that if the Bank of Japan stops raising interest rates, the Japanese yen arbitrage trade will make a comeback, and the inflation problem may become more serious, and the focus will shift to whether other major economies such as the US are going into recession.

• J.P. Morgan warned that there may be any “black swans” that the market doesn't know at the moment; otherwise, it is impossible to explain the sell-off of Japanese stocks on such a scale. Analysts believe that Japan has more worrisome factors than the recession. Consumption and investment may be curtailed, and that policy mistakes may also jeopardize the relationship between the Japanese government and central bank.

• After the sharp fall in Japanese stocks, there is now a good opportunity to “cut the bottom”. Will Buffett take steps to increase his holdings? Various signs send a signal of “bottoming out”: the stock prices of the five major trading companies have plummeted, and the market capitalization has evaporated to nearly 7 billion dollars; the expected price-earnings ratio of two of these companies has fallen to the level when Buffett increased his holdings last year; after drastically reducing Apple holdings in the second quarter, Berkshire has record cash reserves.

Kweichow Moutai's net profit for the first half of the year was 41.696 billion yuan, an increase of 15.88% over the previous year. In the first half of the year, Maotai's revenue increased 17.76% year-on-year to 81.931 billion yuan. The company said that in 2024-2026, the total cash dividend distributed by the company each year was not less than 75% of the net profit attributable to shareholders of listed companies in that year.

SMIC's second-quarter net profit of $0.1646 billion surpassed expectations, down nearly 60% year over year. SMIC's Q2 revenue increased 22% year over year to 1.9 billion US dollars, gross margin fell 6.4 percentage points year over year to 13.9%, and monthly wafer production capacity surged 50% year over year.

Eli Lilly's revenue and profit for the second quarter both greatly exceeded expectations. The annual results guide was raised, and the stock price once surged 13%. Eli Lilly's second-quarter revenue increased 36% year over year, and net profit surged 68% year over year, both exceeding market expectations. The company predicts that demand for diet pills will continue to rise during the year, raising its annual revenue forecast by 3 billion US dollars.

Domestic macro

Major banks took steps to sell long-term bonds, and the bond market fell into a long and short game. According to the Shanghai Securities News, in the past two days, major banks have become the main sellers in the bond market. What has caught the market's attention even more is whether major banks have enough bonds to sell. “Currently, there are not many bonds that can be sold in the positions of major banks. On the afternoon of August 6, a major bank almost defaulted when selling securities.” A bond trader told reporters.

Guangshen added “buy and build” guaranteed housing: the market's digestibility is stronger. Analysts say Beijing and Shanghai are expected to follow suit. According to the analysis, the previous acquisition in Zengcheng District of Guangzhou also had special characteristics; it was a “purchase-for-construction” in a specific area under a specific project; this time, the Shenzhen housing collection was carried out throughout the city, and the demonstration effect is stronger, and it is also more signalling.

Zhang Xia, Chief Strategy Analyst at China Merchants Securities: The market is vaguely standing at the end of 2018, which ushered in the eve of a major style change. In terms of style, if the internal and external environment changes, there will be a major shift in the configuration for the next three years.

Domestic companies

The Huawei MateBook GT 14 is officially on sale. Huawei's new flagship laptop HUAWEI MateBook GT 14 is officially on sale. This product is powered by an ancient model developed by Huawei itself. The Huawei MateBook GT 14 is the first product in the Huawei MateBook GT series. In terms of price, the Huawei MateBook GT 14 starts at 7499 yuan. The agency believes that more AI PC products are expected to be launched in 2024, which will add vitality to PC market sales in 2024.

Passenger Vehicle Federation: Passenger car retail sales fell 2.8% year on year in July, and the NEV retail penetration rate exceeded 50% for the first time. Recently, the country's “trade-in” passenger car scrapping and renewal policy has gradually taken effect, and corresponding policies and measures have been introduced and followed up in various regions. The release of consumption potential driven by the policy has worked very well. As a result, the NEV trend in July was better than what the passenger car manufacturer forecasting team expected. According to the analysis, the off-season for the car market in July was not weak.

Minsheng Securities merged into the League of Nations Securities pricing, with a total price of 29.5 billion yuan.

Shiseido's stock price plummeted 16%, and the Chinese market dragged down performance. Due to weak demand in China and production problems in the US, Shiseido lost money in the first half of the year. Operating loss for January-June was 2.728 billion yen (18.4 million US dollars), compared to 13.6 billion yen for the same period last year. After the nuclear sewage incident, the aftermath of Chinese consumers cutting back on buying Japanese products still lingers.

Overseas macro

The market is seeking high yields. The 30-year US bond auction is once again poor. US bonds have fallen, and US stocks have held up. According to the analysis, yesterday's dismal 10-year US bond auction caused US bond yields to soar and US stocks to plummet. What the market least wanted to see was another fiasco in the 30-year US bond auction, but this is the fiasco it just experienced. US bonds fell unexpectedly, but unlike yesterday, US stocks maintained their gains after a bad 30-year US bond auction, and then the increase further expanded.

Goldman Sachs: With the current level of market turmoil, the Federal Reserve is not panicking; there is no need to cut interest rates urgently.

Extreme high temperatures hit the world. July broke temperature records for two consecutive days, and 2024 may become the hottest year in history. This past July was the second-hottest month in the world since records began. Japan's average temperature hit the highest in history, and many countries such as Greece and Hungary experienced the hottest July on record.

Overseas companies

Apple will sell the smallest Mac computer in history in the fall — the new Mac Mini equipped with the M4 chip to welcome AI features. This is also the first major design change for the Mac Mini desktop since the Jobs era. The appearance will be reduced to the size of an Apple TV set-top box, and developers call it the “iPad Pro in a small box.” Apple plans to replace all Mac computers with M4 chips by next year. Welcoming AI features is a major selling point, hoping to revive sales.

The details of the ruling in Google's antitrust case have come to light: Microsoft doesn't have to pay for it, and Apple doesn't have to. An Apple executive said, “Even if Microsoft offers Bing for free, or even if the company sends it together, we won't consider it.” It's been ten years since Google-Apple signed a win-win agreement. Apple is not reluctant to develop its own search engine, but it would probably cost at least 20 billion dollars to replicate Google's current technical infrastructure.

The global regulatory antitrust storm continues, and Amazon's $4 billion investment in Anthropic is subject to UK regulatory scrutiny.

Altman's “Strawberry” sparked a buzz. A mysterious new model appeared in the arena, and the first wave of actual testing by netizens was here. Last month, it was revealed that OpenAI was developing a next-generation basic model, the “Strawberry,” the predecessor of which is said to be the mysterious Q* before. People familiar with the matter said that OpenAI hopes to greatly improve the reasoning ability of AI models through this project. “Strawberry” has already completed pre-training on a very large data set and used a special processing method, such as post-training.

Driven by AI demand, the overseas CPU war in the second quarter led to AMD's pressure on Intel! Bank of America Merrill Lynch expects AMD's CPU sales to grow 38% year over year in 2024, compared to Intel's growth rate of only 2%. By 2025, AMD's revenue share in the PC and server market is expected to reach 25%, far higher than last year's 19%.

The two AI drug companies announced a merger to create one of AI Bio's largest mergers and acquisitions. Recursion and Exscientia plc announced that the two companies have reached a final agreement to merge Recursion and Exscientia, the former capable of decoding biology to industrialize drug discovery, and the latter working to create more effective medicines for patients more quickly.

Is CNN worth a penny? The parent company subtracted traditional TV networks by a huge amount of $9.1 billion. Warner Bros. explores a net loss of nearly 10 billion US dollars in the second quarter, more than eight times that of a year ago. The value of traditional TV networks such as CNN was reduced by 9.1 billion US dollars during the quarter. The deduction reflects the increasing shift of viewers from cable networks to streaming media, taking away most of the advertising and subscription fees of traditional TV revenue. Warner's stock price once fell to a record low of nearly 13% on Thursday.

Industry/Concept

1. Diet pills | Global pharmaceutical giant Lilly announced its second-quarter results report on the 8th. The company achieved revenue of 11.3028 billion US dollars in the second quarter, up 36% year on year; reported net profit of 2.967 billion US dollars, up 68% year on year; reported earnings per share of 3.28 US dollars, 1.95 US dollars in the same period last year; and the expected revenue range for the full year of 2024 increased by 3 billion US dollars to 46.4 billion US dollars to 46.6 billion US dollars. After the financial report was announced, Eli Lilly's US stock surged more than 12% before the market.

Comment: Analysts believe that Eli Lilly's performance exceeded expectations, mainly due to strong sales of the diet drug Zepbound and the diabetes drug Mounjaro. Eli Lilly previously said that part of the reason for the increase in guidance was that the production expansion path for Zepbound, Mounjaro and similar drugs in the second half of this year was “more clear”. GLP-1 drugs can simulate hormones produced in the intestines to suppress appetite and regulate blood sugar, and are widely popular among weight loss people around the world. Eli Lilly is continuing to expand the production scale of diet pills. Analysts say that Zepbound's sales in the first year of marketing are expected to exceed 1 billion US dollars, and may become the highest-selling drug in history.

2. Folding screen | IT Home reports that Huawei will launch its first tri-folding phone in September, even earlier than the Huawei Mate 70 series. This new product will be the world's first mobile phone with a double hinge inner and outer tri-folding design, and will incorporate the latest AI technology. According to industry sources, the creases of the Huawei three-folding screen phone passed the 28 μm test. Using the Hongmeng NEXT system and the new Kirin processor, the phone can achieve many Hongmeng PC-level applications and achieve the entire ecosystem of one system.

Comment: According to the analysis, the data shows that in the first quarter of 2024, the global foldable smartphone market grew 49% year on year, reaching a record high in six quarters. In July of this year, manufacturers such as Samsung, Honor, and Xiaomi released folding screen phones one after another. The release of various new models is expected to stimulate the folding screen phone market. Mainstream mobile phone manufacturers are speeding up their deployment in the field of folding screen phones, deeply integrating with AI on the end side to explore AI functions that are more suitable for folding screen phones. At the same time, they are designing corresponding AI functions for different smart devices such as smart watches and PCs. Software and hardware complement each other to fully empower smart devices. The folding screen phone market is entering a wave of intensive new phone releases. Subsequent updates from manufacturers such as Huawei and vivo are also worth looking forward to. After more new folding screen models that balance lightness and performance are launched, the penetration rate of folding screen phones will further increase.

3. Optical chip | According to a report by Beijing Daily, Professor Fang Lu's research group from the Department of Electronic Engineering of Tsinghua University and Academician Dai Qionghai's research group from the Department of Automation recently achieved efficient and accurate training of large-scale neural networks in optical computing systems. The research group constructed a photon propagation symmetry model, abandoned the reverse propagation paradigm of electric training, pioneered an all-forward intelligent optical computational training architecture, and developed the general optical training chip “Taiji-II”, which eliminated dependence on offline training and supported efficient and accurate light training for intelligent systems. The launch of “Taiji-II” has filled the gap in the core puzzle of intelligent optical computing in large-scale training.

Comment: Analysts believe that the rapid development and widespread application of artificial intelligence models has made computing power a major strategic gripper and infrastructure. Over a long period of time, the growth in the computing power of electronic chips has supported the continuous development of AI models. However, their high energy consumption has also brought unprecedented energy challenges, and the establishment and development of an emerging computing paradigm is imminent. Using light as a computational medium, computational models are constructed using the controlled propagation of light. Optical computing has opened up a new racetrack for intelligent computing with its high computing power and low energy consumption characteristics, showing great potential in the post-Moorish era.

4. Digital RMB | According to the latest data released by the central bank, as of the end of May 2024, the cumulative transaction amount of digital yuan reached 6.6 trillion yuan. Compared with the transaction amount in 2023, the scope of the digital yuan pilot has been expanded to 26 regions in 17 provinces (cities), including promotion and application in the fields of shopping, catering, transportation, tourism, and government payments.

Comment: According to the analysis, the digital yuan, as a legal tender introduced by the Central Bank of China, has now entered a period of rapid development, empowering more segments of the digital economy. In recent years, the construction of the digital yuan ecosystem has been continuously improved, and application scenarios in various fields such as retail consumption, transportation, government affairs and people's livelihood, and prepaid services have been gradually expanded and improved. With the advancement of digital yuan pilots, related application products and scenarios are becoming more and more abundant. Even without a bank account, users can use a unique ID such as a mobile phone number to open a digital wallet and use digital yuan payments, meeting diverse payment needs. In the future, the usage scenarios of digital yuan will be further deepened to provide more convenient and secure services for the real economy and people's lives.

5. Hydrogen Energy | According to Global Network reports, the country's first hydrogen smart rail tram recently launched on the Yibin Smart Rail T1, marking the entry of Yibin Smart Rail into the hydrogen energy era. According to reports, the first hydrogen energy smart rail in China launched this time innovatively uses a 35 MPa hydrogen storage system and a high-power fuel cell system. It has the characteristics of high energy conversion efficiency and fast hydrogenation speed. It can drive more than 200 kilometers with one refueling. At the same time, trains can achieve zero emissions and no pollution during operation.

Comment: According to the International Hydrogen Energy Commission, by 2050, hydrogen energy will bear 18% of the world's energy terminal demand and create a market value of more than 2.5 trillion US dollars. Fuel cell vehicles will account for 20% to 25% of global vehicles. At that time, hydrogen energy will become the main consumer of the terminal energy system along with gasoline and diesel.

6. Che Lu Yun | Five departments including the Shanghai Municipal Transportation Commission jointly issued the “Shanghai Transportation Sector Large-scale Facility and Equipment Renewal Special Work Plan (2024-2027)”. It is planned that by the end of 2027, buses and taxis in Shanghai will be fully converted to new energy, and a total of 6,200 buses and 0.011 million taxis will be renewed. In terms of promoting the digital transformation of transportation infrastructure, the plan proposes speeding up the digital transformation of highway and waterway traffic infrastructure, building digital sensing networks, intelligent control systems, and networked service systems; promoting vehicle cloud integration, transforming equipment such as ETC gantry systems, RSU, etc., to achieve interaction and collaboration with vehicle information.

Comment: RSU is a roadside unit. In the ETC electronic no-stop toll system, the unit is installed on the roadside and communicates with the on-board unit (OBU) through dedicated short-range communication technology to achieve vehicle identification and electronic billing. The Beijing Vehicle Road Cloud Integrated New Infrastructure Project Proposal, which was released earlier, also proposed the construction of roadside intelligent sensing devices such as integrated vehicle-road cloud sensing devices and edge computing units. Guoxin Securities believes that demand for the current vehicle road cloud project is expected to replicate the ETC rapid penetration rate increase phase in 2019-2020, and the RSU procurement volume for the Beijing project alone will reach 0.0132 million units.

7. Elderly Care | The press conference of the Information Office of the State Council will be held at 10 a.m. on August 9, 2024. Assistant Minister of Commerce Tang Wenhong will be invited to introduce the “Opinions on Promoting High-Quality Development of Service Consumption” with relevant officials from the National Development and Reform Commission, the Ministry of Civil Affairs, and the Ministry of Culture and Tourism.

Comment: Analysts believe that the State Council's opinions on promoting high-quality development of service consumption are proposed to vigorously develop the silver hair economy, promote the development of the smart health and pension industry, promote barrier-free construction of public spaces, consumer places, etc., and raise the level of adaptation of homes to aging. Minsheng Securities believes that the aging of China's population is gradually deepening, and the pension industry is on the cusp. According to the forecast of the National Health and Health Commission, around 2035, China's elderly population aged 60 and above will exceed 0.4 billion, accounting for more than 30% of the total population, entering a stage of severe aging. In the context of aging, related industrial chains are expected to benefit.

8. HBM | According to TrendForce Jibang Consulting's latest report, with the iteration of AI chips, the HBM (high bandwidth memory) capacity of a single chip has also increased markedly. Take Nvidia Hopper series chips as an example. The HBM capacity of the first generation H100 was 80GB, while the H200 released in 2024 jumped to 144GB. Driven by the growth of AI chips and single chip capacity, the overall HBM consumption of the industry will increase significantly. The estimated growth rate will exceed 200% in 2024, and HBM consumption will double again in 2025.

Comment: Ping An Securities believes that the bandwidth of traditional memory limits the maximum computing power performance of AI hardware and systems. HBM is the preferred memory technology in the current AI era, and global HBM output value is expected to grow from 5.5 billion yuan in 2023 to 19.9 billion US dollars in 2025. Considering the high standard requirements of advanced sealing technologies such as TSV and MR-MUF for semiconductor equipment, materials, and sealing and testing processes, as well as the current plans of the original factory to expand production, the related industry chain is expected to continue to benefit.

Today's news preview

China July CPI, PPI.

The scale of social financing in China increased in July, adding RMB loans, M0, M1, and M2.

German CPI for July.

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