Macro trends

Powell says the Fed is not “in a hurry” to lower US interest rates

Federal Reserve Chairman Jay Powell advocates a gradual approach to lowering interest rates, stressing that due to the strong economy and the tortuous path of inflation, the Federal Reserve is not in a hurry to cut interest rates. He praised the performance of the US economy and pointed out that the US has made significant progress in controlling inflation, but efforts are still needed to reach the 2% target.

Powell's remarks led to a rise in two-year Treasury yields and adjusted market expectations for December interest rate cuts. The Federal Reserve recently cut the benchmark interest rate to a range of 4.25% to 4.75%, and officials plan to continue to be cautious to balance controlling inflation with maintaining a strong economy.

Despite recent increases in inflation indicators, Powell said that the overall downward trend remains unchanged, but also acknowledged that there may be fluctuations. He pointed out that if the data supports it, the Federal Reserve may consider slowing down the pace of interest rate cuts, which is in line with Federal Reserve Governor Adriana Kugler's previous speech.

Trump's tariffs are imminent, and China's stimulus policy boosts domestic consumption

In the fourth quarter, driven by stimulus measures, consumption growth was almost at the same level as factory output, and the Chinese economy showed more balanced growth. Retail sales growth in October was the fastest in eight months, exceeding economists' forecasts; at the same time, industrial production remained strong, supporting the government's 2024 growth target. This increase in consumption is particularly significant given the imbalance in the previous recovery, where household spending lags behind production. With Trump re-elected as US President, threatening to impose 60% tariffs on most Chinese imports poses a major risk to China's export industry, so this boost in internal demand has become critical.

Funding trends

The current equity risk premium indicates that investors are not receiving compensation commensurate with the risk associated with the stock. As a result, US Treasury bonds may be more attractive than US stocks.

Although strong earnings growth forecasts for 2025 provide a positive backdrop for potential market performance, investors still need to be wary due to high valuations and market concentration.

Goldman Sachs predicts that by the end of 2024, the 10-year US Treasury yield will reach 3.85%, which is different from current futures market expectations.

Bitcoin breaks the $90,000 mark due to the Trump effect

Bitcoin broke through the $0.09 million mark on Wednesday, reaching a new all-time high. Markets generally expect Trump's presidency to benefit cryptocurrencies, so there is no sign of slowing down in this wave of gains.

Company news

Alibaba's Q2 results beat expectations

On November 15, Alibaba Group released its Q2 financial report for fiscal year 2025, with quarterly revenue of 236.503 billion yuan, an increase of 5% over the previous year, in line with market expectations. Focusing on “user-first, AI-driven” firm investment, Alibaba's core business continues to reap high-quality growth.

Box office and streaming success drive Disney's profit growth

Due to the box office success of the Marvel movie “Deadpool and Wolverine” and the Pixar movie “Mind Force 2,” as well as strong profits from “Disney+” (Disney+) and Hulu streaming services, Disney's stock price rose more than 6% after a 39% increase in earnings. These earnings offset the decline in Disney's traditional TV business. The streaming media division, which includes ESPN+, achieved a total revenue of 0.321 billion dollars, reversing the previous loss situation. Disney anticipates strong holiday box office performance with the upcoming releases of “Ocean Adventure 2” and “The Lion King: Mufasa.”

Despite challenges in the “experience” sector, which includes theme parks and cruises, Disney's revenue has reached a record high and plans to invest $60 billion in this sector over the next ten years. The company reported net revenue for the fourth fiscal quarter of $0.46 billion, and adjusted earnings exceeded Wall Street expectations. CEO Bob Iger's cost-cutting and restructuring measures have improved share price performance, and Disney plans to buy back $3 billion in shares in 2025.

Alibaba is allegedly considering issuing a $5 billion bond

According to people familiar with the matter, Alibaba Group is considering issuing bonds totaling about 5 billion US dollars as early as this month. Potential bond issuances may include dollar and renminbi denominated portions. Previously, Alibaba issued a record $5 billion convertible bond in a private placement in May of this year. The last time Alibaba issued standard dollar bonds on the open market was in 2021, when the total transaction volume was 5 billion US dollars. Currently, it is unclear whether the plan is a private offering or a public sale.

Now is a great time for borrowers to enter the Asian credit market. Earnings premiums on dollar securities in the region have recently fallen to historic lows after Chinese policymakers introduced a series of monetary and fiscal stimulus measures, increasing the attractiveness of the region's debt.

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