Morning News

Source: Wall Street News

## Market Overview

Optimism in global trade has lifted investor confidence, and the US July CPI data has strengthened the market's expectation that the Federal Reserve will cut interest rates in September. Capital has flowed into risk assets across the board. Both the Nasdaq and the S&P 500 have risen by more than 1%, hitting new all-time highs. The Russell Small-Cap Index has soared by 3%. Meta has climbed more than 3% and closed at a new record high.

After releasing its earnings report, Circle, known as the "first stablecoin stock," once surged by over 15% but then pulled back, ending the trading day with a gain of just over 1%. News of a post-market stock offering caused its share price to drop by more than 6%. Another US IPO star stock, Coreweave, fell by more than 10% after its earnings announcement.

After the release of the inflation data, US Treasury yields all plummeted, then generally rebounded. However, the 2-year yield still closed down by nearly 3 basis points. The US dollar declined by 0.47%. Ethereum jumped nearly 9%, returning above the $4,500 mark for the first time in almost four years. Gold fluctuated widely around $3,350.

Crude oil closed lower, with US oil dropping nearly 2% from its daily high. In the domestic night session, rapeseed oil closed up 3.79%, and rapeseed meal rose 3.57%.

During the Asian session, the ChiNext Index rose more than 1%. Chip stocks surged in the afternoon, with Cambricon hitting the daily limit and reaching a new high. Coke and coking coal futures rose sharply. The Hang Seng Index gained 0.25%, and Fosun International jumped more than 13%.

## Key News

- Three ministries and commissions: For single consumption transactions exceeding 50,000 yuan, interest subsidies will be provided with a maximum limit of 50,000 yuan on the consumption amount. The Ministry of Finance and eight other departments: Service industry business entities can enjoy a 1% interest subsidy on loans, with the maximum amount of subsidized loans reaching 1 million yuan.

- Joint statement of the China-US economic and trade talks in Stockholm: The 24% tariff will be suspended again for 90 days starting from August 12, 2025.

- Foreign Ministry response: Trump said he might allow NVIDIA to sell the "special customized version" of Blackwell in China.

- The US July CPI rose 2.7% year-on-year, which was lower than expected, while the core CPI growth rate climbed to the highest level since February.

- Trump: Considering allowing a major lawsuit to be filed against Federal Reserve Chairman Powell. Trump criticized Goldman Sachs' tariff forecast, and told the CEO to replace economists, saying "you just focus on being a DJ."

- Bessent hinted: The Federal Reserve should keep an open attitude towards a 50-basis-point interest rate cut in September and hopes that Milan will take office before next month's monetary policy meeting. Milan, the Federal Reserve governor nominated by Trump, and Brad, a top candidate for the Fed chair, strongly support interest rate cuts, saying that tariffs do not cause inflation.

- The director of the US Bureau of Labor Statistics nominated by Trump suggested suspending the release of monthly employment reports, while the White House stated that it still plans to release them.

- US tariff revenue hit a record high in July, but the Trump administration's budget deficit still expanded.

- Media report: Zelensky has softened his stance, and Ukraine may agree to a ceasefire and make concessions on territorial issues.

- The US spot Ethereum ETF saw a single-day net inflow of over $1 billion on Monday, setting a new record.

- Circle, the "first stablecoin stock," saw its Q2 revenue surge 53% year-on-year, and the circulation of USDC jumped 90% year-on-year. Driven by AI demand, CoreWeave's Q2 revenue tripled, and it raised its full-year guidance, but its profit performance was disappointing, with its stock falling more than 10% after hours.

- Huawei released the innovative AI inference technology UCM, which breaks the dependence on HBM and achieves high throughput and low latency experience.

- Kweichow Moutai's first-half net profit increased 8.89% year-on-year, while its cash flow plummeted 64%.

- China Evergrande was delisted.

## Market Closing Reports

- US and European stock markets: The S&P 500 Index rose 1.13% to 6,445.76 points. The Dow Jones Industrial Average gained 1.10% to 44,458.61 points. The Nasdaq Composite Index climbed 1.39% to 21,681.90 points. Europe's STOXX 600 Index closed up 0.21% at 547.89 points.

- A-shares: The Shanghai Composite Index rose 0.5% to 3,665.92 points. The Shenzhen Component Index closed at 11,351.63 points, up 0.53%. The ChiNext Index increased 1.24% to 2,409.4 points.

- Bond market: The yield on the US 10-year benchmark Treasury note rose 0.39 basis points to 4.2888%. The 2-year US Treasury yield fell 3.76 basis points to 3.7308%.

- Commodities: COMEX gold futures fell 0.15% to $3,399.60 per ounce. WTI September crude oil futures closed down 1.23% at $63.17 per barrel. Brent October crude oil futures dropped 0.76% to $66.12 per barrel.

Details of Key News

Global Highlights

Ministry of Finance Response: What procedures are required to apply for fiscal interest subsidies on consumer loans? What conditions need to be met? The Ministry of Finance stated that unlike previous subsidy policies that focused on supporting the investment and supply sides, the newly introduced fiscal interest subsidy policy for personal consumer loans starts from the demand side, directly benefiting individual consumers and reducing the cost of personal consumer loans. The subsidy funds will be directly deducted by relevant loan institutions when collecting loan interest from borrowers, enhancing consumers' sense of happiness and gain. Meanwhile, loans for service industry entities in 8 consumer sectors, including catering and accommodation, health, elderly care, childcare, housekeeping, cultural and entertainment, tourism, and sports, can enjoy subsidy support.

Three ministries and commissions: For single consumption transactions exceeding 50,000 yuan, interest subsidies will be provided with a maximum limit of 50,000 yuan on the consumption amount. From September 1, 2025 to August 31, 2026, the part of personal consumer loans (excluding credit card business) issued by loan institutions to individual residents that is actually used for consumption, and for which the loan institution can identify the borrower's relevant consumption transaction information through the loan disbursement account, etc., can enjoy the interest subsidy policy in accordance with regulations. The scope of subsidies includes consumption with a single transaction of less than 50,000 yuan, and consumption in key areas such as household cars, elderly care and childbirth, education and training, cultural tourism, home decoration, electronic products, and health care with a single transaction of 50,000 yuan or more. For consumption with a single transaction exceeding 50,000 yuan, the subsidy is capped at 50,000 yuan. After the policy expires, the possibility of extending the policy period and expanding the scope of support may be studied based on the implementation effect.

Ministry of Finance and 8 other departments: Service industry entities can enjoy 1% interest subsidy on loans, with the maximum subsidized loan scale reaching 1 million yuan. The "Plan" proposes that service industry entities are strictly prohibited from using loan funds for real estate development or investment, wealth management, and other arbitrage activities; subsidies will be given to entities based on the principal of the loan, with a subsidy period not exceeding 1 year and an annual subsidy ratio of 1 percentage point; the banks handling the loans for service industry entities that receive subsidies from the central finance are 21 national banks.

Joint Statement of China-US Economic and Trade Talks in Stockholm: The 24% tariff will be suspended again for 90 days starting from August 12, 2025. Both China and the US will retain a 10% tariff. In accordance with the agreement in the Geneva Joint Statement, China will take or maintain necessary measures to suspend or cancel non-tariff countermeasures against the US. This talk continues the cooperation framework of the Geneva Joint Statement, with Chinese representative Vice Premier He Lifeng, and US representatives Treasury Secretary Bessent and Trade Representative Greer participating.

Foreign Ministry Response: Trump said he might allow NVIDIA to sell "special customized version" of Blackwell in China.

On August 12, Foreign Ministry Spokesperson Lin Jian answered reporters' questions. Reuters reporter: It is reported that US President Trump said on Monday that he might allow NVIDIA to sell the "special customized version" of Blackwell artificial intelligence chips in China, which is likely to be more powerful than the H20 chips previously approved for sale in China. What is China's comment on this?

Lin Jian: For specific issues, please consult the competent Chinese authorities. China has repeatedly stated its principled position on the issue of US chips exported to China, and hopes that the US will take practical actions to maintain the stability and smoothness of the global industrial and supply chains.

US July CPI rose 2.7% year-on-year, lower than expected; core CPI growth climbed to the highest level since February. The US overall CPI rose 0.2% month-on-month in July, in line with market expectations, with a year-on-year increase of 2.7%, lower than the expected 2.8%. Core inflation rose to the highest level since February, mainly driven by rising service prices. The market believes that the July CPI data is generally moderate, and traders have significantly increased their expectations for the Federal Reserve to cut interest rates in September, with the probability now as high as 95%.

Trump: Considering allowing a major lawsuit to be filed against Federal Reserve Chairman Powell. On Tuesday, Trump said on social media that he is considering allowing a major lawsuit to be filed against Powell, citing that the cost of the renovation project of the Federal Reserve headquarters has seriously exceeded the budget, soaring from the original $50 million to $3 billion. After Trump's statement, the general decline in US Treasury yields narrowed, and the 10-year US Treasury yield turned positive.

Trump criticized Goldman Sachs' tariff forecast, telling the CEO to replace economists and "you just focus on being a DJ". Goldman Sachs economists released a report last Sunday predicting that by October, the proportion of tariff costs borne by US consumers will rise from 22% in June to 67%. Trump posted on Tuesday that tariffs have not caused inflation problems for consumers, and in most cases, these tariffs are not even paid; the Goldman Sachs CEO refused to acknowledge this, and he should find a new economist, as Goldman Sachs has long incorrectly predicted market reactions and tariffs.

Bessent hinted: The Federal Reserve should keep an open attitude towards a 50-basis-point interest rate cut in September and hopes that Milan will take office before next month's monetary policy meeting. US Treasury Secretary Bessent hinted that the Federal Reserve should keep an open attitude towards a 50-basis-point interest rate cut in September, saying that if the Fed had grasped the "real" employment report data, it should have acted in June or July. He hopes that Milan, nominated by Trump, can take office as a Federal Reserve governor before the September FOMC meeting, saying that this will change the pattern of the board. Bessent also revealed that Trump is widely looking for a successor to Powell, saying that the Federal Reserve is currently facing "fundamental problems" and the next chairman should be someone who can "reform the institution".

Brad, Trump's nominee for Federal Reserve governor and a top candidate for the Fed chair, strongly supports interest rate cuts, saying that tariffs do not cause inflation. The Federal Reserve governor nominated by US President Trump, Chairman of the White House Council of Economic Advisers Milan, and former St. Louis Fed President Brad, who is regarded as one of the top candidates for the next Fed chair, said in separate media interviews on Tuesday that tariffs will not push up inflation and endorsed Trump's position on interest rate cuts. Both also said that maintaining the independence of the Federal Reserve is very important.

The director of the US Bureau of Labor Statistics nominated by Trump suggested suspending the release of monthly employment reports, while the White House stated that it still plans to release them. EJ Antoni, nominated by Trump to be the director of the US Bureau of Labor Statistics, suggested in an interview with the media before Trump nominated him on Monday that the agency's monthly employment report could be suspended and only quarterly data released until data collection issues are corrected. However, the White House confirmed on Tuesday that the US Bureau of Labor Statistics (BLS) will continue to release its monthly employment report.

For the new director of the US Bureau of Labor Statistics, Trump chose a "MAGA faction". EJ Antoni has a clear political stance and is a candidate strongly promoted by Steve Bannon, who is highly influential in conservative circles. He believes that part of the reason for the continuous data problems is that the Bureau of Statistics is not run by "MAGA Republicans". A highly politically colored candidate in charge of BLS may further shake the market's confidence in US core economic indicators.

US tariff revenue hit a record high in July, but the Trump administration's budget deficit still expanded. US tariff revenue in July was $28 billion, a record high, surging 273% year-on-year. The budget deficit for the ten months to July was $1.63 trillion. After adjusting for calendar differences, the July budget deficit was $291 billion, an increase of 10% compared with the same period last year.

Media: Zelensky has softened his stance; Ukraine may agree to a ceasefire and make concessions on territorial issues. According to the Global Times, reports say that Zelensky's softened negotiating stance means that the war on the current conflict front is expected to be frozen, allowing Russia to actually control its occupied areas in the four eastern Ukrainian regions (Luhansk, Donetsk, Zaporizhia, Kherson) and Crimea.

The US spot Ethereum ETF saw a single-day net inflow of over $1 billion on Monday, setting a new record. Led by giants such as BlackRock and Fidelity, funds are accelerating into US spot Ethereum ETFs, with the first single-day net inflow exceeding $1 billion on Monday, and the cumulative net inflow has exceeded $10 billion. Analysts say that the strong inflow of funds reflects that institutional investors' confidence in Ethereum's long-term potential as a store of value and the foundation layer of Web3 is increasing, regarding it as the "cornerstone" of the mainstreaming of cryptocurrencies. Ethereum has risen more than 45% in the past month.

Competing for the top spot in Ethereum's "treasury": Bitmine "soars like a rocket", Sharplink "refuses to be outdone". Bitmine has become the largest corporate holder with more than 300,000 Ethereum, worth about $1.13 billion. To regain the top spot, SharpLink Gaming received $400 million in financing, planning to push the total value of Ethereum it holds to more than $3 billion. The co-founder of Ethereum has also joined this "cruel race for the lead",高调宣称 "the game begins".

Circle, the "first stablecoin stock," saw its Q2 revenue surge 53% year-on-year, and the circulation of USDC jumped 90% year-on-year. Circle's net loss in the second quarter was $482 million, mainly affected by huge IPO expenses. Adjusted EBITDA increased 52% year-on-year to $126 million, exceeding the market expectation of $121.1 million, indicating stable profitability of core businesses.

Driven by AI demand, CoreWeave's Q2 revenue tripled and it raised its full-year guidance, but its profit performance was disappointing, with its stock plummeting after hours. CoreWeave's Q2 revenue exceeded expectations and hit a new quarterly high, but the year-on-year growth rate slowed from 420% in the first quarter, and the margin by which it exceeded analysts' expectations was lower than that in the first quarter; the Q2 EPS loss exceeded expectations. The Q3 revenue is expected to hit a new high, the full-year revenue guidance range has been raised by at least nearly 5%, and the low end of the Q3 operating profit guidance is nearly 17% lower than analysts' expectations. The CEO said that CoreWeave is the first company to provide a complete Blackwell GPU product portfolio on a large scale, and AI demand is "unprecedented". The stock price fell more than 10% after hours.

Huawei released the innovative AI inference technology UCM, which breaks the dependence on HBM and achieves high throughput and low latency experience. This breakthrough is expected to reduce China's AI inference dependence on HBM technology and improve the performance of domestic AI large model inference. As an inference acceleration suite centered on KV Cache, it integrates multiple types of cache acceleration algorithm tools, manages the KV Cache memory data generated during the inference process in a hierarchical manner, expands the inference context window, achieves high throughput and low latency inference experience, and reduces the inference cost per Token.

Kweichow Moutai's first-half net profit increased 8.89% year-on-year, while its cash flow plummeted 64%. Moutai's first-half operating income was 89.39 billion yuan, a year-on-year increase of 9.1%, with the growth rate slowing down; the net profit attributable to the parent company was 45.4 billion yuan, a year-on-year increase of 8.89%. In terms of product structure, Moutai liquor achieved revenue of 75.59 billion yuan, accounting for 84.6% of the total revenue, continuing to play the role of absolute main force.

China Evergrande was delisted. Evergrande is ultimately to be delisted, with the last day of share trading being August 22, 2025, and the listing status of the shares will be canceled from 9:00 a.m. on August 25, 2025. The company has no intention to apply for a review of the listing committee's decision to cancel the listing status.

Domestic Macroeconomics

Who is the incremental capital in the market? Guojin Securities pointed out that overall, in this round of bull market, the strength of the national team's market support has weakened, public fund institutions have acted cautiously, insurance funds have continued to enter the market, and the incremental capital at the emotional level comes from retail investors and foreign capital. Looking forward, the sustainability of the A-share and H-share markets depends on the progress of residents' wealth management transfer and the global liquidity released by the weak US dollar.

Domestic Companies

After visiting the Beijing "World Robot Expo", Goldman Sachs commented: The iteration speed is amazing, and the "ChatGPT moment" is still 2-3 years away. Goldman Sachs believes that China's humanoid robot industry is iterating products at an amazing speed, with overall performance improving significantly in just a few months, and the commercialization path is becoming increasingly clear. However, the industry is still at least 2 to 3 years away from the "ChatGPT moment" of truly realizing universal capabilities. The technical bottleneck lies in the accumulation of high-quality real-world data and model training. At the same time, the report emphasizes that investors need to pay attention to the risk of product redesign caused by the rapid collaborative evolution of software and hardware.

Pony.ai's Q2 total revenue increased 75.9% year-on-year, and Robotaxi business revenue grew 157.8%, among which Robotaxi passenger fare revenue surged more than 3 times year-on-year. The total number of vehicles exceeded 500, and it is expected to exceed 1,000 by the end of the year.

Boosted by online music services, Tencent Music's Q2 revenue increased 17.9% year-on-year, and net profit surged 43.2% year-on-year. In the second quarter, Tencent Music's online music service revenue reached 6.85 billion yuan, a year-on-year increase of 26.4%, accounting for 81.2% of total revenue. SVIP users exceeded 15 million, and the average monthly ARPPU increased to 11.7 yuan, a year-on-year increase of 9.3%.

China Unicom's first-half revenue exceeded 200 billion yuan, and capital expenditure decreased 15% year-on-year.

China Reading's first-half net profit attributable to the parent company increased 68.5% year-on-year, while IP operation revenue dropped 46.4% year-on-year.

Golden Arowana's first-half net profit surged 60.07%, and the central kitchen business has become a new growth driver.

Overseas Macroeconomics

Expecting "US stagflation" and limited room for the Federal Reserve to cut interest rates, Deutsche Bank recommends shorting 10-year US bonds. Deutsche Bank believes that tariff increases and tighter immigration policies will have a negative supply shock on the US economy, pushing up inflation while weakening economic growth, but will not lead to a recession. It is expected that core CPI inflation may rise by about 0.5 percentage points year-on-year in the next few months due to the impact of tariffs, significantly higher than market consensus and current pricing. The terminal interest rate priced by the market may have been more than 100 basis points lower than the neutral level, and the Federal Reserve has limited room for interest rate cuts.

Harvard "bowed" to the Trump administration; the two sides are close to reaching a $500 million settlement agreement. Harvard University will pay up to $500 million to US labor and career programs, with the funds not directly going to the US federal government. In exchange, the Trump administration will unfreeze billions of dollars previously earmarked for Harvard for research and other projects. The settlement will also terminate the lawsuit between Harvard University and the US government.

Is the easing cycle far from over? The Reserve Bank of Australia cut interest rates for the third time this year and significantly lowered economic expectations. The Reserve Bank of Australia continued its loose policy and cut the benchmark interest rate to 3.6%, the lowest level since April 2023, and it is expected to cut interest rates by another 80 basis points in the next year. At the same time, the Reserve Bank of Australia significantly lowered its economic growth forecast, reducing the 2025 GDP growth forecast from 2.1% in May to 1.7%.

OPEC raised next year's oil demand to 1.4 million barrels per day and lowered the forecast for non-OPEC supply growth. OPEC raised its forecast for 2026 global oil demand growth by 100,000 barrels per day to 1.4 million barrels per day, slightly higher than this year's level, while lowering the forecast for non-OPEC supply growth. If OPEC and its allies do not further restore the suspended production, global oil inventories will decrease significantly next year, with a decline of nearly 1.2 million barrels per day.

Overseas Companies

Perplexity, a star AI company, has proposed to acquire Google's Chrome for $34.5 billion. Perplexity's offer is significantly higher than its own valuation of approximately $18 billion. Several investors, including major venture capital funds, have agreed to fully support this transaction. US District Judge Amit Mehta ruled last year that Google illegally monopolized the search market and is expected to issue a ruling this month on how to restore competition. Mehta is considering whether to force Google to sell Chrome. Media analysis points out that Perplexity's acquisition proposal may be intended to show the judge that there are potential buyers in the market once he orders the sale.

"Profit margins are either zero or negative"! Could the most popular AI applications just be "working for large models"? It is reported that the high cost of calling large language models has become the biggest burden. The more users an AI programming assistant has, the greater the number of model calls, and the higher the operating costs. Industry insiders reveal that the profit margins of all "code generation" products are "either zero or negative", and the situation is "quite bad". Facing direct competition from model providers such as OpenAI and Anthropic, AI programming companies are forced to make difficult choices between developing their own models, being acquired, or passing on costs to users.

Tesla's AI strategy undergoes major adjustments as the Dojo project is scaled back and core talents move to DensityAI? It has been revealed that Tesla disbanded its Dojo supercomputer team, and its leaders and core members have joined DensityAI, a mysterious AI startup founded by former Tesla executives. This dramatic personnel change and project contraction not only raise questions about the sustainability of its internal self-developed chip strategy but also indicate that the company may be undergoing a profound reshaping of its AI roadmap by "lightening the load" and strengthening external cooperation.

OpenAI's Altman supports startups entering the brain-computer field to compete with Musk's Neuralink. Media reports indicate that Sam Altman, co-founder of OpenAI, is supporting a new company called Merge Labs to enter the brain-computer interface field, directly competing with Elon Musk's Neuralink. Merge Labs is valued at $850 million and plans to raise $250 million, with the main funds expected to come from OpenAI's venture capital team. Altman will serve as a co-founder but will not participate in daily operations nor invest personally.

Berkshire's newly purchased "mysterious stock" to be revealed on Thursday. Berkshire Hathaway, led by Warren Buffett, will file its 13-F report on Thursday, when a long-confidential "mysterious position" may emerge. The market speculates that the target is an industrial company, with a total investment possibly approaching $5 billion.

Industries/Concepts

1. Liquid Cooling: Orient Securities is optimistic that liquid cooling will become a necessary heat dissipation requirement for subsequent AI infrastructure, with an accelerating penetration rate. The industry chain is expected to move from a thematic trend to sustained exceeding expectations in orders and performance. Meanwhile, with the rapid growth in demand, the supply chain structure will become more open due to the supply-demand gap of core components. Domestic manufacturers are expected to enter overseas supply chains directly or indirectly by virtue of their advantages in high-quality products, product R&D iteration efficiency, and costs.

2. Electronic Cloth: Huayuan Securities' research report points out that expectations for Q-cloth are gradually being revised, and the demand for electronic cloth is still underestimated. The long-term growth of high-end electronic cloth coupled with the short-term supply-demand imbalance is expected to create a large-scale cyclical growth resonance market.

3. Papermaking: Since July, multiple玖龙 (Jiulong) bases have issued multiple price increase notices, mainly due to the steady rise in the price of national waste on the cost side, prompting small factories to actively follow the price increases starting from mid-to-late July. Guotai Haitong Securities points out that the cost price of waste paper is expected to rise simultaneously, and the first increase in wood pulp prices has opened the pulp and paper price increase channel. It is optimistic about the sustainability of price increases in the pulp and paper industry chain against the backdrop of reduced internal competition.

4. AI Applications: Guojin Securities points out that the current AI track is developing rapidly with iterations. AI for Science (AI4S) will have a significant impact on the future competitive landscape of the chemical industry, with expected breakthroughs first in bio-fermentation and agricultural innovation fields. High-quality data will be the key to differentiating chemical companies' AI layouts.

Today's News Preview

China Embodied Intelligent Robot Industry Conference will be held.

Germany's July CPI.

Speeches by Richmond Fed President Barkin, Chicago Fed President Goolsbee, and Atlanta Fed President Bostic.

US EIA crude oil inventory changes for last week.

IEA releases monthly crude oil market report.

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