Morning News

**Source**: Wall Street Journal

**Market Overview**

The impact of Moody's downgrade was short - lived. US stocks opened lower and closed higher. The S&P 500 index had a thrilling six - day winning streak. Both the S&P 500 and the Nasdaq erased their early - session declines of more than 1% and turned higher. After disclosing the insider buying by the CEO and others, UnitedHealth rose more than 8%, leading the Dow Jones Industrial Average higher. Nvidia initially fell more than 2% but closed higher, and Tesla initially fell nearly 5% but then narrowed its decline by more than half. The China stock index declined but erased most of its losses during the session. Alibaba initially fell more than 2% and closed down 0.4%.

The price of US bonds reversed in a V - shape. The yield on the 10 - year US Treasury bond hit a five - week high intraday and then plunged more than 10 basis points.

The US dollar index fell 1% intraday, approaching the 100 - mark and hitting a new low in more than a week. Bitcoin rose above $107,000, reaching a four - month high, and then turned down. Later, it rebounded more than $3,000 at one point.

Gold emerged from a five - week low, and gold futures rebounded more than 2% at one point. Crude oil nearly declined, but after falling more than 1% intraday, it turned higher.

During the Asian session, the Shanghai Composite Index rose slightly, the Beijing Stock Exchange 50 hit a record high, the M&A and restructuring concept stocks collectively surged, the Hang Seng Index fell slightly, Pop Mart hit a new high, and government bonds rose.

**Top News**

The Chinese Ministry of Commerce: The US side's actions have seriously undermined the consensus reached at the high - level talks between China and the US in Geneva. The US side is required to correct its mistakes.

China's total retail sales of consumer goods in April increased by 5.1% year - on - year, and the added value of industries above designated size increased by 6.1%. From January to April, the urban fixed - asset investment increased by 4%, and the national real - estate development investment decreased by 10.3% year - on - year. The consumption recovery speed slightly exceeded expectations. The products in the emerging - industry fields expanded rapidly. The overall growth rate of fixed - asset investment was low, and the real - estate sector showed signs of a pullback.

Media reports said that several state - owned major banks would lower the deposit interest rates by up to 25 basis points, and the announcement would be made on Tuesday. China Construction Bank and China Merchants Bank had already cut the interest rates.

Lei Jun: Xiaomi is scheduled to release the SUV model YU7, the 3 - nm self - developed mobile - phone SoC chip Xuanjie O1, and the Xiaomi 15S Pro flagship mobile phone on May 22. More than 13.5 billion yuan has been invested in the research and development of Xuanjie.

Senior officials of the Federal Reserve, including the second - and third - in - command, poured cold water on the idea of interest - rate cuts, suggesting that the interest rates may remain unchanged until at least September.

Jen - Hsun Huang's speech at Computex: The next - generation GB300 system will be launched in the third quarter, and the personal AI computer DGX Spark has been fully put into production.

Microsoft's Build conference announced the arrival of the AI - agent era. Microsoft 365 Copilot and GitHub coding have been upgraded, and Elon Musk's xAI model has been incorporated into the Microsoft cloud.

The European Central Bank sounded the alarm: Under geopolitical pressure, the gold market may pose a threat to the financial stability of Europe.

Donald Trump talked with the leaders of Russia and Ukraine respectively. Vladimir Putin said that he was willing to jointly draft a peace memorandum with Ukraine. Volodymyr Zelensky said that he was willing to sign a peace memorandum with Russia and was willing to conduct negotiations in any form, but territorial compromise and troop withdrawal were "off the table".

Michael Hartnett of Bank of America: A new round of "rising yields and a falling dollar" will trigger a stock - market sell - off, and the next bull market will be in emerging markets.

Ray Dalio warned: Moody's, which downgraded the US rating, actually underestimated the risk of US bonds.

**Market Closing Quotes**

European and US stock markets: The Dow Jones Industrial Average rose 0.32%, the S&P 500 index rose 0.09%, and the Nasdaq Composite rose 0.02%. The European STOXX 600 index rose 0.13%.

China's A - share market: The Shanghai Composite Index rose slightly, the Shenzhen Component Index fell 0.08%, and the ChiNext Index fell 0.33%.

Bond market: At the end of the bond - market trading session, the yield on the 10 - year benchmark US Treasury bond was about 4.45%, down about 2 basis points on the day; the yield on the 2 - year US Treasury bond was about 3.98%, down about 2 basis points on the day.

Commodities: The June WTI crude - oil futures rose 0.32%. The July Brent crude - oil futures rose 0.2%. The June COMEX gold futures rose 1.45%. The July COMEX copper futures rose 1.68%.

**Detailed Top News**  

**Global Highlights**  

Chinese Ministry of Commerce: The U.S. actions have seriously undermined the consensus reached at the China-U.S. high-level talks in Geneva, and the U.S. is demanded to correct its mistakes. The Ministry of Commerce stated that China has noticed that the U.S. recently adjusted the wording in the press release on its export control guidelines for AI chips, but the discriminatory measures and market-distorting nature of the guidelines themselves have not changed. China urges the U.S. to immediately correct its wrong practices and stop discriminatory measures against China. If the U.S. insists on going its own way and continues to substantially harm China’s interests, China will surely take resolute measures to safeguard its legitimate rights and interests.  

China released its April economic data, showing that consumption recovery slightly exceeded expectations, products in emerging industries expanded rapidly, overall fixed asset investment growth was low, and the real estate sector showed signs of correction.  

Retail sales of consumer goods in April slowed to 5.1% year-on-year. Home appliances, furniture, and cultural goods related to the "trade-in" policy grew rapidly. The consumer goods trade-in policy continued to show effects, with retail sales of household appliances and audio-visual equipment, cultural and office supplies, furniture, and communication equipment above designated thresholds increasing by 38.8%, 33.5%, 26.9%, and 19.9% respectively. Retail sales of gold, silver, and jewelry increased by 25% year-on-year, automobile consumption grew by 0.7%, and retail sales of petroleum and its products fell by 5.7%.  

Industrial added value above designated size in April increased by 6.1% year-on-year, with accelerated production growth of industrial robots and new energy vehicles. Among 41 major industries, 36 saw year-on-year growth in added value, with rapid growth in rail, shipbuilding, aerospace and other transportation equipment manufacturing, electrical machinery and equipment manufacturing, etc. Production of industrial robots and new energy vehicles increased by 51.5% and 38.9% year-on-year, respectively.  

Urban fixed asset investment from January to April increased by 4% year-on-year, with the growth rate slowing by 0.2 percentage points from January to March. By sector, infrastructure investment increased by 5.8% year-on-year, and manufacturing investment grew by 8.8%. In high-tech industries, investment in information services, computer and office equipment manufacturing, aviation, aerospace and equipment manufacturing, and professional technical services increased by 40.6%, 28.9%, 23.9%, and 17.6% year-on-year, respectively.  

National real estate development investment from January to April fell 10.3% year-on-year, and the sales area of newly built commercial housing fell 2.8% year-on-year, with the decline narrowing by 0.2 percentage points from January to March. At the end of April, the floor area of unsold commercial housing was 781.42 million square meters, a decrease of 5.22 million square meters from the end of March.  

April housing prices in 70 cities: Second-hand home prices in first-tier cities turned downward month-on-month, and year-on-year declines in housing prices across all tiers continued to narrow. The overall decline in second-hand home prices in all tiers of cities narrowed, with first-tier cities turning downward month-on-month; new home prices in all tiers were basically flat month-on-month, and year-on-year declines continued to narrow.  

Where are the highlights and weaknesses in the April economic data? Guo Lei believes that one highlight is that although actual growth slowed, it remained resilient, with rapid expansion of products in some emerging industries; the second is that the production-sales ratio showed no significant changes, and the supply-demand relationship was not significantly pressured by external shocks; the third is that the consumption recovery speed slightly exceeded expectations. There are also three weaknesses: first, the overall growth rate of fixed asset investment is low; second, the real estate sector has shown correction characteristics, and prices have not yet stabilized; third, the low price center has not changed.  

Media reported that multiple state-owned major banks will cut deposit rates by up to 25 basis points, with an announcement on Tuesday. Media reported that multiple state-owned major banks and some joint-stock banks will cut rates for demand deposits, time deposits, and notice deposits from Tuesday, the 20th. This is a market-driven transmission after the central bank cut policy rates on May 8. Later, in the early morning of Tuesday, China Construction Bank and China Merchants Bank each cut deposit rates by up to 25 basis points.  

Lei Jun announced in a lengthy post: Xiaomi’s 3nm chip is here. Lei Jun said that only by developing high-end flagship SoCs can we truly master advanced chip technology and better support our premiumization strategy; Xiaomi’s Xuanjie O1 uses second-generation 3nm process technology, striving to join the first梯队 (first tier) of flagship experiences. More than 13.5 billion yuan has been invested in Xuanjie’s R&D.  

Xiaomi is scheduled to launch the SUV model YU7, self-developed mobile phone SoC chip Xuanjie O1, and Xiaomi 15S Pro flagship phone on May 22. Goldman Sachs: Buy! Goldman Sachs believes that with its strong balance sheet, hardware-software integration capabilities, and cost advantages, Xiaomi is poised to build the world’s largest consumer physical intelligence ecosystem. It is expected that Xiaomi’s AIoT revenue will grow by approximately 50% year-on-year in Q1, the launch of the Xuanjie O1 chip will further boost Xiaomi’s premiumization strategy, and YU7’s delivery volume will reach 85,000 and 360,000 units this year and next, respectively.  

The U.S. is anxious, and gold rose 1% at the start of Asian trading. Bessent "threatened": If "countries do not negotiate in good faith," the highest tariffs will be imposed. Analysts point out that deep分歧 (divisions) currently exist among the U.S. and its major allies such as the EU, Japan, and South Korea, with complex political factors. Therefore, before early July, the situation may not be as stable as the market expects, and more "dramatic events" may erupt instead.  

Senior Fed officials, including the No. 2 and No. 3 figures, poured cold water on rate cuts, hinting that rates may remain unchanged until at least September.  

Fed Vice Chair Jefferson, the No. 2 figure, emphasized a wait-and-see attitude and advocated patience in adjusting rates. He stated that it is essential to ensure that price increases triggered by policy changes do not lead to sustained inflation, and the current policy stance is "very good."  

New York Fed President Williams, the No. 3 figure, said Fed policymakers may need months to gain a clearer understanding of the U.S. economic outlook. "We won’t understand what’s happening in June, nor in July."  

Atlanta Fed President warned of inflation risks, saying he "prefers one rate cut this year." He hinted at the Fed’s short-term reluctance to adjust rates, stating, "I think we may need to wait three to six months to see how the situation unfolds." He believes Moody’s downgrade of U.S. debt could negatively impact American companies and households seeking to borrow.  

Jen-Hsun Huang’s Computex speech: The next-generation GB300 system will launch in Q3, and the personal AI computer DGX Spark is fully operational. Huang stated that GB300 is equipped with upgraded Blackwell chips, offering 1.5x improved inference performance, 1.5x increased HBM memory capacity, doubled network connectivity, and enhanced overall system performance. Huang said we are at the dawn of an "AI Factories" era, and NVIDIA will be an AI infrastructure company, no longer just a chipmaker.  

Understanding Huang’s ComputeX speech: This is not a product launch but an "AI industrial revolution mobilization order." From AI infrastructure, chip platforms, and enterprise AI to robots and digital twins, Huang outlined a rising new era of "AI Factories."  

Microsoft’s Build Conference announced the arrival of the AI agent era, with upgrades to Microsoft 365 Copilot and GitHub coding, and Musk’s xAI model integrated into Microsoft Cloud.  

GitHub Copilot was upgraded to an "autonomous programming agent"; Microsoft 365 Copilot introduced Copilot Tuning capabilities for multi-agent collaboration; Azure AI Foundry added xAI models; a unified local AI development platform, Windows AI Foundry, was launched; Edge browser’s new API integrates AI functions into Web app transformation, with a PDF translation tool supporting over 70 languages; an open project called NLWeb enables websites to easily build AI chatbots; the "USB-C of AI" arrives: Windows integrates the MCP protocol; a new open-source Windows command-line text editor, Edit, was released.  

ECB sounds the alarm: Geopolitical pressures may threaten European financial stability through the gold market. The ECB stated that commodity markets are often dominated by a few large institutions, highly leveraged, and highly opaque due to over-the-counter derivatives, collectively creating market vulnerabilities. Market participants may face massive margin calls or difficulties in acquiring and transporting physical gold for derivative contract settlement, exposing themselves to potential huge losses.  

Central banks bought 64 tons of gold in March, and Goldman Sachs continues to bullish on gold prices reaching $3,700 by year-end. Goldman data shows strong global central bank gold buying demand in March, with China again the largest identifiable buyer at 30 tons. Global central bank demand has averaged 94 tons monthly so far this year, far exceeding the previous forecast of 80 tons.  

BofA’s Hartnett: A new round of "rising yields, falling dollar" will trigger stock market sell-offs, with the next bull market in emerging markets. Hartnett warned that the market currently dislikes any term investments, and the consensus of "anything but bonds (ABB)" remains entrenched. Another wave of "rising yields, falling dollar," especially if Trump loses control of the long-end bond market, could trigger the next stock sell-off.  

Dalio warns: Moody’s, which downgraded the U.S. rating, actually underestimated U.S. debt risks. Dalio said rating agencies like Moody’s only assess the risk of governments not repaying debt, without considering a bigger risk: if the U.S. government prints money to repay debt, bondholders will suffer losses due to currency devaluation.  

Trump spoke separately with the leaders of Russia and Ukraine. Putin said he is willing to jointly draft a peace memorandum with Ukraine; Zelensky said he is willing to hold negotiations in any form but ruled out territorial compromises or troop withdrawals. Zelensky had two calls with Trump on Monday, with the second joint call involving multiple EU countries. Zelensky asked the U.S. not to make decisions for Ukraine without authorization.  

**Domestic Companies**  

Huawei’s first HarmonyOS computer arrives, fully self-developed from chip to system, starting at 23,999 yuan! Huawei officially launched two HarmonyOS computers: the first HarmonyOS foldable PC, Huawei MateBook Fold Ultimate, and Huawei MateBook Pro, both running HarmonyOS 5. CCTV reported that the launch of personal computers using the HarmonyOS operating system marks a significant breakthrough for domestic operating systems in the PC sector.  

Moutai’s shareholders’ meeting: Shifting from "selling alcohol" to "selling a lifestyle." At the 2024 annual shareholders’ meeting, Kweichow Moutai Chairman Zhang Deqin said Moutai is actively creating a new marketing model, shifting from "selling alcohol" to "selling a lifestyle," and will future appear more in family gatherings, consumers’ high-profile moments, and international markets. Despite past achievements, Zhang said Moutai still has gaps in modern governance systems, technological innovation, and supply-demand mismatches, requiring precise measures for resolution. "Please believe Moutai will not disappoint investors’ expectations."  

Zhang Deqin, chairman of Kweichow Moutai, explains in detail how to travel through this cycle! Zhang Deqin expressed his sincere thanks to investors for their recognition of Moutai and hopes that everyone will care and maintain more for Moutai brands and enterprises. At the same time, Kweichow Moutai executives faced the investor problems and explained in detail how Moutai will travel through this cycle. Wang Li, deputy secretary of the Party Committee, director and acting general manager of Kweichow Moutai, encouraged all shareholders in one sentence - "It is difficult to cross mountains and mountains, and there is no way to cross the river and the boat will cross it."

After making billions from gold, futures giant Zhongcai Futures has quietly shifted to become the largest bull in Shanghai copper, earning $200 million. In spring 2025, while global investors focused on record-high gold prices, a mysterious Chinese trader quietly shifted funds from gold to copper. With a $1 billion long position, he has made a $200 million floating profit. He is Bian Ximing, 61, chairman of Zhongcai Group, Zhongcai Futures, and other enterprises.  

**Overseas Macro**  

Late-night reversal: Trump’s tax cut bill passes House Budget Committee vote. Late Sunday, Trump’s tax bill passed a key vote, with four previously opposed lawmakers abstaining this time. Trump hopes to sign it into law by July 4, and the House Speaker is pushing for passage by May 26.  

Report: The EU and UK have reached a preliminary agreement to strengthen bilateral ties. Ahead of their first post-Brexit bilateral summit, the UK and EU reached a breakthrough agreement that will significantly reduce trade barriers, extend fishing rights to 2038, and restart security and defense cooperation. The deal is expected to improve the UK’s economic growth prospects but at the cost of partial sovereignty concessions—the UK must accept EU rules and the oversight of its courts.  

Ahead of U.S.-Japan negotiations, hedge funds go long on the yen. Hedge funds and long-term investors are rebuilding positions betting on yen appreciation, hitting a five-year high. Antony Foster, head of G10 currency trading at Nomura International, said speculation that Japan might discuss exchange rates in tariff negotiations has attracted yen buyers back.  

Putin: The call with Trump was very beneficial, and Russia favors a peaceful resolution to the Ukraine crisis. Putin stated in a post-call statement that the conversation lasted over two hours, was very substantive and open, and "very beneficial." Russia favors a peaceful resolution to the Ukraine crisis but believes more effective paths to peace should be identified.  

**Overseas Companies**  

Warren Buffett will be absent from the 2026 Berkshire Hathaway shareholders’ meeting, and his successor will take the spotlight to face 30,000 investors.  

Why has Apple struggled with AI? Internal employees: "It’s like a sinking ship that has been sinking for a long time." Apple’s AI chief, John Giannandrea, has struggled to integrate into Apple’s core circle and faced strong resistance from entrenched corporate culture, directly impacting the implementation of Apple’s AI strategy. Apple’s software chief, Federighi, has been reluctant to make large-scale investments in AI. According to internal employees, he does not view AI as a core function for PCs or mobile devices.  

**Industries/Concepts**  

1. **Commercial & Industrial Energy Storage**: CSC Financial notes that overseas commercial and industrial energy storage will enter an explosive growth phase this year. Driven by subsidies and dynamic electricity prices, the internal rate of return (IRR) in the European market is expected to reach 15%, with new commercial and industrial energy storage capacity expected to grow by over 60% in 2025. Frequent power outages and price hikes in Asia, Africa, and Latin America this year have significantly increased the willingness to adopt commercial and industrial energy storage.  

2. **Photomasks**: Tianfeng Securities reports that photomasks are core materials in the semiconductor industry with high barriers. China’s photomask industry chain is currently lagging, with low localization rates, but downstream new applications are opening up new growth spaces.  

3. **Glyphosate**: The glyphosate industry may be in a major reshuffle of supply and demand dynamics. Chinese glyphosate producers are expected to take the initiative with their complete industry chains and cost advantages. Meanwhile, glufosinate demand is expected to grow rapidly due to changes in the glyphosate market.  

4. **Photovoltaics**: The 2024 annual reports and 2025 Q1 reports for the industry have been disclosed, showing supply-side clearing in the PV sector. Changjiang Securities notes that the PV sector is now at a double bottom in fundamentals and capital flows, with valuation repair opportunities. Additionally, institutional holdings are at low levels, with the proportion of heavy positions in A-shares in Q1 2025 comparable to levels before the 2020 PV market rally.  

**Upcoming Top News**  

- China’s May loan prime rates (1-year and 5-year).  

- The 2025 Taipei International Computer Exhibition (COMPUTEX) will be held from May 20 to 23, with NVIDIA CEO Jen-Hsun Huang attending.  

- CATL lists and begins trading on the Hong Kong Stock Exchange on May 20.  

- Google holds its annual I/O Developers Conference.  

- The Reserve Bank of Australia announces its interest rate decision.  

- Speeches by Richmond Fed President Barkin, Atlanta Fed President Bostic, and St. Louis Fed President Moussalem.  

- G7 finance ministers and central bank governors meet.  

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