Morning News

**Source:** Wall Street Insights  

**Market Overview**  

According to CCTV News, Xi Jinping held a telephone conversation with U.S. President Trump. The news boosted the early trading of U.S. stocks to rise slightly, but随后 (subsequently) the escalation of the dispute between Trump and Musk led Tesla to drag down U.S. stocks, with major U.S. stock indices closing lower. The Nasdaq fell nearly 2% from its daily high at one point. Uncertainty caused bond markets, digital currencies, and gold to decline in tandem. The market is awaiting nonfarm payroll data.  

Tesla's stock price plummeted 14%, with an intraday decline of nearly 18% at one point. Most of the "Magnificent Seven" tech stocks fell. Circle, the issuer of the stablecoin, rose 168% on its first day of U.S. IPO. Broadcom's Q2 revenue exceeded expectations, but its AI revenue guidance was less than stunning, causing its after-hours price to drop over 5% at one point. Lululemon's U.S. stock price plunged 21% in after-hours trading. The China concept stock index outperformed the broader U.S. market again.  

U.S. Treasury yields rose across the board, with the 10-year yield up approximately 3 basis points. The U.S. dollar reversed in a "V" shape during the day and closed flat. Gold fell more than 1% from its daily high. Spot silver rose over 4% at one point, hitting a 13-year high.  

During Asian trading hours, China's ChiNext closed up over 1%, the computing power industry chain surged, the Hang Seng Tech Index rose nearly 2%, while the "Three Treasures of New Consumption" plunged—Laopu Gold fell over 9%.  

**Key News**  

- Xi Jinping held a telephone conversation with U.S. President Trump. Xi noted that the U.S. should view progress achieved in a factual manner and revoke negative measures against China. Trump expressed great respect for President Xi, stating that U.S.-China relations are of great importance. The U.S. welcomes Chinese students to study in the U.S.  

- Indonesia is considering purchasing China's J-10 fighter jets, with "its performance in the India-Pakistan conflict being a key factor"! Previously, it ordered 42 Dassault Rafale fighters for $8.1 billion.  

- Trump and Musk publicly clashed, causing Tesla's stock to fall nearly 18% intraday, with its market value evaporating over $150 billion in a day. Trump called Musk "crazy," accusing him of attacking spending bills for electric vehicle interests and threatening to terminate government contracts. Musk retorted that Trump would not have won the election without his support, that Trump should be impeached, and that he has never passed a "great" bill, adding that SpaceX's Dragon spacecraft would stop cooperating.  

- U.S. House Speaker Johnson: Article 899 is an important and good policy.  

- The ECB delivered a 25-basis-point rate cut as expected, significantly lowering next year's inflation forecast—the eighth rate cut in a year! ECB President: The rate-cutting cycle is nearing an end, and loose fiscal policies will strongly drive inflation.  

- Vietnam submitted trade documents to the U.S. before the deadline.  

- Japan's long-term bonds were once again "cold," with demand for 30-year Treasury bond auctions hitting a two-year low.  

- Broadcom's Q2 revenue surged 20% above expectations, but its AI revenue guidance disappointed, causing after-hours shares to drop over 5%.  

- Circle, the "first stablecoin stock," surged 122% at the opening of its U.S. IPO and closed nearly 170% higher.  

**Market Closing Data**  

- **Europe and U.S. Stocks:** Dow Jones -0.25%, S&P 500 -0.53%, Nasdaq -0.83%. Europe's STOXX 600 +0.16%.  

- **China A-Shares:** Shanghai Composite +0.23%, Shenzhen Component +0.58%, ChiNext +1.17%.  

- **Bond Market:** U.S. 10-year Treasury yield +3.54 bps, closing at 4.3906%. 2-year yield +5.36 bps, closing at 3.9201%.  

- **Commodities:** WTI July crude oil futures +0.83%, closing at $63.37/barrel. Brent August crude oil futures +0.74%, closing at $65.34/barrel. COMEX gold futures -0.64%, closing at $3,377.30/oz.

**Detailed Key News**  

**Global Highlights**  

Xi Jinping Held a Telephone Conversation with U.S. President Trump.  

Xi Jinping pointed out that the Chinese have always been committed to keeping their words and delivering results. Since a consensus has been reached, both sides should abide by it. After the Geneva talks, China has seriously implemented the agreement. The U.S. should view the progress achieved in a factual manner and revoke the negative measures imposed on China. The two sides should enhance exchanges in diplomatic, economic, trade, military, law enforcement and other fields to increase consensus, reduce misunderstandings and strengthen cooperation.  

Trump expressed great respect for President Xi, noting that U.S.-China relations are of great importance. The U.S. is pleased to see China's economy maintain strong growth. U.S.-China cooperation can achieve many good things. The U.S. will continue to adhere to the one-China policy. The Geneva economic and trade talks between the two countries were very successful and reached good agreements. The U.S. is willing to work with China to implement the agreements. The U.S. welcomes Chinese students to study in the U.S.  

Han Zheng Met with the U.S. Delegation of the China-U.S. High-Level Track II Dialogue. Han Zheng said he hopes the China-U.S. high-level Track II dialogue can continuously gather insights from visionary figures in both countries, enhance understanding of China across all sectors in the U.S., and jointly promote the stable, healthy and sustainable development of China-U.S. relations.  

Indonesia Is Considering Purchasing China's J-10 Fighter Jets, with "Its Performance in the India-Pakistan Conflict Being a Key Factor"! Previously, it ordered 42 Dassault Rafale fighter jets for $8.1 billion. According to Indonesian military sources on June 5 local time, the Indonesian government is conducting a feasibility assessment on purchasing China-made J-10 fighter jets. Deputy Defense Minister Dawanto said this move aims to enhance the modern combat capabilities of the Indonesian Air Force while taking into account the cost-effectiveness of the defense budget.  

Trump and Musk Had a Public Fallout, Sending Tesla's Stock Down Nearly 18% Intraday, with Its Market Value Evaporating Over $150 Billion in a Day. Trump called Musk "crazy," accusing him of attacking the spending bill for electric vehicle interests and threatening to terminate government contracts. Musk retorted that Trump would not have won the election without his support, that Trump should be impeached, that he has never passed a "great" bill, and that SpaceX's Dragon spacecraft would stop government missions.  

Trump said he was "disappointed" in Musk, claiming that Musk understood the bill better than others and had no objections before suddenly turning to attack it. He was angry because the Biden administration's electric vehicle tax credits were revoked; he could have won Pennsylvania in the election without Musk's support.  

In response to Trump's accusation that Musk attacked the spending bill because of the revocation of so-called mandates and electric vehicle tax credits, Musk retorted "whatever," calling the bill's reduction of electric vehicle incentives while not cutting oil and gas subsidies "very unfair." Even so, the bill should be "lean and beautiful," and there has never been a "great" bill. He also said Trump had never shown him the bill and would not have won the election without his support.  

After Trump threatened to terminate government contracts, Musk accused Trump of being involved in the Epstein case, claiming this is the real reason why the case files have not been released; SpaceX's Dragon spacecraft would immediately解除 (terminate) government missions; Trump's tariffs would lead to a U.S. economic recession in the second half of the year; and Trump should be impeached.  

U.S. House Speaker Johnson: Article 899 Is an Important and Good Policy. House Speaker Johnson defended Clause 899, stating that it "is an important and good policy." However, he acknowledged that senators are discussing amending the clause.  

Another Case of "Killing One Thousand to Lose Eight Hundred"? Trump's Clause 899 May Cause U.S. Borrowers' Costs to Soar! Clause 899 in Trump's tax and spending bill was intended to retaliate against digital service taxes imposed by countries such as Canada, the U.K., and France. But legal experts warn that this "retaliatory tax" could make U.S. borrowers pay for their government in the form of higher borrowing costs.  

The ECB Delivered a 25-Basis-Point Rate Cut as Expected, Significantly Lowering Next Year's Inflation Forecast—the Eighth Rate Cut in a Year! ECB President: The Rate-Cutting Cycle Is Nearing an End, and Loose Fiscal Policies Will Strongly Drive Inflation.  

The ECB's latest quarterly forecast lowered its 2026 overall inflation projection to 1.6% and revised its next year's economic growth forecast slightly below previous expectations. Traders then increased their rate-cut bets, expecting another 33 basis points of cuts this year.  

Lagarde said the policy rate-cutting cycle is nearing an end, and loose fiscal policies are strongly driving inflation. All signs indicate that inflation will stabilize at the 2% target. Subsequently, money markets reduced expectations for ECB rate cuts, projecting about 25 basis points of cuts by the end of the year, down from the previous forecast of 30 basis points.  

Vietnam Submitted Trade Documents to the U.S. Before the Deadline. Facing the Trump administration's "ultimatum" on Wednesday, Vietnam rushed to submit trade negotiation documents before the deadline, demonstrating "determination and sincerity" for consultation, but the specific proposal content remains undisclosed. Currently, U.S.-Vietnam negotiators have met in Paris, and both sides have agreed to accelerate the negotiation process and make maximum efforts to achieve the best results in the third round of talks.  

Japanese Long-Term Bonds Were Once Again "Cold," with Demand for 30-Year Treasury Bond Auctions Hitting a Two-Year Low. The bid-to-cover ratio for Japan's 30-year Treasury bond auction was only 2.92, far below the average of 3.39 over the past 12 months and the lowest since 2023. More disturbingly, the tail spread widened to 0.49, far higher than 0.3 in the previous auction. Analysts say the government needs to stop issuing bonds with maturities over 30 years to calm bond market volatility.  

Institution: Global Central Bank Gold Purchases May Reach 1,000 Tons This Year; Rising Prices Have Not Deterred Buying Enthusiasm. Central banks have become the third-largest consumer of gold. In the first quarter's purchasing activities, Poland, Azerbaijan, and China led the way, while the steady inflow from the Central Bank of Iran suggests its continued gold accumulation.  

Broadcom's Q2 Revenue Surpassed Expectations with a 20% Surge, but Its AI Revenue Guidance Was Underwhelming, Causing After-Hours Shares to Drop Over 5%. Broadcom's second fiscal quarter revenue hit a record high, with EPS continuing to grow by over 40%—better than expected. AI revenue grew 46% in the quarter, significantly slowing from the previous quarter's 77% growth rate. Broadcom expects AI chip revenue to grow for the tenth consecutive quarter in Q3 and accelerate to $5.1 billion, but this is still 3.7% below some analysts' higher expectations.  

Circle, the "First Stablecoin Stock," Surged 122% at the Opening of Its U.S. IPO and Closed Nearly 170% Higher. Circle Internet Group Inc. (CRCL), the "first stablecoin stock," opened at $69 on its U.S. IPO day—122% higher than the previously announced IPO price of $31 per share. Circle's stock soared as much as 235% intraday to a high of $103.75. As of Thursday's U.S. market close, Circle closed nearly 170% higher.  

Tariff Pressures and Weak Sales in the Americas Prompt Lululemon to Lower Its Full-Year Earnings Guidance, Sending Its After-Hours Stock Price Plunging 23%. Lululemon announced its first-quarter 2025 financial results on Wednesday, citing risks from the new U.S. tariff policy and an unexpected decline in sales in the Americas. The company lowered its full-year earnings guidance, causing its stock price to plummet 23% in after-hours trading.  

**Domestic Macro**  

China's Caixin Services PMI Was 51.1 in May, with Increased New Service Orders and the Employment Index Rising to a Six-Month High. Service sector activity rebounded in May, driven by accelerated growth in new business volumes. Although service sector activity grew faster in May, it was not enough to offset the contraction in manufacturing output. The overall business climate slightly slowed in May, falling from 51.1 in April to 49.6, below the 50.0 threshold.  

**Domestic Companies**  

U.S. Media: Airbus Is Negotiating a Large Order with Chinese Companies, Possibly Involving About 300 Aircraft. According to Global Times, sources said Airbus is negotiating the scale of a potential order with Chinese airlines, expected to be finalized as early as July, with the order size possibly ranging between 200 and 500 aircraft. Rival Boeing has not secured a large order from China since 2017 due to U.S.-China trade tensions.  

Latest Transactions Show: Xiaohongshu's Valuation Has Surged from $20 Billion to $26 Billion. The estimate comes from the portfolio report of GSR IV Fund, which holds an 8.47% stake in Xiaohongshu valued at $2.22 billion. This valuation also exceeds the peak during the 2021 pandemic, injecting strong momentum into the widely expected IPO plan this year.  

Is New Consumption Stagnating? BofA Downgrades Mixue Bingcheng to "Underperform," Citing "Stock Price Has Far Outpaced Fundamentals." In its research report, BofA identified three key risks for Mixue Bingcheng: short-term fundamentals struggling to support high valuations, overseas expansion and coffee business setbacks limiting long-term growth, and potential correction of valuation bubbles driven by capital flows.  

Slowing AI Demand: Hon Hai's May Sales Grew 11.9% YoY, Falling Short of Expectations. Hon Hai's May sales reached NT$615.7 billion, up 11.9% YoY but below the market expectation of 16.8%. AI-related demand remained the core growth engine, with cloud network products leading other business segments in both YoY and MoM growth. The company remains cautious about its 2025 performance outlook, mainly due to potential impacts from U.S. tariffs.  

Interview with the CEO of Qunhe Technology ("Six Dragons of Hangzhou AI"): Physical AI Is Just the Beginning of a New Era; Entrepreneurship Is About Creating a Hammer First, Then Changing the World. Physical AI marks the dawn of a new era. In the future, homes, workplaces, and factories will be filled with embodied or humanoid robots. Entrepreneurship means finding nails with a hammer, but you must first create the hammer. Only China can accumulate such digital assets—no other country has such a庞大 (massive) industrial system. The scale is so large that manual production is impossible, requiring unmanned factories for automated production.  

**Overseas Macro**  

Trump's First Foreign Exchange Report After Returning to the White House: No Country Was Designated as a Currency Manipulator. U.S. Treasury Secretary Besant previously stated that exchange rate policies did not become a major issue in negotiations with key trading partners. The report said the U.S. will strengthen analysis of trading partners' exchange rate policies and issue strong warnings against any "unfair" exchange rate practices.  

U.S. Initial Jobless Claims Last Week Rose to an Eight-Month High Above Expectations. The U.S. labor market continued to cool, with initial jobless claims rising to 247,000 for the week ending May 31—higher than expected and the highest since October last year. Continuing claims reached 1.904 million, exceeding 1.9 million for the second consecutive week, indicating increased difficulty for the unemployed to find new jobs.  

U.S. Trade Deficit in April Saw the Largest Drop on Record, with a Sharp Decline in Imports. The U.S. goods and services trade deficit narrowed by 55.5% in April from the previous month to $61.6 billion, hitting a new low since 2023 and almost completely reversing the sharp expansion in the first quarter. Imports fell by a record 16.3% in April, while exports grew 3%.  

Wall Street Warns That the "TACO" Trade Is Overdone, and the Rally Has Deviated from Fundamentals. Strategists at independent research firm BCA warn that investors are becoming overly complacent and that U.S. stocks have not fully reflected underlying risks. Morgan Stanley expects summer trading to be "similar to a stagflation phase,"不利于 (unfavorable for) a sustained U.S. stock rally, especially with the S&P 500 trading at a forward P/E ratio of 22.  

Not Content with Reselling Green Cards, Trump Plans to Launch a "Tourist Visa Rush" Service: $1,000 to Jump the Queue. Reports say the Trump administration is considering charging tourist visa applicants a $1,000 "expedited interview fee," allowing some applicants to "jump the queue" for visa interviews. The World Travel & Tourism Council expects U.S. international travel spending to fall by about 7% in 2025, and the program could further dampen demand for travel to the U.S.  

Analysis: The Number of Corporate Bankruptcies in Germany Will Continue to Hit New Highs in the Next Two Years, Worse Than in 2008. According to the latest analysis by credit insurance giant Allianz Trade, corporate bankruptcies in Germany will surge 11% to about 24,400 in 2025 and further rise to 25,050 in 2026. The bankruptcy wave is expected to put 210,000 jobs at risk.  

A Super Military Expansion Is Coming! Germany Plans to Expand Its Active Troops by One-Third, as the U.S. Says the 5% Military Spending Target Has Become a NATO Consensus. German Defense Minister said Germany will assume a large portion of NATO's military expansion plan and will have the second-highest military spending among NATO's 32 member states. "The era of complaining about insufficient budgets is over. Today is the starting point." U.S. Defense Minister重申 (reiterated) the U.S. position that NATO members' military spending must account for 5% of their GDP.  

Iran's Supreme Leader Clearly Rejected the U.S. Plan: Completely Abandoning Uranium Enrichment "100% Contradicts Iran's Interests." According to Xinhua News Agency, Khamenei said Iran's "complete nuclear fuel cycle capability" is the result of believing in the "We Can Do It" philosophy. The U.S. demand completely violates this pioneering principle. "The U.S. and Israel must understand that they cannot strangle Iran's nuclear industry."  

**Overseas Companies**  

Ignoring Trump's Warnings, Apple Deepens Its Layout in India, with Tata Group Taking Over iPhone Maintenance. Media reports say Apple has handed over iPhone and MacBook device maintenance in the Indian market to Tata Group. Previously, Trump repeatedly threatened Apple CEO Tim Cook, urging him to manufacture and produce iPhones sold in the U.S. in the U.S., not in India or other places.  

Morgan Stanley Pitches a "New Story" for Tesla: A Defense Company in Consumer Goods Clothing? Morgan Stanley believes Tesla's core capabilities in manufacturing, materials science, navigation autonomy systems, motor R&D, and robotics give it a competitive edge in the drone sector—both commercial and military. Morgan Stanley estimates that Tesla's entry into the aviation market could add $100-$1,000 per share to its valuation, which is not yet included in current estimates.  

Musk: Dojo 2 Will Launch Later This Year. Musk said Tesla's Dojo AI training computer is making progress and will launch Dojo 2 later this year. He also emphasized that a new technology needs to go through three major iterations to become excellent. Dojo 2 is already good, but Dojo 3 will be even better.  

OpenAI Announced Late at Night That ChatGPT Supports MCP and Meeting Minutes—Here Comes the Era of Internet of Everything! With MCP support, ChatGPT can connect to various internal corporate data sources such as GitHub and Gmail. ChatGPT has also introduced a recording mode to capture and extract key content from meetings. In simple terms, OpenAI hopes to build ChatGPT into an intelligent collaboration platform that can handle all tasks in one place.  

Trump's Tariff Threats Prompt P&G to Plan 7,000 Layoffs Over Two Years, Cutting 15% of Office Positions. Due to weak consumption and increased uncertainty from Trump's tariffs, P&G announced on Thursday that it will lay off 7,000 employees over the next two years and exit specific product categories and brands to "streamline for winter."  

**Industries/Concepts**  

1. Sensors: Huajin Securities notes that the industrialization process of humanoid robots is accelerating, and six-dimensional force sensors may become a key incremental component for solving motion control. Interaction needs in complex scenarios bring incremental demand for components. Focus on the force sensor track, which has a large demand space and broad国产化 (domestic substitution) potential.  

2. Electronic Cloth: Huayuan Securities' research report points out that orders for high-end electronic cloth have surged, with demand rapidly releasing. The growth of the glass fiber industry in high-end fields has opened a new ceiling, and glass fiber companies that take the lead are expected to fully benefit.  

3. Infrastructure: Since 2025, the construction sector has remained in a weak fundamental recovery phase. Huayuan Securities' research report suggests focusing on three main lines: "regional directions," "relative return allocation portfolios," and "industrial extension and transformation," to select targets with policy advantages, profit repair capabilities, or growth elasticity.  

4. Coking Coal: Kaiyuan Securities notes that due to increasing supply and weak demand, coking coal futures prices have hit an 8-year low. Domestically, coking coal prices are close to production costs, and Mongolian coking coal export prices are also approaching cost lines. Further price declines may lead to production cuts, suggesting coking coal prices may be near the bottom.  

**Upcoming Key News for Today**  

- U.S. May Nonfarm Payrolls  

- Eurozone Q1 GDP  

- Eurozone April Retail Sales  

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**Disclaimer:** The views in this article represent only the author's personal opinions and do not constitute investment advice from this platform. This platform