Morning News

Source: Wall Street News

## Market Overview

Supported by strong U.S. retail sales data and a decline in initial jobless claims last week, both the U.S. dollar and U.S. stocks rose, with the S&P 500 and Nasdaq closing at new highs.

TSMC released better-than-expected earnings, and its ADR rose another 3.38%, closing at a record high for the third consecutive day. Netflix once fell 2% after releasing its earnings report.

The interest rate-sensitive 2-year U.S. Treasury yield once rose by more than 3 basis points. The U.S. dollar closed up 0.33%, recouping most of the previous day's losses.

Gold rebounded after falling more than 1.1% intraday but still closed down 0.28%. Crude oil first fell and then rose, with U.S. oil rising nearly 2% from the daily low. Cryptocurrencies rose briefly after the U.S. Congress passed a stablecoin bill.

During the Asian session, A-shares opened lower and moved higher, with the three major stock indices closing collectively higher. The computing power industry chain surged. Hong Kong stocks were divided, with pharmaceutical stocks rising sharply, and commodities and government bonds both rose.

## Key News

The Trump administration is expected to conduct an on-site visit to the Federal Reserve regarding renovation issues in about a week, and Powell responded.

Potential Federal Reserve Chair candidate Kevin Warsh: Trump's public pressure is correct; the last thing we need is for the Federal Reserve to continue as usual. Fed Governor Christopher Waller, a top candidate for the next Fed Chair, said: The Federal Reserve should cut interest rates by 25 basis points in July.

Report: The EU is drafting a list of tariffs on U.S. services in preparation for an escalation of the trade war. The U.S.-India agreement is "close to being reached," and India wants more favorable tariffs than Indonesia. Japan's exports to the U.S. plummeted 11.4% in June, the largest drop since 2020.

U.S. retail sales rose 0.6% month-on-month in June, exceeding expectations and reversing the decline of the previous two months.

Foreign investors increased their holdings of U.S. Treasuries in May, with Canadian purchases surging.

The U.S. House of Representatives overwhelmingly passed three major cryptocurrency bills, and the White House said Trump would sign them on Friday.

Driven by strong demand for AI chips, TSMC's Q2 net profit surged 61% beyond expectations, and it is expected that this year's sales will increase by about 30%. TSMC's earnings call: Raised the full-year sales growth rate for 2025 to about 30%, warning that Q3 may be hit harder by exchange rates.

A weak U.S. dollar helped Netflix achieve a "non-sluggish off-season." Q2 profits increased by more than 40% to a new high, and it raised its full-year guidance.

Russian officials: Do not rule out the use of nuclear means to respond to NATO attacks.

## Market Closing Quotes

European and American stock markets: The S&P 500 Index closed up 0.54% at 6297.36 points. The Dow Jones Industrial Average rose 0.52% to 44484.49 points. The Nasdaq Composite Index rose 0.74% to 20884.27 points, continuing to hit a new closing record high. Europe's STOXX 600 Index closed up 0.96% at 547.03 points.

A-shares: The Shanghai Composite Index closed up 0.37% at 3516.83 points. The Shenzhen Component Index closed up 1.43% at 10873.62 points. The ChiNext Composite Index closed up 1.76% at 2269.33 points.

Bond market: The 10-year U.S. Treasury yield fell 0.40 basis points to 4.4513%. The 2-year U.S. Treasury yield rose 1.28 basis points to 3.9045%.

Commodities: WTI August crude oil futures closed up 1.75% at $67.54 per barrel. Brent September crude oil futures closed up 1.46% at $69.52 per barrel. COMEX gold futures fell 0.45% to $3344.10 per ounce.

### Details of Major News

#### Global Highlights

The Trump administration is set to conduct an on-site visit to the Federal Reserve over renovation issues in approximately one week, with Powell responding. Russ Vought, Director of the White House Office of Management and Budget (OMB), stated that the $2.5 billion renovation project of the Federal Reserve headquarters is shocking, and the cost overruns have infuriated Trump. OMB officials aim to make an on-site visit to the Fed in about a week. Federal Reserve Chair Powell responded that the renovation project of the Fed's headquarters and its funding arrangements have been under strict supervision by the Federal Reserve Board and its oversight bodies from start to finish.

Kevin Warsh, a potential candidate for the next Federal Reserve Chair, said: Trump's public pressure is correct, and the last thing we need is for the Fed to stay the same. Warsh noted that the independence of the Federal Reserve is "vital". However, under the leadership of current Chair Powell, the Fed has ventured into policy areas beyond its jurisdiction. Warsh also opined that the Fed should not overly worry that Trump's tariffs might lead to rising inflation.

Christopher Waller, a Federal Reserve Governor and a top contender for the next Fed Chair, stated: The Federal Reserve should cut interest rates by 25 basis points in July.

JPMorgan Chase: Don't be too concerned about Powell; the independence of the Federal Reserve is essentially a "myth". U.S. stocks will continue to rise amid bets on rate cuts. JPMorgan mentioned that pressure on the Fed has been "taking place behind closed doors" for decades, not being unique to the Trump era. Whether Powell is fired is irrelevant; what matters is that Powell's term is about to end, and the market will soon realize he is effectively out, starting to price in the policies of the next chair. No matter who the next chair is, the power of doves will grow, and U.S. stocks are likely to keep rising on rate cut expectations.

Report: The EU is drafting a list of tariffs on U.S. services in preparation for an escalation of the trade war. The EU plans to impose fees on U.S. digital services, such as advertising services, if negotiations fail. The U.S. has a deficit with the EU in goods trade but a surplus in services trade, making it more vulnerable to retaliation in this sector.

The U.S.-India agreement is "close to being reached", with India seeking more favorable tariffs than Indonesia. Informed officials revealed that India believes the U.S. will not treat it as a transit hub like Vietnam and other Southeast Asian countries, and negotiations so far indicate that India's tariff rates will be better than those of these countries. India hopes to lower tariffs to below 10%. Analysts pointed out that recent developments show Trump's preferred level tends to be in the 15%-20% range.

With negotiations deadlocked, Japan's exports to the U.S. plummeted 11.4% in June, the largest drop since 2020. As U.S.-Japan negotiations stalled, Japan's exports to the U.S. plunged 11.4% in June, exceeding the 11% drop in May. The core drag came from the automotive industry – under the weight of the U.S. 25% tariff, automobile exports to the U.S. slumped 26.7% year-on-year. Overall exports have declined for two consecutive months, increasing the risk of Japan's economy sliding into a technical recession.

U.S. retail sales rose 0.6% month-on-month in June, exceeding expectations and reversing the decline of the previous two months. Despite the impact of Trump's tariff policies beginning to show, U.S. consumers still seem to be spending actively. U.S. retail sales increased by 0.6% month-on-month in June, reversing the consecutive two-month decline and surpassing most economists' expectations. Auto sales climbed after two months of decline, becoming a key driver of overall growth.

Foreign investors increased their holdings of U.S. Treasuries in May, with Canadian purchases surging. The total U.S. Treasuries held by foreign investors in May stood at $9.05 trillion, up $32.4 billion from April, almost completely offsetting the April decline and pushing total holdings to the second-highest level in history. Japan's holdings of U.S. Treasuries rose by $500 million in May, marking the fifth consecutive month of increase, reaching $1.135 trillion. Mainland China's holdings of U.S. Treasuries decreased by $900 million in May, to $756.3 billion.

The U.S. House of Representatives overwhelmingly passed three major cryptocurrency bills, and the White House stated that Trump will sign them on Friday. The "Genius Act" related to stablecoin regulation received 2.5 times more votes in favor than against, with over 100 Democratic lawmakers "defecting" to support it. On Wednesday night, the three bills narrowly passed a new procedural vote in the House, with only five more votes in favor than against. Due to more than a dozen Republicans "revolting", these bills failed to pass the first procedural vote in the House on Tuesday.

15,000-word transcript of Huang Renxun's exchange meeting: Covering China-U.S. chips, H20, CUDA compatibility, with massive information. Huang Renxun disclosed that the H20 chip has been re-approved for sale, which will accelerate the launch of Blackwell products in China. He praised China's global leadership in AI models, talents, and applications, noting that many top AI researchers are trained by China's education system, and he believes AGI may be achieved soon. Meanwhile, Huang Renxun highly praised Chinese automakers such as Xiaomi Auto, NIO, and XPeng, calling Chinese electric vehicles a "global surprise" that is reshaping the world's competitive landscape.

Huang Renxun and Wang Jian's fireside chat at the Chain Expo: Computing underpins AI, and silicon is the origin of everything. Huang Renxun believes that artificial intelligence technology is currently in the stage of reasoning AI and is extremely close to the stage of general artificial intelligence. In the future, open source will be the safest way to promote AI development. NVIDIA's technology roadmap has covered plans for nearly a decade ahead. Hangzhou may be China's Silicon Valley, with many excellent large models such as DeepSeek and Kimi emerging.

Huang Renxun is anxious. According to statistics from IDC, a third-party research institution, from 2023 to 2024, the proportion of domestic computing power in China's data center accelerator card market has surged from 14% to 34.6%. Has domestic substitution made Huang Renxun anxious?

How significant is the positive impact of "H20 resumption"? JPMorgan believes that "H20 resumption" is an incremental positive but far from a "game-changer". Meanwhile, in the early stages of this AI competition, Alibaba's "shovel-selling" model seems to be able to create financial returns for shareholders more quickly, while Tencent, which focuses on long-term goals, may face short-term negatives. Goldman Sachs predicts that Alibaba and Tencent's capital expenditures will hit bottom in the second quarter of 2025 and start to recover month-on-month in the second half of the year.

Strong demand for AI chips drives TSMC's Q2 net profit up 61% beyond expectations, with this year's sales growth expected to be around 30%. TSMC, the world's largest chip foundry, saw its Q2 revenue and net profit hit record highs, with net profit surging 61%, exceeding analysts' expectations. The 3nm process contributed 24% of wafer revenue, up from 22% in the previous quarter, further confirming the strong momentum of the global AI spending boom.

TSMC's earnings call: Raised full-year 2025 sales growth to around 30%, warning of possible greater exchange rate impact in Q3. TSMC stated that it remains confident in maintaining a gross profit margin target of 53% or higher, keeping its 2025 capital expenditure guidance unchanged, and expects capital expenditures not to drop significantly in the next few years. The company warned that Q3 revenue will be hit by local exchange rate fluctuations. Considering uncertainties such as tariff policies, it remains cautious about business plans for the second half of 2025 and 2026.

A weak U.S. dollar helps Netflix avoid a "sluggish off-season", with Q2 profit up over 40% to a new high, and full-year guidance raised. Netflix's Q2 revenue and EPS earnings both exceeded expectations with accelerated growth, up about 16% and 47% year-on-year respectively. Netflix said that the quarterly revenue and profits were slightly higher than the company's expectations, partly due to exchange rates. Netflix raised the upper end of its annual revenue guidance range by nearly 3%, and the new range is equivalent to a maximum revenue increase of 16% compared to last year. The stock price fell 3% in after-hours trading.

Who defeated the "gold standard"? By industry, only high dividends have been relatively resilient in the long term; recently, fintech has taken the lead. Among secondary industries, precious metals stand out, with new drivers outperforming old ones; from the perspective of style and strategy factors, small-cap stocks are absolute winners, and the micro-cap index has outperformed gold in all periods.

Russian official: Does not rule out the use of nuclear means to respond to NATO attacks. Leonid Slutsky, Chairman of the International Affairs Committee of the Russian State Duma, said that a NATO attack on the Kaliningrad region would mean an attack on Russia, which would trigger Russia to take all corresponding countermeasures including the use of nuclear doctrine. The United States must clearly recognize this rather than making such remarks casually.

#### Domestic Macro

Ministry of Housing and Urban-Rural Development: Urban renewal should be placed in a more prominent position, and a series of livelihood projects, safety projects, and development projects should be implemented in a coordinated manner. The ministry's meeting emphasized accelerating the construction of a new model for real estate development and steadily advancing the renovation of urban villages and dilapidated houses. Build complete communities to better care for "the elderly and children". Promote the construction of new urban infrastructure and accelerate the renovation and upgrading of old pipelines. Promote the construction of urban infrastructure lifeline safety projects, and coordinate urban flood control systems and waterlogging management. Continue to promote domestic waste classification.

Regarding the booming Hong Kong stock IPO market, Goldman Sachs conducted key Q&A. Goldman Sachs stated that factors such as the strong rebound of Hong Kong stocks, relaxed listing rules, and positive statements from regulators have jointly driven the recovery of Hong Kong stock IPOs. It is expected that with the continued activity of IPOs, the market performance will be positive. New stocks are in higher demand in popular industries such as consumption, medical care, and technology, and companies with cornerstone holdings of 30%-50% perform better. The A-share market is also expected to benefit.

#### Domestic Companies

The latest documents of Wahaha's inheritance dispute case have been exposed, putting Zong Fuli in big trouble. Three illegitimate children are demanding the trust rights of $700 million each promised by Zong Qinghou during his lifetime, meaning that the HSBC account in Hong Kong is not the trust rights account set up by Zong Qinghou for Zong Fuli's three younger siblings. The three filed a lawsuit with the Hong Kong High Court as early as December 30, 2024, which was only half a year after Zong Qinghou's death, indicating that this family conflict had long existed.

The inheritance lawsuit of the three Zong siblings has been exposed! Court order: Zong Fuli and other defendants should explain the whereabouts of $1.085 million in the HSBC account! Previously, lawyers revealed that the account balance was about $1.8 billion. Zong Jichang, Zong Jieli, and Zong Jisheng, who claim to be his children, sued Zong Fuli and her associated offshore companies in the Hong Kong High Court. The court has issued a temporary injunction to freeze the disposal rights of the offshore company's assets in the HSBC account and ordered Zong Fuli to explain the specific whereabouts of approximately $1.085 million within a time limit. This lawsuit over huge offshore trust assets and inheritance rights is revealing hidden family secrets and has also triggered legal disputes over the validity of wills and blood relationship identification.

Morgan Stanley is optimistic about Pop Mart: The growth curve is becoming steeper, the valuation is still attractive, and it will hit a new high in the short term. Morgan Stanley believes that Pop Mart's preliminary sales and profits in the first half of the year were 8% and 20% higher than its estimates respectively, with the Greater China region and the Asia-Pacific region being the key markets that exceeded expectations. Morgan Stanley raised the target price from HK$302 to HK$365. Although it is expected to face profit-taking pressure in the short term, it believes that the adjustment will provide opportunities for long-term investors and still has "notable upside potential".

Goldman Sachs significantly raised its forecast for China's Robotaxi market size, driven by four major forces, with accelerated operational deployment. Goldman Sachs stated that driven by government policy support, increased consumer acceptance, and the rapid development of related technologies, leading Chinese Robotaxi operators are expected to accelerate their commercialization process in the next few years. It raised its forecast for China's Robotaxi market size by 9%-35%, expecting the market size to reach $14 billion by 2030 and $61.2 billion by 2035.

#### Overseas Macro

Trump diagnosed with venous disease. U.S. White House Press Secretary Levitt stated on the 17th that President Trump recently experienced leg swelling and was diagnosed with a venous disease. An ultrasound examination of Trump's legs showed that he has chronic venous insufficiency.

The third meeting of G20 Finance Ministers and Central Bank Governors opened in South Africa. On July 17 local time, the G20 Finance Ministers and Central Bank Governors Meeting opened in KwaZulu-Natal Province, South Africa. South African Finance Minister Enoch Godongwana, the rotating chair of the G20, called on all parties to unite and cooperate to jointly respond to the complex and severe economic environment.

Three gray rhinos in the U.S. economy in the second half of the year. Song Xuetao believes that the "three gray rhinos" are: after the implementation of the Great Beauty Act, fiscal policy will focus more on "cutting", showing a clearer tendency to reduce expenditures; foreign tariffs and the reshaping of international relations will be more "pragmatic and radical", increasing the risk of TACO's backlash; differences in attitudes towards interest rate cuts between the new and old Fed chairs will cause confusion, and the shadow Fed chair may have "market dominance".

U.S. high inflation whistleblower: Trump's attempt to control the Fed and push for rate cuts may cause inflation expectations to soar. Former U.S. Treasury Secretary Summers said that he does not know any mainstream economist who supports a 1% interest rate in the current environment. Such a move may bring economic prosperity in the short term but at the cost of forming severe inflation psychology. Regarding rumors that Trump will fire Powell on Wednesday, Summers said, "We have seen a small-scale experiment", reflecting the possible impact of the monetary policy advocated by Trump.

Riding the AI wave, demand for the rare metal "ruthenium" has surged, with its price increase outpacing that of gold and silver. The AI boom has driven the price of the ultra-rare metal ruthenium to soar, nearly doubling to $800 per ounce in a year, matching the 2021 peak. Ruthenium is highly sought after for its key application in hard disk drives, which can effectively meet the data storage needs of the AI era.

#### Overseas Companies

Anthropic's valuation has exceeded $100 billion, with revenue growing fourfold and a gross profit margin exceeding 60%! Despite high cash consumption, AI star company Anthropic, with its explosive revenue growth, is attracting investors' interest in a new round of financing at a valuation of over $100 billion, nearly doubling its valuation of $58 billion four months ago. This potential transaction highlights the market's high expectations for the future growth of leading AI companies, especially the company's strong monetization capabilities in the field of AI coding applications.

AI search startup Perplexity's valuation jumped to $18 billion in two months. According to media reports, AI search startup Perplexity was valued at $14 billion when it completed a round of financing in May this year. After the financing, new investors took the initiative to contact the company and were told they could buy shares at a valuation of $18 billion.

SK Hynix plummeted nearly 9%, with Goldman Sachs downgrading its rating for the first time in three years. Is an HBM price war imminent? Goldman Sachs analysts downgraded SK Hynix's rating from buy to neutral, warning that with increased competition and pricing power shifting to major customers, HBM pricing may decline for the first time in 2026, which will pose a major challenge to SK Hynix, which is heavily dependent on NVIDIA.

The unmanned driving sector is heating up, with Uber joining hands with Lucid to challenge Tesla's Robotaxi. Uber plans to launch a high-end Robotaxi service in the second half of 2026, with the first batch of vehicles scheduled to be put into use in an undisclosed major U.S. city in the second half of 2026. It will purchase "at least" 20,000 Gravity SUV electric vehicles produced by Lucid within the next six years, all equipped with autonomous driving systems developed by Nuro. Lucid's stock price closed up 36% on Thursday, the largest increase in two and a half years.

U.S. tariffs hit profits, with Volvo reporting its first loss since its IPO in Q2. Affected by U.S. tariffs and high restructuring costs, Volvo Cars recorded its first quarterly loss since its listing in 2021, with an operating loss of 10 billion Swedish kronor in the second quarter. The loss was mainly due to a one-time impairment charge of 11.4 billion Swedish kronor, resulting from U.S. tariffs on imported cars, which prevented its new ES90 model from being sold in the U.S. market. Volvo plans to produce XC60 SUVs in the U.S. starting from the end of 2026 to avoid tariffs.

Industries/Concepts

1. Data Centers: Guotai Haitong Securities pointed out that in the wave of digitalization, data centers, as key infrastructure of the digital economy, are undergoing profound changes. The vigorous development of AI has brought unprecedented opportunities to data centers, with industry orders showing significant inflection point characteristics, marking the start of a new round of growth cycle.

2. Disposable Gloves: Everbright Securities believes that the price floor in Q2 of 2025 has basically been established, and tariffs may push up the price of nitrile gloves. With the gradual release of overseas production capacity by domestic leading enterprises and the natural growth of end-demand, the price of disposable gloves will return to a reasonable level. Domestic enterprises are expected to occupy global market share by virtue of multiple advantages such as cost control, extension of the industrial chain (both upstream and downstream), and research and development.

3. Food and Beverage: A research report from Zheshang Securities indicates that the "newness" of new consumption lies in changes in product and channel logic. That is, exploring new demands by innovatively providing high-quality supplies (such as extreme cost performance, emotional value, and technological innovation), or creating new growth through new channels. Attention should be paid to segmented tracks such as snack and beverage, pre-mixed wine, and health products.

4. Short Dramas: The overseas short drama market is experiencing explosive growth. Its in-app purchase revenue scale surged from less than $100 million in 2023 to $1.5 billion in 2024, and the long-term potential is expected to exceed overseas movie box office (with a scale of $24.2 billion in 2024). The popularity of overseas short dramas represents a leap forward for China's online literature industry. In the future, its business model will be benchmarked against Netflix, aiming to achieve a stable net profit margin of 15%-20%.

Preview of Today's Major News

The State Council Information Office holds a series of thematic press conferences on "High-quality Completion of the '14th Five-Year Plan'".

The State Council Information Office holds a press conference on the development of industry and information technology in the first half of 2025.

University of Michigan Consumer Sentiment and Inflation Expectations for July in the United States.

U.S. June New Home Starts and Building Permits.

Japan's June CPI.

<End of Full Text>

Disclaimer: The views in this article only represent the author's personal opinions and do not constitute investment advice on this platform. This platform makes no guarantee regarding the accuracy, completeness, originality, and timeliness of the information in the article, nor does it assume any liability for any losses caused by the use or reliance on the information in the article.