Morning News

Source: Wall Street News

## Market Overview

Google's earnings report showed that demand for AI remains strong, driving tech stocks higher. Coupled with the continuous decline in U.S. initial jobless claims for six weeks, the Nasdaq and S&P 500 hit new highs again. Small-cap stocks closed down. Google opened higher but moved lower, closing up 1%. Tesla fell more than 8% due to a pessimistic outlook. NVIDIA closed at a new high. Intel fell about 3% after its after-hours earnings report.

U.S. jobless claims data weakened expectations of a Fed rate cut, with the 2-year yield rising 5 basis points intraday. The U.S. dollar rose 0.3%. Bitcoin fluctuated around $118,500.

Gold fell 0.55%. Chevron may resume oil extraction in Venezuela, causing crude oil to plunge at one point, dropping about 1.5% from the daily high, then rebounded, with U.S. oil closing up more than 1%. Most domestic futures night sessions closed higher, with coking coal night session up 5.7% and iron ore down more than 1.3%.

During the Asian session, the Shanghai Composite Index closed above 3,600 points for the first time in three and a half years. The Hang Seng Index rose for five consecutive days. Hainan Free Trade Zone and rare metals stocks surged collectively, coking coal hit the daily limit, and national bonds fell.

## Key News

China strongly "counteracts involution"! After 27 years, the Price Law has been revised again.

Trump's "tariff model" has been made clear: investment in exchange for 15% tariffs! Detailed version of the U.S.-Japan agreement: Japan will invest $550 billion in the U.S. and purchase $8 billion of U.S. agricultural products.

The Fed's "renovation gate" escalated. Trump put pressure on rate cuts with his first "visit", but the alarm to fire Powell was paused. Bessent pointed out that there are other risks.

The European Central Bank stopped after eight consecutive rate cuts, kept interest rates unchanged, and waited for the U.S. tariff policy to become clear. Expectations of a September rate cut plummeted; Lagarde warned that if U.S.-Europe trade frictions escalate, it will put downward pressure on inflation.

The U.S. Markit Manufacturing PMI fell back into contraction in July, but overall business activity expanded at the fastest pace since December. U.S. initial jobless claims fell for the sixth consecutive week last week, and continuing jobless claims remained at a high level since 2021. The Eurozone PMI rose to 51 in July, a new high in nearly a year. German manufacturing recovered, while French manufacturing continued to shrink due to the political deadlock.

Report: OpenAI is preparing to launch GPT-5 in early August.

Intel's second-quarter revenue exceeded expectations and announced layoffs of about 15%, but the CEO did not ease market concerns about the company's competitiveness. The stock price rose 6% after hours and then fell nearly 4%.

Luxury giants are eager for a U.S.-Europe agreement. LVMH's Q2 core business revenue unexpectedly fell 9%. The CFO said that a 15% tariff is a "good result".

## Market Closing Quotes

European and American stock markets: The S&P 500 Index rose 0.07% to 6363.35 points. The Dow Jones Industrial Average fell 0.70% to 44693.91 points. The Nasdaq Composite Index rose 0.18% to 21057.96 points. Europe's STOXX 600 Index closed up 0.24% at 551.55 points.

A-shares: The Shanghai Composite Index rose 0.65% to 3605.73 points. The Shenzhen Component Index rose 1.21% to 11193.06 points. The ChiNext Index rose 1.5% to 2345.37 points.

Bond market: The yield on the 10-year U.S. Treasury note rose 1.59 basis points to 4.3957%. The yield on the 2-year U.S. Treasury note rose 3.62 basis points to 3.9162%.

Commodities: WTI September crude oil futures closed up 1.19% at $66.03 per barrel. Brent September crude oil futures closed up 0.98% at $69.18 per barrel. COMEX gold futures fell 0.74% to $3372.50 per ounce.

Details of Key News

Global Highlights

China strongly "counteracts involution"! After 27 years, the Price Law has been revised. China is comprehensively revising the "Price Law" that has been in effect for 27 years. The amendment draft directly addresses the much-concerned "involution" phenomenon in current market competition. The content of the draft shows that regulatory authorities will strengthen the governance of irrational price wars by improving the standards for identifying low-price dumping, clearly prohibiting the use of algorithms to engage in improper pricing behaviors, and other means.

Trump's "tariff model" has been made clear: investment in exchange for 15% tariffs! The core of the U.S.-Japan agreement lies in tariff concessions and reciprocal commitments, which may set a "template" for partners such as the European Union and South Korea, exchanging investment and other financing forms for more favorable tariff treatment from the U.S., and striving for tariff rates lower than the threatened level of 20%. Some analysts say that the agreement reached with Japan indicates that a 15% tariff level can be applied to most major U.S. trading partners.

The U.S. released the detailed version of the U.S.-Japan agreement: Japan will invest $550 billion in the U.S. and purchase $8 billion of U.S. agricultural products. The White House confirmed that Japan will invest $550 billion in the U.S. through a newly established investment fund, which is the largest foreign investment commitment ever obtained by any country. Japan will immediately increase the import quota of U.S. rice by 75% within the framework of the minimum market access for rice with zero tariffs. U.S. automobiles will no longer be subject to long-standing restrictions, will be able to enter the Japanese consumer market, and U.S. automobile standards will be recognized in Japan for the first time.

The "key clause" of the U.S.-Japan agreement: Japan establishes a $550 billion fund, and the U.S. "directs where to invest". The investment decision-making power of this定向 fund is in the hands of the U.S. side, and the funds will serve the key points of the U.S. industrial strategy, not limited to Japanese companies' projects in the U.S. The U.S. regards the U.S.-Japan agreement as a "template" for negotiations with the EU, saying that whether other trading partners can obtain similar reciprocal tariffs depends on whether they can provide similar financing tools. This also means that in the future, U.S. trade negotiation strategies may be more linked to large-scale, strategically oriented capital commitments, rather than simply balancing trade flows.

Will the U.S.-Japan tariff agreement fuel inflation and make the Bank of Japan raise interest rates earlier? Barclays believes that the U.S.-Japan tariff agreement has significantly eased the tariff pressure on Japan's manufacturing industry, increased the possibility of achieving a wage increase of more than 4.5% in next year's spring wage negotiations, and created more favorable conditions for the Bank of Japan to achieve its 2% inflation target. The expectation of the Bank of Japan's interest rate hike may be advanced from January next year to October this year.

The 15% tariff agreement ends Japan's "Age of Discovery" of capital? The long-term consequence of the U.S.-Japan agreement is that Japan's demand for purchasing U.S. Treasury bonds and other foreign bonds and stocks may decrease. Global markets, especially U.S. assets, may feel that the capital "flow" from Japan is ebbing.

The Fed's "renovation gate" escalated. Trump put pressure on rate cuts with his first "visit", but the alarm to fire Powell was paused. Bessent pointed out that there are other risks.

Trump became the first president in nearly 20 years to visit the Fed headquarters in person. During his inspection of the renovation project of the Fed building, he said that the project cost has exceeded $3.1 billion, but Powell refuted, saying he had not heard anyone say so. Trump later suggested that he would not fire Powell just because of the project cost overrun, saying he only wanted interest rate cuts and there was no need to dismiss Powell. His term will expire soon, and he believes he will do the right thing, and there may be three candidates for the next Fed chair.

U.S. Treasury Secretary Bessent said that other operations of the Fed may affect the independence of monetary policy, and the Fed has too much influence and should return to its main business.

Before Trump's inspection, the media reported that a U.S. House committee was investigating the renovation project of the Fed headquarters; the Fed made a rare high-profile public relations move, with staff taking reporters to visit the project site.

The "New Fed News Agency" believes that the inspection is part of Trump's action to discredit Powell's public image and promote interest rate cuts.

The Fed's July meeting is imminent. Trump's allies have gone to court, demanding that the closed-door meeting be made public. Azoria Capital filed a lawsuit with the Federal Court in Washington on Thursday, saying that the meetings of the Federal Open Market Committee (FOMC) of the Fed have long been held behind closed doors, which violates government transparency regulations. The fund requested the court to order the Fed to make public the content of the monetary policy meeting on July 29-30.

The European Central Bank stopped after eight consecutive rate cuts, kept interest rates unchanged, and waited for the U.S. tariff policy to become clear. Expectations of a September rate cut plummeted; Lagarde warned that if U.S.-Europe trade frictions escalate, it will put downward pressure on inflation.

Due to the unclear final implementation of tariffs, the European Central Bank did not provide any forward-looking guidance on the subsequent policy path. The European Central Bank rarely listed "trade disputes" as the main source of policy uncertainty in its statement, emphasizing that the current environment is "exceptionally uncertain".

Lagarde said that rising tariff barriers, on the one hand,抑制 European export demand, and on the other hand, lead to countries with excess production capacity shifting goods to the European market, thereby suppressing local prices. After the press conference, the probability of a September rate cut has dropped sharply from 40% before the decision to 28%; the probability of a December rate cut is 72%, compared with a forecast of more than 90% earlier in the day.

The U.S. Markit Manufacturing PMI fell back into contraction in July, but overall business activity expanded at the fastest pace since December. The U.S. Markit Manufacturing PMI flash reading for July fell to 49.5, the lowest since December last year; the Services PMI flash reading was 55.2, the highest since December last year; the Composite PMI flash reading was 54.6, the highest since December last year. Business confidence in both manufacturing and services for the next year fell to one of the lowest levels in the past two and a half years. Inflationary pressures intensified.

U.S. initial jobless claims fell for the sixth consecutive week last week, and continuing jobless claims remained at a high level since 2021. The current U.S. labor market remains resilient. The decline in initial claims was mainly driven by New York State. However, the number of people continuing to receive unemployment benefits is still high, indicating that although there are not many layoffs, it is more difficult to find a new job after unemployment.

The Eurozone PMI rose to 51 in July, a new high in nearly a year. German manufacturing recovered, while French manufacturing continued to shrink due to the political deadlock. The Eurozone economy showed resilience in July, with the PMI index hitting a nearly one-year high, driven by the near-recovery of manufacturing and accelerated growth of services. German private sector activity expanded for the fifth consecutive month, with manufacturing showing signs of recovery and services stabilizing; while the French economy continued to shrink due to the political deadlock, and business confidence deteriorated.

Report: OpenAI is preparing to launch GPT-5 in early August. According to The Verge, OpenAI is preparing to officially launch GPT-5 in early August, and will simultaneously launch mini and nano versions suitable for API. OpenAI is also preparing to launch an open-source language model, which is expected to be released by the end of July; this model is described as "similar to o3 mini", with reasoning capabilities, and will be the first OpenAI to publicly release a weighted model since the launch of GPT-2 in 2019.

Intel's second-quarter revenue exceeded expectations and announced layoffs of about 15%, but the CEO did not ease market concerns about the company's competitiveness. The stock price rose 6% after hours and then fell nearly 4%. Intel's second-quarter revenue exceeded expectations, data center + AI revenue exceeded expectations, PC demand rose, and it announced layoffs of about 15%. The new CEO Patrick Gelsinger announced a significant reduction in chip factory construction. Intel's stock price rose 6% after hours, but then turned down, once falling nearly 4%. Analysts said that although Gelsinger vowed to implement "new financial discipline" at Intel, he could not clearly explain how to make the company more competitive again, so the company's stock price fell after hours.

Luxury giants are eager for a U.S.-Europe agreement. LVMH's Q2 core business revenue unexpectedly fell 9%. The CFO said that a 15% tariff is a "good result".

LVMH's second-quarter revenue fell 7% year-on-year, missing expectations for two consecutive quarters. First-half revenue fell 4%, and net profit plummeted 22%; in the second quarter, the organic revenue of LVMH's largest business, fashion and leather goods, fell 9% more than expected, the worst performance among all businesses; in the second quarter, organic revenue in Japan fell 28% due to the base effect, as the depreciation of the yen last year stimulated foreign tourists to spend in Japan.

The media reported that LVMH CEO has lobbied EU countries in recent weeks to promote a trade agreement similar to the U.S.-Japan agreement. LVMH CFO said that if the U.S.-Europe agreement proposes that the U.S. impose a 15% tariff on the EU, it will be a good result because LVMH's brands have pricing power. LVMH's U.S. stock closed down nearly 4%.

The "rising logic" of global bank stocks: populism, fiscal easing, and local currency appreciation. UBS pointed out that populism has triggered concerns about fiscal easing, pushing up bond yields, and bank stocks are one of the biggest beneficiaries; as a localized industry, banks will significantly benefit from currency appreciation in Europe, Japan and other places; the inflection point of private sector credit growth has emerged, and the core business of banks has ushered in a new upward cycle. The bank reiterated its long-term overweight position on bank stocks, believing that the current valuation level of bank stocks is extremely attractive, with moderate crowding, and strong profit revisions and other indicators support the allocation of bank stocks.

Domestic Macro

Xi Jinping met with European Council President Costa and European Commission President von der Leyen. Xi Jinping pointed out that both China and Europe are constructive forces advocating multilateralism and open cooperation. The more severe and complex the international situation, the more China and Europe need to strengthen communication, enhance mutual trust, and deepen cooperation.

Li Qiang co-chaired the 25th China-EU Leaders' Meeting with European Council President Costa and European Commission President von der Leyen. Li Qiang said that in the face of the current international situation full of changes and chaos, China and Europe, as two major global forces and markets, should further strengthen multilateral cooperation, jointly safeguard multilateralism and free trade, resist unilateralism and protectionism, firmly support the core position of the United Nations in global governance, support the reform and development of the WTO, safeguard international fairness and justice and the global economic and trade order, and jointly promote world peace, stability and prosperity.

European Council President and European Commission President: Today's meeting, although brief, is of great significance. Von der Leyen said that we expressed our respective concerns very frankly and openly, and also talked about trade, investment and geopolitical issues very clearly and directly. She also revealed, "We have partially found solutions. For example, I mentioned the bottlenecks in export controls, and you (China) have a rapid solution mechanism for this."

China and the U.S. will hold economic and trade talks in Sweden next week, and the outside world expects the two sides to reach further consensus. According to the Global Times, "First, the remaining tariff issues, especially the tariffs imposed by the U.S. under the name of fentanyl, should be resolved; second, how China and the U.S. can further carry out economic and trade cooperation." He Weiwen, director of the China-US-EU Research Center of the China Society for World Trade Organization Studies, believes that the important thing about this talk is to continue the achievements of the previous two talks, further concretize the agreement framework reached by China and the U.S., and strive for more specific results.

Ministry of Commerce: Zero tolerance for smuggling and export of strategic minerals. He Yadong, spokesman of the Ministry of Commerce, said that relevant departments will strengthen coordination and cooperation, always maintain a high-pressure posture of strict inspection and severe crackdown, resolutely combat the smuggling and export of strategic minerals, and safeguard national security and interests.

Domestic Companies

The wholesale price of Feitian Moutai is approaching 1,800 yuan. Kweichow Moutai issued the "hand card" of development rights. At present, the price of 53-degree 500ml Feitian Moutai in bulk bottles has dropped to 1,870 yuan per bottle, and the price of original boxed bottles has dropped to 1,920 yuan per bottle. As the price of Feitian Moutai continues to decline, a piece of news in the market is regarded as a "prelude" to Moutai's price stabilization. It is understood that Moutai has recently promoted the plan to establish a joint venture company led by provincial dealers' associations.

Pop Mart's Wang Ning: How can Chinese trendy toys be paid for globally? Wang Ning said that the most important thing for an IP company is to continue to operate IP, and to cultivate and manage IP for a long time. He hopes to make some consumer goods with higher added value and become a new generation of world-class Chinese consumer goods. The previous goal was to become China's Disney, but now I want to become Pop Mart of the world. "Many well-known film companies, including Hollywood, also want to shoot LABUBU movies, and we are still thinking about it."

China Passenger Car Association: Retail sales of narrow-sense passenger vehicles in July are expected to be 1.85 million units, with new energy vehicles expected to be 1.01 million units. It is preliminarily estimated that the total retail market of narrow-sense passenger vehicles this month will be about 1.85 million units, an increase of 7.6% year-on-year and a decrease of 11.2% month-on-month. Among them, new energy retail sales are expected to reach 1.01 million units, with the penetration rate rising to about 54.6%.

Polysilicon and silicon wafers reported another increase, and downstream games continue. This week, the prices of polysilicon and silicon wafers in the upstream of the photovoltaic industry chain rose significantly, with N-type polysilicon rising by 18%-23%, and silicon wafers also rising across the board, with inventories falling. The price of battery cells rose due to the pull of overseas demand, but the transmission of the increase to the downstream module end was blocked. The module link faced resistance to price increases due to fierce games with the terminal market. The decline in demand has intensified the price game in the downstream.

Overseas Macro

Is the "2007 quantitative earthquake" repeating itself? Retail investors' short squeeze wave is coming, and U.S. quantitative funds have suffered the largest drawdown in 5 years! Goldman Sachs data shows that quantitative funds have lost 3.6% cumulatively in July, falling 5% since the beginning of June, the worst monthly performance in nearly 5 years. Momentum trading, crowded long positions and high-volatility stocks have become the main factors dragging down the performance of quantitative funds. At the same time, retail investors have re-influxed into high short interest stocks, promoting a new round of short squeeze, further exacerbating the drawdown of quantitative strategies.

"Little Buffett" Seth Klarman on investment philosophy: looking for value and maintaining discipline. In his latest interview, Klarman adhered to his value investment philosophy, emphasizing the importance of maintaining a cautious stance in the current high valuation environment. This legendary investor, who has almost never had major losses in 42 years, always puts "margin of safety" and "downside risk protection" first. He believes that this kind of reverse thinking that is different from the mainstream market sentiment is the key to achieving long-term stable returns and avoiding catastrophic losses.

Armed conflict broke out between Thailand and Cambodia! According to Global Times and CCTV International News, on July 24, armed conflicts broke out between Thailand and Cambodia in the border dispute area. The Cambodian army launched rockets that hit Thai civilian communities, injuring 3 people. According to Cambodian media reports, the Cambodian army has fully controlled the areas of Ta Moan Thom Temple and Ta Krabey Temple. According to Thai media reports, Thai Air Force F-16 fighter jets carried out air strikes, and the headquarters of the 8th and 9th Support Divisions of the Cambodian military have been destroyed with serious damage.

Overseas Companies/Industries

Ethereum spot ETFs have a strong momentum of attracting funds, with 13 consecutive days of net inflows, totaling more than $4 billion. During the 13 consecutive inflows starting from July 2, the cumulative net inflow of all Ethereum ETFs has jumped from $4.25 billion to $8.32 billion. The total net assets locked in these products reached $19.85 billion, accounting for 4.44% of Ethereum's market value. Analysts believe that the inflow of Ethereum spot ETFs is mainly driven by the decline in Bitcoin's dominant position and the growth of institutional demand for ETH exposure.

European car sales in June recorded the largest drop in 10 months, and the growth of electric vehicles continued to slow down. New car registrations in Europe fell 5.1% to 1.24 million in June. By region, new car registrations in Germany plummeted 14% in June, while those in Italy and France fell 17% and 6.7% respectively; by type, plug-in hybrid car sales surged 38%, while pure electric car sales growth slowed to 14%, the lowest level this year.

Neuralink's fundraising document: It is expected to reach $1 billion in revenue by 2031, implanting "brain-computer interfaces" in 20,000 people annually. The company also plans to operate five large clinics within six years and launch at least three types of brain implant devices, including Telepathy for brain-computer communication, Blindsight for restoring vision in the blind, and Deep for treating tremors and Parkinson's disease.

Jeff Bezos is considering acquiring CNBC, having already owned The Washington Post. Reports say that CNBC's programs are in line with Bezos' interests and are expected to complement his media portfolio as a "neutral voice". Previously, The Washington Post has been facing a continuous loss of subscribers and an exodus of employees due to its political stance and operational adjustments, with over 300,000 readers canceling their subscriptions before last year's U.S. election.

Industry/Concept

1. Glyphosate: Glyphosate is the largest herbicide variety and the world's largest pesticide variety. At present, it is witnessing a resonance of supply and demand coupled with domestic anti-involution drivers. In the future, the production capacity of Monsanto is uncertain, and the industry is迎来 a bottom reversal.

2. Engineering and infrastructure: Based on the bidding experience of Zangmu Hydropower Station and Dadu River Yingliangbao Hydropower Station, Everbright Securities has sorted out some potential directions and companies for the new demand for construction and materials brought by the start of the Yajiang Hydropower Station.

3. Nuclear fusion: Huaxin Securities pointed out that FRC nuclear fusion is expected to be commercialized first. The power supply system is the key to the stable operation of FRC, and semiconductor switches are the general trend. Domestic nuclear fusion startups choosing the FRC technical path, such as Nova Fusion, Xingneng Xuanguang, and Hanhai Juneng, are accelerating their establishment, and investment and financing demand is increasing. Relevant core components such as vacuum switches and capacitors will benefit first.

4. Solid-state transformer (SST): The SST solution has outstanding advantages. As the industrialization pace approaches, relevant demand will increase with the construction of downstream data centers, and related companies in the industrial chain are expected to benefit from the growth dividends of the track.

Today's News Preview

Japan's July Tokyo CPI.

U.S. June durable goods orders.

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