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View detailsWall street has reached an agreement? Both Goldman Sachs and JPMorgan Chase models show that the risk of recession in the United States is rising.
Influenced by the uncertainty of tariff policy and weak economic data, Wall Street is increasingly worried about the economic prospects of the United States. A number of top investment bank models show that the probability of economic recession implied by the market has increased significantly, which has sounded the alarm of the US economic prospects. According to the JPMorgan Chase model, the implied probability of economic recession in the market has jumped from 17% at the end of November last year to 31%. The model of Goldman Sachs Group also shows a similar trend, with the risk of economic recession rising from 14% in January to 23%. Anticipated by the recession, the US dollar index has fallen to 104.30 as of press time.
2025-03-06 -
View detailsNew Fed News Agency talks about "stagflation": The Fed is faced with the dilemma of "pushing up inflation" or "damaging employment"
Recently, Trump announced his decision to substantially increase tariffs on imported goods, bringing the word "stagflation" back to the focus of US economic discussion. On the 4th, Nick Timiraos, known as the "New Federal Reserve News Agency", published an article in The Wall Street Journal, expressing his concern about the economic prospects of the United States. He believes that tariffs are pushing the United States into the "stagflation" dilemma of weak or even stagnant economic growth and rising prices. Faced with this thorny situation, the Fed is caught in a dilemma: either it chooses to raise interest rates to curb inflation, but this may further damage the job market; Either choose to cut interest rates to stimulate the economy, but this may lead to runaway inflation. In the past four years, commentators have repeatedly warned of the risk of stagflation, but stagflation has never really appeared. However, Austan Goolsbee, president of the Chicago Fed, pointed out that some people now put forward a view similar to that of that year that tariffs are also a temporary supply shock. But he warned: "Once I mention the word' temporary', you should be on your guard, because this logic will not hold in 2020." Under the impact of tariffs, inflationary pressure is beginning to appear. According to CCTV news, Trump announced that he would impose a 25% tariff on Mexican and Canadian goods. Ray Farris, chief economist of rudential PLC, pointed out that this would "seriously disrupt the investment plan of enterprises" and "push up inflation and impact the real income of families". Although US Commerce Secretary Howard Lutnick hinted that some tariffs might be abolished, economists warned that if tariffs continue, the risk of economic recession will increase significantly. Tim Mahedy, chief economist of Access/Macro, said: "The situation may quickly get out of control ... Although it has not reached the level of the 1970s and 1980s, it is beginning to show signs of stagflation." Timiraos cited the latest market sentiment indicators and business reviews, showing that the threat of rising prices has led to a decline in business confidence. Corie Barry, CEO of electronic retail giant Best Buy, said on Tuesday that Mexico is one of the important sources of consumer electronic products for the company. The company's share price plummeted 13% that day. "We expect suppliers to pass on some tariff costs to retailers, and American consumers are likely to face price increases." Fed officials believe that inflation expectations are the key driver of future inflation, and some indicators have already shown problems. A survey by the University of Michigan and inflation-protected bonds show that both consumers and investors expect inflation to be slightly higher in the next few years. New york Fed President John Williams said on Tuesday that he expected tariffs to lead to higher inflation this year than he had expected: "The impact of tariffs on consumer goods will be reflected in the price paid by consumers relatively soon, while tariffs on intermediate goods will take longer to appear, but the impact will be more lasting." The Federal Reserve's Policy Dilemma Timiraos believes that the economic threat brought by tariffs is particularly difficult for the Fed. The mission of the Federal Reserve is to maintain low and stable inflation while maintaining a healthy job market. However, tariffs represent a "supply shock", which not only pushes up inflation (which requires raising interest rates), but also harms employment (which requires lowering interest rates). In this case, the Fed must choose which threat to deal with. Boston Fed researchers estimate that imposing a 25% tariff on Canada and Mexico may increase core inflation by 0.5 to 0.8 percentage points, depending on the reaction of American importers. This estimate does not take into account factors such as consumers turning to cheaper domestic goods, trade retaliation or exchange rate fluctuations. Alberto Musalem, president of the St. Louis fed, warned at an economic conference in Washington: "The combination of deteriorating job market and rising inflation may bring difficult choices." He mentioned the last stagflation in the United States in the 1970s, when the Federal Reserve wavered between raising interest rates to fight inflation and cutting interest rates to deal with high unemployment. This "stop-go-stop" policy was widely regarded as a failure, because it failed to control inflation and unemployment well. Austan Goolsbee, president of the Chicago Fed, pointed out that some people think that tariffs are also a temporary supply shock in theory, similar to inflation at the beginning of the epidemic, but "once I mention the word' temporary', you should be wary, because this logic does not hold during the epidemic." Dean Maki, chief economist of hedge fund Point72 Asset Management, said: "This does not bode well for the Fed, and I think it will also worry the government." Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-03-05 -
View detailsFed officials: If the central bank's goals conflict, it will keep a close eye on the changes in inflation expectations.
Moussallem, president of the St. Louis Fed, said recently that although he expected the US price growth rate to slow down to the central bank's target of 2%, it was very important for policy makers to control inflation expectations. In a speech delivered in official website, Moussallem wrote that the long-term inflation expectations in the United States have remained basically stable at present, but will pay close attention to any signs that the expectations become unstable. He reiterated that the policy should remain "moderately restrictive" until there is more evidence that inflation is moving towards the Fed's 2% target. He added: "When determining how monetary policy should respond to unexpected scenarios, especially when these scenarios may involve difficult trade-offs between employment and inflation, it is very important to maintain a good anchor of medium and long-term inflation expectations." Moussallem stressed that his baseline expectation is that inflation will continue to decline and the labor market will remain close to full employment, and maintaining the stability of inflation expectation is "essential" to achieve this goal. He believes that this situation is likely to happen if the "net effect" of the new policy of the US government on trade, immigration, supervision and other financial changes is small. If optimistic, the new policy may also help inflation fall faster, while maintaining the stability of the labor market. According to the data released last Friday (February 28th), due to the bad winter weather, American consumers cut back on spending in January, which caused the year-on-year increase of the US core PCE price index to slow down from 2.9% to 2.6%, the smallest year-on-year increase since the beginning of 2021. On the other hand, the decline in consumer spending has added to Americans' growing pessimism about the future and their growing concern about rising prices, which has aroused people's concern that the US economy may fall into stagflation. Not long before the press release, the Atlanta Fed's GDPNow model recently predicted that the GDP of the United States in the first quarter would shrink by 2.8% year-on-year, compared with the previous forecast of 1.5%. Moussallem admitted that in the case of a weak labor market, the central bank may face the situation that inflation is "stagnant at more than 2%". "The deterioration of the labor market and higher inflation may bring difficult choices." "The current risk may be higher, because if consumers and enterprises have not experienced high inflation recently, they may be more sensitive to inflation," he added. "If I see evidence that inflation expectations have become unstable, I will be particularly worried." Two weeks ago, a survey released by the University of Michigan showed that consumers' expectations for the inflation rate in the coming year jumped from 3.3% to 4.3%, and the business community was frustrated by the Trump administration's arbitrary imposition of tariff measures.
2025-03-04 -
View detailsDid the United States grab gold and grab an
Recently, the data of economic activity in the United States has been weaker than expected. Consumer spending declined slightly in January. The trade deficit in the United States has greatly expanded in the past few months, and the number of initial jobless claims has also increased significantly last week. In this regard, the market is somewhat pessimistic about the expectation of GDP growth in the first quarter of the United States. The Atlanta Fed's GDPNow model predicts that the GDP growth rate in the first quarter has dropped by more than 4 percentage points, and it is expected to drop to -1.5% annualized growth rate. However, the team of Jan Hatzius, an analyst at Goldman Sachs, pointed out in the research report released on March 1 that although the slowdown of GDP growth in the United States this year is a high probability event and policy uncertainty has brought some downside risks, the recent data is not as bad as it seems. In particular, the surge in gold imports has produced a significant distortion effect on trade data, leading to the market's expectation of GDP growth in the first quarter being too pessimistic. Goldman Sachs pointed out that since November last year, the expansion of the trade deficit has been mainly driven by the surge in gold imports, which are usually excluded from GDP calculation because they are usually not consumed or used for production. Goldman Sachs predicts that the GDP growth rate of the United States will be 1.6% in the first quarter of 2025, which is lower than the previous forecast, but higher than the Atlanta Fed's forecast. At the same time, Goldman Sachs maintained its GDP growth forecast for the fourth quarter and the fourth quarter of 2025 at 2.2%, slightly lower than the original forecast of 2.4%. Goldman Sachs: The surge in gold imports will make Q1 GDP data "distorted" Goldman Sachs research report pointed out that since November 2024, the main reason for the expansion of the US trade deficit is the increase in gold imports. In January, the US merchandise trade deficit accounted for more than 6% of GDP. By analyzing the New York Mercantile Exchange's gold inventory data and Swiss customs data, Goldman Sachs estimated that the gold import in January was about US$ 25 billion, accounting for almost all of the US trade deficit of US$ 31 billion. This data shows that the surge in gold imports has produced a significant distortion effect on trade data. This made investors worried about the weakness of GDP data in the first quarter, and the Atlanta Fed's GDPNow forecast was greatly lowered to -1.5%. According to the analysis of the research report, these gold imports mainly come from Europe and are insurance measures taken by participants in the gold market to cope with potential tariff risks. In this context, these gold imports do not necessarily come from future pre-procurement, but in order to be quickly obtained when the actual needs are delivered, and this demand rarely occurs in practice. Crucially, the Bureau of Economic Analysis (BEA) will exclude most gold imports when calculating GDP. Because GDP measures the production of a country or region, most gold imports have nothing to do with the production or consumption of the United States, and are mainly affected by the needs of gold market participants. Not just the "pot" of gold. In addition to the impact of gold imports, the Goldman Sachs research report also analyzed other factors that may lead to data "distortion": Weak consumption or affected by multiple factors: the research report believes that the weak consumer spending in January may be the result of multiple factors such as cold weather, seasonal factors and normal callback after excessive consumption growth in the second half of 2024. The number of people applying for unemployment benefits has risen or been overestimated: the research report points out that the data of unemployment benefits applications at the beginning of each year usually fluctuates greatly, and seasonal adjustment may be difficult. In addition, there have been several similar surges in the number of jobless claims recently, but they soon fell back. Considering the above factors, especially the distortion of trade data caused by gold imports, Goldman Sachs believes that the market's interpretation of recent data may be too pessimistic. Goldman Sachs predicts that the GDP growth rate of the United States will be 1.6% in the first quarter of 2025, which is lower than the previous forecast, but much higher than the Atlanta Fed's forecast. At the same time, Goldman Sachs maintained its GDP growth forecast for the fourth quarter and the fourth quarter of 2025 at 2.2%, slightly lower than the original forecast of 2.4%. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-03-03 -
View detailsSenior officials of the Federal Reserve expect to cut interest rates twice this year, and super-dove senior officials are worried about tariffs.
On Thursday, several senior officials of the Federal Reserve spoke out. Bostic, president of Atlanta Fed, predicts that the Fed will cut interest rates twice this year, but the uncertainty of this prediction has increased. Bostic's latest speech emphasized high uncertainty. This year, Musalem, president of the St. Louis Fed, said that monetary policy should remain "moderately restrictive" and the risk that inflation improvement may stagnate or even reverse is rising. Goolsbee, the ultra-dove official within the Federal Reserve and chairman of the Chicago Federal Reserve, predicted that PCE, the inflation indicator favored by the Federal Reserve, would not be as "alarming" as the previously announced consumer price index CPI. However, if a large-scale tariff is introduced, it may trigger a major supply shock, which will aggravate inflation. Fed officials kept the benchmark interest rate unchanged at the January meeting and expressed their willingness to wait and see until inflation cooled further. The minutes of the January meeting released yesterday show that policymakers are considering that changes in government policies may hinder the progress of inflation. US President Trump is advancing an economic agenda and plans to make major adjustments to US trade and immigration policies. Atlanta Fed President: It is expected to cut interest rates twice this year. On Thursday, Atlanta Fed President Bostic said that he expected the Fed to cut interest rates twice in 2025, but the uncertainty of this forecast has increased: Although this is my benchmark expectation, many things in the future may affect this decision and may develop in two directions. At present, the benchmark interest rate of the Federal Reserve is 4.25%-4.5%. Bostic believes that it is currently in a moderately restrictive range. The Fed still has room to cut interest rates without touching the so-called "neutral level". The neutral interest rate may be between 3% and 3.5%. He supported the Federal Reserve's interest rate cut last year. As inflation dropped from its peak in 2022, it was appropriate to reduce the restrictive policies to protect the labor market. Regarding the current labor market, Bostic pointed out that employment growth is good and real wages are rising. However, he also mentioned that the difficulty for the unemployed to find jobs is increasing, and the number of people who voluntarily resign is decreasing. Bostic is confident that inflation will return to the Fed's 2% target, although this path may fluctuate. "Although inflation is still above the target, in a cooled but still stable labor market environment, price stability is no longer the most urgent issue." Nevertheless, he still expressed some concerns about inflationary pressure. "I still believe that inflation is the biggest risk at present. With the sharp drop in inflation, the Fed's policy objectives tend to be balanced, so I am now more concerned about the possibility that we can reduce inflation to 2% without causing too much damage to the labor market. " In an article published on Thursday, Bostic wrote that the current monetary policy is in a good position and the economy is strong. However, he warned that it is not time to take it lightly, and policymakers must remain vigilant in the face of increasing policy uncertainty, which may affect the labor market and inflation. In discussions with the media, Bostic stressed that Fed officials are facing questions about the policy intentions of the new Trump administration. Earlier this week, he said that some Trump policies may push up inflation, while others may promote investment. He is willing to keep a wait-and-see attitude and wait for the further development of the economic situation. A theme of Bostic's latest speech is high uncertainty: At present, there are still great uncertainties in the direction of many important factors, and trade, immigration, energy and fiscal policies may change. It is very likely that the economic outlook in six months will be different from my forecast today. The high degree of uncertainty worries the enterprises in his area: Some business contacts are optimistic about potential changes in tax and regulatory policies, but they are also worried about changes in trade and immigration policies. In short, business contacts worry that tariffs may push up costs. Many executives believe that they can pass on the tariff costs to consumers. Some enterprises are also worried that the large-scale repatriation of immigrants may reduce their labor supply, especially in the construction, leisure and hotel industries. "Our contacts told us that a sudden drop in the number of workers may bring unpredictable interruptions, even those employers who usually do not hire a large number of immigrants may be affected." This year, the voting Committee emphasized the risk of inflation. This year, Musalem, the voting committee and president of the Federal Reserve Bank of St. Louis, said that monetary policy should remain "moderately restrictive" until inflation clearly moves towards the Fed's 2% target. He also pointed out that the risk that inflation improvement may stagnate or even reverse is rising. Musalem stressed that his basic expectation is that the labor market is strong and inflation will continue to move closer to 2%. However, he pointed out that the upcoming changes in government policies may have a major impact on the economic trend: The benchmark scenario requires monetary policy to remain moderately restrictive until the return of inflation is guaranteed. At that time, the policy interest rate can be gradually lowered to a neutral level with the progress of inflation. In the baseline scenario, the risk of inflation stagnating above 2% or rising further seems to be upward. Compared with the sharp weakening of the labor market, the risk of stagnant inflation is greater. Musalem said he wanted to see a "sustained" decline in inflation. From the data alone, the recent inflation report shows that more efforts are needed to achieve price stability. At the same time, for the recently released non-agricultural data, Musalem called the labor market "stable" and pointed out that the prospect of sustained economic growth looks good. Musalem pointed out on Thursday that various changes in trade, immigration, supervision, fiscal and energy policies, or other changes in the economic environment may have a major impact on the economic path. However, his basic expectation is that the net impact of all these policy changes on inflation and employment will be small in the short to medium term. Chicago Fed President Worried about Tariff Impact on Inflation Goolsbee, the ultra-dove official within the Federal Reserve and chairman of the Chicago Federal Reserve, said on Thursday that he did not expect PCE, the inflation indicator favored by the Federal Reserve, to be as "alarming" as the previously released consumer price index CPI. Goolsbee admits that the latest published CPI data is too high and not ideal, and PCE data may still not be very good, but it will not be as worrying as CPI data. Goolsbee pointed out that despite the uncertainty, the United States has made significant progress in cooling inflation from the 40-year high in 2022. However, he also said that economic uncertainty and the tariff policy being adjusted by the Trump administration may have an impact. "Before we consider the uncertainties caused by policies, geopolitics and other factors, the overall inflation situation seems quite good to me." However, Goolsbee also mentioned that he is somewhat worried that large-scale tariffs may trigger a major supply shock, which will aggravate inflation, just like what happened during the epidemic. He pointed out: The tariff policies implemented by Trump during his first term did not have a significant impact on inflation, partly because of the narrow coverage of these tariffs and sufficient exemption clauses, so the supply chain was not seriously affected. However, for the broader and higher-level tariff policy that Trump is currently formulating, the key lies in how many countries these tariffs will apply to and how large they are. If this is more like an impact during an epidemic, then we should really be worried about it. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-02-21 -
View details"New Fed News Agency": The Fed said that it may be appropriate to consider suspending or slowing QT until the debt ceiling is resolved.
Nick Timiraos, the "New Federal Reserve News Agency", said that the minutes of the Fed's January meeting showed that officials discussed whether to slow down or suspend the reduction of its nearly $6.8 trillion asset portfolio at last month's meeting, because in the coming months, they were faced with complicated problems brought about by raising the federal debt ceiling. Timiraos pointed out that market dynamics related to the debt ceiling may lead to large fluctuations in the reserves of the Fed's debt side. Reserve is the bank's deposit with the Federal Reserve. Since mid-2022, the Federal Reserve has been shrinking its balance sheet to reverse the loose monetary policy QE during the COVID-19 epidemic. The process of shrinking the table will eventually exhaust the reserves of the banking system, and Fed officials are not sure how long this process will last. The management of its cash balance by the U.S. Treasury may trigger violent fluctuations in the money market, which will make the Fed face greater challenges in determining the appropriate reserve level. Therefore, according to the minutes of the January 28-29 meeting released on Wednesday, Fed officials believe that "it may be appropriate to consider suspending or slowing down the reduction of the balance sheet until the debt ceiling problem is resolved". Timiraos said that Fed officials will eventually stop reducing their positions in US Treasury bonds, when they need to buy new treasury bonds to replace maturing debts. According to the minutes of the meeting, at the meeting last month, officials expressed their support for adjusting the bond purchase strategy to make the maturity structure of the US Treasury bonds held by the Federal Reserve closer to the maturity distribution of the overall US debt in the market. The Timiraos article also stated that the minutes of the Fed meeting showed that the willingness to cut interest rates in the short term was not strong, and officials were generally satisfied with the decision to keep interest rates unchanged at last month's meeting, and did not give any indication that they would immediately change their wait-and-see stance on interest rate cuts. Officials pointed out that trade policy is a factor that hinders the inflation process. According to Bloomberg analysis, the most noteworthy content in the minutes of this meeting may be the discussion on further slowing down or even suspending the balance sheet reduction (QT). Bloomberg pointed out that considering that the debt ceiling problem has not been solved, this process may seriously disturb the reserve level of the banking system. Specifically: As the U.S. Treasury depletes funds from the General Account (TGA) of the Treasury, the bank reserves may rise sharply; When the Ministry of Finance re-accumulates cash reserves, bank reserves may drop rapidly. In this context, keeping the size of the Fed's balance sheet unchanged may help to alleviate the liquidity pressure caused by the sudden drop of the reserve level to only "sufficient" range. Bloomberg also mentioned that on the economic front, the minutes of this meeting did not provide much new information. However, it is worth noting that some enterprises have reported that if the government implements the new tariff policy, they will try to pass on the costs to consumers. This means that in the short term, it may push up prices, and then depress real income. Bloomberg concluded that overall, the minutes of the meeting did not change the market's expectations for the direction of the Fed's policies. At present, the Fed is firmly in a "wait-and-see" mode, waiting for more evidence to assess the impact of Trump administration policies. After the minutes of the Fed meeting were released, the yield of US two-year treasury bonds fell to about 4 basis points, and the refresh date was as low as 4.2676%. The yield of 10-year US bonds fell by more than 2 basis points in the short term, and also fell to 4.5268%, a record low. According to Bloomberg analysis, the decline in long-term US bond yields may be more driven by the expectation of loosening the supervision of potential supplementary leverage ratio (SLR), and has little to do with the possible adjustment of interest rate policy or the Fed's balance sheet. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-02-20 -
View detailsBuy stocks globally! Institutional risk appetite has not been so high in the past 15 years.
Investors are now' long positions in stocks and short positions in everything else'. Recently, the Bank of America survey shows that at present, stocks have become the favorite asset class of global investors, and investors' risk appetite has reached the highest level since 2010. According to the survey, the cash level of fund managers has fallen to the lowest point in 15 years. 34% of the participants expect that the global stock market will become the best performing asset in 2025, and 11% of the participants said that they have insufficient positions in bonds. Bank of America strategist Michael Hartnett wrote in a report: "Investors are now' long positions in stocks and short positions in everything else'. Behind this optimism is the expectation of strong economic growth this year and the downward adjustment of US interest rates." Since the end of 2022, global stocks have risen by more than 60%, driven by the rapid development of AI and the optimism that the United States has avoided economic recession. However, analysts pointed out that this increase was mainly driven by American technology stocks, but investors are now flocking to cheaper European stocks. It is expected that the European Stoxx Index will outperform the US Nasdaq 100 Index this year. In addition, the survey also shows that investors' expectations of the global economic recession have dropped to the lowest point in three years, and about 77% of fund managers expect the Federal Reserve to cut interest rates in 2025. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-02-19 -
View detailsStrong demand from the central bank, Goldman Sachs raised the target price of gold, with a sword of $3,100!
There has been a sharp correction in the price of gold these days. However, Wall Street's bullish sentiment towards gold is still strong, and Goldman Sachs has even raised its year-end target price for gold from the original $3,000 to $3,100 per ounce. Goldman Sachs analysts Lina Thomas and Daan Struyven pointed out in their latest report that strong central bank demand and gold ETF capital inflows supported their expectations. In fact, since the beginning of this year, the price of gold has hit a new high for seven consecutive weeks, continuing the upward trend of last year. Goldman Sachs pointed out that the continuous rise in gold prices is mainly driven by three factors: the increase in demand for gold purchases by the central bank, the continuous interest rate cuts by the Federal Reserve, and the recent increase in investors' concerns about US President Trump's destructive tariff policy. Goldman Sachs predicts that the average monthly purchase of gold by the central bank may reach 50 tons, far exceeding previous expectations. And: "If the uncertainty of economic policies, including tariff policies, persists, the increase in speculative positions may push the price of gold to soar to $3,300 per ounce." This level means that the price of gold will increase by 26% during the year. In addition, it is estimated that in December 2024 alone, global central banks bought 108 tons of gold. Analysts believe that inflation concerns and rising financial risks may push central banks around the world to buy more gold, especially those holding a large amount of US Treasury bonds. In addition to the central bank's demand, Goldman Sachs also expects that the Fed's two interest rate cuts will "gradually increase" the gold ETF positions. However, the price of gold has recently adjusted back. Up to now, the spot price of gold has hovered around $2,913 per ounce, having exceeded $2,942 in the previous week, setting a record high, but Goldman Sachs is still firmly bullish.
2025-02-18 -
View detailsThe intervention started? Trump's chief economic adviser will meet with Powell regularly.
As the inflationary pressure in the United States continues, the relationship between the Trump administration and the Federal Reserve has once again become the focus. On Sunday, local time, Kevin Hassett, director of the White House National Economic Council, revealed in an interview that he will meet with Federal Reserve Chairman Powell regularly to discuss the US economic situation and provide a channel for the President to convey his opinions. This practice has raised concerns about the independence of the Federal Reserve. Hassett said that this practice is to restore the practice of Trump's first term and will not infringe on the independence of the Fed. He stressed: Powell is an independent man, and the independence of the Federal Reserve is respected. The point is that the president's opinion should also be heard. We will discuss our views on the current situation and listen to his opinions. The relationship between the Trump administration and the Federal Reserve is in a delicate balance. Regular meetings provide communication channels for both sides, but under the pressure of inflation and policy differences, potential conflicts still exist. With the CPI exceeding expectations in January, the differences between the Trump administration and the Federal Reserve may intensify. Nouriel Roubini, a famous economist, warned that even if the Fed only postponed the interest rate cut, it might have a "head-on conflict" with Trump. Trump recently once again called on the Federal Reserve to cut interest rates, believing that this would be in line with its tariff policy. However, Powell reiterated at a congressional hearing last week that the Fed is in no hurry to cut interest rates and will maintain a restrictive policy stance. Wall Street is skeptical about Trump's policy agenda. Roubini warned that the policies proposed by the Trump administration, including tariffs, may aggravate the current inflationary pressure. Mark Zandi, chief economist of Moody's analysis, also warned that consumers will "bear the burden". David Kostin, chief US equity strategist at Goldman Sachs, said that tariffs are a key downside risk to the earnings growth of US stocks. It is predicted that every 5% increase in the US tariff rate will reduce the profit forecast of the S&P 500 index by about 1% to 2% in 2025. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-02-17 -
View detailsUBS gave a benchmarking list: Cambrian vs. NVIDIA, Xiaomi vs. Tesla, SMIC vs. TSMC ...
CAMBRIAN and NVIDIA "played tricks", Xiaomi and Ideal Benchmarking Tesla, SMIC and TSMC "beat" ... UBS gave a benchmarking list of Chinese and American technology stocks in the latest research report. With the release of R1 model of DeepSeek, the development of AI in China has once again become the focus of investors' attention. According to the report of James Wang team of UBS on 12th, since the beginning of the year, AI-related China listed stocks have risen by 15% on average, outperforming MSCI China Index by 9%. Considering the current abundant liquidity and low interest rate, UBS believes that there are opportunities for valuation revaluation of AI-related stocks. UBS said that the valuation of Cambrian was three times higher than that of NVIDIA, Xiaomi and Ideal were 80% and 90% lower than Tesla respectively, and SMIC was 15% lower than TSMC. The report also mentioned that the development of the AI industry usually promotes the valuation of related stocks. In the past 4G, 5G and cloud computing times, the performance of related stocks was better than the market by 50% to 100%, and this rebound usually lasted for one to two years. UBS believes that the current AI-related market rebound may not be more than half, especially for software stocks, and there is still much room for valuation improvement in the future. AI enterprise benchmarking: the competitiveness of China enterprises In this report, UBS listed a series of benchmarks of AI-related enterprises in detail, and made a valuation comparison. This list covers hardware, software, Internet, automobiles and other fields, and some of the comparisons are particularly striking: CAMBRIAN: As a leading AI chip manufacturer in China, CAMBRIAN has been compared with NVIDIA in UBS's benchmarking list. The valuation of Cambrian is 312% higher than that of NVIDIA. Xiaomi: Xiaomi is developing rapidly in the fields of intelligent hardware and AI. In UBS's list, Xiaomi is compared with Tesla. Although Xiaomi's valuation is 80% lower than Tesla's, its potential in intelligent hardware and AI ecology should not be underestimated. LI: As one of the representatives of new energy vehicles in China, LI is in comparison with Tesla. LI's valuation is 90% lower than Tesla's, which shows the market's expectation for its future development. SMIC: SMIC is on the list of UBS against TSMC. The valuation of SMIC is 15% lower than that of TSMC, and its status and technological progress have become an important force in the field of AI chip manufacturing. The detailed chart is as follows: Source: UBS, the sinicization of Wall Street. The outlet of a new wave of science and technology The report pointed out that although AI accounts for a limited proportion of most companies' revenue, the rapid development and application of AI technology will promote the valuation of related companies. UBS believes that infrastructure providers (such as IDC and hardware manufacturers) will gain revenue from AI applications at the earliest, because AI users (such as cloud service providers) are eager to build an ecosystem, even at the expense of profitability. UBS is optimistic about software stocks and believes that it is expected to usher in a significant revaluation in the next few years: "According to the experience of 2019-2020 (cloud computing) and 2023 (AI), the valuation revaluation of software companies is the most significant, and the P/S ratio has increased by 4-14 times during the period. Compared with the broader market, the current trading price of software stocks is still 53% lower than the peak in early 2021 and 38% lower than the peak in 2023. " In addition, UBS also mentioned that the development of AI technology will promote changes in many industries, including the Internet, finance, medical care, automobiles and other fields. For example, AI technology will help Internet companies optimize advertising technology and enhance the user experience; Financial institutions will reduce costs and improve efficiency through AI technology; The medical industry will use AI technology to accelerate drug research and development and improve diagnostic accuracy. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.
2025-02-14