Breakfast | The China Concept Index fell over 2%, Alibaba fell over 7%, JD.com fell nearly 4%

Market Overview

U.S. economic data boosts interest rate cut expectations, with the S&P rising for four consecutive days. Meta delays the release of its AI model, dragging down the Nasdaq, which ends a six-day winning streak. Meta falls over 2%, marking the first decline this week for Nvidia and Tesla. UnitedHealth experiences another significant drop, falling nearly 11%. The China concept index declines over 2%, with Alibaba dropping over 7% and JD.com nearly 4%.

The yield on the 10-year U.S. Treasury bond plummets more than 10 basis points during the session, briefly spiking after Powell's speech. Following U.S. retail data, the dollar index approaches a recent low.

Gold rises nearly 2% after hitting a one-month low. Tensions in the Middle East ease, with U.S. oil briefly dropping over 4%.

During the Asian session, A-shares collectively decline, with the ChiNext index falling nearly 2%. Rare earths and gold show divergence, while the Hang Seng Tech Index drops over 1%, with tech stocks broadly declining.

Macroeconomic Information

Tariffs Impact, U.S. April PPI and Retail Data Weak

The U.S. April PPI rose 2.4% year-on-year, below expectations, and fell 0.5% month-on-month, marking the largest decline in five years. The unexpected significant drop of 0.5% in April PPI is primarily due to declining corporate profit margins. This indicates that companies are absorbing some of the tariff impacts rather than passing all costs onto consumers.

U.S. retail sales in April slightly exceeded expectations with a month-on-month increase of 0.1%, revealing signs of weak consumer spending. Retail sales in April showed almost no growth, indicating that consumers have begun to cut back on spending in the face of rising prices and concerns over tariffs. Among the 13 categories of goods covered in the report, sales in seven categories declined, with sports goods, gas stations, and clothing being the most affected.

Federal Reserve Chairman Powell: Need to Reconsider Employment and Inflation Strategies in Current Monetary Policy

Federal Reserve Chairman Powell stated on Thursday that, given the inflation experiences of the past few years and the potential for more frequent supply shocks and related price increases in the coming years, Fed officials believe they need to reconsider key elements surrounding employment and inflation in the current monetary policy approach. "We may be entering a period where supply shocks are more frequent and possibly more persistent, which poses a difficult challenge for the economy and the Fed," Powell said during the opening remarks of a two-day meeting aimed at reassessing the monetary policy adopted by the Fed in 2020 when the economy was still affected by the pandemic.

Fed Governor Barr stated that the U.S. economic fundamentals are solid, and inflation is moving towards the Fed's 2% target, but trade policies cast a shadow over the outlook.

"Focus Development Strategy on Strengthening Domestic Circulation to Hedge Uncertainties in International Circulation"

Chinese Premier stated on Thursday at the "Strengthening Domestic Circulation Work Promotion Meeting" that it is essential to deeply understand and accurately grasp the current economic situation, placing the strategic focus of development on strengthening domestic circulation to hedge against uncertainties in international circulation with the inherent stability and long-term growth of domestic circulation.

Chip Export Related

Eight bipartisan U.S. lawmakers have proposed a bill requiring AI chip manufacturers like Nvidia to use technology to verify chip locations before exporting chips The Financial Times (FT) reported on Thursday, citing five informed sources, that the U.S. Department of Commerce is considering adding more Chinese companies, including Changxin Storage, to the "Entity List." The report stated that the Bureau of Industry and Security (BIS) has drafted a list that also includes subsidiaries of SMIC and Yangtze Memory Technologies.

Berkshire's Q1 Holdings Information Released

In Q1, significantly reduced bank stocks, completely sold Citigroup, unchanged Apple holdings, beer manufacturer holdings doubled, and there are confidential holdings.

The 13F filing shows that Berkshire Hathaway, led by Buffett, completely sold Citigroup and reduced its holdings in Bank of America and First Capital Financial. The largest purchase for the quarter was beer manufacturer Constellation Brands, with holdings increasing by over 113%. Berkshire also submitted a confidentiality request to the U.S. SEC, asking to withhold disclosure of one or more stock investments in the 13-F report. Analysts suggest that if the newly added confidential holding is only one stock, its investment scale is relatively small, estimated between $1 billion and $2 billion, and the new investment is likely part of Berkshire's so-called "commercial and industrial" stock investment portfolio.

European Central Bank: Trade Wars, High Debt, and Market Volatility are the Biggest Risks Facing the Eurozone

European Central Bank Vice President Luis de Guindos stated on Thursday while previewing the upcoming financial stability report that global trade wars, financial market volatility, and high debt levels are the three main risks facing the Eurozone economy. Despite the financial market turbulence caused by the U.S. imposing tariffs last month, the Eurozone economy appears to remain robust. However, given its heavy reliance on trade, the Eurozone still faces trade barriers that could hinder economic growth. The ECB's semi-annual financial stability report will be released on May 21, and de Guindos noted that the report will also focus on how global turmoil since President Trump's inauguration may have harmed the Eurozone, which consists of 20 countries.

Company Information

Alibaba Falls 7.5%, Performance Below Expectations

Alibaba's Q4 revenue grew 7% year-on-year, below expectations, with Alibaba Cloud accelerating growth at 18%, and AI revenue experiencing triple-digit growth for seven consecutive quarters; conference call: Cloud business growth is mainly driven by AI demand, and it will remain in an upward trend for the next few quarters, converting more Taobao users into instant retail users.

Alibaba's fourth-quarter revenue was 236.45 billion yuan, a year-on-year increase of 7%. Among them, Taotian's revenue grew by 9% year-on-year, and the number of 88VIP members continued to grow at double digits. Alibaba Cloud's quarterly revenue achieved the fastest growth in three years, with AI revenue experiencing triple-digit growth for seven consecutive quarters. Local life revenue grew by 10% year-on-year, while Cainiao's revenue declined by 12%.

During the conference call, Alibaba stated that the revenue growth rate of Alibaba Cloud will remain in an upward trend for the next few quarters, and the explosion of inference demand has not yet fully reflected in this financial report, with customer demand driven by inference continuing to rise steadily. The focus of instant retail is to convert more Taobao users into instant retail users and then upgrade the business model. In addition, the overall push + software service fees will provide a considerable amount of time for incremental growth.

UnitedHealth Continues to Plummet, Closing Down 10.93% As of now, the stock has fallen for 8 consecutive trading days, with a cumulative decline of 32.2%. So far this year, the stock has dropped over 45%, making it the worst-performing component of the Dow Jones Industrial Average during the same period.

According to reports, the U.S. Department of Justice has begun a criminal investigation into UnitedHealth Group due to potential Medicare fraud. A spokesperson for UnitedHealth later stated that they had not yet received any notification from the Department of Justice regarding the "rumored" investigation. Since the stock price hit an all-time high last November, the market value of this healthcare group has shrunk by more than half, exceeding $300 billion.

Coinbase fell 7.2%

On Thursday, media confirmed that the U.S. Securities and Exchange Commission (SEC) has been investigating whether Coinbase, the cryptocurrency exchange, inflated its user numbers.

Reports indicate that the SEC's investigation focuses on the number of "verified users" reported by the company, which claims to have over 100 million users in various securities filings and marketing materials. This news led to a drop in the company's stock price. The investigation began during the Biden administration, which is known for its hostility towards the cryptocurrency industry, and has continued under the leadership of the SEC, which was more favorable to cryptocurrencies during the Trump administration.

Coinbase's Chief Legal Officer Paul Grewal stated, "This is a delayed investigation into a metric that the previous administration stopped reporting two and a half years ago, which has been fully disclosed to the public. We explained that the verified user metric includes everyone who has verified their email address or phone number with us, so it may exaggerate the number of unique users."

Netflix rose 2.3%

On Wednesday, Netflix announced that its lower-priced, ad-supported subscription plan currently has 94 million monthly active users, an increase of over 20 million since the public data was released last November. The ad-supported subscription plan costs $7.99 per month, significantly lower than its cheapest ad-free subscription plan, which costs $17.99 per month