Breakfast | May 23, 2025

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Market Overview

As Trump's tax bill was submitted to the Senate after being approved by the House of Representatives, investors struggled to cope with rising interest rates and concerns about inflation in the United States. The sell-off in U.S. Treasuries paused, and the benchmark U.S. stock indices rebounded across the board during intraday trading, but closed mixed.

Apple fell for seven consecutive days, the only one among the seven tech giants to decline, while Tesla rebounded nearly 2%. The tax law eliminated important clean energy tax credits, leading to a plunge in the photovoltaic sector, with Sunrun down 37%. Fannie Mae rose over 50%. Nuclear power stock Oklo surged over 10% in after-hours trading. XPeng fell nearly 8%.

After the House of Representatives passed the tax cut bill, U.S. Treasury yields briefly rebounded, and yields generally continued to decline after the U.S. market opened.

Bitcoin approached $112,000 for the first time in history during intraday trading, setting a new record.

Crude oil fell over 2%, marking a third consecutive decline. Gold, after reaching a nearly two-week high, turned to decline by over 1%.

During the Asian session, the ChiNext index fell nearly 1%, the Beijing Stock Exchange 50 dropped over 6%, while banks strengthened against the trend. The Hang Seng Index fell 1.7%, and Baidu dropped over 4%.

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Important News

By a narrow margin, Trump's tax cut bill passed the House of Representatives but still faces challenges in the Senate. Federal Reserve Governor Waller: The tax cut bill triggered a sell-off in U.S. Treasuries, and if tariffs stabilize, there will be rate cuts in the second half of the year.

The U.S. suspended Harvard University's eligibility to enroll international students, and foreign students currently enrolled must transfer "or risk losing their legal status."

U.S. May Markit Manufacturing and Services PMI both exceeded expectations and expanded, with the price index rising again. Eurozone May PMI unexpectedly contracted, with the services sector posting its worst performance in 16 months.

White House Chief Economic Advisor: The dollar policy remains unchanged, still adhering to a "strong dollar" stance. U.S. and Japanese finance ministers stated after their meeting: The U.S. side "did not discuss exchange rates," and the current exchange rate reflects the fundamentals, while the Japanese side "did not discuss U.S. Treasuries." LV's boss rarely "criticized" the European Union: The negotiations "started off poorly," suggesting they should learn from the UK and make necessary concessions.

OPEC+ is discussing a significant increase in production in July, with Saudi Arabia taking action to punish "quota traitors."

Xiaomi press conference: self-developed Xuanjie O1 chip debuts, aiming to compete with Apple, YU 7 to launch in July, priced at 199,000 is impossible! Lei Jun: Xiaomi's investment in Xuanjie R&D ranks among the top three in the industry, with project goals of "latest technology," "flagship level," and "first tier."

Historic moment: BYD's sales in Europe surpass Tesla for the first time, with April sales soaring by 169%.

"The world's strongest programming model" is here! Anthropic releases Claude 4, performing stably for seven hours straight.

OpenAI announces the construction of the world's largest AI data center in Abu Dhabi, and is considering expansion to the Asia-Pacific region.

Kunlun Wanwei hits the daily limit up of 20cm, launches Tiangong Super Intelligence, with Deep Research capabilities ranked first globally, surpassing OpenAI and Manus.

Market Report

US and European stock markets: The Dow closed flat, the S&P 500 index fell by 0.04%, and the Nasdaq rose by 0.28%. The European STOXX 600 index closed down by 0.64%.

A-shares: The Shanghai Composite Index fell by 0.22%, the Shenzhen Component Index fell by 0.72%, and the ChiNext Index fell by 0.96%.

Bond market: The yield on the US 10-year benchmark Treasury bond fell by 7.38 basis points, refreshing the daily low to 4.5247%. The yield on the 2-year US Treasury bond fell by 2.94 basis points, reporting at 3.99%.

Commodities: WTI July crude oil futures fell by 0.60%, reporting at $61.20 per barrel. Brent July crude oil futures fell by 0.72%, reporting at $64.44 per barrel. COMEX gold futures fell by 0.57%, reporting at $3,294.30 per ounce.

News Details

Global Highlights

By a narrow margin, Trump's tax cut bill narrowly passed in the House, but faces challenges in the Senate. The House passed the bill with a vote of 215 in favor and 214 against. The over-thousand-page tax cut bill underwent dozens of amendments two days before the House vote, highlighting the difficulty for Republican leaders to unite the various factions within the party. Several Republican senators have indicated they will demand significant changes to the bill before approving it. Democrats warn that voting in favor of the bill will cost many Republicans their seats in the midterm elections.

Federal Reserve Governor Waller: The tax cut bill has triggered a sell-off in US Treasuries, and if tariffs stabilize, interest rates may be cut in the second half of the year. Federal Reserve Governor Waller stated that the Fed will not purchase bonds in primary auctions. If the Trump administration's tariff policy stabilizes around 10%, the Fed may cut interest rates in the second half of 2025U.S. Treasury yields are nearing highs, and investors are once again flocking to gold and Bitcoin, the market is warning about Trump's tax cut plan. After the "death to Trump" in April, is the market about to play it out again? Just like last month's tariff issue, the market is trying to figure out what levels of bond yields and the S&P 500 index are needed for Trump to correct fiscal policy.

• Deutsche Bank warns: This time even Fed QE won't save it! Fed QE intervention is a temporary fix, and there are only two "solutions" to this problem, either Congress acts to tighten fiscal policy or let U.S. Treasuries depreciate. Additionally, Deutsche Bank stated that the resilience of U.S. stocks will also be tested, and the behavior of Asian investors will become a key barometer, so close attention should be paid to the movements of U.S. Treasuries and the dollar during Asian trading hours.
• The best market indicator for measuring U.S. fiscal risk. Deutsche Bank pointed out that in the context of rising U.S. yields, the yen is unusually strengthening, which is clear evidence of reduced foreign participation in the U.S. Treasury market and has become the most important market indicator of accelerating U.S. fiscal risk.

With 30-year Japanese bonds dropping like this, will it drag down 30-year U.S. bonds as well? Analysts indicate that structural supply-demand imbalances have led Japanese bonds into a "value trap," and the yield on Japanese bonds after currency hedging still has appeal, which may lead to a further steepening of the U.S. Treasury yield curve. Furthermore, the collapse of Japanese bonds may be a warning signal of structural problems in the global bond market, which faces a common triple pressure: persistent inflationary pressure, declining demand from ALM investors, and high government financing needs.

The U.S. has suspended Harvard University's eligibility to enroll international students, and foreign students currently enrolled must transfer "or risk losing their legal status." U.S. Secretary of Homeland Security Noem stated that the order regarding Harvard University affects up to 27% of enrolled students. According to CCTV News, Noem also mentioned in an interview with Fox News that similar measures are being considered at other universities.

• Analysts say that this decision by the Trump administration is the latest significant blow to Harvard University after the U.S. government froze billions of dollars in federal funds. This marks a further escalation of the confrontation between the Trump administration and elite U.S. universities, pushing the conflict to unprecedented heights.

In May, U.S. Markit Manufacturing and Services PMIs both exceeded expectations and expanded, with the price index rising again. Driven by new orders, the preliminary Markit Manufacturing PMI for May was 52.3, a three-month high, compared to expectations of 49.9 and a previous value of 50.2; the preliminary Services PMI was 52.3, a two-month high, compared to expectations of 51 and a previous value of 50.8; the Composite PMI was 52.1, compared to expectations of 50.3 and a previous value of 50.6.

The Eurozone's May PMI unexpectedly contracted, with services showing the worst performance in 16 months. The Eurozone's Composite PMI fell from 50.4 in April to 49.5 in May, with services performance hitting the worst level in 16 months, while a slight improvement in manufacturing was offset by the decline in services. Economic activity in France has contracted for nine consecutive months, and both German and French service activities have seen declinesWhite House Chief Economic Advisor: Dollar policy unchanged, still insists on a "strong dollar" stance. Stephen Miller, Chairman of the White House Council of Economic Advisers, stated on Thursday that the U.S. continues to uphold the "strong dollar" policy, refuting speculation about a potential shift towards a "weak dollar" or secret monetary agreements. Following this statement, the dollar index rose sharply, increasing by 0.5% to 100.1216.

After the U.S.-Japan finance ministers' meeting: The U.S. side "did not discuss exchange rates, the current exchange rate reflects fundamentals," the Japanese side "did not discuss U.S. Treasuries." The finance ministers of the U.S. and Japan stated that there was "no discussion of foreign exchange levels" during the meeting, and that exchange rates should be determined by the market, with the current dollar-yen exchange rate reflecting fundamentals. As a result of this news, the yen weakened. The Japanese side also denied discussing U.S. Treasuries, likely aiming to alleviate market concerns about Japan potentially reducing its holdings of U.S. debt.

LV boss rarely "criticizes" the EU: Negotiations "started too poorly," learn from the UK, concessions should be made. "Negotiations must proceed in a constructive manner, requiring mutual concessions from both sides. Look at how the British did it; they negotiated very well." The LV boss openly criticized the EU's negotiations with the U.S. as being poor and urged the EU to engage in "constructive" negotiations.

OPEC+ discusses significant production increase in July, Saudi Arabia takes action against "quota traitors." Reports indicate that OPEC+ plans to significantly increase production by 411,000 barrels per day in July, marking the third consecutive month of production increases, aimed at pressuring member countries that exceed their quotas. Brent crude briefly fell to $63.92 per barrel, with a daily decline of 1.5%.

Xiaomi press conference: Self-developed Xuanjie O1 chip debuts, chips to benchmark against Apple, YU 7 to launch in July, pricing at 199,000 impossible! Key points from the conference include: Xiaomi's self-developed 3nm Xuanjie O1 chip, ranking in the top tier for performance; Xiaomi's first SUV, Yu7, positioned as a luxury high-performance SUV, with an auxiliary driving chip computing power of 700 TOPS, and laser radar standard across the lineup. Regarding pricing, Lei Jun stated that 199,000 is impossible, and for configurations comparable to Model Y, selling for around 300,000 is more realistic.

• Lei Jun: Xiaomi's Xuanjie R&D investment ranks among the top three in the industry, project goals are "latest technology," "flagship level," "top tier." Lei Jun posted on Weibo that as of the end of April this year, the cumulative R&D investment in Xuanjie has exceeded 13.5 billion RMB. From the outset, Xuanjie set high goals: "the latest process technology, flagship-level transistor scale, top-tier performance and energy efficiency."

Morgan Stanley: Regarding Tesla, this is the most important statement from Musk, related to Xiaomi YU 7. The Xiaomi YU7 looks like a Ferrari or Aston Martin SUV, but is priced similarly to a Toyota Camry. Perhaps it's worth considering whether Tesla is truly suited to launch more electric vehicles with steering wheelsHistoric Moment: BYD's European Sales Surpass Tesla for the First Time, with April Sales Soaring 169%! In the European market, BYD's registered sales for the month reached 7,231 vehicles, a year-on-year increase of 169%. If plug-in hybrid models are included, total sales skyrocketed by 359%. Against the backdrop of a 28% overall growth in the European electric vehicle market, Tesla's sales plummeted by 49%. Analysts say this marks a watershed moment in the European electric vehicle market.

"The World's Strongest Programming Model" is Here! Anthropic Releases Claude 4, Stable Performance for Seven Continuous Hours. Anthropic claims that as the world's best programming model, Claude Opus 4 can maintain stable performance in long-duration tasks requiring focused effort and thousands of steps, with e-commerce giant Rakuten verifying its ability to work continuously for seven hours; in the SWE-bench evaluation, Claude Sonnet 4 achieved an accuracy of 72.7%, significantly up from Sonnet 3.7's 62.3%; Claude Code is officially launched, supported by two Claude 4 models.

OpenAI Announces the Construction of the World's Largest AI Data Center in Abu Dhabi, Considering Expansion to the Asia-Pacific Region. The total capacity of the AI data center reaches 5GW, covering approximately 10 square miles, with an energy consumption equivalent to five nuclear power plants. This project is a significant overseas expansion of OpenAI's "Interstellar Gateway" global infrastructure plan, jointly developed by OpenAI and UAE AI company G42, which has also committed to an equivalent investment in U.S. AI infrastructure.

Kunlun Wanwei Hits the 20cm Limit, Launches Tiangong Super Intelligence, Deep Research Capability Ranked First Globally, Surpassing OpenAI and Manus. Tiangong Super Intelligence focuses on "AI Version Office." It has built a vertical professional system consisting of "5 Expert Intelligence Agents" + "1 General Intelligence Agent." The expert intelligence agents specialize in generating professional documents, PPTs, spreadsheets, podcasts, and web pages, while the general intelligence agent connects to dozens of MCPs and can handle multimodal creative tasks. Tiangong can provide deep research capabilities comparable to OpenAI, but at only 40% of the latter's cost. Just three hours after its release, Kunlun Wanwei announced it would implement usage limits due to excessive demand.

Domestic Companies

Even Beckham is on board, Labubu is Going Crazy Worldwide! Driving Pop Mart's Sales in Europe and America Soaring in April, TikTok Followers Up 68%. LABUBU 3.0 is a sensation among European and American celebrities and KOLs, with Pop Mart's TikTok followers in the U.S. increasing by 68% in April, ranking first in sales on TikTok. Sales in the U.S. and European markets in April grew approximately 8 times and 5 times year-on-year, respectively, with scenes of long queues at major overseas storesHumanoid robots will be mass-produced in 2026! Morgan Stanley exclaimed: XPeng's imaginative space has opened up, and other car companies are the same. Morgan Stanley pointed out that XPeng has laid a solid foundation in the field of AI smart cars, with 70% of its AI technology being shareable, such as the large models for autonomous driving, Turing AI chips, and algorithm simulation platforms, which can be directly transferred from automotive applications to humanoid robots. Coupled with the synergy of data, energy, algorithms, and manufacturing, XPeng has a natural advantage of "from car to human."

Lenovo's Q4 net profit fell by 64% year-on-year, while revenue grew by 23% under the "order front-loading" effect. Lenovo's Q4 net profit saw its first decline after five consecutive quarters of growth, plummeting by 64%. The smart devices division's revenue grew by 13%, but analysts believe this is partly due to consumers placing orders in advance to cope with tariffs.

Overseas Macro

G7 finance ministers issued a joint communiqué: productive exchanges took place, reaching multiple consensus. The communiqué stated that the parties involved had productive and candid exchanges of views on the current global economic and financial situation, the common risks and opportunities faced by various countries, and response measures.

JP Morgan's Jamie Dimon: The U.S. still faces stagflation risks, and the Fed's decision not to cut interest rates is correct. The head of the largest bank in the U.S. stated that the U.S. economy is far from being in "optimal condition," with geopolitical issues, fiscal deficits, and inflationary pressures posing significant threats, making the decision not to cut rates the right one. Ray Dalio also warned that the Fed is in a difficult position and should not cut rates.

U.S. April existing home sales hit the worst level for the same period since 2009, with inventory surging year-on-year and home prices reaching new highs. The U.S. April existing home market unexpectedly cooled, with transaction volume declining by 0.5% month-on-month, resulting in an annualized sales volume of only 4 million units, the worst April since 2009. Although the number of listings surged by 21% year-on-year, the high mortgage rate of 6.92% continues to suppress buyer demand, leading the National Association of Realtors (NAR) to lower its forecast for annual existing home sales.

European Central Bank: The April rate cut was actually a "preemptive action for June," with inflation close to target but tariff concerns still present. Some European Central Bank officials believe that the reduction in borrowing costs in April was essentially a "preemption" of the rate cut originally scheduled for June. Eurozone inflation is "nearing its end," but trade tensions may suppress prices in the short term. The market expects a 90% probability of a rate cut by the European Central Bank next month, with another rate cut anticipated later this year.

Overseas Companies

Report: Apple, Tesla, and NVIDIA stocks will be traded in token form on the Kraken trading platform. Kraken plans to launch tokenized versions of over 50 stocks and ETFs, allowing non-U.S. customers to trade. This new initiative will start in the coming weeks. These tokens can be traded around the clock—even during U.S. market closures. Kraken stated that these tokenized stocks provide international investors with a cheaper and more convenient way to enter the U.S. stock marketJP Morgan praises Google: AI technology is leading, far surpassing previous innovation speed, "AI reshaping search" has taken shape, and monetization has also been considered. JP Morgan pointed out that Google is releasing products at an unprecedented speed, and its full-stack AI strategy gives its foundational models advantages in efficiency and cost. The AI Mode of Google's search engine is the "biggest revolution since the invention of search engines." In addition, Google plans to commercialize AI technology through models like Gemini and Gemma.

Google's collaboration agreement with Character.AI is under scrutiny. The U.S. Department of Justice is investigating whether Google violated antitrust laws due to its collaboration agreement with chatbot company Character.AI. Currently, the U.S. Department of Justice is intensifying its antitrust review of Google. The U.S. government urges judges to prohibit Google from paying for default settings for search engines, which also includes AI products, and demands that law enforcement agencies have the authority to review any AI-related acquisitions by Google, even if the transactions do not meet the formal review threshold.

Apple plans to launch smart glasses in 2026 and has halted the development of camera-equipped smartwatches. Media reports indicate that Apple plans to launch smart glasses by the end of next year, competing with Meta's Ray-Ban smart glasses. However, the company has currently paused the development of smartwatches equipped with built-in cameras that can analyze the surrounding environment.

Microsoft CTO: AI has already reached "overcapacity," and the industry needs to work to narrow the gap between model capabilities and actual product delivery. "AI programming" is merely a change in software industry tools; when tools change, one must maintain an open mindset. Innovation in the AI era does not rely on creating a completely new infrastructure; the real way to innovate is to understand a specific user problem more deeply than anyone else and then fine-tune based on existing infrastructure to solve that problem at a world-class level. Next year, we may see AI agents executing more complex interactive solutions and engaging in "asynchronous interactions."

Goldman Sachs deep report: Nuclear power is entering a golden decade, and the uranium market is facing a structural shortage era! Analysis indicates that the nuclear power theme will continue to outperform the market in the 2030s and is likely to extend to 2040. Goldman Sachs' report shows that old mines are depleting, and new mines are delayed in production, leading to a severe shortage cycle in the global uranium market, while demand for nuclear power is surging in the AI era.

Industry/Concept

1. New Consumption: Huafu Securities pointed out that Generation Z is more focused on "new consumption" centered on personal pleasure, with important directions including IP trendy toys, pet supplies, gold jewelry, and beauty skincare.

2. Beer: Guosheng Securities research report pointed out that May marks the peak season for beer, and the sector's main logic is shifting from expectations to data verification. With an extremely low base in Q2-Q3 of 2024, improvements in weather, rising consumer confidence, and policy stimulus in 2025 are expected to drive positive sales growth, with both volume and price performance having opportunities to exceed expectations

3. Coal: Guotai Junan believes that coal will reach an upward turning point before the end of May. Coupled with the peak summer demand in June, the current price acceleration is expected to be the last drop before the peak season. Attention should be paid to thermal coal, coking coal, and dividends.

4. Dining: From the consumption range, the mainstream of the dining market remains low-end consumption with a unit price below 50 yuan. As of Q1 2025, the proportion of store numbers reached 70%, with further increases expected. Considering the intensified policies to boost domestic demand, terminal consumption in dining and supply chain demand are expected to recover subsequently. The second quarter will enter a low base period for performance, and the financial statements are expected to improve.

Today's News Preview

Japan's April CPI.

U.S. April new home sales.

Federal Reserve Governor Cook, St. Louis Fed President Bullard, and Kansas Fed President George will speak.

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Risk Warning and Disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk