Breakfast | Strong U.S. retail sales, S&P and Nasdaq hit record highs

Market Overview

Strong U.S. retail sales data and a decline in initial jobless claims last week led to a rise in both the dollar and U.S. stocks, with the S&P 500 and Nasdaq closing at new highs.

Taiwan Semiconductor reported better-than-expected earnings, with ADR rising 3.38%, closing at a historical high for three consecutive days. Netflix's stock dropped 2% after its earnings report.

The yield on the 2-year U.S. Treasury bond, sensitive to interest rates, briefly rose over 3 basis points. The dollar closed up 0.33%, recovering most of the previous day's losses.

Gold rebounded after a drop of over 1.1% during the session, but still closed down 0.28%. Oil prices initially fell before rising, with U.S. crude up nearly 2% from the day's low. After the U.S. Congress passed a stablecoin bill, cryptocurrency prices rose sharply.

During the Asian session, A-shares opened lower but rose throughout the day, with all three major indices closing up. The computing power industry chain surged, while Hong Kong stocks showed divergence, with pharmaceutical stocks soaring and commodities and government bonds rising together.

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Key News

The Trump administration is expected to visit the Federal Reserve in about a week regarding renovation issues, with Powell responding.

Potential Federal Reserve Chair candidate Waller: Trump's public pressure is correct; what we need least is for the Federal Reserve to continue as usual. The popular candidate for the next Federal Reserve Chair, Federal Reserve Governor Waller: The Federal Reserve should cut rates by 25 basis points in July.

Reports: The EU is drafting a tariff list for U.S. services, preparing for an escalation in the trade war. The U.S. and India agreement is "close to being reached," with India seeking more favorable tariffs than Indonesia. Japan's exports to the U.S. fell 11.4% in June, the largest decline since 2020.

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

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

The U.S. House of Representatives overwhelmingly passed three major cryptocurrency bills, with the White House stating that Trump will sign them on Friday.

Strong demand for AI chips led to Taiwan Semiconductor's Q2 net profit surging 61%, exceeding expectations, with projected sales growth of about 30% this year. At the Taiwan Semiconductor earnings call: Sales growth for the full year 2025 has been raised to around 30%, warning that Q3 may face greater exchange rate impacts.

A weak dollar helped Netflix have a "not-so-quiet" "off-season," with Q2 profits increasing over 40% to set a new record, raising its full-year guidance.

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

Market Closing Report

U.S. and European Stock Markets: The S&P 500 index rose 0.54%, closing at 6297.36 points. The Dow Jones increased by 0.52%, closing at 44484.49 points. The Nasdaq rose 0.74%, closing at 20884.27 points, continuing to set a new closing historical high. The European STOXX 600 index rose 0.96%, closing at 547.03 points.

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

Bond Market: The yield on the U.S. 10-year benchmark Treasury bond fell by 0.40 basis points, closing at 4.4513%. The yield on the 2-year U.S. Treasury bond rose by 1.28 basis points, closing at 3.9045%.

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

News Details

Global Highlights

The Trump administration is expected to visit the Federal Reserve in about a week regarding renovation issues, Powell responded. Russ Vought, Director of the Office of Management and Budget (OMB), stated that the $2.5 billion renovation project at the Federal Reserve headquarters is shocking, and the cost overruns have angered Trump. OMB officials hope to conduct an on-site visit to the Federal Reserve in about a week. Federal Reserve Chairman Powell responded that the renovation project and its funding arrangements have been strictly monitored by the Federal Reserve Board and its oversight bodies from the beginning.

• Potential Federal Reserve Chair candidate Walsh: Trump's public pressure is correct; what we need least is for the Federal Reserve to continue as usual. Walsh stated that the independence of the Federal Reserve is "crucial." However, under the leadership of current Chairman Powell, the Federal Reserve has ventured into policy areas beyond its authority. Walsh also believes that the Federal Reserve should not overly worry about the inflation rise that may result from Trump's tariffs.
• A popular candidate for the next Federal Reserve Chair, Fed Governor Waller: The Federal Reserve should cut rates by 25 basis points in July.
• JP Morgan: Don't worry too much about Powell, the independence of the Federal Reserve has always been a "myth", and under rate cut bets, U.S. stocks will continue to rise. JP Morgan stated that pressure on the Federal Reserve has been "conducted behind closed doors" for decades, not just a phenomenon of the Trump era. Whether Powell is fired is not important; what matters is that Powell's term is about to expire, the market will soon realize that he is effectively out and start pricing in the policies of the next chairRegardless of who the next chairman is, the influence of doves will continue to grow, and U.S. stocks may continue to rise under the expectation of interest rate cuts.

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

The U.S.-India agreement is "close to being reached," India wants more favorable tariffs than Indonesia. Informed officials revealed that India believes the U.S. will not view it as a transshipment hub like Vietnam and other Southeast Asian countries, and current negotiations indicate that India's tariff rates will be better than those of these countries. India hopes to reduce tariffs to below 10%. Analysts point out that the latest developments show that Trump's preferred level tends toward the 15%-20% range.

Negotiations are at a standstill, Japan's exports to the U.S. fell 11.4% in June, the largest decline since 2020. As U.S.-Japan negotiations have stalled, Japan's exports to the U.S. plummeted 11.4% in June, exceeding the 11% decline in May. The core drag comes from the automotive industry—under the pressure of a 25% tariff from the U.S., exports of cars to the U.S. fell by 26.7% year-on-year. Overall exports have declined for two consecutive months, increasing the risk of Japan sliding into a technical recession.

U.S. retail sales rose 0.6% month-on-month in June, exceeding expectations, reversing the decline of the previous two months. Although Trump's tariff policy has begun to take effect, U.S. consumers still seem to be spending actively. Retail sales in the U.S. rose 0.6% month-on-month in June, reversing the decline of the previous two months and exceeding most economists' expectations. After two months of decline, auto sales rebounded, becoming an important factor driving overall growth.

Foreign investors increased their holdings of U.S. Treasury bonds in May, with a surge in Canadian purchases. In May, the total amount of U.S. Treasury bonds held by foreign investors was $9.05 trillion, an increase of $32.4 billion from April, almost completely offsetting the decline in April, bringing the total holdings to the second-highest level in history. Japan's holdings of U.S. Treasury bonds increased by $500 million in May, marking the fifth consecutive month of increases, reaching $1.135 trillion. Mainland China's holdings of U.S. Treasury bonds decreased by $900 million in May, to $756.3 billion.

The U.S. House of Representatives overwhelmingly voted to pass three major cryptocurrency bills, with the White House stating that Trump signed them on Friday. The stablecoin regulation-related "Genius Act" received 2.5 times as many votes in favor as against, with over 100 Democratic lawmakers "crossing the aisle" to support it. On Wednesday night, the three bills narrowly passed in a new round of procedural voting in the House, with only five more votes in favor than against. Due to more than a dozen Republicans "defecting," these bills had previously failed in the first procedural vote in the House on Tuesday.

Jensen Huang's 15,000-word transcript of the exchange: discussing U.S.-China chips, H20, CUDA compatibility, with a wealth of information. Jensen Huang revealed that the H20 chip has been re-approved for sale, which will accelerate the rollout of Blackwell products in ChinaHe praised China for being globally leading in AI models, talent, and applications, stating that many top AI researchers are cultivated by the Chinese education system, and believes that AGI may be achieved soon. At the same time, Jensen Huang highly praised Chinese car companies such as Xiaomi, Nio, and XPeng, calling Chinese electric vehicles a "global surprise" that is reshaping the world competitive landscape.

• Jensen Huang and Wang Jian had a fireside chat at the Chain 博会: Computing supports AI, silicon is the origin of everything. Jensen Huang believes that artificial intelligence technology is currently in the reasoning AI stage and is infinitely close to the general artificial intelligence stage. In the future, open-source will be the safest way to promote AI development. NVIDIA's technology roadmap has already covered nearly a decade of future planning. Hangzhou may be China's Silicon Valley, producing many excellent large models like DeepSeek and Kimi.
• Jensen Huang is anxious. According to statistics from the third-party research agency IDC, from 2023 to 2024, the market share of domestic computing power in China's data center accelerator card market has surged from 14% to 34.6%. Is domestic substitution making Jensen Huang anxious?
• How significant is the "H20 recovery"? JP Morgan believes that while the "H20 recovery" is an incremental benefit, it is far from being a "game changer." At the same time, in the early stages of this AI competition, Alibaba's "shovel-selling" model seems to be able to create financial returns for shareholders more quickly, while it may be a short-term negative for Tencent, which is focused on long-term goals. Goldman Sachs expects that the capital expenditures of Alibaba and Tencent will bottom out in the second quarter of 2025 and begin to recover quarter-on-quarter in the second half of the year.

Demand for AI chips is strong, Taiwan Semiconductor's Q2 net profit surged 61% exceeding expectations, and sales are expected to grow by about 30% this year. The world's largest chip foundry, Taiwan Semiconductor, achieved record highs in both revenue and net profit in the second quarter, with net profit surging 61%, exceeding analyst expectations. The 3nm process contributed 24% of wafer revenue, up from 22% in the previous quarter, further confirming the strong momentum of global AI spending.

• Taiwan Semiconductor's earnings call: raised the full-year sales growth rate for 2025 to around 30%, warning that Q3 may face greater exchange rate impacts. Taiwan Semiconductor stated that it remains confident in maintaining a gross margin target of 53% or higher and keeps its 2025 capital expenditure guidance unchanged, expecting that capital expenditures will not decline significantly in the coming years. The company warned that third-quarter revenue will be impacted by local exchange rate fluctuations. Considering uncertainties such as tariff policies, it remains cautious about business planning for the second half of 2025 and 2026.

A weak dollar helps Netflix's "off-season" not be dull, Q2 profit increased by over 40% to set a new high, raising the full-year guidance. In the second quarter, Netflix's revenue and EPS earnings both exceeded expectations with accelerated growth, increasing approximately 16% and 47% year-on-year, respectively. Netflix stated that the revenue and profit for the quarter slightly exceeded the company's expectations, partly due to exchange rates. Netflix raised the upper limit of its revenue guidance for this year by nearly 3%, with the new range corresponding to a maximum revenue increase of 16% compared to last year. The stock price fell by as much as 3% in after-hours tradingWho has defeated the "gold standard"? By industry, only high dividends have shown relative resilience in the long term, while recently, financial technology has taken the lead. In the secondary industry, precious metals stand out, with new momentum outperforming old momentum; from the perspective of style and strategy factors, small-cap stocks are the absolute winners, with the micro-cap stock index outperforming gold in all periods.

Russian officials: Do not rule out using nuclear means to respond to NATO attacks. Leonid Slutsky, chairman of the International Affairs Committee of the State Duma of Russia, stated that NATO's attack on Kaliningrad would mean an attack on Russia, triggering all corresponding countermeasures from the Russian side, including the activation of nuclear doctrine. The United States must clearly recognize this instead of making such remarks casually.

Domestic Macro

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

Regarding the booming Hong Kong stock IPOs, Goldman Sachs has provided a Q&A. Goldman Sachs stated that the strong rebound of Hong Kong stocks, the relaxation of listing rules, and the proactive stance of regulators have jointly driven the recovery of Hong Kong IPOs. It is expected that with the continued activity of IPOs, the market performance will improve, and new stocks in popular sectors such as consumption, healthcare, and technology will see higher demand. Companies with cornerstone holdings of 30%-50% will perform better, and the A-share market is also expected to benefit.

Domestic Companies

The latest documents in the Wahaha inheritance case have been exposed, Zong Fuli is in big trouble. Three non-marital children are demanding to claim the $700 million trust rights promised by Zong Qinghou during his lifetime, which means that the HSBC account in Hong Kong is not the trust rights account set up by Zong Qinghou for Zong Fuli's three siblings. The three had already submitted a lawsuit to the Hong Kong High Court on December 30, 2024, just six months after Zong Qinghou's death, indicating that this family conflict had already occurred.

• The lawsuit filed by the three Zong siblings has been exposed! The court ordered: Zong Fuli and other defendants must explain the whereabouts of the $1.085 million in the HSBC account! Previously, lawyers revealed that the account balance was about $1.8 billion. The three individuals claiming to be his children, Zong Jichang, Zong Jieli, and Zong Jisheng, have sued Zong Fuli and her associated offshore companies in the Hong Kong High Court. The court has issued a temporary injunction, freezing the offshore company's asset disposal rights in the HSBC account, and ordered Zong Fuli to explain the specific whereabouts of approximately $1.085 million within a specified time. This lawsuit surrounding the massive offshore trust assets and inheritance rights is revealing hidden family secrets and has sparked legal disputes over the validity of wills and bloodline identification.

Morgan Stanley is optimistic about Pop Mart: The growth curve is becoming increasingly steep, and the valuation remains attractive, expecting to reach new highs in the short term. Morgan Stanley believes that Pop Mart's preliminary sales and profits in the first half of the year exceeded its estimates by 8% and 20%, respectively, with the Greater China and Asia-Pacific regions being key markets that exceeded expectations. Morgan Stanley raised its target price from HKD 302 to HKD 365Although it is expected that there may be profit-taking pressure in the short term, it is believed that the adjustment will provide a good opportunity for long-term investors, still possessing "attractive upside potential."

Goldman Sachs significantly raises its forecast for China's Robotaxi market size, driven by four major forces, with operational deployment accelerating. Goldman Sachs stated that with the support of government policies, increased consumer acceptance, and rapid technological advancements, leading Chinese Robotaxi operators are expected to accelerate the commercialization process in the coming years, raising the forecast for China's Robotaxi market size by 9%-35%. It is expected that by 2030 and 2035, the market size will reach USD 14 billion and USD 61.2 billion, respectively.

Overseas Macro

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

The third meeting of G20 finance ministers and central bank governors opens in South Africa. On July 17th local time, the G20 finance ministers and central bank governors meeting opened in KwaZulu-Natal, South Africa. The rotating chair of the G20, South African Finance Minister Godongwana, called for unity and cooperation among all parties to jointly address the complex and severe economic environment.

Three gray rhinos for the U.S. economy in the second half of the year. Song Xuetao believes that the "three gray rhinos" are: after the implementation of the Inflation Reduction Act, fiscal policy will do more "subtraction," showing a clearer tendency for spending cuts; external tariffs and the reshaping of international relations will become more "pragmatic and aggressive," increasing the risk of backlash from TACO; the differences in interest rate cut attitudes between the old and new Federal Reserve chairs have caused confusion, with the shadow Fed chair possibly holding "market dominance."

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

Riding the AI wave, demand for the rare metal "ruthenium" surges, with price increases surpassing gold and silver. The AI boom has driven the price of the ultra-rare metal ruthenium to soar, nearly doubling to USD 800 per ounce within a year, now matching the peak in 2021. Ruthenium is highly sought after due to its critical applications in hard disk drives, effectively meeting the data storage needs of the AI era.

Overseas Companies

Anthropic's valuation has exceeded USD 100 billion, with revenue growth of 4 times and gross margins exceeding 60%! Despite facing high cash consumption, the AI star company Anthropic is attracting investor interest for a new round of financing at a valuation exceeding USD 100 billion, nearly doubling from its USD 58 billion valuation four months ago. This potential deal highlights the market's extremely high expectations for the future growth of leading AI companies, especially regarding the company's strong monetization capabilities in the AI coding application fieldAI search startup Perplexity's valuation has soared to $18 billion within two months. According to media reports, AI search startup Perplexity was valued at $14 billion when it completed a funding round in May this year. After the funding round, new investors proactively approached the company and were informed that they could purchase equity at an $18 billion valuation.

SK Hynix plummeted nearly 9%, Goldman Sachs downgraded its rating for the first time in three years. Is a price war in HBM about to break out? Goldman Sachs analysts downgraded SK Hynix's rating from Buy to Neutral, warning that as competition intensifies and pricing power shifts to major customers, HBM pricing may see its first decline in 2026, which would pose a significant challenge for SK Hynix, which heavily relies on Nvidia.

The autonomous driving sector is heating up, with Uber teaming up with Lucid to challenge Tesla's Robotaxi. Uber plans to launch a high-end Robotaxi service in the second half of 2026, with the first vehicles expected to be deployed in an undisclosed major U.S. city in the second half of 2026. Over the next six years, Uber plans to purchase "at least" 20,000 Gravity SUV electric vehicles produced by Lucid, all equipped with an autonomous driving system developed by Nuro. Lucid's stock price rose 36% on Thursday, marking its largest increase in two and a half years.

U.S. tariffs hit profits, Volvo reports its first loss since IPO in Q2. Affected by U.S. tariffs and high restructuring costs, Volvo Cars recorded its first quarterly loss since going public in 2021, with an operating loss of 10 billion Swedish Krona in the second quarter. The loss was primarily due to a one-time impairment charge of 11.4 billion Swedish Krona, incurred from U.S. tariffs on imported cars, which prevented the sale of its new ES90 model in the U.S. market. Volvo plans to start producing the XC60 SUV in the U.S. by the end of 2026 to avoid tariffs.

Today's News Preview

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

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

U.S. July University of Michigan consumer confidence and inflation expectations.

U.S. June housing starts and building permits.

Japan's June CPI.

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Risk Warning and Disclaimer

The market has risks, and investment requires caution. 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 are suitable for their specific circumstances. Investing based on this is at your own risk