Breakfast | The Finance Minister stated that half of the tariffs may be lifted, and Bessenet is optimistic about a significant acceleration in the economy in Q4

News

China's exports in August increased by 4.4% year-on-year in USD terms, while imports grew by 1.3% year-on-year, with significant growth in integrated circuits and automobile exports; seasonal recovery in bulk commodity imports, with crude oil, iron ore, and copper rebounding, soybean imports hitting a record high, and rare earths seeing a decrease in quantity but an increase in value, with export value rising by 51% month-on-month.

Trump stated he is prepared to implement the second phase of sanctions against Russia.

U.S. Treasury Secretary stated that if the Supreme Court upholds the ruling, they will be forced to refund half of the tariffs; Bessent provided a "forward guidance": the U.S. economy will "significantly accelerate" in the fourth quarter, and manufacturing "cannot build factories in the blink of an eye."

The third French Prime Minister in a year resigned, as Borne failed to pass a confidence vote and submitted her resignation on Tuesday.

Argentina's president suffered a crushing defeat in key provincial elections, leading to a triple whammy in stocks, bonds, and currency, with stock indices falling over 10% and the peso depreciating by 7% against the dollar at one point.

The electric vehicle supply chain faces uncertainties, as U.S. law enforcement actions raise concerns for Korean companies, with LG Energy possibly delaying the production launch of its battery factory.

The iPhone 17 is set to be released, made in India for the U.S. market, with Foxconn and five other factories ensuring supply, and worker salaries at 1250 yuan. Reports indicate that the iPhone 17 will not debut with the domestic AI version, and the new Air model may be absent from the Chinese market this year.

Musk's xAI has revealed its self-developed reasoning chip, codenamed X1, using TSMC's 3-nanometer process, set to go into mass production next year.

Market Closing

U.S. and European Stock Markets: The S&P 500 rose by 0.21%, closing at 6495.15 points. The Dow Jones increased by 0.25%, closing at 45514.95 points. The Nasdaq climbed by 0.45%, closing at 21798.699 points. The European STOXX 600 index closed up by 0.52%, at 552.04 points.

A-shares: The Shanghai Composite Index rose by 0.38%, closing at 3826.84 points; the Shenzhen Component Index increased by 0.61%, closing at 12666.84 points; the ChiNext Index fell by 0.84%, closing at 2933.25 points.

Bond Market: By the end of the bond market, the yield on the U.S. ten-year benchmark Treasury bond was about 4.04%, down about 3 basis points during the day; the yield on the two-year U.S. Treasury bond was about 3.49%, down about 2 basis points during the day.

Commodities: WTI October crude oil futures closed up by 0.63%, at $62.26 per barrel. Brent November crude oil futures closed up by 0.79%, at $66.02 per barrel. COMEX December gold futures closed up by 0.66%, at $3677.4 per ounce.

News Details

Global Highlights

China's exports in August increased by 4.4% year-on-year in USD terms, while imports rose by 1.3% year-on-year, with significant growth in integrated circuits and automobile exports; Seasonal recovery in commodity imports, with crude oil, iron ore, and copper rebounding, soybean imports hitting a record high, and a decrease in rare earth quantities but an increase in value, with export value rising by 51% month-on-month

• In the first eight months of this year, China's cumulative import and export growth rate accelerated by 0.6 percentage points compared to the first half of the year, with both exports and imports growing in August, achieving three consecutive months of dual growth. In the first eight months, exports of integrated circuits and automobiles increased by 23.3% and 11.9% respectively, with electromechanical products accounting for over 60% of exports. Trade with countries participating in the Belt and Road Initiative reached 15.3 trillion yuan, an increase of 5.4%, accounting for 51.7% of China's total import and export value.
• In August, iron ore imports broke through 105 million tons again, soybean imports reached a record high of 12.28 million tons for a single month, and both crude oil and copper concentrate achieved year-on-year growth. In terms of exports, automobile exports surged by 25% year-on-year to 763,000 units, while rare earth exports showed a pattern of reduced quantity but increased value, with export value skyrocketing by 51% month-on-month to 55 million USD, reflecting China's pricing influence in the rare earth industry chain.
• China Galaxy believes that the decline in export growth in August was influenced by a high base effect, while the moderate recovery of the global economy and the support from export and transshipment trade still supported export growth. Exports to the U.S. continued to decline sharply, with ASEAN and the EU being the main supports. The growth rate of integrated circuit and mobile phone exports is recovering. The export situation may gradually come under pressure in the future.
• CICC believes that the main contributing factor to the expanded decline in exports to the U.S. in August may be the fading of the front-loading effect. On the import side, the price contribution has marginally declined, and domestic demand still awaits policy support. It is expected that as the base in September decreases, year-on-year export growth may improve.

U.S. Treasury Secretary states that if the Supreme Court upholds the ruling, it will be forced to refund half of the tariffs. If the Supreme Court does not intervene by October 14, the relevant tariffs will automatically expire; if the Supreme Court decides to hear the case, oral arguments may take place in the fourth quarter of 2025, with a final ruling expected in the first quarter of 2026.

Trump claims he is prepared to impose a second phase of sanctions on Russia. Trump did not elaborate on the specifics of the "second phase of sanctions," but Bessent stated that the U.S. is prepared to work with European partners to impose more sanctions and secondary tariffs on countries purchasing Russian oil, aiming to "cripple" the Russian economy Bessenet provides "forward guidance": The US economy will "accelerate significantly" in the fourth quarter, and manufacturing "cannot build factories at the snap of a finger". Bessenet questioned the reliability of employment data, stating that recent data contains noise and may face revisions, pointing out that August is the "noisiest month" for employment data, and criticized the Federal Reserve's lagging policies. He expects the upcoming non-farm annual revision may lower jobs by 800,000. In light of the reality that the manufacturing sector has lost 42,000 jobs, Bessenet acknowledged that a recovery in manufacturing will take time.

The third French Prime Minister resigns within a year, Berlusconi fails to pass the confidence vote and submitted his resignation on Tuesday. In the confidence vote held in the French National Assembly on Monday, there were a total of 364 opposing votes, accounting for more than 60% of the total votes, far exceeding the 280 votes needed to trigger a no-confidence motion. Berlusconi's proposed €44 billion austerity budget plan faced bipartisan opposition, and his defeat in the confidence vote was entirely expected on Wall Street. Media reports indicate that after Berlusconi's resignation, Macron is inclined to seek an agreement among various parties to appoint a new Prime Minister rather than dissolve the parliament and call for new elections.

Expectations for fiscal expansion rise, Shinzo Abe's resignation triggers a plunge in Japanese long-term government bonds, with 30-year bond yields soaring to historic highs. Shinzo Abe's resignation raised concerns about a loosening of fiscal discipline, with the 30-year Japanese government bond yield jumping 6 basis points on Monday, matching the historic high set last week, and the yield curve steepening further. The market currently expects the likelihood of the Bank of Japan raising interest rates in October has dropped from over 50% last week to 21%.

Key provincial election defeat! Ahead of next month's midterm elections in Argentina, Milei is caught in controversies over "reform and corruption". Last Sunday, in a key province election that holds nearly 40% of Argentina's voters, Milei's party received only 33.9% of the votes, far below the Peronist coalition's 47%, a result that was quite unexpected and casts a shadow over next month's midterm elections.

• Argentina's stocks, bonds, and currency all plummet: On Monday, Argentina's Merval index fell by over 13%, the yield on Argentina's dollar bonds maturing in 2035 approached 13%, and the Argentine peso against the US dollar once dropped by 7%.

Electric vehicle supply chain faces uncertainties, US law enforcement actions raise concerns for Korean companies, LG Energy may delay battery plant production. On the 4th, US federal law enforcement agencies raided a battery joint venture plant of Hyundai Motor and LG Energy in Georgia, arresting hundreds of Korean workers. In response, LG Energy has preliminarily decided to delay the production start date of the joint venture plant from the originally planned second half of this year to the first half of next year Hyundai Motor has prohibited all employees from traveling to the United States for business trips. This has raised concerns about the investment prospects and production efficiency of South Korean companies in the U.S.

• U.S. conducts surprise searches on Korean companies, South Korea shocked: "Isn't this a betrayal after massive investments?" According to Global Times, U.S. federal law enforcement agencies conducted surprise searches at a battery joint venture plant of South Korea's Hyundai Motor and LG Energy Solution in Georgia, taking away 475 people, more than 300 of whom are South Korean. Industry insiders say this search operation is actually pressuring South Korean companies to hire more American workers.

Citi lowers NVIDIA's target price: Broadcom's XPU poses a substantial threat to GPUs. Citi analysts have lowered NVIDIA's target price to $200 due to intensified competition from TPUs, predicting that GPU sales will decrease by approximately $12 billion by 2026. Specifically, the XPU market is expected to achieve a 53% year-on-year growth in 2026, significantly surpassing the 34% year-on-year growth rate of AI GPU sales. This growth is mainly driven by the ramp-up of production capacity from Google, Meta, and Amazon.

iPhone 17 is about to be released, made in India for the U.S. market, with Foxconn and 5 factories ensuring supply, workers' salary at 1250 yuan. Foreign media reports that nearly 80% of iPhones in the U.S. market are imported from India, with an expected 18.6 million units in the first half of the year, a significant increase compared to 53% a year ago. Apple's India manufacturing project has absorbed about 150,000 employees, with a female employee ratio as high as 70%-80%, mainly in assembly positions. Assembly workers earn about 15,000 rupees per month (approximately 1250 yuan) and enjoy benefits such as free meals, transportation, and insurance.

• Report: iPhone 17 launch misses domestic AI, new Air model likely absent from the Chinese market this year. According to well-known tech journalist Gurman, Apple Intelligence will not be available until the end of this year at the earliest, meaning this feature will miss the launch with the iPhone 17 in the Chinese market; the new lightweight model "iPhone 17 Air" is expected to completely eliminate the physical SIM card slot and fully transition to eSIM, which will make its sales in mainland China difficult, with the possibility of being "restricted or delayed" not ruled out.

Reshuffling accelerates, Tesla's market share in the U.S. drops to the lowest point since 2017. Data from Cox Automotive shows that in August this year, Tesla's share of total electric vehicle sales in the U.S. dropped to 38%. This is the first time since October 2017 that the company's market share has fallen below 40% Currently, Tesla has shifted its strategic focus to developing robotaxis and humanoid robots.

Elon Musk's xAI self-developed inference chip exposed, code-named X1, TSMC 3nm process, mass production next year. Musk's xAI is developing a self-designed inference chip code-named "X1," expected to use TSMC's 3nm process and enter mass production in 2026. This move aims to address xAI's "chip shortage" issue and achieve Musk's ambitious goal of having 50 million H100 computing power within five years. Companies like Google, Meta, and OpenAI are also actively working on self-developed chips.

MIT Report 2.0? Apollo: The adoption rate of AI by large enterprises is declining. Apollo's chief economist found, based on a survey of 1.2 million companies by the U.S. Census Bureau, that enterprises with more than 250 employees are slowing down their application of AI. Three weeks ago, an MIT report stated that up to 95% of companies have seen zero returns from investments in generative AI.

Domestic Macro

Chinese President delivers an important speech at the BRICS Leaders' Online Summit. He made three suggestions: First, uphold multilateralism and defend international fairness and justice. Multilateralism is the trend of the times and an important reliance for world peace and development. Second, adhere to open and win-win cooperation, and maintain the international economic and trade order. Economic globalization is an unstoppable historical trend. Third, insist on unity and cooperation to gather forces for common development. To forge iron, one must be strong oneself. Only by managing one's own affairs well can one better respond to external challenges.

Domestic Companies

Alibaba Cloud makes its first foray into embodied intelligence, leading a 1 billion yuan financing round for robotics startup Self-Variable. In addition to leading the investment from Alibaba Cloud and Guoke Investment, this financing round also attracted participation from Sequoia China (HSG), INCE Capital, and Lenovo Capital, with existing investors Meituan and Lenovo Star continuing to follow up. Since its establishment in 2023, this is the eighth financing round completed by Self-Variable in less than two years, bringing the company's total financing amount to approximately 2 billion yuan.

At Putin's residence, Lavrov asks "Where is Labub?". According to reports from RIA Novosti and RT, during Russian President Putin's recent visit to China, Russian Foreign Minister Lavrov, upon seeing various distinctly styled decorations at Putin's residence, hurriedly asked, "Where is Labub?" Subsequently, Russian Finance Minister Siluanov also gestured the shape of Labub on-site, causing laughter among those present The chairman of the stock trading software company Tonghuashun announced: I will moderately reduce my shareholding, "to give up market participation opportunities"! He is expected to make nearly 200 million yuan by buying low and selling high. Tonghuashun announced that Chairman Yi Zheng will reduce his shareholding in the company by no more than 1.3831 million shares, aiming to give up market participation opportunities and release liquidity. The 684,000 shares he plans to reduce come from his previous increase in holdings, which he purchased for 50.099 million yuan in April 2022. Since last September, Tonghuashun's stock price has increased by more than 260%. Based on this calculation, this portion of shares he increased has already earned nearly 200 million yuan.

Overseas Macro

Federal Reserve Survey: Consumer inflation expectations in August remained relatively stable, confidence in smoothly changing jobs fell to a record low. The latest survey from the New York Fed shows that the one-year inflation expectation in the U.S. for August is 3.2%, up from 3.1% previously, while the three-year inflation expectation remains steady at 3% and the five-year inflation expectation remains steady at 2.9%. However, the survey indicates that Americans' confidence in smoothly changing jobs has fallen to a historic low, with the proportion expecting the unemployment rate to rise in a year increasing to 39.1%, up 1.7 percentage points from July. The survey highlights the latest signs of difficulties in the U.S. labor market.

Why is Wall Street quietly allocating to safe-haven assets? Bank of America Hartnett: "Nixon Revisited" under pressure on U.S. Treasuries. Bank of America Hartnett compares the current market environment to the Nixon era from 1970 to 1974, predicting that the Federal Reserve will face immense political pressure to implement easing policies to create pre-election prosperity. He advises investors to go long on gold, bonds, and small-cap stocks in preparation for the upcoming YCC policy.

Key provincial election defeat casts shadow over next month's Argentine midterm elections, Milei trapped in "reform and corruption" controversy. In a key province election that holds nearly 40% of Argentina's voters, Milei's party received only 33.9% of the votes, far below the Peronist coalition's 47%. This unexpected result casts a shadow over next month's midterm elections. Analysts expect the market to react negatively on Monday, with bonds and stocks declining and national risk rising.

Behind OPEC+'s production increase: Saudi Arabia abandons high oil price strategy in favor of market share competition. Despite weak global demand prospects and potential oversupply risks in the market, OPEC+ unexpectedly decided to slightly increase production in October. This move marks a significant shift in Saudi Arabia's core strategy, moving from prioritizing high oil prices to increasing revenue and reclaiming global market share by restoring idle production capacity

Overseas Companies

AI pioneer Hinton never expected that his ex-girlfriend would use ChatGPT to break up with him. In an interview with British media, Hinton revealed that his ex-girlfriend used ChatGPT to "write a breakup letter." Although he was not affected, it highlights how AI has infiltrated personal lives. He believes that the future relationship between humans and AI should be as intimate and symbiotic as that of "mother and child," which is humanity's only hope. Despite being cautious about AI, he still uses ChatGPT daily.

Musk's space empire expands again, SpaceX bids $17 billion for EchoStar's precious spectrum resources. Musk's SpaceX has agreed to acquire EchoStar's AWS-4 and H-block spectrum licenses for approximately $17 billion in cash and stock. Following the news, EchoStar's stock price soared by 64% in pre-market trading on Monday, rising nearly 200% year-to-date.

Today's News Preview

The 17th meeting of the Standing Committee of the 14th National People's Congress will be held in Beijing from September 8 to 12.

China's August financial data.

The U.S. Bureau of Labor Statistics will release the annual benchmark revision data for non-farm payrolls.

Apple will hold a new product launch event for the iPhone 17.

Oracle will announce its financial report.

EIA will release the monthly Short-Term Energy Outlook report.