Breakfast | Three major events will be revealed this week: the U.S. election, the Federal Reserve's interest rate decision, and the Standing Committee of the National People's Congress

The 12th meeting of the Standing Committee of the National People's Congress will be held in Beijing from November 4 to 8, and it is expected to review the increase of the government debt limit and promote debt resolution work. The Ministry of Finance has stated that there is considerable room for borrowing and plans to increase the debt limit to support large state-owned commercial banks. As the date of the 2024 U.S. presidential election approaches, competition is exceptionally fierce, with candidate support rates close.

U.S. Election Competition is Exceptionally Fierce, Expected to Finalize Election Results Around Noon on the 6th Beijing Time

The 2024 U.S. presidential election will begin final voting on November 5 (Tuesday), and it is expected that the election results will be basically finalized around noon on the 6th Beijing time. The winner will take office in the White House in January 2025, starting a four-year presidential term.

The policy proposals of Trump and Harris have both similarities and differences, with significant differences in their impact on the U.S.-China economy and asset prices. Current polling results show Trump temporarily leading, and the market is widely betting on the "Trump trade," but attention should also be paid to the possibility of an election reversal leading to a "Harris surprise." For China, regardless of who wins, the outcome will not change the U.S.'s ongoing suppression of China in the economic and technological fields, and timely and proper responses should be made.

According to RCP, as of November 2, Harris's national polling support rate is 48.1%, while Trump's support rate is 48.4%. At the same time, Trump leads Harris by 10.6 percentage points with a 54.7% betting win rate, although the lead has narrowed.

Currently, Trump is leading in five key swing states. According to RCP, as of November 2, Trump is leading in five key states, while Harris has secured Wisconsin and Michigan, with the electoral vote outcome potentially showing Trump winning with 287 votes.

The Republican Party, to which Trump belongs, is leading in congressional elections. According to RCP, as of November 2, in the House of Representatives, the Republican Party is temporarily leading the Democratic Party with 201 seats to 192; in the Senate, the Republican Party is temporarily leading the Democratic Party with 50 seats to 43.

However, the stock price of Trump Media & Technology Group (DJT) has plummeted by 36% in the days leading up to the election, with a market value evaporating by over $4 billion, reflecting a sharp decline in market support for Trump. The value of Trump's equity has dropped from $5.9 billion to $3.5 billion, indicating a 180-degree shift in market sentiment. Although polls show a fierce competition between the two candidates, the decline in DJT's stock price suggests that Trump's chances are weakening.

Additionally, according to the latest news, on November 3 local time, a joint poll conducted by The New York Times and Siena College shows that in seven key "swing states" for the 2024 U.S. election, U.S. Vice President and Democratic presidential candidate Harris leads former U.S. President and Republican presidential candidate Trump by a narrow margin of 48% to 47%.

According to the poll, in Nevada, Harris has a support rate of 49% among potential voters, while Trump's support rate is 46%; in North Carolina, Harris leads Trump with a support rate of 48% to 46%; in Wisconsin, Harris leads Trump with a support rate of 49% to 47%; in Georgia, Harris leads Trump with a support rate of 48% to 47%In Arizona, Trump leads Harris with a support rate of 49% to 45%; in Michigan and Pennsylvania, their support rates are even, at 47% and 48% respectively.

This poll was conducted from October 24 to November 1, with a total of 7,879 voters participating.

The 12th Meeting of the 14th National People's Congress Standing Committee will be held from November 4 to 8, marking a "key window" for the implementation of incremental policies.

The 12th meeting of the 14th National People's Congress Standing Committee is scheduled to be held in Beijing from November 4 to 8. The market generally expects this meeting to review the topic of raising the government debt ceiling and to promote a new round of debt resolution work.

On October 12, the Ministry of Finance held a press conference to introduce the latest fiscal policies, mentioning that the central government still has considerable borrowing space, plans to increase the debt limit in one go, replace local governments' hidden debts, and issue special government bonds to support large state-owned commercial banks, although the specific scale has not yet been announced. According to regulations, important matters involving fiscal budgets and debt scales must be approved by the Standing Committee of the National People's Congress before implementation.

The market generally expects that this Standing Committee will review specific arrangements for the issuance of additional government bonds and the scale of local debt, marking a "key window" for more incremental policies to be implemented.

Liu Dian, a distinguished associate researcher at Fudan University's China Research Institute and director of the Public Affairs Department at Guan Chuan Media, analyzes that the Standing Committee of the National People's Congress, as the permanent body of the National People's Congress, exercises national legislative power and will be the "decision-making" link for the implementation of a series of important measures.

Liu Dian believes that, in addition to the debt resolution topic, related content regarding economic targets and whether the 3% fiscal deficit red line will be breached is also worth paying attention to.

The Federal Reserve's decision is a heavyweight finale, is a 25 basis point rate cut "a done deal"?

On Friday (November 8), the Federal Reserve will announce its latest interest rate decision, with the market unanimously expecting a 25 basis point rate cut, lowering the federal funds rate to a range of 4.5%-4.75%.

Pricing in the federal funds futures market shows that the market has almost fully digested the expectation of a 25 basis point rate cut, with the probability of a 25 basis point cut reaching 95.7%.

This week's PCE inflation and non-farm data are expected to be important references for Federal Reserve officials in making their decision.

In terms of inflation data, the U.S. core PCE price index in September rose 2.7% year-on-year and 2.1% month-on-month, in line with expectations, marking the lowest level since early 2021; the core PCE price index in September rose 2.7% year-on-year, matching the previous value and exceeding the expected 2.6%.

In terms of non-farm data, the U.S. non-farm payrolls in October saw a sharp drop to 12,000 from 254,000 in September (revised down to 223,000), the lowest level since 2020, and far below the expected 100,000, with an unemployment rate of 4.1%, in line with expectations.

Nick Timiraos, a reporter for The Wall Street Journal known as the "new Federal Reserve correspondent," stated that the analysis of this employment report can be "subjective," with most Wall Street analysts believing that the poor data is mainly due to two hurricanes in October and the Boeing strike, but some analysts are concerned that the job market is indeed deteriorating. Almost all analysts believe that this report will not affect the expectation of a 25 basis point rate cut by the Federal Reserve this month

Berkshire's Q3 Operating Profit Decreased by 6.2% Year-on-Year, Falling Short of Expectations, Continued Reduction in Apple Holdings, Cash Reserves Reach New Highs

Berkshire's Q3 operating profit decreased by 6.2% year-on-year, falling short of expectations, and it continued to reduce its holdings in Apple. This marks the first time since 2018 that the company has paused repurchases of its own stock, with cash reserves reaching a record high. Due to poor performance in the insurance business, Berkshire Hathaway's revenue and operating profit unexpectedly declined slightly in the third quarter. Cash reserves rose to $325.2 billion, setting a historical record. The number of shares held in Apple was reduced from approximately 400 million in the second quarter to about 300 million, a reduction of 25%. Berkshire's selling spree is not limited to Apple; the company has been a net seller of stocks for the eighth consecutive quarter.

A Change of Era! NVIDIA to be Included in the Dow, Replacing Intel

On November 1st, after U.S. market hours, S&P Dow Jones Indices announced that NVIDIA (stock code: NVDA) will be included in the Dow Jones Industrial Average, replacing the current semiconductor component Intel (code: INTC). Another adjustment announced for the Dow is that Sherwin-Williams Co. (code: SHW) will replace Dow Chemical (code: DOW).

The announcement stated that these adjustments will take effect before the market opens on Friday, November 8th. This means that next Friday, NVIDIA will officially become a component of the Dow. At that time, the Dow will include all three stocks with a market capitalization exceeding $30 trillion: Apple, Microsoft, and NVIDIA.

Following the announcement of the adjustment, NVIDIA's stock price rose over 3% in after-hours trading, while Intel's stock price fell over 2% in after-hours trading.

Key Focus This Week

The 12th meeting of the Standing Committee of the 14th National People's Congress, the 2024 U.S. presidential election, the Federal Reserve's interest rate decision, China's release of October import and export, foreign exchange, and inflation data, and the Eurozone's release of September PPI and September retail sales data