Breakfast | Morgan Stanley "Tesla Energy may be more valuable than cars", Apple plans to raise second-half shipment targets

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Overnight Morning Market

Federal Reserve Chairman Powell attended a congressional hearing, stating that the Fed does not need to wait for inflation to drop below 2% before cutting interest rates, as waiting too long could lead to excessively low inflation. Delaying rate cuts too late or too little could weaken economic activity and employment. The labor market has clearly cooled, and Powell did not make any hawkish remarks as expected, with expectations for a rate cut in September rising.

The three major U.S. stock indexes collectively closed higher, with the Dow up 1.09%, the Nasdaq up 1.18%, marking the seventh consecutive trading day of gains. The S&P 500 index rose 1.02%, with the Nasdaq and S&P 500 indexes hitting new all-time highs. The S&P 500 index broke through 5600 points for the first time in history, setting new highs for six consecutive trading days.

Tesla rose by less than 1%, marking the eleventh consecutive day of gains. Nvidia rose over 2%, Microsoft and Google rose over 1%. Apple rose by 1.88%, marking seven consecutive trading days of gains, with a total market value approaching $3.6 trillion.

Chinese concept stocks closed roughly flat. Li Auto rose over 3%, XPeng rose over 7.4%, ZEEKR rose by about 2.3%, Nio rose by about 2.6%; Baidu rose by 2.66%, Pinduoduo rose by 0.26%, Alibaba rose by 0.41%, JD.com fell by 0.22%, NetEase fell by over 3%, TAL Education fell by over 2.1%.

Blue Chips and Hot Stocks

Apple is counting on AI services to boost demand for its new products, telling suppliers and partners that the company's goal is to increase shipments of the new iPhone by around 10% compared to the previous generation, with at least 90 million iPhone 16 units shipped in the second half of this year. Previously, Apple shipped about 81 million iPhone 15 units in the second half of 2023.

Due to the European Commission imposing tariffs on electric cars manufactured in China, Tesla has raised the prices of its Model 3 cars in countries such as Germany, the Netherlands, and Spain by around 1500 euros, depending on the model. The European Commission stated that Tesla's cars should have been subject to a 20.8% tariff, but has requested a recalculation of its tax rate.

Morgan Stanley: Bullish on Tesla's Energy Storage Business

Morgan Stanley has raised its valuation of Tesla's energy storage business, expecting the AI boom to drive a surge in global electricity demand, and the company has the ability to expand its market share in this area. The valuation of Tesla Energy has been raised from $36 per share to $50 per share, with a target price for Tesla at $310, while also lowering expectations for Tesla's car sales by 2030. Morgan Stanley estimates that the profit generated from fully utilizing a large factory producing high-capacity batteries is equivalent to the profit from selling 1 million Tesla cars.

Sources: Microsoft is set to pay around 20 million euros to settle an antitrust lawsuit brought by the European Cloud Infrastructure Services Providers Association (CISPE) in the EU.

Novo Nordisk's insulin weekly formulation did not receive approval from the U.S. Food and Drug Administration.

Chairman of the U.S. Senate Health Committee Bernie Sanders: Novo Nordisk may lower the price of weight loss drugs, currently focusing on Novo Nordisk, but will definitely pay attention to Eli Lilly in the futureTencent responds to canceling double salary and housing subsidies: evenly distributed to monthly salary to enhance employee cash flow

Tencent has adjusted its employee compensation and benefits policies, canceling year-end double salary and housing subsidies, and instead distributing them evenly into the monthly salary. Tencent responded that this move is to address employees' concerns about stable cash flow and worries about income fluctuations after the housing subsidies end. It is understood that the original housing subsidies at Tencent varied by city, such as RMB 4,000 per month in Beijing, Shanghai, Guangzhou, and Shenzhen, and RMB 2,000 in Chengdu. After the adjustment, this subsidy will be distributed over 15 months and directly included in the monthly salary base, with an expected increase of RMB 3,200 in basic monthly wages for employees.

Transportation Department responds to "Luobo Kuai Pao" competing for online ride-hailing drivers: the industry is relatively stable, with "Luobo Kuai Pao" having deployed over 400 vehicles in Wuhan.

Chips and Artificial Intelligence

News has it that the Federal Trade Commission (FTC) in the United States is investigating Microsoft's investment in OpenAI, and it is unlikely that Microsoft's withdrawal from the OpenAI board will resolve the FTC's concerns.

Market news: AMD is set to acquire artificial intelligence startup Silo AI in an all-cash deal worth approximately USD 665 million to gain the capabilities needed to catch up with NVIDIA.

OpenAI collaborates with US National Laboratory

OpenAI is collaborating with the Los Alamos National Laboratory (LANL) in the United States to research how scientists can safely use artificial intelligence in laboratory environments to advance biological science research. Moderna has been utilizing OpenAI's technology to build a data analysis assistant to help analyze large datasets, thereby facilitating the development of clinical trials.

Macro: Taking you around the world

Federal Reserve Chairman Powell's key points in Congress House testimony and hearing

1. Inflation situation: Significant progress has been made in inflation, no need for inflation to be below 2% before cutting rates, no specific inflation number to determine rate cuts.

2. Economic development: Economic growth is around 2%, achieving a soft landing without causing a significant economic downturn is what keeps Powell "awake at night."

3. Labor market: There is a noticeable softness in the labor market, although still strong, the focus is on maintaining a strong labor market while controlling inflation.

4. Interest rate policy: Current policy is restrictive, unlikely to fall to the extremely low rate levels before the crisis, later evaluations this year will focus on neutral interest rates.

5. Stress tests: Tests show that large banks will not have problems in commercial real estate, transparency in bank stress tests has been increased, and further improvements are desired.

6. Balance sheet: There is still a way to go in shrinking the balance sheet, no specific target for the size of the balance sheet, will find the appropriate level based on experience.

7. Independence issue: Political factors are not considered when setting rates, independence is crucial, maintaining independence is beneficial for promoting price stability.

Federal Reserve Chairman Powell: There is still a long way to go in reducing the balance sheet, the neutral interest rate has risen at least in the short term. Powell also mentioned that he hasn't spoken to Biden in two years and has not noticed any cognitive decline in him beforeAccording to AXIOS website: Senate Majority Leader Schumer is open to the idea of replacing President Biden as the Democratic presidential candidate, sending a signal to Democratic donors.

According to Punchbowl: Bipartisan groups of senators in the US Senate will announce an agreement to ban members of Congress from trading stocks.

Main character of the century's big blowout found guilty, once caused Wall Street to lose billions of dollars

Archegos founder Bill Hwang has been criminally charged for his company's bankruptcy in 2021, refusing to plead guilty to one count of conspiracy, three counts of fraud, and seven counts of market manipulation, but 10 out of the 11 charges have been proven. Each convicted charge carries a maximum sentence of 20 years in prison.

China's Ministry of Commerce: Conducting a trade and investment barrier investigation into the EU's practices related to Chinese companies under the "Foreign Subsidies Regulation".

Hong Kong Institute of Certified Public Accountants: Currently, there is insufficient evidence to support three allegations regarding PwC's quality management system