Breakfast | U.S. ADP data unexpectedly declines, market anticipates interest rate cut next week, U.S. stocks rise broadly

Market Overview

The unexpected decline in the U.S. ADP data has led investors to be almost certain that the Federal Reserve will cut interest rates next week. The "bad news is good news" script is playing out again.

U.S. stocks rose broadly, with nearly 350 companies in the S&P 500 gaining. Small-cap stocks performed particularly well, rising nearly 2%. Microsoft's stock fell 2.5% due to sales concerns, dragging down large tech stocks, while the Nasdaq rose slightly by 0.17%. Reports indicate that the Trump administration is considering supporting the robotics industry, leading to a rise in robotics concept stocks, with Tesla up over 4% and iRobot soaring nearly 74%.

U.S. Treasury yields fell across the board, with the 10-year yield down 2.7 basis points. The dollar dropped nearly 0.5%, hitting a more than one-month low and falling below the 50-day moving average. Offshore RMB continued its strong performance in November, rising above 7.06. Ethereum accelerated its recovery from the monthly low, gaining about 5.7% on the day. Bitcoin rose by 2.08%.

London copper reached a historic high again after a day, with U.S. copper surging 3.7% at one point, hitting a five-month high. Gold hovered around $4,200. U.S. oil rose by 0.85%.

During the Asian session, A-shares experienced volatile adjustments, with the ChiNext index falling over 1%. The commercial aerospace sector showed mixed performance, while superhard materials surged against the trend. The Hong Kong Hang Seng Index fell over 1%, and the 30-year Treasury bond faced significant pressure.

Key News

Li Qiang presided over the 17th special study session of the State Council.

Bessent downplayed the Federal Reserve Chairman's control over interest rates, proposing to promote the residency duration of regional Federal Reserve chairmen, stating that tariffs could be restructured. The White House canceled the originally scheduled interview process, and the new Federal Reserve Chairman Hassett is "on the horizon." Reports indicate that bond investors are warning the U.S. Treasury about the possibility of Hassett becoming the Federal Reserve Chairman.

U.S. November ADP unexpectedly declined, with employment numbers decreasing by 32,000, marking the largest drop since March 2023, and small business unemployment surged.

U.S. ISM Services PMI expanded at the fastest pace in nine months, with the price index hitting a seven-month low and the employment index reaching a six-month high.

Reports indicate that Microsoft has lowered its AI software sales quotas, with its stock falling nearly 3%, which Microsoft denied.

Meta is making moves to poach talent: reports suggest that Apple design executive Alan Dye has jumped ship with his deputy.

AI applications are favorable, with Salesforce expecting a revenue increase of over 10% this quarter and raising its full-year guidance, leading to a jump in after-hours trading.

Competing for an IPO with OpenAI! Reports indicate that Anthropic has hired IPO lawyers and plans to go public as early as 2026.

The Trump administration is going all in! It is reportedly considering issuing a robotics executive order next year, causing iRobot's stock to soar nearly 80% during the session.

A new milestone in China's commercial aerospace: Zhuque-3 successfully completed its maiden flight and entered orbit, although the first-stage recovery failed.

Doubao's mobile assistant triggered a forced logout of WeChat accounts? Both Doubao and WeChat responded

The first domestic GPU stock, Moore Threads, listed on Friday!

Automotive companies are crossing over to seize the smart wearable entry, Li Auto launches its first AI glasses, starting at 1999 yuan.

Copper prices hit a new historical high, with LME delivery orders soaring to the highest level since 2013, driven by surging demand in Asia. Glencore: plans to increase copper production to 1.6 million tons per year over the next decade.

Report: The EU pushes for a "70% European-made" standard for critical commodities, which could increase annual costs for businesses by over 10 billion euros.

Market Closing Report

US and European Stock Markets: The S&P 500 rose 0.30%, closing at 6849.72 points. The Dow Jones increased by 0.86%, closing at 47882.90 points. The Nasdaq rose 0.17%, closing at 23454.092 points. The European STOXX 600 index closed up 0.10%, at 576.22 points.

A-shares: The Shanghai Composite Index closed at 3878.00 points, down 0.51%. The Shenzhen Component Index closed at 12955.25 points, down 0.78%. The ChiNext Index closed at 3036.79 points, down 1.12%.

Bond Market: The yield on the US 10-year benchmark Treasury bond fell by 2.32 basis points, to 4.0633%. The yield on the 2-year US Treasury bond fell by 2.24 basis points, to 3.4855%.

Commodities: WTI January crude oil futures rose 0.53%, closing at $58.95 per barrel. Brent February crude oil futures increased by 0.35%, closing at $62.67 per barrel. COMEX gold futures rose 0.44%, closing at $4239.30 per ounce.

News Details

Global Highlights

Li Qiang presides over the 17th special study session of the State Council. According to Xinhua News Agency, on December 3rd, the State Council held the 17th special study session themed "Deepening the people-centered new urbanization and focusing on building a new pattern of urban-rural integrated development." Li Qiang pointed out that new urbanization is an important carrier for expanding domestic demand, promoting industrial upgrading, and strengthening the domestic circulation. In recent years, various regions and departments have deeply implemented the new urbanization strategy, achieving significant progress. Looking ahead to the 14th Five-Year Plan period, there is still great potential for the development of new urbanization.

Besenet downplays the Federal Reserve Chair's control over interest rates, plans to push for a residency requirement for regional Federal Reserve Chair candidates, stating that tariffs can be restructured. US Treasury Secretary Besenet emphasized on Wednesday that the actual control of interest rates by the Federal Reserve Chair is limited, and he also stated that he would advocate for a new regulation requiring candidates for regional Federal Reserve Chairs to have resided in the jurisdiction for at least three years When discussing private credit, he expressed concerns that this type of credit would exhibit strong pro-cyclical behavior during economic downturns. Bessent also stated that regardless of whether the case currently submitted to the U.S. Supreme Court ultimately prevails, the Trump administration still has the ability to advance its tariff agenda.

• The White House cancels the scheduled interview process, new Federal Reserve Chairman Hassett "on the verge". The Trump team informed candidates that the interview originally scheduled for Wednesday with Vice President Pence has been canceled, but did not specify the reason for the cancellation. Trump himself clearly stated at Tuesday's cabinet meeting that the candidate list has been "narrowed down to one." He directly referred to Hassett, who was present, as a "potential Federal Reserve Chairman," making Bessent's carefully designed interview process a mere formality.
• Report: Bond investors warn the U.S. Treasury about the possibility of Hassett becoming Federal Reserve Chairman. According to media reports citing multiple informed sources, bond investors have expressed to the U.S. Treasury their concerns about Kevin Hassett potentially being appointed as Federal Reserve Chairman. Investors worry that the current White House National Economic Council Director Hassett may significantly lower interest rates to please President Trump.

U.S. November ADP unexpectedly declines, employment decreases by 32,000, the largest drop since March 2023, with a surge in small business unemployment. The ADP report shows that small businesses have become the hardest hit by layoffs. Small businesses with fewer than 50 employees collectively reduced 120,000 jobs, with firms employing 20 to 49 people laying off 74,000. In contrast, large enterprises with more than 50 employees netted 90,000 new jobs, indicating a clear divergence in the labor market.

U.S. ISM services sector expansion rate hits a nine-month high, price index at a seven-month low, employment index at a six-month high. The U.S. ISM services PMI index rose to 52.6 in November, the highest in nine months, with an expectation of 52.0. The overall services index was supported by extended supplier delivery times and further improvement in business activity, while the payment price index fell to a seven-month low, and the employment index rose to a six-month high of 48.9, indicating a slowdown in the rate of employment decline.

Reports Microsoft lowers AI software sales quotas, stock price drops nearly 3%, Microsoft denies. Microsoft lowered its sales targets due to enterprise customers' slower-than-expected acceptance of AI products, with the stock price dropping nearly 3%, marking the largest decline since November 18. The company has reduced sales quotas for several AI products, with one sales department for Azure significantly lowering its growth target for a product named Foundry from 50% to 25% Subsequently, according to media reports, Microsoft stated in an email that the company has not lowered the sales quotas for its salespeople, and the company's stock price decline narrowed to 1.7%.

Meta's poaching move: Reports say Apple design executive Alan Dye is jumping ship with his deputy. Alan Dye will serve as the Chief Design Officer of Meta's new design studio starting December 31, fully responsible for the design work of hardware, software, and AI interface integration. For Apple, its acclaimed design team is facing an increasing talent drain. However, the market reacted calmly after the news broke. On Wednesday, during intraday trading, Apple's stock price fell to a daily low, down 0.62% to $284.4.

AI applications are favorable, Salesforce expects revenue to grow over 10% this quarter, raises full-year guidance, stock jumps after hours. In the third fiscal quarter, Salesforce's revenue grew 9% year-on-year, slightly below expectations, but EPS surged 35%, far exceeding expectations, with AI and data cloud platform annualized revenue maintaining triple-digit growth. The midpoint of the fourth fiscal quarter revenue guidance indicates nearly 12% year-on-year growth, the first single-quarter growth of over 10% in seven quarters; the key metric reflecting confirmed contract revenue CRPO is expected to grow 15% above expectations, reaching the highest growth rate in over three years, with the acquisition of Informatica contributing 4 percentage points to growth; the full-year revenue guidance has been raised for the second time this fiscal year. The stock price jumped 8% after hours.

Competing for an IPO with OpenAI! Reports: Anthropic hires IPO lawyers, plans to go public as early as 2026. Media reports indicate that Anthropic may be ready for an IPO by 2026, and OpenAI is also conducting preliminary preparations for an IPO. OpenAI was valued at $500 billion last October, while Anthropic's valuation is between $300 billion and $350 billion. Investors in Anthropic are enthusiastic about the IPO, believing that the company can seize the initiative from OpenAI by going public first.

• Anthropic's first internal report is out! Engineers describe: Productivity soared by 50%, but it feels like they are digging their own graves. Self-reports from employees show that Claude's share of their work increased from 28% a year ago to 59%, with productivity improvements rising from 20% to 50%, growing 2-3 times within a year. Engineers' work efficiency has significantly improved, becoming more "full-stack," with accelerated learning and iteration speeds. Some have noticed that increased collaboration with AI means reduced collaboration with colleagues; others have begun to ponder whether they will ultimately be replaced by automation tools Trump Administration All in! Reportedly considering issuing an executive order on robots next year, iRobot surged nearly 80% during trading. Media reports indicate that the U.S. Secretary of Commerce has been frequently meeting with CEOs of the robotics industry to fully support the accelerated development of this sector; the U.S. Department of Transportation is preparing to announce the establishment of a robotics working group, which may be disclosed by the end of the year. A spokesperson for the U.S. Department of Commerce stated that they are committed to robotics and advanced manufacturing, as they are crucial for bringing critical production back to the United States. Tesla saw a 3.5% increase during trading.

New milestone in China's commercial space industry: Zhuque-3 successfully launched into orbit, first stage recovery failed. Blue Arrow Aerospace's Zhuque-3 rocket successfully delivered the second stage into the designated orbit, validating China's large liquid oxygen-methane rocket development capabilities in the commercial space sector. However, the first stage of the rocket failed during recovery due to abnormal combustion, and the specific cause is under investigation. Catalyzed by favorable policies, the A-share commercial space concept sector surged against the trend, with Shanghai Hanxun and Zhaobiao Co., Ltd. both hitting the daily limit, Zhonghuan Hailu rising over 10%, and Shunhao Co., Ltd. previously hitting the daily limit.

• The war behind reusable rockets: whoever occupies the orbit will occupy the future. The race for reusable rockets has fully commenced, which not only concerns the reduction of launch costs but also the competition for "land grabbing" rights in low Earth orbit, communication sovereignty, and control over the infrastructure of the future space economy. By the end of 2025 to 2026, China's commercial space industry may see a series of maiden flights for reusable rockets, including Zhuque-3, Lijian-2, Tianglong-3, Yingli-2, Shuangjuxian-3, and Zhishenxing-1.
• The launch of Zhuque-3 marks significant progress for China in reusable rocket technology, and under the strong catalysis of policies such as the establishment of a commercial space administration, an industry track expected to reach 10 trillion is rapidly taking shape. Analysts point out that the resonance of technological breakthroughs and policy dividends will assist in satellite constellation construction and make low-cost space tourism applications possible, presenting a historic opportunity for China's commercial space industry.

Doubao mobile assistant triggers forced logout of WeChat account? Responses from both Doubao and WeChat. According to The Paper, the engineering version of the Doubao assistant preview can currently use WeChat normally, but the mobile operation function of the Doubao assistant no longer supports WeChat operations. Doubao stated that the Doubao mobile assistant obtains permissions through cooperation with terminal mobile phone manufacturers and thoroughly discloses them in its privacy white paper and permission list. This permission allows the assistant to simulate click events to complete tasks. The mobile assistant requires user authorization to execute tasks, with clear displays during the execution process, and users can interrupt it The ability to operate mobile phones is triggered and supervised by users, and is not executed automatically.

The first domestic GPU stock, Moore Threads, will be listed on Friday! Moore Threads will be listed on the Sci-Tech Innovation Board on December 5, with an issue price of 114.28 yuan, setting a new high for A-shares this year, corresponding to a market value of approximately 53.7 billion yuan. The company is currently not profitable and will be included in the Sci-Tech Growth Tier after listing. Its issuance has been highly sought after by institutions, with an offline subscription multiple as high as 1572 times, involving 267 institutions. The company raised approximately 8 billion yuan, making it the largest IPO on the Sci-Tech Innovation Board this year. The time from acceptance to registration was only 122 days, setting one of the fastest approval records on the Sci-Tech Innovation Board.

Car companies are crossing over to seize the smart wearable market, Li Auto launches its first AI glasses, starting at 1999 yuan. Internally, Li Auto positions the AI glasses as "wearable robots," which is part of its embodied intelligence strategy. Users of Livis glasses can complete operations such as turning on the car air conditioning, heating the steering wheel, and controlling the tailgate through voice commands. In the face of fierce competition in the AI glasses market, car companies like Li Auto do not have traditional advantages in brand recognition, and whether the interaction logic between the car and glasses conflicts is also a potential challenge.

Copper prices hit a new historical high, LME delivery orders soar to the highest level since 2013, with surging demand in Asia. The London Metal Exchange (LME) copper prices have continuously refreshed historical highs, with prices per ton once breaking through 11,461 USD. The main contract for Shanghai copper futures has surpassed 90,000 yuan/ton, currently up over 1%, setting a new historical high. LME trading data shows that delivery orders recorded the largest single-day increase since 2013, with particularly strong demand from warehouses in Taiwan and South Korea. This round of market trends is driven by the supply side, with major global copper mine production interruptions, a deadlock in negotiations for copper concentrate processing fees in 2026 raising cost expectations, and the acceleration of inventory transfers to the U.S. to avoid potential tariffs, all contributing to the tightening of spot supply.

• Glencore: Plans to increase copper production to 1.6 million tons annually within the next decade. Glencore announced a long-term expansion plan, aiming to increase copper production to 1.6 million tons by 2035, nearly doubling the current output. This strategy focuses on expanding existing mines, including the Collahuasi mine in Chile and projects in Argentina and Peru, and plans to restart the Bajo de la Alumbrera mine in Argentina. The company also lowered its production target for 2026 to 810,000-870,000 tons.

Report: The EU promotes a "70% European manufacturing" standard for key commodities, potentially increasing annual costs for companies by over 10 billion euros According to reports, the European Union plans to introduce the "Industrial Acceleration Act," requiring key products (such as cars, batteries, etc.) to meet a local content standard of up to 70% "European manufacturing." This policy will be implemented through government subsidies and public procurement incentives. However, there are divisions within the EU, with concerns that European product prices are significantly higher than Asian imports, potentially increasing costs for businesses by over €10 billion annually and weakening market competitiveness.

Domestic Macro

China's November RatingDog Services PMI slightly decreased to 52.1, with a significant improvement in new export orders. In November, the RatingDog Services PMI for China slightly fell to 52.1, indicating a slight slowdown in expansion. New export orders showed significant improvement, benefiting from increased marketing efforts by companies and a temporary easing of uncertainties in China-U.S. trade, leading to an improvement in external demand.

Wang Jiang, Deputy Director of the Central Financial Office, wrote in the People's Daily: Accelerate the construction of a financial powerhouse. The article pointed out the need to actively develop diversified equity financing, expand bond financing, and increase support for equity and debt financing for enterprises that align with national industrial guidance and break through key core technologies. Under the premise of controllable risks, steadily develop futures, derivatives, and asset securitization. Support Shanghai in using technologies such as blockchain, big data, and artificial intelligence to enhance proactive research and timely assessment of financial risks.

JP Morgan upgrades China's stock market rating, citing low valuations and light positions, optimistic about accelerated AI applications and anti-involution. JP Morgan believes that the risk of a "significant rise" in China's stock market by 2026 is much higher than the risk of a "significant decline," and expects a 19% upside for the MSCI China Index under a basic scenario. The bank is optimistic about multiple positive factors in the Chinese market, including the acceleration of AI applications, the boost to corporate profit margins from "anti-involution" policies aimed at curbing excessive competition, increased shareholder returns, and the reallocation of domestic liquidity from deposits to the stock market.

Domestic Companies

Chen Tianqiao wrote: In the AI era, enterprise management will retreat, and cognition will rise, the KPI system will collapse! Chen Tianqiao believes that in the future, enterprises will no longer be led by humans but will be expanded by intelligence. He emphasized that traditional management theories are based on compensating for human cognitive deficiencies, and when the executing entity becomes an AI intelligent agent with eternal memory and holographic cognition, the foundation of this system will "collapse."

Morgan Stanley's China robotics research: humanoid robots currently lack mature products, composite robots may lead in volume. Morgan Stanley's research shows that 62% of Chinese companies plan to deploy humanoid robots internally within three years, but only 23% are satisfied with existing products, indicating a need for improvements in flexibility, functionality, and pricing The composite robot (mobile base + robotic arm) will lead the way in deployment due to technological maturity, with a deployment rate reaching 64% by 2027, faster than wheeled (58%) and bipedal (41%) robots. Logistics warehousing and manufacturing will be the main application scenarios.

Overseas Macro

Will the AI bubble burst in the U.S. in 2026? Economist Ruchir Sharma believes that the AI technology bubble may end at some point next year. He emphasized that once the U.S. economy remains strong and rising inflation forces the Federal Reserve to shift to interest rate hikes, the current over-investment bubble driven by AI capital expenditures will face collapse. He also believes that high-quality stocks will regain favor, and the long-standing trend of international markets outperforming the U.S. market will continue.

Borrow short, repay long: The Bank of England and the Bank of Japan lead the way in abandoning long-term bonds, turning to high-frequency rolling "interest rate gambling". Major global economies are quietly moving away from long-term bonds and turning to issuing short-term debt to alleviate the fiscal pressure of high long-term borrowing costs. In the context of central banks exiting bond purchases and declining demand from traditional buyers, the UK and Japan are particularly aggressive in significantly shortening debt maturities. However, this move essentially bets on future interest rate declines; if expectations fail, governments will face uncontrolled costs and risks to fiscal sustainability due to frequent rollovers.

U.S.-India negotiations stalled, India's central bank's emergency "market protection" fails, rupee falls below the 90 mark. Amid unclear prospects for U.S.-India trade negotiations and pressure from capital outflows, the Indian rupee has historically fallen below the key 90 mark against the U.S. dollar. Although the Reserve Bank of India has intervened, the rupee's downward trend is difficult to change in the context of bearish market expectations and an expanding trade deficit, which may affect its monetary policy direction.

Overseas Companies

Concerns over the AI bubble intensify, Oracle's debt panic indicator hits a new high since 2009. Oracle's credit default swap (CDS) prices closed at an annualized rate of approximately 1.28 percentage points on Tuesday, the highest since March 2009, having more than doubled from a low of 0.36 percentage points in June. As AI giants ramp up bond issuance, the U.S. credit bond market faces supply-demand imbalance pressure, with analysts predicting that the industry's spreads will reach a "fundamental range" of 100 to 110 basis points above the benchmark rate next year, higher than the 75 to 85 basis points expected in 2025.

IBM CEO: With current costs, investing trillions to build AI data centers is "impossible to make a profit". IBM CEO Arvind Krishna warned about the AI infrastructure investment frenzy, stating that based on current costs, the approximately $8 trillion capital expenditure globally chasing AGI is "impossible" to be profitable, as just the interest would require $800 billion in annual profits to cover He also expressed extreme skepticism about the possibility of achieving AGI through the current technological path, believing the probability is only 0 to 1%.

New competitors for GPUs have arrived! Amazon officially announces Trainium3: Cost reduced by over 50% compared to GPUs. AI video company Decart's tests show that Trainium3 helps increase video generation frame rates to four times that of other chips. Despite the rise of custom chips, NVIDIA's market position is difficult to shake in the short term. Ron Diamant, chief architect of Trainium chips, stated, "Ultimately, the main advantage lies in cost performance."

• AWS CEO: How is Amazon making a comeback in the AI era? Delivering cheaper and more reliable AI at a massive scale. The AWS AI factory offers customers two technical route options; customers can choose the Nvidia-AWS AI factory integration solution, while AWS provides a solution based on its self-developed Trainium chips. By offering flexible deployment methods and more cost-effective dedicated infrastructure, Amazon is starting to compete for high-value customers with strict data sovereignty and compliance requirements, such as government agencies and large organizations.

Marvell's acquisition fills gaps, is NVIDIA's "alternative" path becoming faster? Marvell announced the acquisition of Celestial AI to fill the multi-rack interconnection gap, becoming a vendor covering all scenarios of "scale out + scale up." The company emphasized that there is "no revenue gap" in cooperation with Amazon, alleviating share concerns. However, its data center business growth rate is only 25%, and custom ASIC growth is over 20%, far below the overall growth rate of the AI chip market. Analysts point out that Marvell lacks incremental large customers and is in a relatively marginal position in the AI chip market, with a significant gap compared to NVIDIA, the road to becoming an "alternative" is long and arduous.

Observations on the "American Black Friday shopping season": ChatGPT's shopping recommendation volume increased by 28%, with Amazon and Walmart accounting for nearly 70% combined. Data from this year's U.S. holiday shopping season shows that generative AI like ChatGPT has become a new engine driving e-commerce traffic, with recommendation volume increasing by 28% year-on-year, and this type of traffic has a higher user conversion rate. However, this emerging dividend shows a highly concentrated trend, with Amazon and Walmart together accounting for nearly 70% of the traffic, further consolidating their market dominance, while small and medium retailers have not generally benefited.

iPhone 17 sparks a wave of upgrades, Apple’s smartphone shipments are expected to reach a historic high in 2025. IDC's latest forecast indicates that driven by the strong performance of the iPhone 17 series, Apple's iPhone shipments are expected to reach 247.4 million units in 2025, Year-on-year growth exceeded 6%, setting a historical new high. Among them, the huge demand for the iPhone 17 in the Chinese market has become the key engine for performance growth.

AI and mobile phones and computers "competing" for chips: Mobile phone manufacturers warn that prices may rise by 30%, and storage shortages will continue until 2027. SK Hynix expects the storage shortage to last until the end of 2027. Tech giants like Microsoft and Google are scrambling to secure supplies from memory chip manufacturers such as Micron, Samsung Electronics, and SK Hynix. A source said, "Everyone is begging for supplies." Counterpoint Research predicts that prices for advanced and traditional memory chips will rise by 30% in the fourth quarter, with a potential additional 20% increase in early 2026.

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