Breakfast | Interest rate cut expectations continue to rise, S&P and Nasdaq rise for three consecutive days

Market Overview

The U.S. unemployment data does not hinder the interest rate cut expectations for this month. Before the release of the significant PCE inflation data, the U.S. stock market's upward momentum diminished, with the S&P 500 and Nasdaq experiencing a thrilling three-day rise. The S&P closed at a new high in over a month, while the Dow fell from a three-week high; Meta rose over 3%; the chip index halted its two-day rise, but NVIDIA rebounded over 2%; Salesforce, with positive guidance, rose nearly 4%. The China concept index reversed two consecutive declines, with Nio rising over 4%.

After the unemployment data was released, U.S. Treasury prices fell back, and yields accelerated their rebound during the session.

The U.S. dollar index turned up after hitting a new one-month low during the session, while the euro turned down after reaching a near seven-week high. Reports reinforced expectations for a rate hike by the Bank of Japan this month, with the yen hitting a new high in over two weeks. The offshore yuan fell over 100 points during the session, breaching 7.07 and moving away from a nearly 14-month high; Bitcoin rose above $94,000 for the first time in over two weeks before turning down over 3%.

The Russia-Ukraine talks are at an impasse, with crude oil rising for two consecutive days to a new two-week high, and U.S. oil rising nearly 2% during the session. Gold rebounded slightly for two consecutive days. London cobalt rose nearly 3%, while London copper temporarily stepped away from record highs.

During the Asian session, A-shares and Hong Kong stocks rebounded from the bottom, with the ChiNext and Hang Seng Tech Index rising over 1%. Robotics, commercial aerospace, and semiconductors led the gains, while government bond futures plummeted.

Key News

Chinese President and Premier respectively met with French President Macron, who is on a state visit to China.

Reports indicate that the production of AI chips is expected to double next year, with Cambricon's stock price surging at the end of the trading session. The company issued a late-night "serious statement": false.

A private data provider stated that the U.S. non-farm payrolls decreased by 9,000 in November, with October revised down to a decrease of 15,500; the Challenger report indicated that companies laid off 71,000 workers in November, with the year-on-year growth rate slowing to 24%, but still the highest level for the same period since 2022; the U.S. job market has entered a "no layoffs, no hiring" mode: the number of first-time unemployment claims last week decreased, hitting a new low in over three years, with recruitment plans significantly declining.

Reports suggest that the Bank of Japan may raise interest rates in December, and the government may tolerate this move, with the yen hitting a new high in over two weeks during the session; the Japanese bond storm escalated, with long-term bond yields collectively soaring to decades-high levels.

Targeting €33 trillion in household savings, the European Union plans to break down national barriers in financial services to promote the creation of a truly unified capital market.

In the face of chip competition from Google and Amazon, NVIDIA once again published a statement to "prove itself": the GB200 NVL72 can enhance the performance of open-source AI models by up to 10 times; reports indicate that Jensen Huang successfully lobbied, and the U.S. Congress will veto the AI chip export bill.

Google enters the AI coding battle, reaching a multi-year cooperation agreement with Replit.

Reports indicate that Meta's former strategic core has significantly contracted, planning to cut its metaverse budget by up to 30%; the EU plans to launch a new antitrust investigation into Meta, targeting AI features within WhatsApp

Market Report

US and European Stock Markets: The S&P 500 rose 0.11% to 6857.12 points; the Dow Jones fell 0.07% to 47850.94 points; the Nasdaq rose 0.22% to 23505.136 points. The European STOXX 600 index rose 0.45% to 578.84 points.

A-shares: The Shanghai Composite Index fell 0.06% to 3875.79 points; the Shenzhen Component Index rose 0.40% to 13006.72 points; the ChiNext Index rose 1.01% to 3067.48 points.

Bond Market: By the end of the bond market, the yield on the US 10-year benchmark Treasury bond was about 4.10%, up about 4 basis points during the day; the yield on the 2-year Treasury bond was about 3.52%, also up about 4 basis points during the day.

Commodities: WTI January crude oil futures rose 0.53% to $58.95 per barrel. Brent February crude oil futures rose 0.35% to $62.67 per barrel. COMEX gold futures rose 0.44% to $4239.30 per ounce. COMEX February gold futures closed up 0.25% at $4243 per ounce. LME cobalt futures rose about 2.9% to $51480 per ton. LME copper futures fell about 0.3% to $11450 per ton.

News Highlights

Global Highlights

Chinese President meets with French President Macron during his state visit to China. According to CCTV News, China is willing to work with France to always adhere to equal dialogue and open cooperation from the fundamental interests of the two peoples and the long-term interests of the international community, ensuring that the China-France comprehensive strategic partnership moves more steadily and better in the "new era," fully demonstrating its strategic value and making new contributions to promoting a multipolar world and inclusive economic globalization.

Premier Li Qiang meets with French President Macron. According to Xinhua News Agency, Li Qiang pointed out that China is willing to strengthen development strategy alignment with France, expand bilateral openness, strengthen cooperation in traditional fields such as aviation, aerospace, and civil nuclear energy, and accelerate cooperation in emerging fields such as artificial intelligence, green development, and the silver economy. Macron expressed that France is willing to strengthen exchanges and dialogue at all levels with China, expand bilateral openness and mutual investment, deepen cooperation in areas such as economy and trade, agriculture, aerospace, aviation, civil nuclear energy, and renewable energy, and jointly explore third-party marketsReports indicate that AI chip production is expected to double next year, Cambricon surged in late trading, issuing a late-night "serious statement": false. Cambricon fell nearly 3% at one point during Thursday's early trading but surged in late trading, closing up 2.75%, with a cumulative increase of 108% this year. Securities Times reported that there are claims that Cambricon plans to triple its AI chip production by 2026 to fill the gap left by NVIDIA's exit. Investment bank Bernstein upgraded Cambricon's rating to outperform the market that day, with a target price of 2000 yuan indicating a potential upside of 46%.

US private data provider Revelio Labs: November non-farm payrolls decreased by 9,000, October revised down to a decrease of 15,500. Data shows that the US labor market continued to show signs of weakness in November, indicating a contraction trend is forming. The market is increasingly polarized, with only a few sectors such as education and health services, and construction providing support, while the leisure and hospitality industry has become a major drag. At the same time, both hiring and turnover rates have declined, and the number of job vacancies has decreased, reflecting a "quiet" state of weakened corporate expansion willingness and significantly slowed market liquidity.

US Challenger companies laid off 71,000 in November, with the year-on-year growth rate slowing to 24%, but still the highest level for the same period since 2022. In November, layoffs were concentrated in the technology, telecommunications, and retail sectors. Layoffs related to artificial intelligence continued to increase, reaching 55,000 in the first 11 months of this year. The report shows that the total number of planned layoffs reported by Challenger companies in the first 11 months of this year has reached approximately 1.171 million, a year-on-year surge of 54%. This is the highest annual layoff level since the pandemic in 2020 and the sixth time since 1993 that annual layoffs have exceeded 1.1 million. In stark contrast, the number of planned hires in the first 11 months of this year was less than 500,000, the lowest annual level since 2010, down 35% year-on-year.

US employment enters a "no layoffs, no hiring" mode: Last week, the number of first-time jobless claims decreased, hitting a new three-year low, with hiring plans significantly declining. In the week including the Thanksgiving holiday, the number of first-time unemployment claims decreased by 27,000 to 191,000, the lowest level since September 2022, while economists expected an increase to 220,000. The number of people continuing to claim unemployment benefits fell to 1.939 million, but it is still close to the highest level since 2021. This reflects a situation where new layoffs in the job market are slowing down while long-term unemployed individuals face difficulties in re-employment.

The yen rises against the dollar in the short term, reports: The Bank of Japan may raise interest rates in December, and the government may tolerate this moveThe Japanese bond storm escalates, with long-term bond yields soaring to decades-highs.

• According to Reuters, the Bank of Japan may raise its policy interest rate from 0.5% to 0.75%, marking the first rate hike since January this year. The government's stance is that "if the Bank of Japan wants to raise rates this month, it should decide for itself," which is seen as tacit approval for the central bank to take action. The yen is trading around 155.37 against the dollar. Market focus is shifting from "whether to raise rates" to "how much more will be raised."
• The yield on Japan's 30-year government bonds has reached a historic high of 3.445%. Demand for Japan's 30-year government bond auction hits a new high since 2019, with a bid-to-cover ratio of 4.04, far exceeding last year's average of 3.35. Strong demand is driven by the attractiveness of high yields and expectations that the government may cut ultra-long bond issuance. Nomura Securities analysts state that the Bank of Japan's move aims to "test market resilience." Currently, the market has begun to be wary of the risk of a year-end "carry trade massacre," which could have significant impacts on global assets such as U.S. stocks.
• In pushing for rate hikes, how does the Bank of Japan "skillfully extract" high market expectations?. Kazuo Ueda released signals in advance, leading the market to price in an 80% probability of a rate hike. After multiple meetings with Ueda, senior government officials ceased their opposition, and the weakness of the yen became a consensus pressure point for both sides. The central bank's team drafted speeches overnight, aiming to stabilize the political front by praising Abenomics and explaining the necessity of gradual rate hikes. Although a rate hike is almost certain, the wide range of neutral interest rates and the divergence between the market and government on future rate paths make subsequent communication more challenging.

Aiming at €33 trillion in household savings! The EU plans to break down national barriers in financial services and promote the creation of a truly unified capital market. The European Commission has launched a new plan to break down financial barriers, attempting to integrate fragmented capital markets into a unified system that can compete with the U.S. The core of the plan is to strengthen ESMA's powers, simplify cross-border transactions, and promote regulatory centralization. The EU hopes to effectively direct €33 trillion in household savings towards innovative enterprises, rather than the €300 billion that flows overseas each year. EU officials warn that without unifying capital markets, Europe will continue to lose ground economically and geopolitically.

Facing off against Google's TPU and Amazon's Trainium? NVIDIA once again claims: GB200 NVL72 can boost open-source AI model performance by up to 10 times. Following its public assertion of being "a generation ahead of the industry" and privately rebutting short-seller views, NVIDIA has released a new technical blog stating that its GB200 NVL72 system can enhance the performance of open-source AI models by up to 10 times. The system addresses the scalability challenges of MoE models in production environments through a collaborative design of hardware and software, effectively eliminating performance bottlenecks in traditional deploymentsJensen Huang's 10,000-word interview: The AI race has no "finish line," and technological iteration is key; he feels the company could go bankrupt every day for 33 years. In the interview, Jensen Huang pointed out that the AI race has no clear finish line, and the ability to continuously iterate is more important than a one-time breakthrough. Technological progress is gradual, and all participants will evolve together. In the past decade, AI computing power has increased by 100,000 times, but this computing power is used to make AI think more cautiously and verify answers, rather than doing dangerous things. Jensen Huang also recounted NVIDIA's near-bankruptcy experiences multiple times, including the critical moment in 1995 when the wrong technical route was chosen, relying on a $5 million investment from Sega and the trust of TSMC's Morris Chang to survive.

Report: Jensen Huang's lobbying succeeds, U.S. Congress will veto AI chip export bill. NVIDIA's intensive lobbying has achieved a key victory, as a bill aimed at restricting its sale of AI chips to certain overseas markets, the GAIN AI Act, has not been included in the U.S. annual defense bill. This turnaround occurred after Jensen Huang personally visited Washington to meet with White House officials. He stated that the bill poses significant potential harm to the U.S., and Congress's actions are "wise." Trump called Jensen Huang a "smart person."

Google's "secret weapon"—TPU to support a $900 billion super track? Google's custom AI chip TPU is being viewed as an important future revenue source. The market expects that by selling to external customers like Anthropic and Meta, TPU is likely to capture a 20% share in the NVIDIA-dominated market, bringing nearly $900 billion in opportunities. Google's stock price surged 31% in the fourth quarter, becoming the tenth best-performing component in the S&P 500 index.

Aiming at the billion-dollar market of Anthropic! Google enters the AI coding battle, reaching a multi-year partnership with Replit. The new collaboration is expected to strengthen Google's competitive position in the rapidly growing field of "ambient coding." According to the agreement, Replit will expand its use of Google Cloud services, integrate more Google AI models into its platform, and provide AI coding solution support for enterprise customers. Google will continue to serve as Replit's primary cloud service provider.

Amazon CEO: Trainium chips have already produced a million units, generating annual revenue in the billions. The Amazon CEO disclosed for the first time that its self-developed AI chip Trainium2 has achieved annualized revenue in the billions, with over 1 million chips in production. This is mainly due to its "cost-performance advantage" and the large-scale adoption by key customer AnthropicAt the same time, Amazon released the next-generation chip Trainium3, which has a performance improvement of four times.

The former strategic core significantly shrinks! Zuckerberg plans to cut Meta's metaverse budget by up to 30%. Zuckerberg is expected to reduce resources allocated for building the metaverse, a project he once positioned as the future of the company. Meta executives have discussed a potential budget cut of up to 30% for the metaverse department next year. This may include layoffs as early as January 2026. Following the report, Meta's stock rose by as much as 5.7% during Thursday's trading session, closing up 3.4%.

Report: The EU plans to launch a new antitrust investigation against Meta, targeting AI features in WhatsApp. According to media reports, the EU will initiate a new antitrust investigation against Meta, focusing on the integration of AI features in WhatsApp, with an announcement expected in the coming days. Italian regulators have already begun an investigation, accusing Meta of integrating AI into WhatsApp without user consent. This investigation is based on traditional antitrust laws rather than the Digital Markets Act.

Domestic Macro

From "dim sum" to "main course," the RMB dim sum bond market faces significant development opportunities. A report from Deutsche Bank suggests that the RMB dim sum bond market is evolving from a marginalized "niche market" into a mainstream asset, driven by a dual transformation on the supply side (low interest rates attracting global issuers) and the demand side (real trade settlement and the introduction of mainland funds through the "Southbound Bond Connect"). Amid global efforts to seek alternatives to the dollar and expectations of RMB appreciation, the market has entered a self-reinforcing virtuous cycle, opening a historic allocation window for investors.

Domestic Companies/Industries

"Silence" ends? Huansheng Quantitative returns to the center stage. This is the most prominent phase for Huansheng in terms of external fundraising performance in recent years. Such relatively stable performance even evokes memories of Huansheng's heyday. Back then, Huansheng, as the leader among the "Four Kings of Quantitative," was the first to break through the trillion scale, but soon faced a dual shrinkage in both performance and scale, until a significant recovery in performance in 2025.

New national standard for food delivery: Riders will stop receiving orders for 20 minutes after continuously accepting orders for over 4 hours, and the average speed of electric vehicles should not exceed 15 kilometers per hour. According to The Paper, the new national standard for food delivery focuses on protecting the rights of delivery personnel, stipulating that platforms should reasonably limit the daily order acceptance duration (generally not exceeding 8 hours), set fatigue reminders and mandatory rest mechanisms after 4 hours of continuous order acceptance, and prohibit forced overtime through algorithms or rewards. Additionally, algorithms must optimize routes, and for deliveries made by electric bicycles, the delivery time should be calculated based on an average speed not exceeding 15 km/hOverseas Macro

If Hassett becomes the Chairman of the Federal Reserve, Bessent may "unify" the economic policies of the Trump administration. Media reports, citing informed sources, state that if Trump decides to appoint Hassett as the next Chairman of the Federal Reserve, Bessent will lead the White House National Economic Council. If this plan is implemented, Bessent will become the chief arbiter of the economic policy mix of this administration, with authority spanning the Treasury Department and the White House.

What does it mean if the "loyal Hassett" becomes the Chairman of the Federal Reserve? Deutsche Bank believes that if Hassett takes office as Chairman of the Federal Reserve, there will be significant obstacles to actual interest rate cuts. By mid-2026, the fundamentals of the U.S. economy may not support substantial rate cuts, and with hawkish resistance within the Federal Reserve Board, aggressive monetary easing is difficult to achieve. Investors should be wary of the market's overly optimistic pricing regarding a "dovish turn," as the ultimate policy path is likely to be much more moderate and neutral than expected.

Big shot Gave warns: The convergence of the Federal Reserve and the Treasury is a done deal, U.S. bonds may collapse first next year, and the appreciation of Asian currencies will end the gold bull market. Louis-Vincent Gave, CEO of Gavekal Group, warns that the convergence of the Federal Reserve and the Treasury is a done deal, and its long-term impact will be the collapse of the U.S. bond market. The outlook for gold depends on the trends of Asian currencies, particularly the severely undervalued yen. The preparation for an IPO by Anthropic may signal a turning point in the capital-intensive bull market and signs of a bubble, as market sentiment shifts from "rewarding cash burning" to "rewarding asset sell-offs."

PGIM warns: Even if Hassett leads the Federal Reserve, he won't be able to "quickly cut rates" as Trump wishes. The co-chief investment officer of PGIM Fixed Income believes that Hassett lacks sufficient authority to build consensus within the Federal Reserve, making it difficult for him to push for rapid rate cuts on his own. The bond market also confirms this. He emphasized that the independence of the Federal Reserve "remains a major concern for investors."

U.S. government unpaid national debt exceeds $30 trillion for the first time, doubling since 2018. The total amount of U.S. Treasury bills, medium-term bonds, and long-term bonds grew by about 0.7% in November, reaching $30.2 trillion. The debt repayment cost is as high as $1.2 trillion.

Commodity trading giant adds fuel to the fire: Mercuria plans to withdraw over 40,000 tons of copper from LME Asian warehouses. Media reports state that Mercuria canceled or marked over 40,000 tons of copper delivered from LME warehouses in South Korea and Taiwan this Tuesday, valued at approximately $460 million based on recent pricesPrevious analysis indicated that on Wednesday, the cancellation of warehouse receipts in LME Asian warehouses surged to a ten-year high, primarily driven by expectations of U.S. tariffs and cross-market arbitrage opportunities.

Perhaps next week, the term "RMP" will dominate the market and be regarded as the "new generation QE". The Federal Reserve has stopped balance sheet reduction, marking the end of the "quantitative tightening" era. The market is focused on RMP (Reserve Management Purchases), which may initiate a new round of balance sheet expansion, potentially adding $20 billion in liquidity each month. Whether the Federal Reserve can stabilize the turmoil in the repurchase market and reshape the direction of monetary policy has become the most watched point on Wall Street.

International oil prices have slightly rebounded, and after Putin rejected parts of the "peace agreement," the Ukrainian delegation is heading to the U.S. for a new round of negotiations. According to reports, Putin stated that some aspects of the U.S. peace plan are "unacceptable." The Ukrainian delegation will travel to the U.S. on Thursday for a new round of negotiations with the U.S. side. According to Xinhua News Agency, on December 2, Putin met with U.S. envoy Wittekov for nearly five hours, reviewing the key points of the agreement item by item, but there are still differences on core issues such as territorial control. Putin insists on the withdrawal of Ukrainian troops from the eastern regions. He also mentioned that there are still differences between Russia and the U.S. on certain issues.

After nearly 5 hours! Putin reveals the reason for the lengthy talks with the U.S. envoy: need to review the "peace agreement" item by item. According to Global Times, Putin stated that there are still differences between Russia and the U.S. on certain issues. "Some issues can be negotiated, but some cannot reach an agreement."

Ethereum undergoes "Fusaka upgrade," continuing "scaling and efficiency improvements," enhancing on-chain settlement capabilities. Ethereum has activated the "Fusaka" key upgrade, increasing Layer-2 data capacity by eight times through PeerDAS technology, and combined with the BPO fork mechanism and Blob base price mechanism, it is expected to significantly reduce Layer-2 operating costs and ensure the long-term economic sustainability of the network. This will solidify its position as a settlement layer and drive the competitive dimension of Layer-2 towards user experience and ecological depth evolution.

Overseas Companies

"Yin and Yang" OpenAI? Anthropic CEO: Some AI companies are taking on excessive risks. The CEO of Anthropic warned that some AI companies (such as OpenAI) are taking on excessive risks due to massive investments in infrastructure like data centers, reflecting widespread concerns in the industry about the contradiction between high costs and uncertain returns. Despite competitors making trillion-dollar bets, Anthropic itself has adopted a more cautious expansion path, planning to invest $50 billion in its first batch of data centersOpenAI internal code leak, the strongest model "Emperor" ascends the throne, 0 thinking delay is frightening. OpenAI is secretly testing four new models codenamed "Penguin Family," with the flagship model "Emperor" having the highest reasoning budget, while also developing a new "memory search" feature for ChatGPT. These actions are seen as the company's intensive counterattack against Google's competition, with the latest models likely to be released soon.

Altman plans to establish a rocket company to compete with Musk's SpaceX. Altman contacted rocket manufacturer Stoke Space last summer, intending to make a series of equity investments in Stoke and ultimately gain a controlling stake. This would put him in "full competition" with Musk, who dominates the rocket launch field with SpaceX and also operates the AI startup xAI. Altman recently founded brain-computer interface startup Merge Labs, competing with Musk's Neuralink, and OpenAI is also establishing a social network that may compete with X.

Storage market "adding insult to injury"? Micron to exit "consumer storage business," focusing on AI storage chips. Micron announced it will completely shut down its Crucial brand business, which has been operating for nearly 30 years, and will continue to ship products through consumer channels until February 2026. Micron is the world's third-largest DRAM supplier, holding a 13% market share in NAND flash memory used for SSDs. Its exit will leave a huge gap in the consumer storage market, and amid analysts warning that memory shortages may last for years, it remains unclear if any company can fill this gap.

Today's News Preview

U.S. September PCE and personal income report.

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

Eurozone Q3 GDP.

Moore Threads listed on the Sci-Tech Innovation Board.

Moxi Co., Ltd. subscription day.

Huawei MateX7 foldable screen goes on sale on December 5th.

Samsung expected to release its first triple-foldable smartphone Galaxy Z TriFold