Breakfast | S&P NASDAQ Composite Index hits 15-month high, Musk establishes AI company xAI

Good morning! A wonderful day starts with making money.

Market Overview

S&P Nasdaq hits 15-month high, Chinese stocks lead for three consecutive days

US inflation cooled significantly, with June CPI increasing by 3% YoY, significantly weaker than the previous value. Core CPI increased by 4.8% YoY, still far exceeding the Federal Reserve's target of 2%. The market's bet on a 25 basis point rate hike by the Federal Reserve in July has risen to 95%. However, the swap market believes that the probability of another rate hike by the Federal Reserve after July is much lower than 50%. Risk assets surged.

US stocks opened significantly higher as a whole, closing higher for three consecutive days. The S&P and Nasdaq stood firm at the highest level in 15 months since early April last year, and the Dow was close to recovering from the decline since last Monday, with the Nasdaq up 1.15%. Russell small-cap stocks rose for four consecutive days.

Tech stocks rose across the board. Meta rose nearly 4%, Apple rose 0.9%, Microsoft rose 1.4%, Amazon rose 1.6%, Google A rose 1.5%, Netflix rose 0.9%, and Tesla rose 0.8%.

Chip stocks rebounded. The Philadelphia Semiconductor Index rose 1.9%, hitting a one-month high for four consecutive days. AMD rose nearly 3%, Intel rose 2%, and Nvidia rose 3.5%.

Chinese stocks continued to lead for three consecutive days, with the Nasdaq China Golden Dragon Index rising above 7,000 points for the first time in a month. JD.com and Baidu rose nearly 4%, Pinduoduo rose 6%. Alibaba rose 2.4%, Tencent ADR rose 4%, Bilibili rose nearly 8%, and iQiyi rose 9%. NIO and Xpeng rose 3%, and Xiaopeng Motors rose over 1%.

Top Stocks

Apple iOS 17 launches public beta

The latest version of Apple's iPhone operating system, iOS 17, released in June, is now available as a public beta, including several major changes such as improved autocorrect, horizontal docking mode, and offline applications.

Indian companies expected to enter Apple's iPhone assembly business for the first time

Insiders said that Indian conglomerate Tata Group is expected to reach an agreement with Apple supplier Wistron to acquire the company's iPhone assembly plant in India.

IMAX China plans to privatize with a premium of nearly 40%

IMAX China plans to privatize the company through an agreement arrangement, with a privatization price of HK$10 per share, a premium of approximately 39.47% over the latest closing price. Trading will resume on the Hong Kong Stock Exchange from July 13. Establishment of xAI, an AI Company Led by Elon Musk's Team

xAI, led by Elon Musk's team, has announced the establishment of an artificial intelligence company. The goal of xAI is to understand the "true nature of the universe," and a press conference will be held on July 14. xAI is independent of Twitter's parent company, X, but will closely collaborate with X and Tesla. Team members come from DeepMind, OpenAI, Google Research, Microsoft Research, Tesla, and the University of Toronto.

US Antitrust Enforcement Agency to Appeal, Seeking to Block Microsoft's Acquisition of Activision Blizzard

The US antitrust enforcement agency has stated that it will appeal in an attempt to block Microsoft's acquisition of Activision Blizzard.

Citi Bullish on NVIDIA: Expected to Capture 90% of the AI Chip Market Share

NVIDIA's position in the AI chip field is like Intel's position in the PC chip field ten years ago. With the CUDA ecosystem and unparalleled GPU performance, NVIDIA is expected to capture more than 90% of the market share in the AI chip field, while AMD can only take second place.

HSBC Establishes Green Finance and Bond Team in Mainland China

According to insiders, HSBC will make significant investments in its asset management department in mainland China this year, including the establishment of a new team dedicated to green assets and fixed income. The bank maintains an "open attitude" towards expanding its business opportunities in China.

Temasek Holdings' Subsidiary Suspends $4 Billion Sale of Hutchison Port Holdings

PSA International, the world's second-largest container terminal operator, acquired a 20% stake in Hutchison Port Holdings for $4.4 billion in 2006.

BYD Property Insurance Continues Restructuring Plan

BYD Property Insurance plans to increase its capital by 3 billion yuan. If the capital increase is successful, the registered capital of BYD Property Insurance will triple to 4 billion yuan.

Macro and Strategy

US Inflation Drops to 3%, Fed Tightening Policy Turning Point May Be Near

In June, US CPI was only one-third of the forty-year peak level set last year, and the data details were better than expected. The key underlying inflation indicators were lower than market expectations. The Federal Reserve is highly likely to refrain from raising interest rates for a considerable period after the rate hike in July. Fed remains vigilant about inflation! Voting member warns against premature withdrawal

Barkin, a voting member of the FOMC next year, said that if inflation is too high, premature removal of tightening measures will cause a strong rebound in inflation, forcing the Fed to take further action.

Kashkari, a voting member this year, believes that if high inflation persists longer than expected by the market, the Fed needs to raise interest rates higher, which may increase pressure on banks, and the Fed has to choose between reducing inflation and maintaining financial stability.

Bank of Canada raises interest rates by 25 basis points as scheduled

The Bank of Canada expects CPI to return to the target level of 2% by mid-2025. Governor Macklem said that if necessary, they are prepared to raise interest rates again.

Oxford Economics: S&P 500 may briefly surpass 4500 points, but it won't last long

Optimism about the Fed achieving a soft landing and curbing high inflation through interest rate hikes may push the S&P 500 index above 4500 points in the coming months, but the economic recession that started later this year will cause a stock market decline and a difficult recovery over the next 10 years.

Chinese Premier holds symposium with platform enterprises

Premier Li Qiang pointed out that the platform economy has provided new channels for employment and entrepreneurship and new support for public services, and its position and role in overall development are increasingly prominent. He emphasized that governments at all levels should strive to create a market environment of fair competition, improve transparent and predictable regulatory systems, reduce compliance costs for enterprises, and promote the healthy development of the industry.

China's National Development and Reform Commission speaks out on platform enterprises

The National Development and Reform Commission stated that it supports platform enterprises in playing a more active role in leading development, creating employment, and international competition. The commission has introduced typical cases to affirm the positive role of platform enterprises. Platform enterprises not only gain substantial returns through investment, enhance their core competitiveness, but also promote high-level technological self-reliance, and improve the quality and efficiency of the real economy. Chinese Central Bank Governor Yi Gang: Maintain Normal Monetary Policy as Much as Possible Under Certain Conditions

Yi Gang pointed out that the interest rate policy and exchange rate policy should first follow the laws of the market economy, which is crucial for maintaining the stable operation of the economy and finance, as well as suppressing systemic financial risks from a macro perspective. In terms of monetary policy regulation, domestic goals should be given top priority, and the optimal policies such as interest rates should be chosen to achieve these goals. Secondly, a favorable environment should be created to allow the exchange rate to be determined by the market. The monetary policy should always operate within a normal range, and the actual interest rate should roughly match the potential economic growth rate.

Since July, the US dollar index has been continuously declining, and the onshore and offshore RMB exchange rates against the US dollar have rebounded. Starting from last Thursday, the RMB has been continuously strengthening against the US dollar. As of the close of yesterday, the offshore RMB has accumulated a 950 basis point increase over 5 trading days.

European Parliament Passes "Chip Act"

The act requires that by 2030, the EU's share of global chip production should increase from the current 10% to 20%, in order to meet its own needs and the needs of the global market.

OECD: Global Minimum Corporate Tax Has Become a Reality

More than 50 countries have taken measures to implement it, with the goal of signing the treaty supporting the first pillar of the global corporate tax agreement by the end of the year, so that the treaty will take effect in 2025.