Key Points - The article discusses the recent economic data from the US and Japan, highlighting significant trends in housing sales, employment, and inflation [2][10] - It emphasizes the mixed signals in the US economy, with some indicators showing improvement while others indicate a slowdown [2][4] Group 1: Important Data Review - US January existing home sales fell significantly, with an annualized rate of 3.91 million units, down 8.4% month-over-month, against an expectation of a 4.15 million unit decline [12] - The US non-farm payrolls for January added 130,000 jobs, exceeding expectations of 65,000, with average hourly earnings increasing by 3.7% year-over-year [12] - Japan's Prime Minister announced plans to implement tax cuts, including a proposal to suspend the consumption tax on food and beverages for two years, potentially reducing tax revenue by approximately 5 trillion yen annually [13] Group 2: Economic Activity Index - The US Weekly Economic Index (WEI) rose to 2.70% for the week ending February 7, up from 2.21% the previous week, indicating a rebound in economic activity [15] - Germany's Weekly Activity Index (WAI) also increased to 0.10% for the week ending February 8, compared to 0.02% the prior week [15] Group 3: Demand - The US Redbook retail sales growth rate decreased to 6.5% year-over-year for the week ending February 6, down from 6.7% the previous week [18] - Mortgage rates in the US fell slightly, with the 30-year fixed mortgage rate at 6.09%, down from 6.11% the previous week [23] Group 4: Employment - The ADP weekly employment change showed an increase, with 26,000 jobs added over the four weeks ending January 24, up from 20,000 the previous week [28] - Initial jobless claims decreased to 227,000 for the week ending February 7, down from 232,000 the previous week [31] - The number of job vacancies fell, with the Indeed job vacancy index averaging 103.5, down from 104.2 in December [36] Group 5: Prices - Commodity prices fell, with the RJ/CRB commodity price index at 306.54, down 1.0% week-over-week and 4.2% over the past two weeks [6] - US gasoline prices increased to $2.77 per gallon, up 0.8% from the previous week [42] Group 6: Financial Conditions - Financial conditions in the US and Eurozone tightened, with the Bloomberg Financial Conditions Index for the US at 0.537, down from 0.755 the previous week [46] - Offshore dollar liquidity worsened, with the three-month swap basis for the yen against the dollar at -20.1909 basis points, down from -17.9347 basis points the previous week [49] - The 10-year government bond yield spreads narrowed between the US and Eurozone, as well as between the US and Japan [52]

Group 1 - The core viewpoint of the article is that inflation in the U.S. is currently not a significant concern, with CPI and core CPI showing a downward trend, indicating a potential for the Federal Reserve to maintain a cautious stance on interest rate cuts [2][9][38] - In January, the CPI year-on-year decreased from 2.7% to 2.4%, slightly below expectations of 2.5%, while core CPI fell from 2.6% to 2.5%, also meeting expectations [17][9] - The article suggests that the largest risk to inflation may come from potential additional fiscal stimulus due to pressures from the midterm elections, rather than from the economic feedback loop [2][9] Group 2 - Employment data for January showed a significant increase in non-farm payrolls, with 130,000 jobs added, surpassing expectations of 65,000, indicating a recovery trend in the labor market [26][33] - The unemployment rate fell to 4.3%, better than the expected 4.4%, reflecting strong demand in the labor market [33][26] - The article notes that while employment growth is improving, the structure of job creation remains concerning, with a heavy reliance on the education and healthcare sectors, which contributed 137,000 jobs, accounting for 105% of the total job growth [27][14] Group 3 - The article highlights that the combination of "employment recovery and soft inflation" may influence the Federal Reserve's decision-making regarding interest rate cuts, suggesting that if inflation continues to decline and employment stabilizes, the Fed may have more flexibility in its policy [6][7] - The market's expectations for interest rate cuts have increased, with futures pricing indicating a higher likelihood of cuts later in the year, particularly in July and December [38][38] - The article emphasizes that the current economic indicators suggest a cautious approach from the Federal Reserve, as the labor market shows signs of recovery without significant inflationary pressures [6][7]

Global Monetary Policy Shift Tracking - Since the beginning of 2026, among 26 major economies tracked, only one has cut rates (Israel) and one has raised rates (Australia), while the US, Eurozone, and Japan have kept their policy rates unchanged [3][15]. - The Federal Reserve's current rate is maintained at 3.5%-3.75%, with a hawkish tone in the January FOMC meeting, indicating a strong economy and a cautious approach to future rate cuts, with market expectations of 2 rate cuts in 2026 [16][23]. - The European Central Bank (ECB) has also kept rates unchanged, with inflation stabilizing within the target range, leading to expectations that the ECB may not cut rates further in 2026 [17][23]. - The Bank of Japan (BOJ) is in a "quasi-stagflation" state, with expectations of 2 rate hikes in 2026, but faces challenges due to supply shortages and inflationary pressures [18][24]. Global Liquidity Tracking - The Federal Reserve's reserve balance has risen to approximately $2.94 trillion, nearing the desired range of 10%-12% of GDP, indicating a recovery in liquidity [7][34]. - Various liquidity spreads have improved, with the EFFR-IOER spread stable at -1bp and the SOFR-EFFR spread averaging around 2bp, reflecting a slightly tight liquidity environment [8][42]. - The US Treasury market shows stable liquidity, with slight increases in bid-ask spreads for 10Y Treasuries, while credit risk premiums remain low, indicating a stable credit market [10][51][57].

Core Viewpoint - The overall trend of inflation in January continues to improve, with CPI year-on-year dropping from 0.8% to 0.2% and core CPI from 1.2% to 0.8%, primarily due to the Spring Festival timing effect, while PPI year-on-year narrowed from -1.9% to -1.4% [2][7]. Group 1: CPI Analysis - CPI year-on-year decreased from 0.8% to 0.2%, mainly influenced by the Spring Festival timing effect, which resulted in a high base from the previous year [14]. - Food prices year-on-year fell from 1.1% to -0.7%, while energy prices dropped from -3.8% to -5% [15]. - Core CPI year-on-year decreased from 1.2% to 0.8%, with core goods prices rising from 2.5% to 2.6%, marking a continuous expansion for nine months [15][19]. Group 2: PPI Analysis - PPI month-on-month increased by 0.4%, marking the fourth consecutive month of growth, while the year-on-year decline narrowed from -1.9% to -1.4% [23][24]. - The increase in PPI is driven by the construction of a unified national market, which has led to price increases in certain industries such as cement and lithium batteries [24]. - Input factors, including overseas monetary easing and demand from the AI industry, have contributed to the price increases in the non-ferrous metal sector, while oil-related prices have decreased [10][24]. Group 3: Future Outlook - The probability of PPI turning positive year-on-year is expected to increase in the third quarter of this year, driven by continuous improvement in midstream supply and demand [4][8]. - The new price factors for PPI are expected to elevate the overall PPI index, with projections for Q1 to Q4 being approximately -1.2%, -0.2%, 0.4%, and 0.2% respectively [5][10]. - The impact of input factors and technical factors is anticipated to support the stabilization of PPI prices earlier than previously expected [10].

Global Wash Trading - The concept of "rate cuts + balance sheet reduction" is central to Wash's philosophy, emphasizing the need to reshape the relationship between monetary policy and fiscal policy, technology, and market dynamics [3][4][6] - The core logic behind rate cuts is based on the belief that the constraints on U.S. economic growth are supply-side rather than demand-side, with AI technology potentially enhancing productivity and efficiency [3] - The rationale for balance sheet reduction is that resource allocation should dynamically adjust according to the private sector's development, allowing the market to efficiently allocate resources when productivity improves [4][6] Impact on U.S. Monetary Policy - In the short term, Wash's ideas may have limited impact on the Federal Reserve's monetary policy due to the current economic conditions and the need for further verification of AI's productivity claims [7] - In the medium term, if the Fed under Wash's leadership recognizes the potential for low rates and no inflation growth driven by productivity, it may open up more policy space for rate cuts and balance sheet reduction [7] Market Implications - Recent market volatility is not solely attributed to Wash's nomination; rather, it is influenced by broader market trends and the narrative surrounding AI's impact on productivity [8] - Market fluctuations may amplify in 2026 if Wash reduces communication with the market, especially as global monetary policy shifts [8] - The core contradiction in the global market remains the evolution of political order and industrial structure, with the performance of U.S. dollar assets hinging on the realization of AI-driven productivity growth [9] Reflections on Chinese Assets - The global interest rate cycle is nearing its end, which is likely to amplify asset price volatility, necessitating consideration of this backdrop in the Chinese asset market [10] - The narrative of AI prosperity in the U.S. will influence foreign capital inflows into China; if the narrative holds, confidence in dollar assets may persist, delaying significant foreign investment in China [10] - Market focus is expected to shift towards fundamentals, profitability, and dividend support as key economic data and policy directions emerge in 2026 [11] - The pricing logic of gold is fundamentally different from that of silver, copper, and Bitcoin, with gold being viewed as a strategic asset amid global order restructuring [12] Core Insights - The identity of Wash is less important than whether the narrative of AI prosperity can transition into reality; the core constraint on the U.S. economy lies in the supply side, while China's economic constraints are demand-driven [13]

Key Points - The central bank acknowledges a resilient global economy but highlights challenges such as supply-demand imbalances [2][8] - The report indicates that exports will likely remain a crucial support for China's economy in 2026 [2][10] - The midstream manufacturing sector is expected to benefit the most from exports, with a clearer outlook for the next three to six months [2][11] Monetary Policy Insights - The central bank emphasizes the need for a moderately loose monetary policy, focusing on stable economic growth and reasonable price recovery [14][18] - The report introduces the goal of guiding reasonable growth in financial totals and balanced credit allocation [14][15] - The central bank plans to utilize various policy tools flexibly and efficiently, including interest rate adjustments [14][15] Structural Policy Changes - The report prioritizes expanding domestic demand over technological innovation in structural monetary policy [18][19] - There is an expectation for new policies related to domestic demand to be introduced, particularly in the context of financial support for key sectors [18][19] Exchange Rate Management - The central bank aims to enhance the exchange rate's role as a stabilizer for the macroeconomy and international balance of payments [19] - The report indicates that a more flexible and two-way floating exchange rate may become the norm, with risks associated with betting on a one-sided exchange rate [19][19]

Core Viewpoint - The book "The Absurdity and Wisdom of Taxes" by Michael Keen combines knowledge with enjoyment, making it accessible for non-professionals to understand the world of taxation [1]. Group 1: Structure and Themes of the Book - The book is organized by topics rather than a chronological timeline, making it a "taxation time-travel drama" [2]. - It consists of five parts: 1. Anecdotes from tax history, exploring key tax principles 2. The balance of taxation, focusing on fairness for beneficiaries and victims 3. Tax avoidance and government countermeasures 4. The dark side of taxation, including painful tax administration 5. Summary and outlook, providing 11 insights for future taxation based on historical lessons [2]. Group 2: Interesting Tax Stories - In the 19th century, British ships had a high accident rate due to taxation on port and lighthouse fees, which increased with the ship's size but not its draft [4][5]. - The introduction of window tax in Britain led to taxpayers sealing their windows to avoid higher taxes, resulting in decreased living quality and no fiscal gain [9][10]. - Property taxes based on width led to "skinny tall buildings" in Vietnam and Japan, distorting architectural designs [13][14]. - Historical taxes like the beard tax in Russia and hat tax in England aimed to change social behaviors, reflecting the use of taxation for cultural reform [17][19]. - The high taxation on athletes in the UK has led to a perception of "invisible discrimination," affecting their participation in events [20][21].

Economic Data and Events - The US manufacturing and services PMI, as well as consumer confidence, exceeded expectations, while employment data was significantly weaker than anticipated [2][14] - In the Eurozone, January manufacturing PMI showed a greater rebound than the initial value, but services PMI and retail sales fell short of expectations; inflation met expectations and remained stable compared to the previous value [2][14] - Japan's manufacturing and services PMI both improved in January [2][14] Upcoming Economic Data and Events - Key focus on the US non-farm payroll report for January to be released on February 11 and the US CPI data for January to be released on February 13 [3][16] Weekly Economic Activity Index - The US economic activity index remained stable, with the WEI index at 2.13% for the week ending January 31, down from 2.49% the previous week [4][18] - Germany's economic activity index returned to positive territory, with the WAI index at 0.1% for the week ending February 1, compared to -0.01% the previous week [5][18] Demand - US Redbook commercial retail year-on-year growth rate showed fluctuations, with a reading of 6.7% for the week ending January 30, down from 7.1% the previous week [6][21] - The US mortgage rate stabilized, with the 30-year mortgage rate at 6.11% on February 5, slightly up from 6.10% the previous week; mortgage applications fell, with the MBA market composite index at 330.8, down 8.9% week-on-week [6][24] Employment - Initial jobless claims rose to 231,000 for the week ending January 31, up from 209,000 the previous week; continuing claims increased from 1.819 million to 1.844 million for the week ending January 24 [7][27] - The number of job vacancies remained stable, with the Indeed job vacancy index at 103.9 as of January 30, slightly lower than the December average of 104.2 [8][29] Prices - Commodity prices experienced a significant pullback, with the RJ/CRB commodity price index down 3.3% week-on-week as of February 6 [9][34] - US gasoline prices stabilized at $2.75 per gallon for the week ending February 2, showing no change from the previous week [9][36] Financial Conditions - Financial conditions in the US and Europe showed signs of recovery, with the Bloomberg financial conditions index for the US at 0.755 on February 6, up from 0.539 the previous day [10][39] - Offshore dollar liquidity remained stable, with narrow fluctuations in swap basis [11][41] - High-yield dollar bond spreads widened but showed signs of recent recovery, with the spread-to-worst for JPMorgan's global BB-B rated dollar bonds at 256.3 basis points [11][43] - The yield spread between US and Japanese bonds narrowed, while the spread between Italian and German bonds widened [11][46] Fiscal Data - As of February 5, cumulative federal funding expenditures in the US increased by 3.8% year-on-year, totaling approximately $784.5 billion [12][49][52]

Core Viewpoint - The article discusses the GDP target adjustments of 31 provinces in China for the year 2026, highlighting a trend of downward adjustments and the implications for economic growth [4][6]. Summary by Sections GDP Target Adjustments - 16 provinces have lowered their GDP targets by 0.5 percentage points, while 12 provinces have kept their targets largely unchanged [6]. - The weighted average GDP target for 2026 across the 31 provinces is set at 5.27%, which is 0.27 percentage points higher than the national target of 5.0% for this year [6]. Specific Provincial Targets - Guangdong and Zhejiang are among 7 provinces that have set range targets, with Guangdong's target set between 4.5% and 5.5% [6]. - Historical context shows that only in 2016 and 2019 did major provinces set range targets, coinciding with significant economic events [6]. Economic Performance Indicators - In 2025, the GDP growth was reported at 5.5%, with fixed asset investment declining by 9.2%, and retail sales increasing by 4.2% [11]. - The expected GDP growth for 2026 is projected to be between 5% and 5.5%, with a focus on achieving better results in practice [12]. Investment and Consumption Goals - The investment target for 2026 includes starting over 2000 key projects, while the retail sales target is set to grow by approximately 4% [12][14]. - The focus on consumption includes expanding cultural industries and enhancing the quality of goods and services available [17]. Employment and Income - The target for urban employment in 2026 is to create around 680,000 new jobs, with an urban unemployment rate aimed at approximately 5.5% [12][18]. - The plan includes measures to increase disposable income for both urban and rural residents, aiming for growth rates above the national average [12][18]. Technological and Industrial Development - The emphasis on technological innovation includes establishing influential centers for smart automotive technology and quantum information [17]. - The strategy involves enhancing the capabilities of emerging industries and fostering a conducive environment for innovation [17].

Core Viewpoint - The article focuses on the recent trends in the real estate market, indicating improvements in second-hand housing indicators, but these are influenced by seasonal factors and require a cautious perspective. In the new housing sector, while improved properties are entering the market, there are still pressures on sales area and inventory, with no signs of recovery yet [2][4]. Group 1: Second-hand Housing - Sales have shown a narrowing decline, with a year-on-year decrease of 19.9% in sales area for 22 cities from January 1 to February 7, 2026, but this is primarily due to the Spring Festival timing. When adjusted for the lunar calendar, the year-on-year decline is -16% nationally and -26.8% for first-tier cities, which is an improvement from December 2025's figures of -27.9% and -37.4% respectively [4][11]. - Prices have seen a slight narrowing of decline, with a month-on-month decrease of -0.85% in January 2026, which is an improvement from December's -0.97%. Major cities like Beijing and Shanghai also experienced reduced price declines [14][15]. - Inventory has decreased seasonally, with a total of 2.56 million second-hand homes listed in January 2026, down from December 2025. Historical data shows a seasonal decline in listings during January and February [20][21]. Group 2: New Housing - Sales continue to face significant pressure, with a year-on-year decline of -7.2% in new housing transactions across 67 cities from January 1 to February 7, 2026. Adjusted for the lunar calendar, the decline is -44.7%, worsening from December 2025's -27.9% [25][28]. - Prices are on the rise due to the entry of improved properties, with the average price of new residential buildings at 17,000 yuan per square meter in January 2026, reflecting a month-on-month increase of 0.18% [30]. - Inventory levels have decreased in absolute terms, but the de-stocking cycle has lengthened, with the inventory of unsold residential area remaining stable at 400 million square meters as of December 2025, while the overall inventory, including land and pre-sold properties, is at 5.1 billion square meters, with the de-stocking cycle extending from 78 months to 84 months [33].