Core Viewpoint - The article discusses the potential implications of Trump's rumored intention to "fire" Powell, the Chairman of the Federal Reserve, and the resulting market reactions, including a significant sell-off in stocks, bonds, and currencies. Group 1: Rumors of Firing Powell - Recent rumors suggest Trump may "fire" Powell, leading to market volatility and concerns over the Federal Reserve's independence [2][5] - Trump's motivation for potentially firing Powell includes a desire for lower interest rates to stimulate the economy and alleviate fiscal pressure, as interest payments accounted for 16.9% of federal spending by June 2025 [22][33] - Legal challenges exist regarding Trump's ability to fire Powell, as he would need to prove "misconduct," and Powell could seek legal recourse to maintain his position [38][41] Group 2: Powell's Response and Potential Resignation - Powell has expressed a strong commitment to completing his term, stating he cannot foresee any reason other than death that would prevent him from doing so [3][45] - Historical precedents exist where Federal Reserve Chairs resigned under political pressure, but Powell's determination appears firm [3][45] Group 3: Next Chairman Nomination Process - If Trump successfully fires Powell, the nomination process for a new chairman could accelerate, with potential candidates including Waller, Hassett, and Basant [48][59] - The nomination process involves presidential nomination, Senate hearings, and confirmation, which can vary in duration [55] Group 4: Market Reactions - The market experienced a "triple kill" (stocks, bonds, and currencies all declining) in response to the rumors, with significant movements in the S&P 500 and U.S. Treasury yields [20][9] - Following Trump's denial of plans to fire Powell, market conditions stabilized, indicating the sensitivity of financial markets to political developments [20][8]

Core Viewpoint - The article discusses the recent economic indicators in the U.S., highlighting weaker-than-expected core CPI and strong retail performance, alongside potential tariff increases on European imports by the U.S. government [2][35][37]. Group 1: Economic Indicators - The U.S. June core CPI increased by 0.2% month-on-month, which was below the market expectation of 0.3%. Year-on-year, the core CPI was reported at 2.9%, matching expectations [35]. - June retail sales in the U.S. rose by 0.6% month-on-month, significantly rebounding from May, indicating a robust consumer spending environment [37]. Group 2: Tariff Developments - On July 12, President Trump announced a potential increase in tariffs on imports from the EU and Mexico to 30% if trade negotiations do not reach an agreement by August 1 [27]. - The U.S. Trade Representative (USTR) initiated a 301 investigation against Brazil on July 15, focusing on digital trade and intellectual property issues [27]. Group 3: Market Performance - Major developed market indices saw gains, with the S&P 500 up by 0.6% and the Hang Seng Index up by 2.8% during the week [2]. - The 10-year U.S. Treasury yield rose by 1.0 basis points to 4.4%, reflecting market reactions to economic data and tariff announcements [2][10]. Group 4: Currency and Commodity Movements - The U.S. dollar index increased by 0.6% to 98.46, while the offshore RMB depreciated to 7.1810 against the dollar [14][20]. - WTI crude oil prices fell by 1.6% to $67.3 per barrel, while COMEX gold prices decreased by 0.3% to $3349.4 per ounce [22][25].

Core Viewpoint - The article discusses the ongoing challenges and potential shifts in the international monetary system, particularly focusing on the decline of the US dollar and the implications of stablecoins in this context [3][4][5]. Group 1: Current Monetary System Challenges - Since early 2025, the narrative of "American exceptionalism" has been challenged, leading to a 12.5% decline in the US dollar index [3]. - Following the "reciprocal tariffs" impact in April, the US financial markets experienced simultaneous declines in stocks, bonds, and currency [3]. - The "Triffin Dilemma," which highlights the inherent instability of a unipolar international monetary system, is relevant to understanding the current situation [4]. Group 2: Historical Context and Theoretical Framework - The article references historical instances, such as the collapse of the Bretton Woods system and the UK's currency crisis in 1931, to illustrate the recurring nature of these monetary challenges [4]. - The discussion emphasizes that the current issues with the dollar system are not isolated but are part of a broader historical pattern of monetary instability [4]. Group 3: Role of Stablecoins - The article raises questions about the nature and functions of stablecoins, exploring their potential roles in the monetary system and their relationship with the US dollar [5]. - It suggests that discussions around stablecoins should return to fundamental questions about the essence and functions of money [5]. Group 4: Political and Economic Interconnections - The relationship between alliance politics, monetary relations, and strategy is highlighted, indicating that the dollar and gold issues are deeply intertwined with broader political concerns, such as US-NATO relations [6]. - The article stresses the importance of understanding economic policies in conjunction with strategic and foreign policy issues, particularly in the context of a chaotic international monetary system [6].

Core Insights - The article discusses the rising attention towards "anti-involution" in the market, highlighting significant misunderstandings regarding the concept, particularly in the context of supply-side reforms and the various hidden mechanisms involved in "anti-involution" [4]. Deep Dive Topics - The "anti-involution" topic has gained traction, but there is a considerable divergence in understanding, with many interpreting it through a supply-side reform lens, which may lead to misinterpretations [4]. - The article emphasizes that beyond production adjustments and self-discipline discussions, there are numerous hidden strategies associated with "anti-involution" [4]. Hot Topics - Since June, there has been a resurgence of the "golden-haired girl" trading phenomenon overseas, with domestic sentiment also heating up. The article questions which data might exceed expectations and whether the market's main narrative will shift due to the effects of tariffs [8]. - The importance of "strategic resources" has been underscored in the context of changing global trade dynamics, prompting an exploration of which resources in China possess strategic attributes and how they should be developed in the future [10]. High-Frequency Tracking - The role of "export grabbing" is evolving, with a shift from emerging markets to the United States, indicating a change in export dynamics [13]. - Credit improvement is primarily driven by short-term loans to enterprises, reflecting a trend in financial data [17]. - The June economic data reveals five significant anomalies, suggesting new changes in the economy that may be hidden [21]. - The article notes that the third quarter will serve as a verification period for tariff-induced inflation effects, with a focus on the June Consumer Price Index (CPI) data [24]. - Domestic infrastructure construction has shown a continuous recovery, while industrial production remains relatively stable, although there is a divergence in the construction sector and a slowdown in real estate transactions [26]. - The expiration of tariff exemptions has led to declines in most developed markets, indicating a potential impact on international trade dynamics [29].

Group 1 - Rare earths are a crucial strategic resource for China due to their key roles in military and high-tech fields, with China holding a complete industrial chain [1][7][16] - China's rare earth production accounts for 70% of global output, with projections for 2024 indicating a production of 270,000 tons, representing 68.5% of global total [1][8][16] - Despite ongoing trade tensions, the U.S. maintains a high dependency on Chinese rare earths, with reliance stabilizing around 75% in recent years [1][8][16] Group 2 - China possesses a complete industrial chain in the rare earth sector, from mining to application, making it difficult for other countries to establish alternative supply chains [2][16] - The rare earth industry is segmented into upstream mining, midstream processing, and downstream manufacturing, with only China achieving full coverage across all segments [2][16] Group 3 - Other products with "extreme reliance" on China include chemicals and mineral metals, particularly in the U.S., where 98 products have over 90% import reliance from China, totaling $16.25 billion [3][19][25] - The U.S. has seen a significant increase in dependency on mineral metals, with reliance jumping from 0% in 2022 to 100% in 2024 [3][25][33] - Chemical imports from China have also surged, with the dependency rising from 28.9% in 2010 to 93.8% in 2024 [3][25][49] Group 4 - Products with strategic value similar to rare earths include certain chemicals and metals, with a total import scale of $1.5 billion, indicating potential as key bargaining chips in trade negotiations [4][39][40] - Key materials such as lithium battery additives and active pharmaceutical ingredients are dominated by Chinese production, making them difficult to replace [4][33][39] Group 5 - China's global export share has remained high over the past 20 years, particularly in chemicals, which have seen a 21.1 percentage point increase since 2010 [5][42][49] - The U.S. has significantly increased its import share of chemicals from China, rising from 34.1% in 2010 to 95.4% in 2024, highlighting China's critical role in the U.S. supply chain [5][49]

Group 1: Industrial Production - Industrial production remains relatively stable, with the blast furnace operating rate maintaining at 0.7% year-on-year [2][5][8] - The chemical production chain shows a slight decline, with soda ash and PTA operating rates down by 2.6 percentage points to 6% and 0.9 percentage points to 1.3%, respectively [2][15] - The automotive sector's semi-steel tire operating rate is still below last year's level, increasing by 2.7 percentage points to -6.3% [2][15] Group 2: Construction Industry - The construction industry shows a mixed performance, with the nationwide grinding operating rate down by 2.4 percentage points to 3.7% [2][27] - Cement shipment rates remain low, with a year-on-year increase of 1.2% to -3% [2][27] - Asphalt operating rates have seen a recovery, increasing by 0.6 percentage points to 7.4% [2][35] Group 3: Real Estate Transactions - Real estate transactions are at a low point, with the average daily transaction area for new homes down by 19.1% year-on-year, despite a 13.1% increase [2][44] - First-tier cities continue to see a decline in transactions, down by 18.6% to 39.9% [2][44] - Third-tier cities show significant improvement, with transaction volumes increasing by 72.4% to 17% [2][44] Group 4: Transportation and Shipping - National railway and highway freight volumes have decreased, with year-on-year declines of 1.3% to 1.2% and 0.9% to 0.8%, respectively [2][54] - Port cargo throughput and container throughput have also shown a decline, down by 9.3% to 6.8% and 4.7% to 0.9%, respectively [2][54] - The overall intensity of human mobility remains high, with a slight year-on-year decrease of 2% to 12.6% [2][63] Group 5: Price Trends - Agricultural product prices are mixed, with pork and vegetable prices rising by 0.1% and 0.8% respectively, while egg and fruit prices fell by 2.2% and 0.1% [3][85] - Industrial product prices have generally increased, with the South China industrial price index rising by 1.1% [3][93] - The energy and chemical price index increased by 1.3%, while the metal price index rose by 0.7% [3][93]

Core Viewpoint - The article discusses the rising importance of "anti-involution" in the market, highlighting significant misunderstandings regarding the concept of "involution" and its implications for supply-side reforms and economic structure transformation [2][3]. Group 1: Misunderstanding of "Involution" - "Involution" is not equivalent to "overcapacity"; it arises from strong demand leading to proactive supply increases, contrasting with passive overcapacity due to demand decline [3][4]. - The price behavior differs: "overcapacity" leads to price drops due to demand decline, while "involution" results in chaotic price competition despite strong demand [3][4]. - Supply-side reforms previously addressed overcapacity in high-energy sectors, while current "anti-involution" focuses on the middle and lower reaches of the supply chain, particularly among private enterprises [4][5]. Group 2: Targeted Areas of "Anti-Involution" - The high-energy sector has undergone significant capacity upgrades, and traditional backward capacities are not as prominent as before [5][6]. - Policies may target specific industries with excessive production, such as coal and pork, to stabilize prices, but the focus is more on aligning supply with demand rather than drastically reducing supply [6][7]. Group 3: Policy Mechanisms - Effective "anti-involution" strategies should not solely rely on self-discipline talks but should include industry mergers, raising standards, and matching supportive policies [8][9]. - Encouraging the development of non-overcapacity sectors, such as services, is crucial to rebalancing demand structures and addressing the root causes of "involution" [8][9]. Group 4: Equipment Update and Debt Management - Addressing the issue of equipment updates is vital, as many industries retain old equipment while acquiring new, which can lead to inefficiencies [9][142]. - The current situation shows a significant increase in overdue accounts, particularly among private enterprises, indicating a need for stricter debt management policies [152][160].

Overview - The core CPI data for June in the US was slightly weaker than expected, but the inflation effects of tariffs are becoming more evident. The CPI year-on-year was 2.7%, slightly above the market expectation of 2.6%, while the core CPI was 2.9%, matching expectations. The month-on-month core CPI was 0.2%, below the expected 0.3% [3][38] - The 10-year US Treasury yield and the US dollar index initially fell but later rebounded, indicating market expectations of stronger future inflation [11][38] Structure - The main drivers of the CPI rebound in June were crude oil, core goods (excluding new and used cars), and non-rent services. The energy CPI rose by 0.9% month-on-month, compared to a previous decline of 1.0%, reflecting the increase in global oil prices [4][39] - Core goods inflation showed signs of warming, with the core goods CPI rising by 0.2% month-on-month, indicating the gradual impact of tariffs. However, the CPI for new and used cars remained weak, with used car prices dropping by 0.7% [20][39] - Rent inflation slightly slowed, with a month-on-month increase of 0.2%, down from 0.3% in May. However, core non-rent service inflation rebounded, with medical, transportation, and entertainment services showing month-on-month increases [39][40] Outlook - The second half of the year may see continued upward pressure on US inflation, with the third quarter being a critical verification period for tariff inflation effects. The combination of increased tariff revenues and strong cost-pass-through willingness from US companies may lead to a rise in inflation [5][28] - The Federal Reserve is expected to initiate interest rate cuts in September, with two cuts anticipated within the year, despite the potential for rising inflation in the third quarter [34][40]

Core Viewpoints - The June economic data reveals five significant "anomalies," indicating new changes in the economy lurking in hidden corners [3][9][110] - Despite strong performance in exports and industrial production, the second quarter GDP remained flat at 5.2%, aligning with market expectations [2][9][107] - The construction industry showed a notable decline, with total output value in the first half of the year growing only 0.2% year-on-year, significantly lower than the 2.5% growth in the first quarter [3][9][107] Economic Indicators - GDP: The second quarter GDP growth was 5.2%, matching expectations, while industrial value-added growth in June was 6.8%, exceeding expectations of 5.5% [2][7][107] - Retail Sales: June retail sales grew by 4.8%, below the expected 5.6%, with significant declines in both commodity retail and catering income due to misaligned e-commerce promotions and competitive subsidies from food delivery platforms [2][20][82] - Fixed Asset Investment: June's fixed asset investment growth fell to 0%, the lowest in three years, primarily due to a decline in investment prices and significant drops in construction and manufacturing investments [4][23][66] Sector Analysis - Real Estate: Although credit financing for real estate improved significantly in June, investment growth declined to -12.9%. The reduction in ongoing projects due to earlier declines in new starts continues to impact the sector negatively [4][30][109] - Industrial Production: The industrial value-added surged due to an increase in working days and "export rush," with textile and chemical raw materials sectors showing recovery, while automotive and steel production weakened [5][41][54] - Consumer Behavior: The decline in retail sales was influenced by the timing of e-commerce promotions, with significant drops in categories like home appliances and communication equipment [20][82][108] Long-term Outlook - The "front-loading effect" may lead to a switch in economic strength between the first and second halves of the year, with the concentrated adjustment phase of the economy since 2022 nearing its end [6][46][110] - The overall economic growth target for the year remains achievable at 5.0%, despite anticipated fluctuations in economic indicators in the second half [46][110]

Core Viewpoint - The improvement in credit is primarily driven by the rapid growth of short-term loans from enterprises, with a monthly year-on-year increase of 490 billion [3][46] - In June, total new credit reached 2.24 trillion, with a year-on-year increase of 110 billion, where enterprise loans increased by 1.4 trillion, mainly from short-term loans [3][46] - The cautious attitude of enterprises towards long-term investments is reflected in the decline of the PMI business expectation index from 53.3 to 52.0 [3][46] Credit and Loan Analysis - In June, household loans showed a mild improvement, largely attributed to operational loans rather than consumer or housing loans, with operational loans accounting for 73.7% of new household loans [3][13] - The total household loans increased by 1.17 trillion in the first half of the year, with operational loans rising by 923.9 billion [3][13] - The slow growth in consumer loans may be linked to current employment prospects, as indicated by the BCI employment expectation index at 49.1 [3][13] Social Financing and Government Bonds - The year-on-year increase in social financing scale has expanded, primarily due to net financing from government bonds, with a total increase of 4.7 trillion in the first half of the year [4][47] - The net financing from government bonds contributed 4.3 trillion to the social financing increase, but this rapid improvement phase may be coming to an end [4][47] - Moving into the third quarter, the high base of government bond net financing may lead to a more stable growth rate in social financing [4][47] Monetary Policy Outlook - The monetary policy will be adjusted based on domestic and international economic conditions, with a focus on the timing and intensity of policy implementation [4][22] - The People's Bank of China indicated that the effects of already implemented monetary policies will continue to manifest over time [4][22] - New policy financial tools introduced in the second half of the year may help stimulate credit growth and stabilize the economy [4][22] Regular Monitoring of M1 and M2 - In June, new credit totaled 2.24 trillion, with a year-on-year increase of 110 billion, mainly driven by the enterprise sector [5][48] - The structure of loans shows that short-term loans increased by 1.16 trillion, while medium and long-term loans saw a smaller increase of 400 billion [5][48] - The M2 growth rate rose by 0.4 percentage points to 8.3%, while M1 increased by 2.3 percentage points to 4.6% [5][49]