Core Viewpoint - The U.S. real estate market is in a downward cycle from 2024 to 2025, with potential for recovery in 2026 depending on stabilization in property sales and continued interest rate cuts by the Federal Reserve [1][6]. Group 1: U.S. Real Estate Market Dynamics - The core contradiction in the U.S. real estate market is insufficient demand, with supply shortages being secondary. Despite a decline in mortgage rates since 2025, housing sales and investment remain weak, indicating a shift to a "buyer's market" [1][10][77]. - The average monthly cost of homeownership is $3,060, accounting for 43.2% of household income, significantly higher than the $2,227 monthly rental cost. This high cost is primarily due to elevated home prices and mortgage rates [2][19][69]. - To bring homeownership costs down to rental levels, mortgage rates would need to decrease from the current 6.2% to 3.7% [2][69]. Group 2: Federal Reserve's Interest Rate Policy - The Federal Reserve is expected to cut interest rates 1-2 times in 2026, but the downward potential for long-term Treasury yields is limited. The central tendency for the 10-year Treasury yield is projected to be around 4.0% by the end of 2026 [3][35][41]. - The relationship between mortgage rates and the 10-year Treasury yield suggests that even with Fed rate cuts, mortgage rates may not significantly decline, limiting the potential for improved housing demand [3][41][69]. Group 3: Trump's Real Estate Policy Initiatives - The Trump administration has proposed five key initiatives aimed at stimulating the real estate market, including transferable mortgages and a ban on large institutional purchases of single-family homes. However, the effectiveness of these measures is questioned [4][52][55]. - The proposed $200 billion MBS purchase by Fannie Mae and Freddie Mac may have a negligible impact on mortgage spreads, estimated to be less than 10 basis points [4][55][56]. - Long-term solutions to the housing crisis require increasing housing supply, but high construction costs and labor shortages pose significant challenges [4][56][65]. Group 4: Market Outlook - The U.S. real estate market is expected to show only weak recovery in 2026, with slight improvements in property sales as mortgage rates gradually decline. This may also positively impact exports of real estate-related goods from China to the U.S. [4][65][71].

Overview - The U.S. added 50,000 non-farm jobs in December, slightly below the expected 65,000, while the unemployment rate fell to 4.4% [1][7] - The labor force participation rate decreased by 0.1 percentage points to 62.4% [7][10] - Market reactions were muted following the data release, with slight fluctuations in the 10-year Treasury yield and the dollar index [1][10] Structure: Understanding the Divergence Between Non-Farm Employment and Unemployment Rate - December's employment in the goods-producing sector was weak, influenced by tariff impacts and other factors [18][20] - The construction sector saw a decrease of 11,000 jobs, while manufacturing employment declined further, reflecting the lagging effects of tariffs [18][20] - Private service sector jobs increased by 58,000, up from 32,000 in the previous month [18][20] - The decline in the unemployment rate to 4.4% was primarily due to tightening labor supply and temporary layoffs being reversed [25][28] Outlook: U.S. Economy Continues "Low-Growth Balance" and Fed Rate Cut Expectations May Be "Delayed" - The characteristics of the U.S. economy in 2026 may include a "low-growth balance" in employment and "jobless prosperity" [28][30] - The anticipated tax cuts in the first half of 2026 could stimulate consumer spending and inflation, potentially leading to a delayed pace of Fed rate cuts [30][34] - The market has adjusted its forecast for Fed rate cuts in 2026 from 2.25 times to 2.10 times following the employment data release [30][34]

Core Viewpoint - The article discusses the relationship between the Chinese yuan and Hong Kong stocks, highlighting their historical positive correlation and the recent divergence due to various market factors [2]. Group 1: Yuan and Hong Kong Stocks - Historical analysis shows a significant positive correlation between the yuan and Hong Kong stocks, influenced by stock earnings, asset revaluation, and foreign capital inflow [2]. - Recent yuan appreciation has not led to an increase in Hong Kong stocks due to weak performance in key sectors and a focus on profit-taking, resulting in limited market responsiveness [2]. - Future projections suggest that as Hong Kong stock earnings improve and foreign capital allocation resumes, the negative correlation with the US dollar may return, with yuan appreciation potentially aiding stock price increases [2]. Group 2: Investment Trends - Equipment investment has shown strong growth, reflecting either a phase of the Juglar cycle or a new stage of economic transformation, raising questions about sustainability in 2026 [8]. - The structure of equipment investment indicates that non-manufacturing sectors account for 35%, with significant contributions from services and construction [8]. Group 3: New Infrastructure Development - The article emphasizes the importance of "new infrastructure" as a core component of broader infrastructure initiatives, advocating for proactive development in technology and digital transformation [9]. - The "14th Five-Year Plan" and "15th Five-Year Plan" highlight the need for advanced infrastructure, including 5G networks and data centers, to enhance efficiency and connectivity [9].

Core Viewpoints - The surge in copper and gold prices, influenced by input factors, has led to a continued rise in inflation for December [2][8] - December's PPI increased primarily due to the rise in copper prices, while other commodity prices and mid-to-lower stream PPI showed weak performance [2][8] - The CPI for December rose year-on-year, supported by high gold prices, although core CPI excluding gold remained low [2][16] Inflation Data Summary - The National Bureau of Statistics reported December CPI at 0.8% year-on-year, up from 0.7% in the previous month, and a month-on-month increase of 0.2% [1][7] - December PPI was reported at -1.9% year-on-year, an improvement from -2.2% previously, with a month-on-month increase of 0.2% [1][7] PPI Analysis - The increase in PPI was driven by a 7.9% rise in copper prices, contributing significantly to the PPI increase [2][8] - Coal prices had a minor positive contribution to PPI, while the decline in international oil prices negatively impacted domestic oil prices, dragging PPI down by -0.05% [2][8] - The underutilization of mid-to-lower stream capacity hindered the transmission of upstream price increases, further affecting PPI negatively [2][8] CPI Breakdown - Food CPI rose by 0.9 percentage points to 1.1% year-on-year, with fresh vegetables and fruits seeing significant price increases due to supply constraints [3][23] - The price of pork, heavily influenced by anti-involution effects, remained low, with pork CPI at -14.6% [3][23] - Service CPI decreased by 0.1 percentage points to 0.6%, primarily due to weak rental demand affecting housing costs [3][29] Future Outlook - The ability of anti-involution policies to sustain price increases in the mid-to-lower stream is critical, with ongoing monitoring of policy effects [4][40] - Commodity prices have only explained about 30% of PPI fluctuations in the past three years, with more influence from mid-to-lower stream price declines [4][40] - High gold prices and improvements in service consumption may support core CPI increases, although the high base effect from the Spring Festival may limit January's CPI growth [4][40] Regular Monitoring - December CPI showed a continued rise, with significant contributions from food items [4][74] - Non-food CPI categories such as household appliances and transportation also saw increases, while overall service CPI experienced a decline [4][74]

Core Viewpoint - The "15th Five-Year Plan" suggests "moderate advanced new infrastructure construction," emphasizing the need for local governments to implement this requirement through tailored approaches based on regional characteristics [1][59]. Group 1: Understanding "Moderate Advanced New Infrastructure" - The "15th Five-Year Plan" emphasizes "moderate advanced construction," focusing on the development of information communication networks, integrated computing networks, and major technological infrastructure, while also promoting the digital transformation of traditional infrastructure [2][60]. - The scope of new infrastructure has significantly expanded compared to the "14th Five-Year Plan," now covering communication networks, data, and computing fields, driven by the digital transformation of the economy [2][9]. - From 2019 to November 2025, investments in electricity, heat, internet software, and logistics have increased by 10.4%, 5.0%, and 4.1% respectively, indicating the core investment attributes of new infrastructure [12][61]. Group 2: Commonalities and Differences in Local Infrastructure Layout - Local governments focus on integrating infrastructure and enhancing information infrastructure, with 28 regions proposing the digital transformation of traditional infrastructure [3][15]. - In the North China region, the focus is on building national data hubs and integrating energy transformation, with Beijing leading in data management and resource centers [3][29]. - The East and South China regions leverage their advantages in low-altitude economies and water transport systems, emphasizing low-altitude infrastructure and smart upgrades to water transport [3][35]. Group 3: Policy Support for New Infrastructure in 2026 - Fiscal policies have increased support for new infrastructure through policy financial tools, with the China Development Bank providing 98.02 billion yuan for digital economy and AI projects [5][43]. - Monetary policies have introduced tools like technology innovation loans to support new infrastructure, with green loans and loans for infrastructure upgrades showing growth rates of 17.5%, 25.1%, and 22.3% respectively [6][49]. - Regulatory measures will optimize spatial layouts, control hidden debts, and prevent redundant construction, aiming to enhance the overall effectiveness of new infrastructure development [6][52].

Group 1 - The core viewpoint of the article emphasizes the implementation of new policies for equipment updates and consumer goods trade-in subsidies in 2026, aimed at stimulating consumption and supporting economic growth [2][3][4] - The 2026 policy expands the scope of equipment updates to include the installation of elevators in old residential areas and support for various sectors such as elderly care and fire rescue [2][3] - The subsidy for new energy passenger vehicles is set at 12% of the vehicle price, with a maximum of 20,000 yuan, while the subsidy for fuel vehicles is 10% with a cap of 15,000 yuan [3][4] - The new policy simplifies the categories of consumer goods eligible for trade-in subsidies, reducing from 12 to 6 categories, focusing on high-efficiency products [3][4] Group 2 - The 2026 budget for early investment in "two heavy" construction projects is approximately 2,950 billion yuan, with a significant increase in funding for urban underground pipelines and high-standard farmland [5][6] - The new personal housing sales tax policy reduces the tax rate for properties sold within two years from 5% to 3%, while properties sold after two years are exempt from tax [7][8][9] - The national fiscal work conference emphasizes the continuation of proactive fiscal policies to boost domestic demand, support innovation, and promote green transformation [10][11] - The State Council meeting outlines measures to promote cross-border trade facilitation, enhancing logistics efficiency and supporting new business models like cross-border e-commerce [12][13]

Core Viewpoint - The article argues that the high growth in equipment investment is not primarily driven by the "Two New" policies or the manufacturing Juglar cycle, but rather by strong investment in broad infrastructure and the service sector [2][9][71]. Group 1: Misconceptions about Equipment Investment Growth - Misconception 1: The strong equipment investment is attributed to the "Juglar cycle"; however, it is actually driven by robust growth in broad infrastructure and service sector investments. In 2024, the growth rates for equipment purchases in construction (65.5%), narrow infrastructure (46.1%), public utilities (16.5%), and services (13.9%) significantly outpaced manufacturing (6.5%), contributing an additional 8.1 percentage points to overall equipment investment [2][9][71]. - Misconception 2: The strong equipment investment is influenced by the "Two New" policies; however, the investment rhythm and structure contradict this view. Special government bonds supporting the "Two New" policies will intensify in the second half of 2024, but by February 2024, manufacturing investment and equipment purchase investment had already surged significantly [2][9][71]. - Misconception 3: The strong manufacturing investment is a result of strong equipment investment; in reality, it stems from construction and installation investments (expansion investments). Since 2024, while manufacturing and equipment purchase investments have grown simultaneously, the growth in equipment investment is not solely derived from manufacturing [3][21][71]. Group 2: Drivers of High Equipment Investment Growth - Reason 1: The establishment of a modern industrial system has driven strong digital infrastructure growth, combined with natural renewal cycles and recovery in travel demand, boosting narrow infrastructure and construction equipment investments. In 2024, narrow infrastructure equipment purchases contributed 4.3 percentage points to total equipment investment, exceeding manufacturing's contribution [4][25][77]. - Reason 2: The acceleration of energy transition and thermal power renovation investments in the central and western regions has strengthened public utility equipment investments, particularly since the intensification of the "dual carbon" policy in 2021. Public utility equipment investment has consistently outpaced construction investment by nearly 10 percentage points since 2021 [4][32][77]. - Reason 3: Increased fiscal spending on research and improvement in travel chain demand have boosted service sector equipment investments. Since 2023, service sector equipment investments have shown a trend of being stronger than construction investments, with significant growth in sectors like leasing and scientific research [5][42][77]. Group 3: Sustainability of High Equipment Investment Growth - Main Line 1: Narrow infrastructure is expected to rebound significantly, especially in digital infrastructure and hub-type investment construction. Recent policy measures, including the issuance of special bonds and financial tools, are set to support new infrastructure investments [6][48][79]. - Main Line 2: The "dual carbon" policy is expected to enhance investments in equipment for carbon reduction, including renovations in high-energy-consuming industries and investments in renewable energy [6][53][79]. - Main Line 3: Policies related to "investment in people" are likely to be significantly intensified, with service sector equipment investments related to consumer infrastructure expected to recover actively [6][58][79]. - Main Line 4: Equipment investments related to external demand are expected to remain resilient, particularly in sectors supporting the industrialization of emerging economies [6][63][79].

Group 1: Industrial Production Trends - The industrial production shows a mixed trend, with an increase in high furnace operation and steel consumption. The high furnace operating rate increased by 0.7% week-on-week and rose by 1.3 percentage points year-on-year to 90% [2] - Steel apparent consumption increased by 0.9% week-on-week and rose by 4.4 percentage points year-on-year to 220 million tons [2] - The social inventory of steel continued to decline, down by 2.5% [2] Group 2: Weakness in Petrochemical and Consumer Chains - In the petrochemical chain, the soda ash operating rate decreased by 1.7% week-on-week and fell by 4.3 percentage points year-on-year to -2.4% [6] - The PTA operating rate saw a slight increase of 0.2% week-on-week but decreased by 1.8 percentage points year-on-year to -8.4% [6] - In the consumer chain, the polyester filament operating rate increased by 0.3% week-on-week and rose by 0.8 percentage points year-on-year to 1.8%, while the operating rate of automotive semi-steel tires decreased by 2.7% week-on-week and fell by 2.1 percentage points year-on-year to -9.2% [6] Group 3: Construction Industry Insights - Cement demand showed marginal improvement, with the national grinding operating rate decreasing by 3.8% week-on-week and falling by 3.9 percentage points year-on-year to 4.7% [11] - The cement shipment rate decreased by 1.1% week-on-week but increased by 0.4 percentage points year-on-year to -1.4% [11] - Cement inventory continued to decline, down by 1.7% week-on-week and up by 0.1 percentage points year-on-year to 0.5% [11] Group 4: Demand Tracking - The average daily transaction area of commercial housing in 30 major cities decreased by 26.1% week-on-week and fell by 0.5 percentage points year-on-year to -26% [20] - First and second-tier cities saw improvements in transactions, with year-on-year increases of 1% and 7.6% respectively, while third-tier cities experienced a year-on-year decline of 21.2% to -50.8% [20] - Port cargo throughput showed a recovery, with a year-on-year increase of 3.7 percentage points to 3.2% [25] Group 5: Price Trends - Agricultural product prices showed divergence, with egg and vegetable prices decreasing by 0.8% and 2.8% respectively, while fruit prices increased by 0.8% [48] - The industrial product price index increased by 0.6% week-on-week, with the energy and chemical price index decreasing by 0.2% and the metal price index increasing by 1.9% [54]

Core Viewpoint - The article discusses the significant correlation between the Hong Kong stock market and the Renminbi (RMB) since 2016, highlighting a recent divergence where the RMB appreciated rapidly while the Hong Kong stock market struggled to gain momentum [1][2]. Group 1: RMB and Hong Kong Stock Market Relationship - Historically, there has been a notable positive correlation between the RMB and the Hong Kong stock market, with a negative correlation of -0.54 between the Hong Kong stock index and the USD/RMB exchange rate since 2016 [2][7]. - When the RMB appreciates by more than 1.5% in a month, the Hang Seng Index has a 93.5% probability of rising in that month [2][7]. - However, since November 13, 2025, the RMB appreciated by 1.9%, while the Hang Seng Index fell by 4.8%, marking a significant divergence from historical trends [2][24]. Group 2: Reasons for the Divergence - The weak performance of key sectors in the Hong Kong stock market has limited the RMB's ability to amplify profits for Hong Kong-listed companies [3][30]. - The appreciation of the RMB can both amplify profits and losses, and the earnings per share (EPS) for the Hang Seng Index has been declining since the fourth quarter of 2025, weakening the revaluation effect [3][30]. - The real estate and energy sectors, which are typically favored during RMB appreciation, have not stabilized, further dragging down the Hong Kong stock market [3][30]. Group 3: Future Outlook for RMB and Hong Kong Stock Market - There is potential for the Hong Kong stock market to realign with the RMB as earnings improve and foreign capital flows increase [4][50]. - The combination of rising earnings expectations and the current downward adjustment in profit forecasts may signal a recovery in the Hong Kong stock market [4][50]. - The recovery of the Producer Price Index (PPI) could attract foreign investment, enhancing the reallocation of domestic savings towards the Hong Kong stock market [4][58]. - Looking ahead, the RMB's appreciation may once again support the Hong Kong stock market, especially after the year-end profit-taking period ends, which typically leads to a strong January effect [4][67].

Group 1: Major Asset Performance - The Hang Seng Index and other major indices saw mixed performance, with the Hang Seng Index rising by 2.0% and the Nasdaq falling by 1.5% [2][8][13] - In the US, the S&P 500 sectors mostly declined, with energy and utilities up by 3.3% and 0.9% respectively, while consumer discretionary and information technology fell by 3.2% and 1.5% [8] - Emerging market indices generally increased, with the Korean Composite Index rising by 4.4% and the Ho Chi Minh Index by 3.2% [2] Group 2: Bond Yields - Developed countries' 10-year bond yields mostly increased, with the US yield rising by 5.0 basis points to 4.19% [19] - Emerging market 10-year bond yields also saw increases, with Turkey's yield up by 133.0 basis points to 29.06% [22] Group 3: Currency Movements - The US dollar index rose by 0.4% to 98.46, while other currencies depreciated against the dollar, including the euro and the British pound [25][35] - The offshore and onshore RMB appreciated against the dollar, with the onshore rate at 6.9890 [35] Group 4: Commodity Prices - Most commodity prices increased, with WTI crude oil rising by 1.0% to $57.3 per barrel, while gold and silver prices fell significantly, with gold down by 5.0% to $4317.8 per ounce [40][46] - Base metal prices saw an overall increase, with LME copper up by 2.4% to $12,510 per ton [46] Group 5: Geopolitical Events - The US military conducted airstrikes in Venezuela, escalating tensions in the region [56] - The Japanese government announced a record-high budget for the fiscal year 2026, totaling 122.3 trillion yen, a 6.3% increase from the previous year [61] Group 6: Trade Policy Updates - The US postponed tariff increases on soft furniture and kitchen cabinets from January 1, 2026, to January 1, 2027, maintaining the current 25% tariff rate [66] - The US Trade Representative announced a delay in additional tariffs on Chinese semiconductors for 18 months, starting with an initial rate of 0% [66] Group 7: Federal Reserve Insights - The Federal Reserve's December meeting minutes revealed a division among officials regarding future interest rate cuts, with some advocating for a pause to assess the impact on the economy [68] - Many participants noted that tariffs' inflationary effects are expected to diminish over time [68]