Core Viewpoint - The PPI may turn positive in certain months of Q2 2026 due to low base effects and sustained demand in AI-related industries, but its sustainability depends on whether real estate investment stabilizes [2][17]. Group 1: Price Data Overview - In January 2026, the CPI decreased by 0.6 percentage points year-on-year to 0.2%, while the PPI increased by 0.5 percentage points to -1.4% due to input inflation [4]. - The impact of the price data revision is minimal, with the average effect on CPI and PPI year-on-year indices being approximately 0.06 and 0.08 percentage points, respectively [5]. - The weight distribution of CPI categories remains largely unchanged, with food, clothing, and housing accounting for significant portions of the index [5]. Group 2: Industry Contributions to PPI - The weight of midstream industries like electrical machinery and electronic equipment manufacturing, as well as non-ferrous metals, has steadily increased, while the share of black-related and downstream industries has slightly decreased [6]. - Gold prices have significantly supported CPI, contributing 0.3 percentage points, while AI-related investments have driven PPI up by 0.9 percentage points [8]. - In January, the PPI for non-ferrous metal mining and smelting industries rose by 22.7% and 17.1% year-on-year, respectively, contributing 1.1 percentage points to the PPI increase [8]. Group 3: Future PPI Trends - The PPI is expected to turn positive in Q2 2026, with tail effects contributing to this change, potentially moving from -1.5 percentage points at the beginning of the year to around +0.4 percentage points by July [13]. - If the PPI's month-on-month average stabilizes above 0%, it could lead to a positive year-on-year PPI by June, with a potential increase of around 1% [16]. - The sustainability of price increases will depend on downstream demand and the stabilization of real estate investments, which have been a drag on PPI due to declining property investments [17].

Core Viewpoint - AI has become an indispensable part of global trade, with China being the largest exporter of AI products and the U.S. leading in AI investment, which directly impacts the export dynamics of China [1][2][23]. Group 1: AI Investment and Economic Impact - AI investment has significantly contributed to the U.S. economy, boosting the actual GDP growth rate by 0.8 percentage points in the first three quarters of 2025, making it a crucial growth engine [4]. - By mid-2025, AI investment in the U.S. is projected to account for 5% of GDP, surpassing the peak levels seen during the "dot-com bubble" in 2000 [4]. - Global AI spending is estimated to reach $1.8 trillion in 2025 and expand to $2.5 trillion by 2026, with the IMF forecasting a global economic growth rate of 3.3% in 2026 due to the AI investment boom [4]. Group 2: AI Trade Growth - AI-related trade is experiencing rapid growth, with a projected year-on-year increase of 21.7% in the second quarter of 2025, significantly outpacing the 4.2% growth of non-AI related trade [6]. - AI-related products are expected to constitute 15% of global trade by 2025, contributing over 40% to the overall growth of global merchandise trade [6]. - The WTO estimates that by 2040, global trade volume will increase by 34%-37% compared to 2025, with global GDP rising by 12%-13% due to the diffusion of AI technology and related trade [6]. Group 3: AI Product Categories and Trade Dynamics - The AI industry chain consists of five layers: hardware, cloud computing, data, models, and applications, with trade primarily focused on the hardware layer [9]. - The narrow definition of AI-related trade encompasses 104 categories, while a broader definition includes 138 categories, covering raw materials, intermediate goods, and equipment [9]. - In 2024, the narrow AI product trade is projected to reach $3.3 trillion, accounting for 13.6% of global trade, with a year-on-year growth of 10.2% [10]. Group 4: Regional Trade Insights - Major exporters of AI-related products include mainland China, the EU, ASEAN, Taiwan, Hong Kong, and the U.S., collectively accounting for 91% of global AI trade [14]. - In the first three quarters of 2025, mainland China's AI-related product exports totaled $840.7 billion, representing 22% of its total exports, with a year-on-year growth of 10.9% [18]. - The export growth of AI-related products in regions like Taiwan and Hong Kong has significantly outpaced other goods, indicating the dominant role of AI trade in regional export performance [14]. Group 5: Future Outlook and Challenges - The U.S. has increased tariffs on AI-related imports from China to 40%, which may lead to a decline in direct trade, pushing some exports through intermediaries like Hong Kong and ASEAN [21]. - The sustainability of U.S. AI investment is critical, as historical trends show that declines in investment can lead to significant drops in GDP growth, affecting both AI and non-AI related trade [26].

Group 1 - The article emphasizes the weakening of the post-World War II rules-based international order, with countries prioritizing strategic autonomy and security, leading to increased resilience investments in energy, food, and critical minerals [4][30] - The concept of "geopolitical security premium" is highlighted as a significant pricing factor for commodities in 2026, driven by national security strategies and the need for strategic reserves [5][30] - Historical insights from the Cold War indicate that national security-driven demand can surpass long industrial cycles, significantly impacting metal prices [6][30] Group 2 - The article discusses the concentration of supply and the dependency on critical minerals, with various countries publishing lists of key minerals to enhance supply chain security [12][14] - The U.S. relies heavily on imports for many critical minerals, with 12 out of 50 minerals completely dependent on net imports, highlighting vulnerabilities in supply chains [14] - The geopolitical landscape shows that resource-rich countries, like the Democratic Republic of Congo for cobalt, are gaining leverage through export controls, reminiscent of Cold War strategies [21][30] Group 3 - Demand for critical minerals such as aluminum, graphite, and cobalt is essential for defense industries, with specific applications in weaponry and aerospace [22][23] - The article outlines the strategic importance of various metals, including titanium and tungsten, in military applications, emphasizing their role in national defense [23][30] - The current global context of geopolitical tensions and supply chain vulnerabilities is expected to elevate the "security premium" on commodities, influencing market dynamics [30]

Core Viewpoint - The article discusses the varying exposure of different commodities to AI, highlighting that metals like vanadium, copper, lithium, gallium, and aluminum significantly contribute to the value of data centers and electrical grid facilities, while gold serves as a hedge against the AI bubble due to its financial attributes. In contrast, crude oil stands in opposition to the AI narrative due to its inflation-suppressing political implications [2][4][55]. Group 1: Data Centers and Power Systems - AI technology is reshaping global metal demand, with data centers becoming critical infrastructure for national economic security. From 2024 to 2035, global data center capacity is expected to triple, with investments reaching $3-7 trillion by 2030. The electrical grid is projected to require $600 billion in investments by 2030, with a total length of 110 million kilometers by 2035 [7][4]. - Data centers and grid upgrades require substantial amounts of copper and aluminum for conductivity, while energy storage systems need lithium, cobalt, and nickel. High-end motors and transformers also require rare earth materials [7][4]. - Each megawatt (MW) of data center capacity corresponds to 60-75 tons of mineral metals, with cooling systems consuming the largest share (35-45%) of metals, primarily iron, aluminum, and copper [9][10][11]. Group 2: Contribution of Minerals to Data Center Value - The contribution of various minerals to the total value of data centers is significant, with gallium contributing 6.0%, germanium 2.4%, and tin 1.2%. Copper contributes only 0.9%, while iron, aluminum, and carbon contribute between 0.1% and 0.3% [12]. - The expansion of electrical demand from data centers is driving the construction of transmission and distribution (ET&D) infrastructure, which will also increase the demand for minerals and metals [13][18]. Group 3: AI-Related Commodity Rankings - The ranking of metals related to AI investments, based on their contribution to data center and electrical grid facilities, is as follows: vanadium, copper, lithium, gallium, and aluminum [20]. - Vanadium's current demand is primarily driven by the steel industry, but its potential in long-duration energy storage is expected to grow as the market evolves [21]. - Copper is essential for AI computing infrastructure due to its excellent conductivity and thermal properties, with a projected supply deficit expected by 2026 [25][22]. Group 4: Precious Metals and Oil - Gold serves as a hedge against the AI bubble, with significant inflows into gold ETFs indicating a growing demand for safe-haven assets amid economic uncertainty [45]. - Silver, with its industrial applications and financial attributes, has shown strong elasticity in demand, while platinum and palladium also have significant industrial uses [47][48]. - Crude oil currently opposes the AI narrative due to its association with inflation control and the political landscape, with potential for price rebounds if OPEC countries decide to cut production [52][55].

Core Viewpoint - The long-term logic of US dollar credit remains unchanged, but the underlying capital flows, asset preference shifts, and leveraged trading have never ceased. The frequent occurrence of global black swan events has led to a reduction in risk appetite, while rising inflationary pressures in the US have tightened interest rate cut expectations, potentially leading to a resonance of these factors at some point [2]. Group 1: Market Dynamics - The recent sharp decline in gold and silver prices is not fundamentally caused by the nomination of Kevin Warsh but is more of a coincidental catalyst that triggered emotional volatility. The core driving force behind the decline is large-scale profit-taking following significant price increases, leading to a chain reaction of deleveraging [5]. - Historically, significant price increases in gold (20%-30%) typically require about six months to digest, but the current cycle has been compressed to a monthly level. The rapid price increases have led to a situation where the market must undergo a severe correction to alleviate overbought pressures [5][6]. - The volatility in gold and silver prices exhibits clear "MEME" characteristics, with pricing no longer solely dependent on "de-dollarization" but driven by liquidity and AI narratives. The demand for hedging has caused gold prices to move in tandem with US stocks, while silver has seen even greater volatility due to its dual role as a financial asset and an industrial demand driven by AI [6]. Group 2: AI and Economic Interactions - The current market's upward momentum is primarily driven by the strength of the AI trend, with both US stocks and precious metals benefiting from this narrative. In contrast, cryptocurrencies have shown weakness due to their disconnection from the AI narrative and competition for resources with the AI industry [8]. - The extreme demand for electricity and computing power from the AI industry has directly impacted cryptocurrency mining costs, leading traditional mining companies to pivot towards investments in computing power centers, thereby increasing the operational costs of cryptocurrencies [8]. - Regardless of who becomes the Federal Reserve Chair, gold and silver may experience significant declines due to previous rapid price increases and the requirement for exchanges to raise reserve requirements, leading to profit-taking and deleveraging [8][9]. Group 3: Monetary Policy and Political Influences - Warsh's nomination as the next Federal Reserve Chair does not alter the dovish policy expectations. The market's insensitivity to his nomination is reflected in the stable interest rate cut expectations and the performance of long-term US Treasury bonds [8][9]. - The Federal Reserve's decisions on interest rate cuts will depend more on economic performance and political will rather than the change in leadership. Warsh's focus on inflation risks and previous opposition to quantitative easing may not align with current economic realities [9][12]. - The current liquidity levels in the dollar market are slightly above adequate levels, and excessive balance sheet reduction could lead to a repeat of the 2019 repo crisis, which the Federal Reserve aims to avoid [12]. Group 4: Fiscal Risks and Economic Outlook - Fiscal risks are emerging as significant instability factors, with political conflicts over immigration regulations complicating budget coordination, potentially leading to government shutdowns. This political maneuvering could create liquidity risks that are more damaging than monetary policy changes [16]. - Rising electricity prices driven by AI demand and significant price increases in key components like storage chips are beginning to affect consumer electronics and durable goods, posing new challenges to purchasing power and potentially reigniting inflation risks [16][17]. - The sustainability of the AI narrative relies on continuous monetary and fiscal support to counteract rising costs and the absence of a significant economic downturn. The profitability of AI-related sectors remains high, but many companies are resorting to layoffs as a cost-control measure, exacerbating economic disparities [17][20].

Core Viewpoint - The EU's narrative around "trade transfer" and "overcapacity" reflects its geopolitical pressures rather than purely trade issues, indicating a need to protect the legitimate rights of Chinese enterprises in the EU for broader cooperation [2][36]. Summary by Sections 1. Substance of China-EU Trade Beyond "Trade Transfer" - In the first eleven months of 2025, China's exports to the EU reached $291.78 billion, marking an 8.4% year-on-year increase, surpassing the trade surplus with the US for the first time [4]. - The main components of China's exports to the EU are industrial machinery and electrical equipment, accounting for over 45% of total exports, with significant growth driven by automation and specialized equipment [7][10]. - Exports of industrial robots surged over 200%, reflecting the EU's manufacturing automation needs, while exports of lithium-ion batteries grew by 39.6%, indicating a strong demand for energy transition [9][10]. - The narrative of "trade transfer" does not align with the actual trade structure, as the growth is not solely driven by low-priced end products but rather by high-tech industrial goods that meet EU demands [5][22]. 2. EU's Anxiety Under "Trade Transfer" Narrative - The EU's frequent references to "trade transfer" stem from its geopolitical anxieties, as it finds itself in a vulnerable position amid US-China tensions, lacking sufficient strategic buffers [23][36]. - The EU is shifting its policy focus towards "security-first competitiveness," emphasizing the need for re-industrialization and enhancing its industrial capabilities in critical technologies [24][29]. - The EU's strategy includes building a sovereign industrial system in key areas such as AI, semiconductors, and clean technologies, while also addressing the competitive pressures from Chinese manufacturing [26][27]. 3. Potential Cooperation Space in China-EU Trade - The EU's updated economic security strategy aims to systematically manage risks while maintaining an open framework for cooperation, particularly in engineering and technology sectors [29][33]. - Cooperation opportunities exist in areas like energy transition equipment and manufacturing automation, where Chinese firms can contribute without transferring control [32][33]. - The EU is open to "value-added" investments from China that enhance local industrial capabilities, provided they do not merely focus on ownership or market share expansion [33].

Core Viewpoint - The stabilization of total demand in core cities, along with long-term factors such as rental yield and price-to-income ratio nearing valuation bottoms, collectively determine the direction of the real estate market's recovery in 2026. The pace of this recovery will depend on short-term factors like rental prices and the volume of second-hand housing listings [2][38]. Group 1: Positive Changes in the Real Estate Market - Since the beginning of 2026, the real estate market has shown positive changes in both "volume" and "price." The transaction volume of second-hand homes in key cities has increased, with a year-on-year decline in transaction area narrowing to -13.0% as of January 25, compared to -26.8% the previous month. The weekly transaction area reached 2.79 million square meters, the highest since June 2025, with a year-on-year growth rate turning positive at 17.7% [4][5]. - In January, the transaction prices of second-hand homes have ended the accelerated decline seen since June 2025, with a month-on-month decrease of only -0.7%, an improvement from the previous half-year's average decline of around -1.3% [9]. Group 2: Short-term Factors Behind Positive Changes - The increase in second-hand home transactions is primarily due to the "seesaw" effect between new and second-hand home demand. As the market enters a stock era, the sales of new and second-hand homes often offset each other. In December 2025, new home sales in 40 cities rebounded, while second-hand home sales remained relatively flat [13]. - The narrowing of price declines is influenced by seasonal factors, with sellers becoming more hesitant to lower prices as the Spring Festival approaches, leading to a slowdown in price drops [14]. Group 3: Long-term Support Factors - The cumulative price decline, rental yield, and price-to-income ratio indicate that the real estate market in most cities is nearing valuation bottoms. The total housing demand in core cities has stabilized, suggesting that the market is beginning to meet conditions for recovery [20]. - The total demand for residential properties in key cities has stabilized, with new home sales in 2025 at 174 million square meters, a year-on-year decline of 11.6%. However, this decline is more due to the increased share of second-hand home transactions rather than a decrease in overall housing demand [21]. Group 4: Rental Yield and Price-to-Income Ratio - As of December 2025, the rental yield in 100 cities has risen to 2.39%, approaching the 2.6% public housing loan rate, indicating a reasonable gap between rental yield and borrowing costs [31]. - The price-to-income ratio has shifted significantly during this downturn, with many properties transitioning from investment assets to consumer goods. The price-to-income ratio in most cities has returned to levels below those seen in 2006, indicating a reduction in valuation bubbles [35][36]. Group 5: Market Recovery Dynamics - The stabilization of total demand in core cities and the nearing of valuation bottoms for rental yield and price-to-income ratio will influence the pace of the real estate market's recovery. The rental prices and the volume of second-hand home listings will be critical short-term factors [38][43]. - The upcoming "Golden March and Silver April" period will be a key window for assessing the market's recovery pace, with optimistic scenarios suggesting stable rental prices and second-hand home listings, while conservative scenarios may see renewed pressure from increased listings [44][45].

Core Viewpoint - The article discusses the phenomenon of "deposit migration" in the context of declining deposit interest rates and the expiration of high-interest fixed-term deposits, highlighting the potential shifts in asset allocation among residents [3][41]. Group 1: Background and Context - The current discussion on "deposit migration" corresponds to the "excess savings" issue discussed three years ago, where residents significantly increased their allocation to fixed-term deposits due to factors like real estate downturn and declining consumer sentiment. In 2022, new household deposits reached 17.8 trillion yuan, with fixed-term deposits accounting for 13.7 trillion yuan. In 2023, new household deposits fell to 16.6 trillion yuan, but fixed-term deposits still made up 96% of this amount [4][41]. - The formation of excess savings from 2022 to 2023 can be attributed to three main sources: a decline in consumer willingness to spend, a shift of funds from real estate purchases to financial investments, and a reallocation of financial assets where residents redeemed wealth management products in favor of deposits [4][9]. Group 2: Future Trends - Starting in 2024, the willingness of residents to allocate funds to deposits is expected to decline, with new fixed-term deposits projected to be around 12 trillion yuan for both 2024 and 2025. The proportion of new deposits to new financial assets is estimated to drop to 68%, significantly lower than the 89% and 79% seen in 2022 and 2023, respectively [9][10]. - By 2026, the maturity of fixed-term deposits for residents is estimated to be around 70 trillion yuan, with a peak in the first quarter. The total maturity of fixed-term deposits is projected to be between 104 trillion and 111 trillion yuan, with household deposits accounting for 65% of this amount [16][17]. Group 3: Deposit Renewal Rates - The renewal rate for deposits is approximately 90%, indicating that most maturing deposits will be reinvested rather than withdrawn from the banking system. The renewal rate has fluctuated, reaching 95% in 2022 and 2023, but is expected to drop to around 88% in 2024 [20][21]. - If the renewal rate decreases to 80%, the potential outflow of deposits could be around 14 trillion yuan, while maintaining a 90% renewal rate would result in an outflow of approximately 7 trillion yuan [21]. Group 4: Asset Allocation Shifts - The primary destinations for migrating deposits are low-risk assets, such as wealth management products and money market funds, while the allocation to risk assets is influenced by market conditions. The majority of residents are risk-averse, with 96% of their financial assets allocated to low-risk and no-risk assets [23][24]. - In 2025, it is anticipated that residents will increase their holdings in money market funds by approximately 1.4 trillion yuan, wealth management products by 2.8 trillion yuan, and insurance by 4.1 trillion yuan. The relationship between insurance and deposits may evolve as deposit rates decline [29][30]. Group 5: Market Behavior and Implications - The behavior of residents regarding high-risk assets is largely dependent on market conditions, with significant increases in holdings during bullish markets. For instance, the net value of bond funds held by individuals rose from 399 billion yuan in 2020 to 1.8 trillion yuan in 2024, but growth slowed in 2025 [24][25]. - The article emphasizes that the migration of deposits does not necessarily correlate with an increase in early loan repayments, as the majority of maturing deposits are from short-term fixed deposits, which typically have lower interest rates compared to existing mortgage rates [38].

Core Viewpoint - The article discusses Trump's expansion of executive power in 2026, focusing on domestic policies aimed at improving affordability and external policies that seek to align personal political interests with national benefits [4]. Group 1: Domestic Policies - Trump aims to control living costs through administrative measures rather than relying on the Federal Reserve's monetary policy, recognizing the limitations of traditional monetary policy [5][9]. - The labor income share for the American working class fell to 53.8% in Q3 2025, marking a historical low and continuing a downward trend since 2000, which may increase fiscal deficit pressures due to higher government transfer payments [6]. - Key policies to improve affordability include capping credit card interest rates at 10% and introducing 50-year mortgages, alongside interventions in the oil market and immigration policies to support low-income wages [9][10]. - The proposed 10% credit card interest rate cap could save households $100 billion in interest payments, but may also lead to reduced credit supply and increased risks of moral hazard [10][12]. Group 2: External Policies - Trump's foreign policy actions, such as the arrest of Maduro and interest in Greenland, aim to maximize U.S. national interests and align with voter concerns, reflecting a strategy of "energy as governance" [16][17]. - The approach to Greenland is driven by political ambitions and strategic goals, including securing strategic minerals and enhancing trade routes [16][17]. - Trump's negotiation tactics, exemplified by the Greenland situation, demonstrate a pattern of extreme pressure to achieve favorable outcomes without significant costs [19]. Group 3: AI and Economic Strategy - Trump emphasizes the importance of maintaining AI leadership, advocating for a patriotic spirit among tech companies to prioritize U.S. interests [20][21]. - The domestic and foreign policies are designed to create a favorable macro environment for AI sustainability, with significant investments in AI-related sectors [21][22]. - The rapid growth of private credit investments in AI firms raises concerns about potential credit risks, as the disparity between stock prices and bond valuations may lead to market corrections [26]. Group 4: Overall Economic Implications - The costs of Trump's policies will ultimately be borne by U.S. dollar credit, with increasing fiscal, inflationary, and deficit pressures complicating the economic landscape [27][28]. - The article suggests that Trump's administrative measures, while potentially effective in the short term, may not address underlying economic realities, leading to future inflation and volatility risks [28].

Core Viewpoint - Geopolitical issues will become a significant topic driven by the midterm elections, with short-term volatility expected but a strengthening narrative of great power competition in the medium to long term [2] Summary by Sections Midterm Elections and Economic Concerns - Polymarket indicates an approximately 80% chance that the Republican Party will lose the House in the 2026 midterm elections [4] - Trump's acknowledgment of the necessity to win the midterm elections to avoid impeachment highlights the importance of economic issues, particularly the cost of living, which remains challenging due to long-term housing shortages and high mortgage rates [4][7] Trump's Strategy and "Trumpism" - Trump prioritizes personal interests, using foreign policy to regain electoral support if domestic issues fail [7] - His approach, termed "Trumpism," combines U.S. national interests with personal political gains, portraying himself as a protector of American security [8][9] Short-Term Tactics vs. Long-Term Strategy - Trump's preference for quick, impactful actions often leads to superficial successes without addressing deeper strategic issues, as seen in the limited return of U.S. manufacturing despite trade wars [9][10] - The recent Venezuelan situation exemplifies this, where immediate control over Maduro boosted Trump's political standing but lacked a sustainable long-term strategy [10][12] Geopolitical Implications - The strategic value of Greenland aligns with Trump's "Trumpism," but the high costs and local opposition complicate potential U.S. acquisition [15] - The situation in Iran reflects a retreat from U.S. strategic interests, with Trump's actions driven more by political necessity than by a coherent long-term strategy [16] Market Impact and Future Outlook - Geopolitical issues are expected to lead to significant asset price volatility in the coming year, influenced by Trump's short-term tactics [17] - The potential for a stronger dollar and fluctuations in U.S. and non-U.S. stock markets, as well as resource prices, should be monitored as Trump seeks to leverage geopolitical events for political gain [17]