Core Viewpoint - Harris Associates L.P. emphasizes a consistent investment philosophy focused on value investing, believing that stock prices will eventually reflect the underlying company's value [1] Investment Philosophy - The company is committed to superior investment research and high levels of customer service, which have remained unchanged since its founding in 1976 [1] - Harris Associates seeks companies trading at significant discounts to their underlying value, with substantial profit potential and management that acts as owners [1] Research Process - The investment process is framed as owning a piece of a business for the long term, highlighting the importance of intensive, fundamental research [1] - The research methodology involves a disciplined quantitative and qualitative screening process, with analysts acting as independent thinkers rather than relying on Wall Street [1] - Analysts at Harris Associates are generalists who evaluate companies based on their fundamental characteristics [1]

Core Viewpoint - Goldman Sachs predicts that the ongoing U.S. government shutdown is likely to end around the second week of November, while also warning that key economic data releases will be delayed [1][2][6]. Group 1: Government Shutdown Insights - Goldman Sachs indicates that the current government shutdown is approaching the record duration of 35 days set in 2018-2019, but believes the end is closer than the beginning [3]. - The prolonged shutdown is partly due to unconventional measures taken by the Trump administration, which has utilized unspent funds from the previous year to pay military salaries, temporarily alleviating some tensions [3]. - Key pressure points, such as air traffic controllers and airport security personnel missing their first full payday on October 28, are increasing the risk of travel delays, which historically have been strong catalysts for government reopening [3][5]. Group 2: Economic Impact and Federal Reserve Decisions - The shutdown has disrupted the Supplemental Nutrition Assistance Program (SNAP) payments, leading to delays in benefits despite court rulings allowing emergency fund usage [4]. - Congressional staff salaries are also affected, which may prompt lawmakers to expedite negotiations [5]. - Political events, such as elections on November 4 and Congress's planned recess after November 7, could create incentives for reaching an agreement before these dates [5]. Group 3: Federal Reserve Rate Cut Predictions - Goldman Sachs and Citigroup both express optimism that the government shutdown will end within two weeks, which is crucial for the Federal Reserve's data-driven decision-making [8]. - If the government reopens around mid-November, the Bureau of Labor Statistics (BLS) may take several days to release the delayed September employment report, with the November employment and CPI reports potentially facing a one-week delay [9][10]. - Citigroup maintains its forecast for consecutive rate cuts by the Federal Reserve in December, January, and March, contingent on the reopening of the government and the subsequent data recovery [11][12]. Group 4: Economic Cost of the Shutdown - Goldman Sachs estimates that if the shutdown lasts about six weeks, it could reduce the annualized real GDP growth for Q4 2025 by 1.15 percentage points due to federal employee furloughs, leading to a downward revision of Q4 GDP growth to 1.0% [13]. - However, this impact is expected to be temporary, with a projected GDP growth boost of 1.3 percentage points in Q1 2026 as furloughed employees return and federal procurement shifts from Q4 to Q1 [13].

Market Reaction to Tax Changes - Gold prices initially slipped by 1% in Asian trading but later recovered, with spot gold trading near $4,012 an ounce in London [2][4] - The recovery followed Beijing's announcement to limit VAT offsets for gold sourced from the Shanghai Gold Exchange (SGE) and the Shanghai Futures Exchange (SHFE) [2][4] - Under the new rules, producers of non-investment gold can now deduct only 6% of VAT instead of the previous 13% [2][4] Impact on Jewellery Stocks - The tax changes led to a significant decline in jewellery stocks, with Chow Tai Fook Jewellery Group Ltd. dropping as much as 12%, Chow Sang Sang Holdings International Ltd. falling over 8%, and Laopu Gold Co. losing more than 9% [3][4] - Analysts predict that the industry will likely raise prices to pass through the cost pressure resulting from the tax changes [3][4] Investor Sentiment and Market Trends - Despite the turbulence, investor appetite for gold remains strong, with prices still over 50% higher since the start of the year [3][4] - Gold reached an all-time high in October due to a surge in retail buying, and core factors such as central bank purchases and safe-haven inflows continue to support the market [3][4] - The recovery in London trading indicates that bullish sentiment towards gold is still firm, despite concerns about the impact of tax changes in China [3][4][5] Performance of Other Precious Metals - In the broader precious metals market, platinum increased by as much as 2.2%, while silver and palladium also recorded small gains [5]

Core Insights - Gold prices dipped below $4,000 an ounce following China's decision to end a long-standing tax rebate for certain retailers, which may negatively impact demand in a major precious metals market [1][2] - The immediate delivery price of gold fell by as much as 1 percent before recovering most of the loss, coinciding with a significant drop in Chinese jewelry stocks [2][4] - Despite a record high in October driven by retail buying, gold prices have seen a sharp decline in the last two weeks of the month, although they remain over 50 percent higher year-to-date [3] Industry Impact - The tax changes in China, the largest consumer of gold, are expected to dampen global sentiment towards gold, according to industry experts [4] - Major jewelry companies in Hong Kong experienced significant stock declines, with Chow Tai Fook Jewelry Group Ltd falling by 12 percent, Chow Sang Sang Holdings International Ltd dropping over 8 percent, and Laopu Gold Co decreasing by more than 9 percent [4] - Analysts predict that the entire gold industry may raise prices to offset the cost pressures resulting from the new tax policy [4] Tax Policy Changes - The new tax policy, effective until the end of 2027, restricts the value-added tax deduction to members of the Shanghai Gold Exchange and Shanghai Futures Exchange for gold sold as investment products [5] - Non-members and exchange members producing non-investment gold, such as jewelry, can now only offset 6 percent of the input value-added tax when selling to consumers, down from 13 percent [6]

Group 1 - Citigroup's stake in China Merchants Bank's H-shares increased from 4.96% to 5.04% as of October 27 [1]

Core Viewpoint - Goldman Sachs predicts that the ongoing partial government shutdown in the U.S. is likely to end within two weeks, which is crucial for the data-driven decision-making of the Federal Reserve [1][2]. Group 1: Government Shutdown Outlook - Goldman Sachs indicates that the shutdown, which is approaching the record duration of 35 days from 2018-2019, is nearing its end, with a likely resolution around the second week of November [2][3]. - The prolonged shutdown is attributed to unconventional measures taken by the Trump administration, such as utilizing unspent funds from the previous year, but this temporary relief is diminishing [2]. - Key pressure points, including missed paychecks for air traffic controllers and airport security personnel, are increasing the urgency for Congress to reach a compromise [2]. Group 2: Impact on Federal Reserve Decisions - The duration of the shutdown is seen as a critical variable influencing the Federal Reserve's interest rate decisions in December [1][4]. - If the government reopens by mid-November, the Bureau of Labor Statistics (BLS) may take additional days to release delayed employment reports, which could affect the timing of key economic data releases [4]. - Citigroup analysts express growing confidence that the government will reopen soon, allowing the Fed to receive multiple employment reports before its December meeting, potentially supporting a 25 basis point rate cut [4]. Group 3: Economic Consequences of the Shutdown - Goldman Sachs estimates that if the shutdown lasts about six weeks, it could reduce the annualized real GDP growth for Q4 2025 by 1.15 percentage points, leading to a downward revision of the GDP growth forecast to 1.0% [5]. - The report suggests that the economic impact of the shutdown is likely to be temporary, with a rebound expected in Q1 2026 as furloughed employees return to work [5].

Core Viewpoint - The Japanese stock market is showing strong momentum towards a long-term bull market, driven by a robust global market and optimistic expectations regarding new government economic policies. Citi predicts that the Nikkei 225 index could reach 50,000 points as just a "checkpoint" on its way to 55,000 points by the end of 2026 [1][6]. Group 1: Government Policies - The establishment of the new government under Prime Minister Sanae Takaichi is seen as a core logic supporting the long-term bullish trend of the Japanese stock market. The government is expected to implement supportive economic policies, including tax cuts, to assist households facing declining real incomes [3][4]. - The new government's policy framework aims to create a virtuous cycle of wages and prices by encouraging investment in growth sectors and improving productivity [3][4]. Group 2: Corporate Earnings - Japanese companies are demonstrating strong profitability even in a persistent inflationary environment, with over 50% of companies exceeding quarterly earnings expectations since 2023. This trend is particularly evident in the non-manufacturing sector, driven by domestic demand [4][5]. - The report indicates that rising prices are helping companies improve their profit margins, and if the new government's measures succeed in boosting real incomes, it will further solidify inflation expectations and ensure sustained strong earnings for domestic-focused companies [4]. Group 3: Valuation and Foreign Investment - Despite short-term signs of overheating in the valuation of Japanese stocks relative to global markets, there remains significant potential for long-term valuation recovery. The average return on equity (RoE) for Japanese companies is increasing, supported by improved profit margins and stock buybacks driven by corporate governance reforms [5][6]. - There is still ample room for foreign capital inflow into the Japanese stock market, with net purchases by foreign investors reaching 5 trillion yen since 2025. This suggests that despite previous net selling trends, there is a substantial amount of overseas capital waiting to enter the market [5][6].

Summary of the Conference Call on Thermal Coal Production and Inventory Industry Overview - The report focuses on the thermal coal industry in China, specifically analyzing high-frequency demand trends and production data from 100 sample thermal coal mines during the week of October 23 to October 29, 2025 [1][2]. Key Points Production Data - **Total Output**: China's thermal coal output from the sample mines was 11,962 kt, reflecting a week-over-week (WoW) increase of 0.4%, but a year-over-year (YoY) decrease of 1.7% [1]. - **Regional Breakdown**: - Shanxi: 2,865 kt (+1.9% WoW, -2.4% YoY) - Shaanxi: 3,527 kt (+0.8% WoW, -4.8% YoY) - Inner Mongolia: 5,570 kt (-0.6% WoW, +0.7% YoY) [1]. - **Year-to-Date (YTD) Output**: The YTD thermal coal output was 533 million tonnes (mnt), representing a 3.0% increase YoY, with regional contributions as follows: - Shanxi: +4.1% YoY - Shaanxi: +1.0% YoY - Inner Mongolia: +3.9% YoY [1]. Utilization Ratio - **Overall Utilization**: The overall utilization ratio of the sample mines was 88.6%, which is an increase of 0.4 percentage points (ppt) WoW but a decrease of 1.6 ppt YoY [1]. - **Regional Utilization**: - Shanxi: 83.2% (+1.6 ppt WoW, -2.1 ppt YoY) - Shaanxi: 90.0% (+0.7 ppt WoW, -4.5 ppt YoY) - Inner Mongolia: 90.7% (-0.5 ppt WoW, +0.6 ppt YoY) [1]. Inventory Levels - **Total Inventory**: The total coal inventory in the sample mines was 3,196 kt as of October 29, 2025, which is an increase of 1.6% WoW but a slight decrease of 0.2% YoY [2]. - **Regional Inventory**: - Shanxi: 857 kt (+1.3% WoW, -2.3% YoY) - Shaanxi: 691 kt (+2.5% WoW, -13.8% YoY) - Inner Mongolia: 1,648 kt (+1.4% WoW, +8.1% YoY) [2]. Additional Insights - The report indicates a pecking order of demand for various materials, with copper, battery materials, and gold leading, followed by aluminum, cement, steel, lithium, and thermal coal [1]. - The data reflects ongoing trends in the thermal coal market, which may be influenced by broader economic conditions and energy demands in China [1][2]. This summary encapsulates the critical data and insights from the conference call regarding the thermal coal industry in China, highlighting production, utilization, and inventory trends.

Core Viewpoint - The ongoing U.S. government shutdown is creating a "data fog" for the Federal Reserve, making its December interest rate decision uncertain. The longer the shutdown lasts, the less likely a rate cut will occur, according to Morgan Stanley, while Citigroup remains optimistic about a resolution within two weeks, allowing for potential rate cuts [1][4][12]. Group 1: Impact of Government Shutdown - The duration of the government shutdown directly affects the availability of key economic data, which the Federal Reserve relies on for decision-making. A longer shutdown leads to a higher probability of pausing rate cuts [4][9]. - The Federal Reserve's Chairman Jerome Powell has indicated that the lack of data will lead to more cautious actions, comparing the situation to "driving in fog" [3][5]. Group 2: Market Perspectives - Morgan Stanley believes that the longer the shutdown continues, the lower the chances of a rate cut, emphasizing the importance of timely data for the Fed's decisions [4][11]. - In contrast, Citigroup expresses confidence that the government will reopen within two weeks, which would provide the Fed with sufficient data to support a rate cut in December [12][16]. Group 3: Scenarios Based on Shutdown Duration - Scenario 1: If the shutdown ends next week, the Fed could receive multiple employment reports and key inflation data, supporting a rate cut decision [11]. - Scenario 2: If the shutdown ends by mid-November, the Fed may only have limited data, but state-level unemployment data could still provide some insights [11]. - Scenario 3: If the shutdown extends past Thanksgiving, the Fed may only have access to September's data, increasing the likelihood of pausing rate cuts unless strong negative signals emerge [11]. Group 4: Immediate Economic Pressures - The shutdown has already impacted social welfare programs, with the Supplemental Nutrition Assistance Program (SNAP) benefits ceasing on November 1, affecting up to 42 million Americans [13]. - There is an impending crisis regarding military pay, as funds for military salaries are running low [14]. - Upcoming local elections may create new political momentum to resolve the shutdown [15].

Core Insights - The MSCI Emerging Markets Index has experienced a continuous rally for ten months, driven by an artificial intelligence boom and a weaker dollar, resulting in a 30% increase year-to-date [1][2] - Emerging-market stocks are outperforming US peers for the first time in eight years, leading to forecasts of a multi-year rally from money managers [4] Group 1: Market Performance - The MSCI Emerging Markets Index closed October with a 4% gain, despite a 0.7% drop on the last trading day of the month [1] - Emerging-market bonds also saw gains, with the Bloomberg EM Sovereign Total Return Index of dollar bonds achieving a seventh consecutive month of increases [5] Group 2: Catalysts for Growth - Strong performance in AI-focused Asian tech stocks and a weaker dollar have prompted diversification from US assets [2] - Targeted stimulus in China has positively impacted earnings estimates, fund flows, and overall market sentiment [2] Group 3: Sector Composition - Emerging-market equities are increasingly diversified beyond traditional sectors like banks and commodities, with significant representation from tech, consumer, and medical sectors [3] Group 4: Economic Outlook - The Federal Reserve's potential decision not to lower interest rates in December has created uncertainty, leading to modest profit-taking in select asset classes [4] - A trade truce between China and the US has contributed to a perceived easing of tariff frictions, benefiting risk assets [5][6]