Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report emphasizes the delayed impact of tariffs on US economic data, with inflation expected to peak by Q3 2025 and growth data lagging behind [6][14] - The strategists anticipate a convergence of US growth towards global growth, particularly European growth, which will influence interest rates and currency exchanges [5][11] - The expectation is for US treasury yields to remain range-bound until Q4 2025, with potential for lower yields if growth and inflation data align with forecasts [5][12] Economic Outlook - The report outlines forecasts for US Real GDP growth, indicating modest growth rates ranging from 0.1% to 0.7% on a quarterly basis from 2023 to 2026 [7] - Core PCE inflation is projected to peak in mid-2025, with a significant lag in data response to tariff impacts [6][14] - Emerging markets are expected to experience adjustments due to changes in US economic policy, with cautious outlooks on returns tracking US Treasuries rather than outperforming [11] Central Bank Policies - The report discusses the Federal Reserve's anticipated policy path, suggesting that while the Fed may hold rates steady in 2025, other central banks have more room to ease due to slowing growth and inflation [12][13] - The Bank of Japan faces challenges from tariffs and currency appreciation, with expectations for an extended pause in rate hikes despite resilient inflation [10] Market Volatility - The report notes significant market volatility in April 2025 due to unexpected tariff levels, leading to a shift in equity/rates correlations as markets adjusted to new economic policies [4] - The strategists highlight that the current pause in dollar weakness is temporary, with expectations for renewed dollar strength as the Fed's path becomes clearer [5]

Investment Rating - The report does not explicitly provide an investment rating for the industry [1] Core Insights - Exports have stabilized sequentially amid a tariff truce, with nominal exports rising 0.8% month-over-month seasonally adjusted, following a decline of 0.4% in April [5][11] - Exports to Europe improved significantly, increasing by 9% cumulatively over the past three months, partly due to a ~10% depreciation of the RMB against the EUR since the end of January [3][11] - The outlook for export growth is cautious, with expectations of 0% nominal export growth for 2025, indicating a potential decline of approximately -5% year-on-year in the second half of the year [4] Summary by Sections Export Performance - In May 2025, exports totaled $316 billion, showing a year-on-year increase of 4.8% [6] - Exports to the US contracted at a milder pace of -8% month-over-month seasonally adjusted after a significant drop of -25% in April [11] - Consumer goods exports showed a rebound, aligning with their high elasticity of demand, while rare earth exports continued to decline [11] Import Trends - Imports totaled $213 billion in May 2025, reflecting a year-on-year decline of -3.4% [6] - The decline in imports was driven by a persistent decrease in commodity volumes and prices, indicating weaker global and domestic demand [3][11] - Notable declines in specific products included unwrought copper and products (-16.9%), steel products (-20.0%), and crude petroleum oil (-22.1%) [6] Trade Balance - The trade balance for May 2025 was reported at $103 billion, an increase from $96 billion in April [6] - The overall trade balance for the first five months of 2025 reached $273 billion, compared to $298 billion in the same period of 2024 [6]

Investment Rating - The report assigns an "Attractive" rating to the overall China advertising industry and an "In-Line" rating to the Greater China Media sector [8]. Core Insights - The 2025 growth forecast for the China advertising industry has been raised from 7% to 11% year-over-year, with online ads expected to grow by 12% and offline ads by only 1% [22][21]. - Key players expected to outperform include Tencent, Alibaba, and Meituan, while Weibo, Baidu, and iQIYI are anticipated to lose market share [7][4]. Summary by Sections Industry Growth Forecast - The China advertising industry is projected to reach Rmb 1.8 trillion in 2025, reflecting an 11.6% year-over-year growth [3]. - Online advertising is expected to grow by 12% year-over-year, with significant increases in short video ads (21%), social ads (12%), and e-commerce ads (10.8%) [23][22]. Competitive Landscape - Short video and social ads are leading the market, with Douyin, WeChat, and Tencent Video Accounts expected to gain preference among advertisers [4]. - Key share gainers include Douyin, Tencent (WeChat, Tencent Video Accounts), and Meituan, while key share losers are Weibo, Baidu, and iQIYI [4]. Demand Trends - Advertisers are concentrating ad budgets on fewer platforms, with a preference for online ads and a focus on customer purchases rather than brand recognition [5][30]. - The average expected growth in ad budgets for 2025 is 2.1%, with most sectors showing improved expectations compared to 2024 [21][13]. AI Improvements - The adoption of AI-powered advertising tools has increased significantly, with 83% of advertisers using some form of AI in their campaigns [70]. - AI tools are reported to enhance advertising efficiency, improve ROI by 4.8%-8.6%, and expand reach without decreasing ROI [76][75]. Stock Recommendations - Key stock ideas include Tencent, Alibaba, and Meituan as "Overweight" (OW) recommendations, while Kuaishou, Bilibili, JD, and others are rated as "Equal-Weight" (EW) [7][84]. - Weibo is rated as "Underweight" (UW) due to its expected decline in market share [7].

Investment Rating - The report provides a bearish outlook for equities, particularly for the S&P 500, MSCI Europe, and MSCI Emerging Markets, with expected returns showing significant declines in the bear case scenario [3]. Core Insights - The report highlights a significant drop in China’s exports to the US, which fell by 34.4% year-over-year in May, indicating potential economic challenges [8][9]. - EU momentum has reached an all-time high, suggesting strong economic performance in the region [14]. - Silver prices have surged to their highest level since 2011, reflecting increased demand and market volatility [15]. Summary by Sections Equities - S&P 500 forecasted returns range from 6,000 in a bear case to 7,200 in a bull case, with a base case return of 4,900, indicating a -17.1% change in the bear scenario [3]. - MSCI Europe and MSCI Emerging Markets show similar bearish trends with expected returns of 1,610 and 870 respectively in the bear case [3]. FX (Foreign Exchange) - The JPY is expected to depreciate to 145 in the bear case, while the EUR is forecasted to remain stable at 1.14 in the base case [3]. - The GBP and AUD are also projected to see slight declines in their respective bear scenarios [3]. Rates - The UST 10-year yield is forecasted to be 4.51% in the bear case, with a base case of 4.00% [3]. - Other government bonds like DBR 10-year and UKT 10-year show similar trends with expected returns reflecting a bearish outlook [3]. Commodities - Brent crude oil is expected to see a significant drop to 45 in the bear case, while gold is forecasted to decline to 2,760 [3]. - Copper prices are also projected to fall to 7,790 in the bear scenario, indicating a bearish outlook for commodities overall [3]. Market Sentiment - The Market Sentiment Indicator (MSI) reflects negative sentiment across various asset classes, suggesting a risk-off environment [58]. - The report indicates a significant divergence in positioning among different asset classes, with equities showing a more negative sentiment compared to bonds [63]. Cross-Asset Positioning - The report details net positioning across various markets, highlighting that US equities have a net positioning of 26% among managers, while EM equities show a higher net positioning of 42% [63]. - In the bond market, UST 10-year shows a net positioning of 38%, indicating a cautious approach among investors [63].

Investment Rating - The report does not explicitly provide an investment rating for the rare earth industry but emphasizes China's strategic leverage over the supply chain as a significant factor in trade negotiations [1][3]. Core Insights - China's control over rare earth supply is a calibrated tool for strategic influence, with a near-monopoly in the supply chain, making rare earths a significant bargaining chip in trade negotiations [1][3]. - Recent changes in China's export controls on rare earth elements, particularly on seven heavier elements, indicate a shift towards using rare earths as a strategic lever amid rising trade tensions and technology restrictions [2][4]. - The report highlights that China currently controls over 85% of global rare earth refining and 90% of NdFeB magnet production, which are critical for various advanced technologies [12]. Summary by Sections Export Controls and Strategic Leverage - China has imposed export controls on seven heavier rare earth elements and their processed products since April 2025, which are essential for modern manufacturing processes [2][4]. - The tightening of export licenses allows Beijing to regulate the volume, destination, and end-use of rare earth materials, enhancing its ability to exert targeted influence [11]. - An export tracking system is being developed to strengthen oversight of finished magnet exports, indicating a systematic approach to control [11]. Market Share and Production Capacity - China holds a dominant market share across the rare earth supply chain, with significant control over mining, refining, and magnet production [7][12]. - The report notes that while mining capacity can be expanded relatively easily, refining and magnet production face technological and environmental challenges, making them harder to replace [14][15][16]. Geopolitical Implications - The current rare earth controls are seen as a mechanism for testing strategic responses to tech restrictions imposed by the US and its allies, aiming to reshape global tech and trade dynamics [13]. - The report suggests that China's actions may lead to reciprocal escalations in trade policies, particularly in response to restrictions on technology exports from the US [13]. Recent Developments - Since the implementation of export controls, several magnet producers have received export permits, indicating a gradual resumption of exports to key markets [17][18]. - The report highlights that while magnets are subject to export controls, motors containing them are not, allowing for alternative production strategies [19].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The "One Big Beautiful Bill" is projected to add $2.84 trillion in deficits through 2034, with two-thirds of this total ($1.89 trillion) occurring by 2029. Tax cuts are front-loaded and expire in 2028, while spending cuts, primarily affecting Medicaid, do not begin until 2027. The fiscal impulse is modest, estimated at about 0.2 percentage points in 2026, and is expected to become a drag thereafter [5][19][24]. Summary by Sections Legislative Overview - The House approved the reconciliation legislation for the Fiscal Year 2025 Concurrent Budget Resolution, known as the "One Big Beautiful Bill Act" (OBBA), with a narrow margin of 215-214 [6]. Fiscal Impact - The bill is expected to result in a modest fiscal impulse of approximately 0.2 percentage points in 2026, with a significant drag on growth anticipated thereafter. The overall fiscal stance is viewed as regressive, with tax cuts benefiting upper-income households while spending cuts impact low-income households [5][8][48]. Major Provisions - The legislation includes provisions that extend and expand the Tax Cuts and Jobs Act (TCJA), maintain current individual income tax rates, and restore bonus depreciation deductions for qualified investments. New tax cuts include no taxes on tips and overtime, and an enhanced state and local tax deduction (SALT) cap increased to $40,000 [10][11][12][13]. Spending Cuts - Major spending reductions proposed include cuts to Medicaid, which will impose work requirements and reduce federal assistance. The bill also reduces spending on the Supplemental Nutrition Assistance Program (SNAP) and modifies student loan provisions, leading to an estimated $250-$300 billion reduction in SNAP outlays and $350 billion in student loan savings over ten years [17][18][19]. Deficit Projections - The report estimates that the OBBA could lead to a total deficit increase of approximately $2.84 trillion over ten years, with significant deficit reduction measures included. However, the net increase in the deficit could approach $4 trillion if tax cuts are extended beyond their planned expiration [18][19][27]. Tariff Revenues - The report notes that tariff revenues are not included in the scoring of the bill, but estimates suggest that they could be substantial, potentially offsetting a significant portion of the deficit increase. The effective tariff rate is projected to rise, contributing to revenue generation [33][35][40]. Economic Growth Implications - The initial fiscal impulse from the bill is expected to boost GDP in 2026, but this will likely be offset by later fiscal contractions, resulting in an average drag on real GDP of about -0.4% over ten years [64][65]. The report emphasizes that the fiscal multipliers associated with the bill's provisions are generally unfavorable, particularly for expansionary measures [62][64].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies covered [19]. Core Insights - China's inflation is expected to soften, with May CPI reported at -0.2% due to weaker food prices and intensified price competition ahead of the shopping festival [8][10]. - Australia’s business sentiment has likely softened in May, reflecting broader economic challenges, particularly in profitability and new orders [8]. - India's CPI is projected to slow year-over-year but rise sequentially due to higher food prices [3]. - Japan's GDP growth has been revised to -0.8% QoQ SAAR, indicating economic contraction [4]. Summary by Relevant Sections Australia - Business confidence declined in May, with a reported score of -1, indicating broad-based weakness in the business environment [10]. - Consumer sentiment improved slightly in June, attributed to a second rate cut, while views on future conditions remain a focus [8]. China - CPI for May decreased to -0.2%, while PPI fell to -3.3%, reflecting weaker industrial demand amid tariff shocks [8][10]. - Exports are expected to slow to 4% YoY, with imports remaining soft at 0% YoY due to sluggish domestic demand [8]. India - CPI for May is reported at 3.0%, indicating a slight decrease from the previous month [10]. Japan - The second preliminary GDP report shows a slight downward revision in real capital expenditure, while public investment has been revised upward [4].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The G7 net DV01 is projected to be $109.3 million per basis point, significantly higher than the average of $72 million per basis point, indicating a robust supply environment [2][12][20] - In the US, a total of $468 billion in supply is expected over the next five weeks, with net issuance projected at $266.9 billion after accounting for coupons and redemptions [5][46] - The euro area anticipates approximately €117.7 billion in supply over the next five weeks, resulting in a net issuance of €39.4 billion [3][42] Summary by Sections Government Bond Auctions - The US will issue a new 3-year UST for an estimated $58 billion, a 10-year UST for $39 billion, and a 30-year UST for $22 billion [5] - In the UK, issuance includes UKT 4.5% Gilt 2035 for £4.25 billion and a syndicated launch of UKTi 1.75% Gilt 2038 for £4 billion [4] - Japan plans two auctions for enhanced liquidity totaling ¥1.1 trillion [6] Supply Overview - The report outlines a detailed schedule of bond supply across various countries, including specific amounts and types of bonds to be issued [11] - The total expected issuance in the euro area is €117.7 billion, with €15.8 billion in coupons and €62.4 billion in redemptions [3][42] G7 Gross Notional and DV01 Estimates - The G7 gross issuance shows significant fluctuations, with the US leading in issuance amounts, particularly in the weeks of May and June [12][13] - The DV01 for the G7 indicates a total of $120.4 million per basis point for the week of June 9, reflecting a strong issuance environment [13][20] Net Issuance and Cash Flow - The report highlights net issuance trends, with the US showing a positive net DV01 of $82 million per basis point for the week of June 9 [20][27] - The UK and Japan exhibit varying net issuance figures, with the UK showing a negative net DV01 in some weeks, indicating potential challenges in the market [18][31]

Investment Rating - The report assigns an "Attractive" industry view for the software sector in North America [4] Core Insights - The emergence of Agentic AI applications is driven by the increasing power of deep reasoning models, enabling automation of broader business functions and unlocking significant value [2][6] - The transition to Agentic AI is viewed as an evolutionary journey, requiring software companies to adapt their business and pricing models over time [2][6] - The Agentic AI market is projected to represent a $52 billion opportunity today, expected to reach $102 billion by 2028, with a compound annual growth rate (CAGR) of 26% [18][46] Market Opportunity - A narrow view of the Agentic AI market indicates a $6 billion opportunity today, projected to grow to $20 billion by 2028 [46] - The market for System of Record (SoR) AI Agents is currently valued at $16 billion, expected to reach $33 billion by 2028, while System of Engagement (SoE) AI Agents represent a $36 billion opportunity today, projected to grow to $69 billion by 2028 [11][76] Key Drivers - Increased demand from enterprises for process automation and ongoing improvements in foundational models are driving further demand for Agentic AI [48] - The declining price of intelligence enhances the return on investment (ROI) for AI initiatives, further fueling demand for agents [48] Company Positioning - Companies identified as Agent Beneficiaries include Microsoft, Amazon, Google, CyberArk, Okta, Salesforce, and HubSpot, which are well-positioned to monetize AI Agents or benefit from agentic adoption [26][64] - Agent Contenders are those in favorable categories but require higher execution and market maturity, while Wildcards are companies where the impact of agentic adoption is uncertain [64][87] Pricing Models - Current pricing for AI Agents is fragmented, with various approaches including activity-based, outcome-based, fixed, and variable pricing structures [27][28] - Traditional seat-based models are still prevalent, but there is a shift towards usage-based components and workflow/outcome-based models gaining traction [29][32] Value Accrual - The highest value capture potential is seen in hyperscalers and AI infrastructure providers, followed by AI model providers, security and governance, data infrastructure, and workflow automation [20][59] - The report emphasizes that the most value likely accrues to the hyperscalers and AI infrastructure layer due to significant compute resource utilization from AI Agent deployments [59][81]

Investment Rating - The report assigns an "Overweight" rating to Tesla Inc with a price target of $410, indicating a belief that the stock's total return will exceed the average total return of the industry over the next 12-18 months [5][34]. Core Insights - The report emphasizes that Tesla's capabilities in physical AI, including autonomous vehicles, robotics, energy storage, and manufacturing, present growth and margin opportunities that surpass those of the traditional electric vehicle business, which is currently under pressure [3][7]. - The report suggests that while Tesla faces well-known challenges in its current business, the future opportunities are potentially underestimated [3]. - The report maintains a price target of $410, with a bull case of $800 and a bear case of $200, reflecting a wide range of potential outcomes based on market conditions [3][5]. Summary by Sections Financial Metrics - As of June 5, 2025, Tesla's stock price was $284.70, with a market capitalization of approximately $1,002,429 million [5]. - The estimated EPS for fiscal years ending in 2024, 2025, 2026, and 2027 are $2.41, $1.59, $2.90, and $4.53 respectively [5]. Market Dynamics - The report notes that the recent rally in Tesla's stock price was primarily driven by hopes that Elon Musk would refocus on Tesla, despite potential political distractions that could affect demand [7]. - It highlights that Tesla's long-term value drivers, such as AI leadership and renewable power, remain strong and largely apolitical [7]. Valuation Methodology - The price target of $410 is derived from multiple components, including $75 per share for the core auto business, $160 for network services, $90 for Tesla Mobility, $67 for energy, and $17 for third-party supplier roles [10].