Investment Rating - The report does not explicitly provide an investment rating for the industry or assets discussed Core Insights - Fiscal sustainability has gained increased attention from investors in the US, UK, and Japan, particularly regarding the US's persistent deficit and its impact on foreign demand for US assets [2][4] - The relationship between fiscal expansion and the Dollar is mixed, generally depending on the business cycle and monetary policy, but historically, greater US net issuance tends to be positive for the Dollar [4][5][21] - Concerns about fiscal sustainability and a declining appetite for US assets from foreign investors could lead to higher yields and a weaker Dollar, altering the historical relationship between fiscal expansion and currency strength [5][21] Summary by Sections Fiscal Risks and the Dollar - Investors are increasingly focused on fiscal sustainability, particularly in the context of the US's large and persistent deficit [2][4] - The effect of fiscal expansion on the Dollar varies, but on average, increased US net issuance is typically Dollar-positive due to structural foreign demand for Treasuries [4][5][14] Market Reactions - Pricing of US fiscal risks shows different implications across various foreign exchange (FX) pairs, with high-yielding currencies being more affected by steepening US yield curves [4][18] - A widening in US credit default swaps is often linked to underperformance in cyclical currencies [18][21] Historical Context - Historically, greater net issuance in the US has been associated with a stronger Dollar, but this relationship may not hold as foreign demand for US assets diminishes [5][14][21] - Other G4 economies do not exhibit the same positive relationship between net issuance and currency returns as seen in the US [10][11] Implications for Investors - Investors have accepted higher yields as compensation for holding US debt, but concerns about fiscal sustainability may now lead to a weaker Dollar as well [21] - The report suggests that the historical relationship between US issuance, foreign inflows, and the Dollar may begin to resemble that of other economies if current trends continue [14][21]

Investment Rating - The report indicates a positive outlook for the S&P 500 with a return forecast of +8% over the next 12 months, targeting a price of 6500 [3][46]. Core Insights - The report emphasizes the resilience of hard economic data, with nonfarm payrolls increasing by 139,000 in May and the unemployment rate steady at 4.2%. However, a softening of economic data is expected in the coming months [2][4]. - Market rotations suggest that investors are pricing in an optimistic growth outlook, reflected in the performance of cyclical versus defensive stocks, which indicates a real GDP growth environment of approximately 2% [6][2]. - Goldman Sachs economists forecast a slowdown in real GDP growth to 0.4% on a quarter-over-quarter annualized basis in Q4 2025, followed by a rebound to 2.0% by Q4 2026 [5][20]. Summary by Sections Economic Data - The report highlights that while hard economic data remains strong, soft data has shown signs of recovery, which typically precedes improvements in hard data during past recessions [12][16]. - The S&P 500 has been more correlated with soft data than hard data, suggesting that continued improvement in soft data could support equity returns even if hard data weakens [16][30]. Market Outlook - Investors appear to be looking beyond near-term economic weakness, with expectations of a rebound in GDP growth by 2026, supported by improvements in soft data and favorable trade policy signals [20][36]. - The report notes that the market's pricing of economic growth may be less optimistic than indicated by the cyclical versus defensive stock performance, as high operating leverage stocks are trading at a significant valuation discount compared to low operating leverage stocks [30][31]. Sector Analysis - The report discusses sector-neutral baskets of economically sensitive stocks, indicating that cyclical stocks have lagged behind defensive stocks year-to-date, suggesting a cautious market sentiment [26][30]. - The valuation for high operating leverage stocks indicates that the market is pricing in downside risks to the economic growth outlook, with a historic valuation discount observed [30][33].

Investment Rating - The report assigns a "Buy" rating to Costco Wholesale (COST) with a 12-month price target of $1,133, indicating an upside potential of 7.3% from the current price of $1,055.59 [9][10]. Core Insights - Costco's May same-store sales (SSS) growth was +6.0%, slightly below the consensus estimate of +6.2% and down from +6.7% in April. U.S. comparable sales (ex-gas) were +5.5%, also below the consensus of +6.4% and down from +7.1% in April. The company noted a negative impact from cannibalization of approximately 70 basis points in May [1]. - Worldwide traffic growth decelerated to +3.4% in May, compared to +4.2% in April. U.S. traffic growth also slowed to +2.8% from +5.0% in April, while global ticket sales (ex-gas/FX) increased by an estimated +2.6% [2]. Sales Performance - The report highlights that the Fresh category saw high-single-digit growth, driven by strong performance in meat and bakery. Food & Sundries grew mid-single-digit to high-single-digit, while non-foods increased mid-single-digit. The ancillary business, however, decreased low-single-digit to mid-single-digit [8]. Financial Metrics - The report provides financial forecasts for Costco, projecting revenues of $254.45 billion for the current year, increasing to $310.24 billion by 2027. EBITDA is expected to grow from $11.52 billion to $15.45 billion over the same period. The earnings per share (EPS) is forecasted to rise from $16.56 to $21.51 [10].

Investment Rating - The report gives a "green light" for the short-term outlook of US equities, indicating a positive investment sentiment [2]. Core Insights - The market is experiencing upward momentum until summer technicals and economic data come into play, with investors likely to be halted before any significant drawdown occurs [3]. - Retail investors are actively buying dips in US equities, while institutional activity remains muted [2]. - Robust liquidity is noted, with top of book liquidity at $11.08 million, above the one-year average of $10.65 million, supporting healthy trading in the near term [7][8]. Summary by Sections Market Setup - The report highlights a preference for specific trades, including SPX call spreads and hedging strategies for long positions [5]. - The liquidity environment is described as supportive for trading, although it may lose momentum as summer approaches [8]. Trading Activity - US equities have seen net buying for six consecutive sessions, with a notable increase in long buys, indicating strong market interest [27]. - The overall gross leverage has increased to 289.2%, placing it in the 95th percentile for the past year, driven by short leverage [28][29]. Seasonal Trends - The report notes that early to mid-June typically sees moderate market increases, providing a favorable trading environment, especially for bearish long-term views [64]. ETF Flows - Significant inflows into factor ETFs were observed, with May being the best month for inflows since the election, indicating strong investor interest in momentum strategies [43][50]. - The report also mentions a growing interest from global investors in emerging market equities due to USD weakness and US growth uncertainty [54].

Investment Rating - The report assigns a "Buy" rating to Xiaomi Corp. with a 12-month target price of HK$65, indicating an upside potential of 27.6% from the current price of HK$50.95 [17][20]. Core Insights - Xiaomi's GMV (Gross Merchandise Value) during the first phase of the 6.18 shopping festival reached Rmb16.9 billion, representing a 64% year-over-year increase compared to Rmb10.3 billion at the same time in 2024 [3][5]. - The report highlights that Xiaomi's flagship series did not make the top 10 list this year, attributed to aggressive inventory clearance by Apple, which temporarily increased competition in the premium segment [1][3]. - Xiaomi's discount level during the 6.18 festival is noted to be more disciplined at around 16%, compared to 22% during the same period last year, with potential discounts reaching up to 29% when considering national subsidies [4][16]. Summary by Sections Sales Performance - Xiaomi ranked No.1/2 in sales volume and GMV among domestic smartphone brands on JD.com, maintaining four of the top 10 best-selling models [3][7]. - The company experienced stronger GMV growth in smartphones (+46%/110% year-over-year) compared to AIoT products (+39%/91% year-over-year) at its proprietary channels [7]. Competitive Landscape - Apple's aggressive inventory clearance has led to a temporary recovery in its market share in China, with a noted increase of 6.6 percentage points year-over-year [1][13]. - The report anticipates that the ratio of Phase I GMV to total shopping festival GMV for this year's 6.18 shopping festival will be around 50%, higher than previous years [3][10]. Future Outlook - Xiaomi is positioned for multi-year ecosystem expansion with projected revenue and EPS CAGRs of 26% and 39% from 2024 to 2027, supported by its "Human x Car x Home" strategy [17][18]. - The report emphasizes Xiaomi's robust balance sheet and competitive advantages in the EV supply chain, enhancing its appeal in the electric vehicle market [17].

Investment Rating - The report maintains a Neutral rating for HUTCHMED (HCM) with a 12-month price target of $18 for the ADR listed in the US, indicating a potential upside of 32.4% from the current price of $13.60 [12][14]. Core Insights - Increased investor focus is expected on savolitinib following data presentations at ASCO, with the company highlighting severe under-detection of MET amplification when using NGS testing compared to FISH testing [1][2]. - The company’s internal unpublished data suggests that only about 30% of patients who test positive for MET amplification via FISH would also test positive using the NGS method [2]. - The global Phase 3 SAFRON study of savolitinib in combination with osimertinib will offer patients the option of two companion diagnostics: FISH and IHC methods [2]. Summary by Sections MET Amplification Testing - Testing for MET amplification is crucial for patient selection, with a cross-study analysis indicating that NGS testing severely under-detects the biomarker compared to FISH [2]. - The MARIPOSA-2 study detected MET amplification in 14% of patients using ctDNA NGS, while the SACHI study showed approximately 30% detection using tissue FISH [5]. Clinical Efficacy - The SACHI study demonstrated a median progression-free survival (PFS) of 8.2 months for the savolitinib plus osimertinib combination compared to 4.5 months for chemotherapy, with a statistically significant hazard ratio of 0.34 [5][6]. - For patients previously treated with a 3rd-generation EGFR TKI, the median PFS was 6.9 months for the combination arm versus 3.0 months for chemotherapy, also showing a significant difference [6]. Safety Profile - The SAVANNAH study indicated a promising PFS curve separation with a manageable safety profile, although adverse events leading to dose interruption of savolitinib occurred in approximately 48% of patients [9].

Investment Rating - The report assigns a "Buy" rating to Xtep International Holdings with a 12-month price target of HK$7.00, indicating an upside potential of 19.9% from the current price of HK$5.84 [10][11]. Core Insights - The company has reiterated its full-year guidance, expecting positive sales growth at the group level, with Saucony and Merrell brands projected to achieve 30%-40% sales growth and over 10% year-on-year net profit growth [2][10]. - Xtep's core business has maintained stable discount levels in the second quarter of 2025, attributed to healthy inventory levels [7][10]. - Management believes that Xtep's established brand recognition and ecosystem provide a competitive advantage in the growing running category [7][10]. Summary by Sections Full Year Guidance - The company expects to deliver positive sales growth at the group level, with Saucony and Merrell brands projected to achieve 30%-40% sales growth and over 10% year-on-year net profit growth [2][10]. Xtep Core - The discount level has remained stable in the second quarter of 2025 due to healthy inventory levels, and the brand is focusing on maintaining stable profit margins [7][10]. Saucony Brand - In the second half of 2025, management anticipates a broader product assortment to meet functional and fashion demands, including new fabrics and an increased focus on women's products, aiming to raise the female sales mix from 10-20% to 30% within the next 1-2 years [4][8]. - The company aims to double Saucony's revenue by 2027 through store expansion, targeting 30-50 new stores annually and enhancing store productivity [4][8].

Investment Rating - The report assigns a "Buy" rating to Anta Sports Products with a 12-month price target of HK$117, indicating an upside potential of 24.1% from the current price of HK$94.25 [14][15]. Core Insights - The report emphasizes the positive outlook for Anta Group, supported by solid year-to-date trading performance and effective execution across its brand portfolio. The completion of the Jack Wolfskin acquisition is noted, although its impact on forecasts has not yet been incorporated [7][14]. - The management's focus on Fila's reform under the new CEO aims for sustainable growth rather than immediate margin improvements, with specific strategies including enhanced product functionality and targeted marketing efforts [9][10]. - The report highlights the importance of the upcoming 618 shopping festival, with expectations of increased online sales and a healthy inventory level across most brands, although discounts are anticipated due to a higher online sales mix [7][11]. Summary by Sections Recent Trends - May online sales benefited from the early start of the 618 shopping festival, while offline sales faced challenges due to unfavorable weather conditions. The company expects to see more discounts leading into the festival [7][11]. Brand Performance - Anta brand's performance aligns with expectations, with new initiatives showing promise. The running category remains strong, accounting for over 40% of footwear volume, while basketball performance is still challenging [11]. Margin Outlook - The report indicates that the operating profit margin (OPM) for Anta and Fila brands is expected to remain relatively flat, with Descente's margin at approximately 30%. There is room for improvement for Kolon and MAIA brands [10][11]. Fila Reform - Fila's new CEO is committed to a mid-single-digit percentage growth target by 2025, focusing on product refinement and marketing strategies to enhance brand positioning [9][10]. Jack Wolfskin and Future M&A - The management anticipates that the Jack Wolfskin acquisition will have a limited impact in the first half of 2025 but will be margin-dilutive for the full year. Future M&A opportunities are identified in brands specializing in female products and premium running [12][13].

Investment Rating - The investment rating for China Resources Beer is "Buy" with a 12-month price target of HK$33.50, representing an upside of 34.0% from the current price of HK$25.00 [9]. Core Insights - China Resources Beer (CRB) has shown continued solid performance in May, driven primarily by Heineken, which sustained over 20% year-on-year volume growth [6][7]. - The overall operating run-rate for CRB's beer volume growth in May was above the volume growth of SD% in 1Q25, with a mild increase in blended average selling price (ASP) and positive margin profiles [6][10]. - Management noted a healthy channel inventory maintained at largely one month of sales, with positive volume growth across mass-market to premium segments [6][10]. Summary by Sections Volume Growth and Performance - CRB's beer volume growth in May trended similarly to April, exceeding the volume growth of SD% in 1Q25 [6]. - Heineken remains the key volume driver, achieving over 20% year-on-year growth in May [7]. - Pure Draft experienced a narrower volume decline year-on-year in May compared to April and 1Q25, while SuperX maintained high single-digit to double-digit growth [7]. Channel and Regional Insights - Management observed a mild recovery in catering channels, particularly in hot pot, BBQ, and trendy restaurants, while nightlife channels remained muted [6][10]. - Performance in East and South China was noted as on track, with slightly better on-trade volume growth in these regions [10]. Instant Delivery and Online Channels - CRB is experiencing strong growth in instant delivery platforms, with growth rates ranging from double-digit to triple-digit percentages from a small base [10]. - Online channels, including instant delivery, currently account for low single-digit to mid-single-digit percentages of total volume, with management indicating that operating profit margins for these businesses are not significantly lower than traditional channels [10].

Investment Ratings - The report maintains a "Buy" rating for Keysight Technologies (KEYS) based on improved order trends and revenue guidance [6][7]. Core Insights - Palo Alto Networks (PANW) reported in-line quarterly results with revenue of $2.29 billion, slightly above consensus expectations of $2.28 billion, and guided for FQ4 revenue between $2.49 billion and $2.51 billion, indicating a growth of 19-20% for FY RPO [3][4]. - Baidu (BIDU) exceeded expectations with Q1 revenue of CNY 32.45 billion, driven by a 42% year-over-year growth in its AI Cloud business, leading to a 2.5% increase in stock price [5][6]. - Keysight Technologies (KEYS) reported a revenue of $1.31 billion, 2% above market expectations, and guided for FY25 revenue growth of approximately 6% year-over-year, reflecting an acceleration in order growth [6][7]. - Wolfspeed (WOLF) shares plummeted 60% following reports of the company preparing for bankruptcy, indicating significant distress in the semiconductor sector [8]. - Google (GOOGL) showcased innovations in AI during its I/O keynote, emphasizing its commitment to integrating AI capabilities across its product suite, which may enhance its competitive position in the search market [9][11]. Summary by Sections Market Insights - Futures are pulling back with NDX/SPX down 65 basis points as higher yields impact risk appetite, with US 10-year yields at 4.53% and 30-year yields at 5.02% [1][2]. - The report highlights a surge in short interest, indicating a shift in market sentiment and potential investment strategies [12][14]. Company Performance - PANW's stock fell 3.5% post-earnings despite meeting expectations, while BIDU's stock rose 2.5% on strong Q1 results [3][4][5]. - KEYS experienced a 5% increase in stock price due to positive order trends and revenue guidance [6][7]. - WOLF's stock saw a drastic decline of 60% amid bankruptcy preparations, reflecting severe challenges in the semiconductor industry [8]. Hedge Fund Trends - Hedge funds have maintained a positive return of +1% YTD, with a notable increase in short positions across ETFs and single stocks, indicating a strategic shift in investment approaches [12][32]. - The average large-cap mutual fund has outperformed benchmarks, with 50% exceeding their targets, reflecting strong relative performance despite macroeconomic uncertainties [19][36].