Industry and Company Analysis 1. **Global Economic Outlook** - **US Economic Growth**: The US economy is expected to grow 2.5% in 2025, outperforming consensus expectations and other DM economies for the third year in a row. [2] - **Euro Area GDP**: Cut to a below-consensus 0.8% due to structural headwinds and trade policy uncertainty. [3] - **China GDP**: Cut to 4.5% due to higher US tariffs partially offset by easier macro policies. [3] - **Inflation**: US core PCE inflation expected to slow to 2.4% by late 2025, with a risk of rising to 3% with a 10% across-the-board tariff. [4] 2. **US Economic Policy Changes** - **Trade**: New tariffs on China and autos, with a 3.4pp increase in the effective tariff rate for US imports. [14] - **Immigration**: Net immigration expected to slow to 750k/year. [14] - **Fiscal**: Lower corporate tax for domestic manufacturers to 15% and reinstating more generous corporate incentives. [14] - **Regulation**: Easier approval of energy projects, expanding LNG exports, and reversing restrictions on greenhouse gas emissions. [14] 3. **Impact on US GDP** - **Base Case**: A small hit to growth in 2025 (0.2pp) and a moderate boost in 2026 (0.3pp). [16] - **Risk Case**: Larger negative impulse from across-the-board tariff, with a net drag on growth averaging 1.0pp in 2026. [18] 4. **Impact on Europe and China** - **Euro Area**: Trade policy uncertainty could subtract 0.9% from GDP. [20] - **China**: US tariff increase expected to subtract 0.7pp from growth in 2025. [22] 5. **Global Growth Outlook** - **Global GDP**: Expected to average 2.7% in 2025, with US outperforming relative to consensus. [30] 6. **Inflation and Disinflation** - **US Core PCE Inflation**: Expected to slow to 2.4% by late 2025, with a risk of rising to 3.1% with a 10% across-the-board tariff. [37] - **Disinflation**: Expected to continue across major DM economies, with the US, UK, and Australia likely to cluster around 2½% by late 2025. [45] 7. **Monetary Policy** - **Fed**: Expected to cut rates to 3.25-3.5% with sequential moves through Q1 and a slowdown thereafter. [49] - **ECB**: Expected to continue sequential cuts and lower the terminal forecast to 1.75%. [51] - **BoE**: Expected to cut rates back to 3.75% by end-2025 and a terminal rate of 3.25% in 2026Q2. [51] - **Other DMs**: Expected to see more aggressive cuts in smaller DM central banks. [52] - **EMs**: Expected to see significant room for monetary easing given that policy rates remain far above neutral. [54] 8. **Market Outlook** - **Equities**: Expected to see modest positive returns across key asset classes, with US equities outperforming and EM equities likely to outperform fixed income. [79] - **Bonds**: Expected to see modest positive returns, with US Treasuries and Bunds/Gilts playing an important diversifying role in portfolios. [80] - **Commodities**: Expected to continue to benefit from a positive roll return, with lower contribution from price shifts. [79] 9. **Tail Risks** - **Broader Trade War**: Underpriced risk, particularly for its potential impact on Europe and some non-China EM economies. [67] - **Fiscal Risk**: Increased possibility of additional fiscal expansion and focus on the sustainability of the US public debt profile. [69] - **Inflation Risk**: Short-term inflation risks are two-sided, with short-dated US inflation swaps priced well above the forecast. [69] - **Oil Market**: Risks of breaking the $70-$85/bbl range are growing, with upside tail risk from Iranian supply and downside risk from ample supply and potential demand hurt by broader tariff action. [71] 10. **Investment Strategy** - **Maintain Exposure**: Maintain exposure to robust US economic outlook while protecting against key tail risks. [80] - **Diversification**: Use diversification to address some of the challenges, including US Treasuries, Bunds/Gilts, and mid-cap equities or a more equal-weighted allocation. [80] - **Options**: Use options to provide protection against macro tails, including long USD positions, long USD optionality, and upside in gold and oil. [82]

Summary of Goldman Sachs Global Markets Analyst Report on US Fiscal Risk Premia Industry Overview - The report focuses on the US Treasury market and the implications of fiscal risk premia on long-term Treasury yields, particularly in the context of the upcoming 2024 US elections [2][8]. Key Points and Arguments Fiscal Outlook and Treasury Yields - The US debt-to-GDP ratio is projected to rise from 97% currently to 130% by 2034, indicating a significant increase in public debt [10]. - Despite the increase in debt levels, long-term Treasury yields and measures of bond term premia have remained relatively stable compared to historical standards [8][10]. - A 1 percentage point (pp) increase in the deficit-to-GDP ratio is estimated to raise long-term yields by approximately 20 basis points (bp) [5]. Sensitivity of Yields to Debt Levels - The sensitivity of longer-term G10 yields to debt-to-GDP has declined over the past three decades, attributed to increased private sector savings and asset values [3][20]. - The report suggests that while the fiscal picture has worsened, the market's ability to absorb Treasury supply has improved due to healthy domestic private sector balance sheets [4][19]. Demand Dynamics for US Treasuries - The demand for US fixed income has broadened over the decades, with foreign ownership of US Treasuries peaking at around 60% in the mid-2000s and currently at about 40% [27][28]. - Post-global financial crisis (GFC), domestic buyers have increasingly filled the gap left by foreign investors, driven by regulatory changes and shifts in financial asset demand [31]. Term Premia and Risk Perception - Term premia, which reflect the compensation investors require for holding longer-term bonds, are influenced by macroeconomic uncertainty and fiscal sustainability concerns [14][15]. - The report indicates that higher public debt can lead to increased term premia due to the supply-demand balance for duration and heightened fiscal concerns [15][16]. Future Projections and Risks - The report anticipates that the trend of rising term premia will be gradual as long as private sector balance sheets remain healthy [40]. - However, a rise in public debt without corresponding productivity growth could exacerbate the crowding-out effect and lead to greater fiscal risk [40][55]. Impact of Fiscal News on Yields - Adjustments in yields often occur abruptly in response to fiscal news, with historical patterns showing that significant revisions to Treasury borrowing estimates can lead to yield spikes [42][45]. - The report highlights that while the long-run sensitivity of yield levels to debt levels has decreased, changes in the fiscal outlook continue to significantly affect interest rates [49][54]. Additional Important Insights - The report discusses the interaction between short-rate expectations and term premia, noting that large increases in short-rate expectations are rarely accompanied by sharp increases in term premia [6][56]. - The analysis suggests that the relationship between fiscal news and yield changes is complex, often involving a larger component of fiscal uncertainty that can influence risk sentiment [54]. This comprehensive analysis provides insights into the dynamics of the US Treasury market, the implications of rising public debt, and the factors influencing long-term yields and fiscal risk premia.

Summary of the China Cement Industry Conference Call Industry Overview - The conference call focused on the **Cement Industry in China**, particularly the **2024 Cement Industry Capacity Replacement Regulations** issued by the Ministry of Industry and Information Technology (MIIT) [1][2]. Key Points from the 2024 Regulations 1. **Stricter Capacity Replacement Criteria**: - The 2024 Edition tightens the definition of idle capacity, stating that cement clinker production lines operating less than 90 days per year for two consecutive years are ineligible for replacement [2]. 2. **Pollution Control Measures**: - A strict ban on new cement clinker capacity in key pollution regions is introduced, along with prohibitions on cross-province capacity replacements unless specific conditions are met [4]. 3. **Refined Replacement Standards**: - The new regulations provide specific standards for different replacement contexts, allowing a 1:1 replacement ratio for intra-company or intra-city relocations [5]. 4. **Simplified Approval Process**: - The approval process for capacity transfers within the same corporate group or pollution-control key regions is streamlined, waiving the need for approval from the original location's industry authority [6]. 5. **Enhanced Energy Efficiency Standards**: - Replacement capacities must meet current national energy efficiency benchmarks, excluding lower-efficiency capacities from replacement [7]. 6. **Increased Replacement Ratios**: - The replacement ratio requirement in key pollution-control regions is raised to at least 2:1, and in non-key areas to 1.5:1, compared to the previous standard of 1.25:1 [8]. Company Insights - **Anhui Conch Cement (0914.HK)**: - Target price set at HK$22 based on a price-to-book (P/B) ratio of 0.55x for 2024, reflecting a downcycle in cement demand due to a slump in property demand [9]. - Risks include a slowdown in property growth, unexpected new cement capacity additions, and rising coal prices [10]. - **China National Building Material (3323.HK)**: - Target price set at HK$4.0 based on a 2025 earnings-based valuation, with expectations for the stock to trade towards its A-share subsidiary Tianshan Cement after re-listing [11]. - Risks include weaker-than-expected cement demand and prices, and higher-than-expected capacity additions [12]. - **China Resources Building Materials Technology Holdings (1313.HK)**: - Target price set at HK$2/share based on a P/B ratio of 0.29x for 2024, with ROE forecasts lower than historical averages [13]. - Risks include weaker cement prices and profits, higher production costs, and a weaker macro economy [14]. Investment Recommendations - The analysis maintains a **Buy** rating on **Anhui Conch**, **China National Building Material**, and **CR Cement**, indicating a preference for cement companies over steel in the near term [1]. Additional Considerations - The revised regulations aim to align the cement industry with carbon reduction goals, promoting a greener and more efficient industry [1]. - The call highlighted the potential for further policies to curb cement supply, indicating a proactive approach to managing industry capacity and environmental impact [1].

Industry: Housing Market **1. Resilient but Rangebound Housing Market Outlook** - The housing market is expected to remain resilient but rangebound in 2025, driven by demographic trends and a healthy labor market. - Higher mortgage rates are expected to continue, but the impact on housing turnover will be mitigated by the high level of home equity and low homeowner vacancy rates. - National home prices are forecasted to rise 3.3% December-over-December in 2024 and 4.3% in 2025, slightly below the historical average of 5%. **2. Existing Home Sales and Home Improvement Spending** - Existing home sales are expected to decline in the coming months due to higher mortgage rates and the financial disincentive for homeowners to move. - Home improvement spending is expected to increase as homeowners invest in their current homes rather than moving, driven by low homeowner vacancy rates and high levels of home equity. **3. Single-Family Homebuilding** - Single-family homebuilding is expected to remain elevated despite higher mortgage rates, due to limited housing supply and strong demand. - The build-to-rent segment is likely to provide an alternative source of demand, further reducing the sensitivity of single-family homebuilding to rates. **4. Multifamily Homebuilding** - Multifamily construction is expected to fall further in 2025, but multifamily starts are likely to rebound but remain depressed. - The backlog of multifamily units under construction is expected to normalize by the end of 2025. **5. Residential Fixed Investment (RFI) Growth** - RFI growth is expected to decline in 2024Q3-Q4 due to lower existing home sales and multifamily homebuilding, but is forecasted to rebound sharply in 2025Q1 before settling around a 2-3% growth pace in the second half of 2025. Company: Not specified **6. No specific company information provided in the document**.

Financial Data and Key Metrics - The AI Neocloud market is a significant driver of GPU demand, expected to grow to more than a third of total demand [8] - Microsoft spends approximately $200 million monthly on GPU compute through AI Neoclouds, despite having its own datacenter teams [1] Business Line Data and Key Metrics - AI Neoclouds are defined as new cloud compute providers focused on GPU compute rental, offering cutting-edge performance and flexibility [2] - Traditional hyperscalers like Google Cloud, Microsoft Azure, and AWS dominate the AI cloud services market, while companies like Meta and Tesla do not currently offer AI services [8][9] - AI Neocloud Giants such as Crusoe, Lambda Labs, and Coreweave focus exclusively on GPU cloud services, with planned capacities exceeding 100k H100 equivalents [10] Market Data and Key Metrics - Emerging AI Neoclouds, including regional players under the Sovereign AI umbrella, are growing rapidly, with some planning to deploy hundreds of thousands of Blackwell GPUs [11][12] - The AI Neocloud market is divided into four categories: Traditional Hyperscalers, Neocloud Giants, Emerging Neoclouds, and Brokers/Platforms/Aggregators [8] Company Strategy and Industry Competition - Traditional hyperscalers benefit from diversified business models and low capital costs but charge premium pricing for AI cloud services [9] - AI Neocloud Giants have higher capital costs but better access to capital compared to Emerging Neoclouds, leading to lower comparative ownership costs [10] - Emerging Neoclouds often face higher capital costs and lack experience in running datacenter infrastructure, but some have ambitious plans to compete with Neocloud Giants [11][12] Management Commentary on Operating Environment and Future Outlook - The rise of AI Neoclouds has captivated the computing industry, with significant investments and GPU allocations driving rapid growth [1] - The market is evolving as AI Neoclouds refine their business models and economic strategies [2] - The deployment of Blackwell GPUs is expected to further shape the market dynamics [4] Other Important Information - The AI Neocloud market is highly competitive, with traditional hyperscalers, Neocloud Giants, and Emerging Neoclouds vying for market share [8][10] - Brokers and Platforms aggregate demand and supply but avoid direct GPU rental price exposure, operating as capital-light intermediaries [13][14] Summary of Q&A Session - No specific Q&A session details were provided in the content.