2025-04-25 02:44Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The average tariff imposed by the US has surged from 3% to over 20%, marking the highest level in nearly a century, which has led to significant declines in stock and commodity prices, reminiscent of the Smoot-Hawley Tariff Act of the 1930s [1][2] - High tariffs disrupt global supply chains, forcing companies to adjust production layouts, which reduces global production efficiency and raises the US policy uncertainty index to its second-highest level in decades [1][5] - The imposition of tariffs is expected to push inflation higher, slow down economic growth in exporting countries, and suppress overall production, leading to a lasting negative impact on the macroeconomy [1][6] - The report predicts a potential recession or stagflation in the US economy, with GDP expected to drop sharply and both consumption and investment slowing down, contrasting with the prevailing belief in the resilience of the US economy [1][8] - Economic data in the US shows significant divergence, with soft data (like consumer confidence) not aligning with hard data (like sales figures), necessitating careful differentiation between core and auxiliary data to avoid reliance on distorted information [1][12] Summary by Sections Tariff Impact - The US government has announced a significant increase in tariffs, raising basic tariffs by 10% and imposing tariffs of 30% to 50% on countries with large trade deficits with the US, resulting in an average tariff increase to over 20% [2][3] - This tariff increase has led to a notable decline in US stock markets and commodity prices, indicating a substantial negative impact on the economy [4][5] Economic Outlook - The report suggests that the US economy may face a challenging future, with a high likelihood of recession or stagflation due to the adverse effects of tariffs and other policies [7][8] - The analysis indicates that the most resilient sectors, such as consumption and investment, are also showing signs of slowing down, confirming the overall downward trend in the economy [17][18] Global Economic Context - China's economy showed a GDP growth of 5.4% in the first quarter, but is expected to face challenges in the second and third quarters due to tariff impacts, with potential government measures to stabilize recovery [19][20] - The report emphasizes the importance of considering the contrasting policy environments between the US and China, with China having more room for counter-cyclical stimulus due to lower inflation [20][21] Asset Allocation Recommendations - In the current environment, the report recommends allocating to safe assets like gold and Chinese bonds, while advising caution regarding traditional safe assets like US dollars and bonds due to their diminished safety and resilience [44][38] - The report suggests that investors should maintain a cautious stance towards US equities, given the potential for recession or stagflation, and consider structural adjustments in their portfolios [39][42]