Core Viewpoint - Citigroup's stock strategists have raised the S&P 500 index target, citing the recent "Big and Beautiful" bill's tax cuts as a counterbalance to the negative impact of tariffs on U.S. corporate earnings [1] Group 1: Market Predictions - Citigroup's strategy team increased the S&P 500 year-end target from 6,300 to 6,600 points, indicating a potential 3% rise from last week's historical closing high, with a mid-2026 target of 6,900 points [1] - Morgan Stanley's chief equity strategist has also turned more optimistic, raising the S&P 500 target to 7,200 points for mid-2026 [5] - Oppenheimer's chief strategist has set the highest S&P 500 target among tracked strategists at 7,100 points for year-end [8] Group 2: Earnings Performance - Over 81% of S&P 500 companies have reported earnings above expectations, marking the highest rate in the past seven quarters [4] - Citigroup has revised its earnings per share (EPS) forecasts upward, projecting 2025 EPS to rise from $261 to $272 and 2026 EPS from $295 to $308 [4] Group 3: Technology Sector Influence - The "Magnificent Seven" tech giants, which include Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms, account for about 35% of the S&P 500 and are key drivers of the index's performance [2] - These tech giants have shown strong revenue growth driven by AI, solid fundamentals, and robust free cash flow, attracting significant global investment [2] - Despite their strong performance, six of the seven giants have expected price-to-earnings ratios significantly above 25x, raising caution among Wall Street analysts [2] Group 4: Investor Sentiment - A record 91% of surveyed institutional investors believe U.S. stocks are overvalued, the highest level since 2001 [8] - Investors are betting on tax cuts and anticipated Federal Reserve rate cuts to boost the market, primarily through large-cap tech stocks [9] - The concentration of returns in the S&P 500 has reached extreme levels, with just five large tech stocks contributing 68% of the index's gains this year [9]

Core Viewpoint - Japanese Prime Minister Shigeru Ishiba emphasizes that sales tax is a revenue source for social welfare programs such as pensions [1] Group 1 - There is a need to establish a framework for publicly discussing tax issues [1] - The pros and cons of tax reduction were not discussed during the election period [1]

Market Overview - Global stock markets experienced a broad recovery, with domestic equities outperforming overseas markets, particularly in the Hong Kong and ChiNext indices, as the Shanghai Composite Index stabilized above 3500 points [1][16] - The market sentiment improved due to easing tensions between China and the U.S., leading to positive expectations for negotiations and a rise in incremental capital inflows driven by enhanced profitability from mid-year earnings reports [1][16] - The overall pre-announcement profit rate for companies reporting mid-year results reached 44%, indicating structural improvements in earnings, particularly in the TMT, utilities, and transportation sectors [1][16] Economic Data Insights - In June, new social financing increased by 4.2 trillion yuan, showing a year-on-year increase of 0.9 trillion yuan, with a balance growth rate of 8.9% [5] - The GDP growth rate for Q2 was 5.2%, slightly below the previous quarter's 5.4%, while industrial output in June rose by 6.8%, exceeding expectations [7][8] - Retail sales in June totaled 42.287 billion yuan, growing by 4.8% year-on-year, indicating a slight decline in domestic demand compared to previous months [9][10] Sector Performance and Strategy - The technology sector is expected to benefit from improved market sentiment and structural reforms, with the "new quality productivity" becoming a long-term focus, particularly in the context of AI advancements [2][17] - Financial sectors are likely to attract new capital due to increased long-term assessments by insurance companies, while consumer leaders are positioned for recovery amid low valuations and supportive domestic policies [2][17] - The Hong Kong market is anticipated to perform better than A-shares in the second half of the year, driven by strong earnings from technology leaders and high dividend yields attracting institutional investments [18] International Market Dynamics - U.S. stock markets showed resilience with the S&P 500 and Nasdaq reaching new highs, supported by strong earnings in the financial and technology sectors, despite some volatility due to speculation around Federal Reserve policies [19] - The U.S. inflation data indicated a moderate rise, with the core CPI at 2.9%, suggesting that tariff impacts on inflation have yet to be fully realized [11][12] - The bond market remains stable, with short-term yields outperforming long-term ones, as the market anticipates a potential rate cut by the Federal Reserve in September [21]

Core Viewpoint - The ruling coalition in Japan is likely to lose its majority in the upper house elections, which could further weaken Prime Minister Shigeru Ishiba's leadership and disrupt financial markets [3][5]. Political Impact - Exit polls indicate that the ruling coalition may secure only 32 to 51 seats out of 125 contested, falling short of the 50 seats needed to maintain a majority in the 248-seat upper house [5]. - Ishiba has stated he will continue as Prime Minister, believing the Liberal Democratic Party (LDP) can still be the largest party in both houses [5]. - If the ruling coalition loses control of the upper house, it would mark the first time since the LDP's establishment in the 1950s that the government is in a minority in both houses [5][7]. Financial Market Implications - The election results could complicate Ishiba's policy agenda and U.S. trade negotiations, potentially leading to his resignation [7]. - Investor uncertainty may increase due to the ruling party's loss of majority, raising concerns about the ability of lawmakers to control fiscal spending, which has contributed to rising bond yields [8]. - The upcoming market reactions will be observed on the foreign exchange market, with the yen trading starting early on Monday [9]. Public Sentiment and Policy Challenges - Public dissatisfaction with rising prices has shifted votes towards opposition parties advocating for tax cuts and increased social welfare spending [9]. - The LDP's stance against lowering consumption tax contrasts with public demand, which may further weaken its position [9]. - The need for a trade agreement with the U.S. by August 1 adds pressure, as failure to do so could lead to increased tariffs on Japanese exports, negatively impacting GDP [10].

Summary of Conference Call Notes Industry Overview - The current market environment shows a significant decline across all asset classes, including both risk assets and safe-haven assets like gold, which recently dropped below $3,200 per ounce, indicating a state of confusion among market participants [1][8]. Key Points and Arguments - The U.S. Treasury market is under substantial downward pressure, with current price levels comparable to those seen on April 2, when tariffs were first introduced. This situation suggests that the warning signals for the U.S. economy remain active, necessitating further efforts to support the market through both messaging and domestic policy [2][4]. - Recent developments in U.S. trade relations, particularly with Japan and South Korea, are progressing, although specific details have not been disclosed by the U.S. or China. The speed of these negotiations appears to be relatively fast, as reported by South Korean media [3]. - The U.S. internal policy regarding tax cuts has reached the House of Representatives. If passed, this could provide some stimulus to the macro economy, which is crucial for economic recovery [3]. - Domestic economic indicators in China have shown disappointing results, particularly in April, where new credit issuance was only around 2,800 million, falling short of expectations. This indicates a lack of robust demand for credit, as much of the financing was attributed to bill financing rather than genuine credit demand [5][6]. - The data reflects a cautious approach from both consumers and businesses regarding loans, with a notable decrease in household loans for home purchases and a lack of substantial investment from enterprises [6][7]. - The recent easing of tariff pressures has created a complex situation for the domestic market, leading to uncertainty about future expectations. This environment may result in a period of volatility, with slight upward movements but no significant breakthroughs anticipated [7][8]. - Market sentiment has shown slight recovery, with trading volumes in Shanghai and Shenzhen dropping to 1.15 trillion, indicating a period of struggle and indecision in the market [8]. - The technical pattern observed in gold suggests a bearish outlook, with the recent price action forming a head-and-shoulders pattern, indicating weak buying support and leading to hesitance among short-term investors [9]. Other Important Insights - The overall market sentiment is characterized by a desire for stability and gradual recovery, with the expectation that any significant upward movement will require stronger catalysts [8]. - The current state of the market is described as a "struggle period," where maintaining stability is seen as a positive outcome amidst the prevailing uncertainties [8][10].

Core Viewpoint - The "Big and Beautiful" tax and spending bill passed by the U.S. House of Representatives may not yield the optimistic outcomes that Republicans envision, particularly regarding its impact on social safety nets and the economy [1][5]. Summary by Sections Tax and Spending Changes - The bill extends tax cuts for corporations and individuals initiated during Trump's first term in 2017, including tax exemptions for certain tip and overtime income, while also lowering corporate taxes [2]. - It represents a significant shift in U.S. spending priorities, with major cuts to social security programs like Medicaid and SNAP, and increased funding for tax cuts, defense, and immigration enforcement [2]. Impact on Social Safety Nets - The bill imposes stricter eligibility requirements for Medicaid, requiring individuals aged 19-64 to work at least 80 hours per month to qualify for insurance, which could severely limit access for many low-income individuals [3]. - The reduction in Medicaid funding and support for low-income families may lead to a diminished safety net, adversely affecting those who rely on these programs for basic healthcare and food assistance [3][4]. Economic Implications - The Congressional Budget Office estimates that the bill will increase the national debt by $3.3 trillion over the next decade, exacerbating the federal government's financial situation [5]. - There are concerns that tax cuts may not lead to immediate investment growth, as manufacturing jobs continue to decline and hiring in retail and services remains sluggish [5]. Societal Consequences - The reduction in social safety net spending could potentially lead to increased crime rates and a decline in birth rates, with the U.S. experiencing its lowest birth rate since 1979 [6]. - The bill reflects a traditional Republican economic policy approach, but its long-term effects on the economy and society may be profound and divisive [6].

1. Report Industry Investment Rating - No specific industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The US non - farm payroll data has dampened the Fed's interest - rate cut expectations, and there is a risk of correction in the non - ferrous metals market, especially for copper, zinc, nickel, and stainless steel [1][9][87][205]. - For copper, due to factors such as improved non - farm data, eased overseas squeeze - out risks, and high prices suppressing downstream demand, copper prices face downward pressure [9]. - For zinc, the long - term bearish logic remains unchanged, and it can be considered as a short - position variety in the non - ferrous metals sector [87]. - For nickel and stainless steel, prices are expected to fluctuate widely. Factors include changes in macro - policies, raw material prices, and inventory levels [205][206]. 3. Summary by Directory 3.1 Non - Ferrous Metal Price Monitoring - **Price Data**: Provided the closing prices, daily, weekly, and annual price changes of various non - ferrous metals such as the US dollar index, exchange rate CNH, and multiple metal varieties. For example, the US dollar index was at 97.0, with a daily decline of 0.13%, a weekly decline of 0.28%, and an annual decline of 10.59% [6]. 3.2 Copper (CU) - **Influencing Factors**: - **Macro**: Negative factors include strong US non - farm data, Trump's signing of the "Great Beauty" bill, and tariff threats [9]. - **Raw Material**: Positive factors are a slight increase in copper concentrate spot processing fees and an increase in domestic copper ore port inventories [9]. - **Smelting**: Slightly bearish, with smelters using spot copper ore having continuous losses, and those using long - term contracts seeing reduced profits [9]. - **Demand**: Negative, as the arrival of the off - season and high copper prices have led to a significant decline in domestic copper product operating rates [9]. - **Inventory**: Negative, with global copper visible inventories increasing and the LME spot premium compressing [9]. - **Investment View**: Bearish, with copper prices at risk of correction [9]. - **Trading Strategy**: Short - term correction risk for unilateral trading; long copper and short zinc for arbitrage [9]. 3.3 Zinc (ZN) - **Influencing Factors**: - **Macro**: Neutral, including factors such as Trump signing a budget bill, strong US non - farm data, and China's plan to regulate the photovoltaic industry [87]. - **Raw Material**: Neutral, with domestic processing fees unchanged, import processing fees slightly increased, and short - term supply remaining relatively loose [87]. - **Smelting**: Bearish, as July sees a combination of maintenance, resumption, and new production, with monthly output expected to increase [87]. - **Demand**: Neutral, with the off - season and tariff uncertainties affecting demand [87]. - **Inventory**: Neutral, with social inventories continuously increasing [87]. - **Investment View**: Bearish, suitable as a short - position variety in the non - ferrous metals sector [87]. - **Trading Strategy**: Wait for unilateral trading; long copper and short zinc for arbitrage [87]. 3.4 Nickel - Stainless Steel (NI - SS) - **Influencing Factors**: - **Macro**: Neutral, with the US non - farm data affecting interest - rate cut expectations, and Trump's tariff policies and domestic "anti - involution" policies causing market sentiment to fluctuate [205][206]. - **Raw Material**: Neutral, with a slight decrease in the premium of Indonesian domestic trade pyrometallurgical nickel ore, an increase in smelter inventories, and a seasonal increase in Philippine shipments [205]. - **Smelting**: Slightly bearish, with high - level pure nickel production, weakening demand, and supply pressure on ferronickel [205]. - **Demand**: Bearish, with stainless steel in the off - season, weak spot transactions, and uncertain new - energy demand [205]. - **Inventory**: Neutral, with inventory levels remaining stable [205]. - **Investment View**: Prices are expected to fluctuate widely, with attention to factors such as policy changes and cost fluctuations [205]. - **Trading Strategy**: Short - sell on rallies for unilateral trading; wait for arbitrage [205][206].

Group 1 - The core content of the "Big and Beautiful" bill includes a $4.5 trillion tax cut extension from Trump's first term, along with approximately $350 billion in investments for national security and immigration enforcement [2] - The bill will cut $1.2 trillion from social welfare programs, primarily targeting Medicaid and SNAP, by imposing stricter work requirements [2] - The Congressional Budget Office estimates that the plan will increase the deficit by $3.3 trillion over ten years and result in 11.8 million people losing health insurance [2] Group 2 - The bill was passed in the House with a vote of 218 to 214, with all Democrats and two Republicans voting against it, marking a significant legislative achievement for Trump [1][2] - Trump described the bill as the largest of its kind ever signed and claimed it would lead to unprecedented economic growth [3][4] - The White House stated that the bill would create historic economic growth and reduce deficits and debt, emphasizing its broad scope and significant tax cuts [4]

Core Points - The article discusses the intense political struggle within the Republican Party regarding President Trump's proposed "Great America" economic bill, highlighting the potential loss of support from core MAGA voters if the bill is rejected [1][2] - The bill, which includes tax cuts, spending cuts, immigration control, and energy policy adjustments, is projected to increase U.S. national debt by $3.4 trillion over the next decade, pushing federal debt beyond $36.2 trillion [1][2] Summary by Sections Legislative Controversy - The bill extends the 2017 tax cuts, reduces Medicaid and food security spending, adds budget for border control, and eliminates several renewable energy subsidies [2] - It also proposes raising the debt ceiling by $5 trillion, necessitating a new agreement in Congress to avoid a sovereign debt default [2] - The Senate passed the bill with a narrow margin, but the House vote remains uncertain, complicating Trump's legislative timeline [2] Political Dynamics - Trump's social media pressure on Republican lawmakers reflects anxiety over moderates within the party, especially regarding Medicaid cuts that have faced backlash [2][3] - Democrats have criticized the bill, claiming it could lead to approximately 10 million low-income individuals losing health insurance and that 83% of tax benefits would go to the wealthiest 1% [2] - The current deadlock reveals deep divisions within the Republican Party, with fiscal conservatives and populists at odds, testing party unity and the future fiscal direction of the U.S. [3]

Core Viewpoint - The statement emphasizes the contrast between significant tax cuts leading to economic prosperity and substantial tax increases resulting in economic failure, urging Republican members to take action to avoid losing voter support [1] Group 1 - The mention of "the largest tax cuts in history" suggests a focus on fiscal policy that promotes economic growth [1] - The reference to "the largest tax increases in history" indicates a warning against policies that could hinder economic performance [1] - The call to action for Republican members highlights the political implications of economic policies on voter sentiment [1]