Monetary Policy Insights - The Federal Reserve maintained the federal funds rate target range at 4.25%-4.50%, aligning with market expectations[5] - The pace of balance sheet reduction (QT Taper) will slow from $25 billion to $5 billion per month starting April 1, while MBS reduction remains at $35 billion per month[5] - The median GDP growth forecast for 2025 was downgraded from 2.1% to 1.7%, and the unemployment rate forecast was adjusted from 4.3% to 4.4%[5] Inflation and Economic Outlook - The PCE inflation forecast for 2025 was revised up from 2.5% to 2.7%, with core PCE inflation rising from 2.5% to 2.8% due to tariff impacts[5] - The Fed's approach has shifted from preemptive rate cuts to a data-dependent strategy, indicating potential delays in response to economic downturns[11] - Current economic indicators, such as a stable unemployment rate at 4.1%, suggest that the economy remains in reasonable condition despite inflation concerns[10] Global Economic Context - The U.S. liquidity situation is tight, with the Fed's total assets reduced to $6.7 trillion, returning to pre-pandemic levels[7] - China's economic challenges are characterized by deflation rather than inflation, with net exports contributing 30% to GDP in 2024, the highest since the 2008 financial crisis[12] - The need for proactive monetary policy adjustments in China is emphasized, particularly in light of potential U.S. economic downturns and tariff impacts[13]

- The quant model used to estimate the activity level of speculative funds showed a decline in activity starting from March 7, indicating a shift from small-cap to large-cap stocks[11] - The GDPNOW model predicted a GDP growth rate of 4.1% for Q1 2025, showing stable marginal changes in macroeconomic forecasts[15] - The informed trader activity index indicated a cautious optimism among informed traders, with the index rising above zero[17] Model Backtesting Results - Speculative funds activity model, IR: 0.5, Sharpe ratio: 1.2, annualized return: 15%[11] - GDPNOW model, predicted GDP growth rate: 4.1%[15] - Informed trader activity index, current value: 0.0025[19] Factor Construction and Evaluation - Factor Name: EP Value; Construction Idea: Preference for high EP value and high dividend yield assets; Construction Process: Calculated using the formula $ EP = \frac{Earnings}{Price} $; Evaluation: Showed positive returns in the current week[27] - Factor Name: Momentum; Construction Idea: Short-term momentum stocks; Construction Process: Calculated using past price performance; Evaluation: Experienced a pullback in the current week[27] Factor Backtesting Results - EP Value factor, weekly return: 0.5%, monthly return: 1.2%, quarterly return: 3.5%[27] - Momentum factor, weekly return: -0.8%, monthly return: 0.9%, quarterly return: 2.1%[27]

Core Viewpoint - Goldman Sachs believes that the three major telecom operators in China are quietly becoming key beneficiaries of the AI wave, not only participating directly in cloud computing but also indirectly benefiting by providing infrastructure services to other cloud companies [2][3]. Group 1: Cloud Business and Profitability - The three major operators, China Mobile, China Telecom, and China Unicom, are benefiting from significant cost advantages in their cloud business compared to other cloud companies like Alibaba [6]. - Telecom operators have their own data centers (IDC) and do not rely on external IDC service providers, which lowers their cloud business costs [6]. - The bandwidth costs for telecom operators are significantly lower than those for other cloud companies, as they utilize their own network infrastructure [6][7]. Group 2: Government and Enterprise Opportunities - The state-owned nature of the three operators allows them to be the first to benefit from government initiatives like the "AI+" action plan, which encourages state-owned enterprises to accelerate AI development [8]. - Government-related clients account for approximately 30% of the telecom operators' cloud revenue, indicating a strong potential for growth as government agencies deploy AI solutions [8]. Group 3: Valuation and Market Performance - Despite stock price increases of 4%, 27%, and 36% for China Mobile, China Telecom, and China Unicom respectively this year, Goldman Sachs believes that current valuation levels do not fully reflect the potential of AI [9][10]. - The expected price-to-earnings ratios for the three operators in 2025 range from 12 to 17 times, while Alibaba's corresponding figures are higher, suggesting that telecom operators may be undervalued [10].