Summary of Key Points Core Viewpoint - The article discusses the impact of U.S. tariff measures, indicating that the actual tax rate increase is significantly lower than the theoretical value, leading to limited effects on the economy. The second half of the tariff measures may address existing loopholes, making the economic impact clearer [2][4]. Group 1: Tariff Measures - The U.S. tariff measures in the first half of 2025 can be characterized as "high open, low close," with a series of announcements leading to a gradual reduction in tariff intensity [6][7]. - The TACO (Trump Always Chicken Out) phenomenon has emerged, suggesting market desensitization to tariff changes due to the inconsistent application of tariffs [8]. Group 2: Tariff Revenue - Tariff revenue growth has been disappointing, with an actual increase of 6.5% compared to a theoretical increase of 14.5%, indicating that revenue expectations have not been met [11][12]. - Three main reasons for this underperformance include: 1. China has reduced the proportion of high-tariff products in U.S. imports through transshipment and expedited shipping, with China's share of U.S. imports dropping from 13.4% in 2024 to 7.4% in May 2025 [14]. 2. The 25% fentanyl tariff on Mexico and Canada has had minimal practical effect, with actual tax rate increases of only 1.8% and 4.1%, respectively [14]. 3. There has been a shift in product-level adjustments, with higher tariff products seeing a more significant decline in import proportions [14]. Group 3: Economic Impact of Tariffs - The impact of tariffs on China's exports and U.S. inflation has been less than expected. Chinese exports have shown stable volume and price increases, with a potential mild decline in the future [21][22]. - U.S. inflation has remained low, partly due to the actual tax rate increases being lower than theoretical values, and weak demand in the automotive market and fluctuations in oil prices have further suppressed inflation [24]. Group 4: Future Tariff Measures - The second half of the tariff measures may see an increase in actual tax rates, as there are indications that the Trump administration may seek to address the shortcomings of the initial measures [26][27]. - If there is a genuine intent to raise tariff rates for revenue or other purposes, the economic impact could exceed expectations, highlighting the need to be cautious of excessive TACO trading risks [27].

Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The current domestic and overseas factors are generally favorable. The "anti - involution" policy and the upcoming Politburo meeting at the end of the month have raised policy expectations. Overseas, the postponement of reciprocal tariffs to August and the TACO transaction have boosted market sentiment, while the recent expectation of a Fed rate cut has increased. A - share liquidity and market sentiment are strong, and stock index futures are expected to run strongly. The strategy is mainly to adjust and go long [3]. 3. Summaries According to Relevant Catalogs 3.1 Main Views and Strategy Overview - **Influence Factors and Their Driving Forces**: Economic and corporate earnings are neutral; macro - policies are neutral; overseas factors are slightly positive; liquidity is slightly positive [3]. - **Investment View and Strategy**: Adjust and go long. The trading strategy is to adjust and go long unilaterally, and pay attention to domestic policies and overseas geopolitical factors [3]. 3.2 Stock Index Market Review - **Index Performance**: Last week, the Shanghai - Shenzhen 300 rose 1.09% to 4058.5; the Shanghai Composite 50 rose 0.28% to 2764.5; the CSI 500 rose 1.2% to 6099.6; the CSI 1000 rose 1.41% to 6552.1 [5]. - **Industry Index Performance**: In the Shenwan Primary Industry Index, communication (7.6%), pharmaceutical biology (4%), automobiles (3.3%), machinery and equipment (2.9%), and national defense and military industry (2.3%) led the gains last week, while media (- 2.2%), real estate (- 2.2%), public utilities (- 1.4%), non - bank finance (- 1.2%), and banks (- 1%) led the losses [8]. - **Futures Volume and Open Interest**: The trading volume and open interest of various stock index futures showed different changes. For example, the trading volume of CSI 1000 futures decreased by 3.10%, and the open interest decreased by 11.96% [12]. - **Cross - Variety Spread Performance**: The spread between the Shanghai - Shenzhen 300 and the Shanghai Composite 50, and the spread between the CSI 1000 and the CSI 500 are at certain historical percentile levels [17]. 3.3 Stock Index Influence Factors - Liquidity - **Funds and Macro - liquidity**: The central bank conducted 17268 billion yuan of 7 - day reverse repurchase operations this week, achieving a net investment of 12011 billion yuan. Next week, 17268 billion yuan of reverse repurchases will expire, and 2000 billion yuan of MLF will expire on July 25 [23]. - **Market Liquidity Indicators**: As of July 17, the margin trading balance of A - shares was 18984.4 billion yuan, an increase of 285.5 billion yuan from the previous week. The average daily trading volume of A - shares last week increased by 323.8 billion yuan compared with the previous week [29]. 3.4 Stock Index Influence Factors - Economic Fundamentals and Corporate Earnings - **Macroeconomic Indicators**: In the first half of 2025, China's GDP totaled 660536 billion yuan, a year - on - year increase of 5.3%. In June, industrial added value increased by 6.8% year - on - year, but the demand side weakened. Real estate investment from January to June further declined to - 11.2%, and the growth rate of consumption in June was 4.8%, lower than last month's 6.4% [3]. - **Corporate Earnings Indicators**: The report provides the year - on - year growth rate of net profit attributable to the parent and ROE of major broad - based indexes and Shenwan primary industry indexes [44][45]. 3.5 Stock Index Influence Factors - Policy Driving - **Recent Macro - policy Trends**: A series of important meetings and policies have been introduced, including the central government's emphasis on promoting the construction of a unified national market, urban work deployment, and a series of monetary and fiscal policies [49][50][51]. 3.6 Stock Index Influence Factors - Overseas Factors - **US Economic Data**: In June, the US manufacturing PMI was 49%, an increase of 0.5 percentage points from the previous value; the non - manufacturing PMI was 50.8%, an increase of 0.9 percentage points from the previous value. The unemployment rate was 4.1%, and the number of new non - farm jobs was 147,000 [57]. - **Trump Team's Actions**: Trump's team has announced a series of tariff policies, which have a significant impact on international trade and the global economic situation [65][67][69]. 3.7 Stock Index Influence Factors - Valuation - **Index Valuation Levels**: As of July 18, 2025, the rolling price - to - earnings ratios of the Shanghai - Shenzhen 300, Shanghai Composite 50, CSI 500, and CSI 1000 were 13.4 times, 11.4 times, 29.8 times, and 40.2 times respectively, and were at the 71.4%, 81.4%, 70.6%, and 60.8% percentile levels in the past ten years [72].

Group 1 - The core message from Wall Street is that merely "performing well" is no longer sufficient for companies, as evidenced by the limited stock price increases despite strong earnings reports from major banks like JPMorgan Chase and Bank of America [1] - Netflix reported revenue and profit that exceeded expectations and raised its full-year guidance, yet its stock price fell by 5%, indicating a disconnect between performance and market reaction [1][2] - Analysts have noted that even strong earnings may not justify current high stock valuations, with concerns about the premium investors are paying for these fundamentals [2][3] Group 2 - As of now, 83% of S&P 500 companies that have reported earnings exceeded expectations, which is above the five-year average of 78%, but the average earnings beat margin of 7.9% is below the five-year average of 9.1% [2] - The earnings growth expectation for the S&P 500 for the second quarter has increased from slightly below 5% to 5.6%, but this remains the slowest growth rate since Q4 2023 [2] - Investors are expected to show less patience for companies that fail to meet expectations, leading to increased volatility in the market [3]

Group 1 - The Trump administration has been pressuring trade partners with tariff threats, but these have not had a lasting impact on the market [1] - Reports indicate that the White House is considering imposing tariffs of 15%-20% on the EU, which caused a temporary dip in the S&P 500 index [1] - Despite the tariff threats, investor sentiment remains strong, with a record increase in risk appetite over the past three months according to Bank of America’s global fund manager survey [1][3] Group 2 - Many investors believe that Trump's aggressive tariff stance is merely a negotiation tactic, with expectations that tariffs will be lowered once trade negotiations progress [4] - There is speculation that even if high tariffs are introduced, they may not withstand legal challenges based on recent court rulings [5] - The recent stock market performance is bolstered by strong corporate earnings and positive economic data, indicating resilience against trade uncertainties [6]

Core Viewpoint - The report from CITIC Securities highlights the contrasting roles of President Trump and Treasury Secretary Mnuchin in influencing market sentiment, with Trump causing market disturbances and Mnuchin providing calming reassurances [1] Group 1: Market Reactions - Trump's statements on July 14 shocked the market, creating negative impacts due to his comments on Section 899, US-Japan tariff negotiations, and the potential dismissal of Powell [1] - Mnuchin's subsequent remarks aimed to stabilize the market, expressing optimism about reaching a US-Japan tariff agreement before August 1 and advising Congress to remove Section 899 from OBBBA [1] Group 2: TACO Trading Strategy - The report suggests that the interactions between Trump and Mnuchin exemplify a "TACO trading" strategy, where Trump's negative news is countered by Mnuchin's positive statements, creating a predictable market response [1] - Mnuchin is portrayed as a voice for the Trump administration, providing necessary context and reassurance following Trump's disruptive announcements [1]

Group 1: Tariff Measures and Economic Impact - Tariff measures in the U.S. saw a high start but began to cool down after April 9, leading to market perceptions of TACO [2] - Actual tariff revenue growth from January to May was 6.5%, significantly lower than the theoretical increase of 14.5%, due to China's strategies to reduce high-tariff imports and ineffective implementation of tariffs on Mexico and Canada [3][4] - The economic impact of tariffs was lower than expected, with stable export volumes from China and low inflation in the U.S. despite tariffs, attributed to lower effective tax rates and weak demand in the automotive market [5] Group 2: Mid-Year Earnings Preview - The overall economic growth remains constrained, with a pre-announcement rate of 43.7% for mid-year earnings, lower than the past three years, indicating a weak profit growth of 1.0% for the entire A-share market [8] - Emerging technology sectors are showing signs of improvement, particularly in high-tech industries like equipment manufacturing, while traditional sectors are lagging [9][10] - Certain cyclical industries, such as rare metals and chemicals, are experiencing price increases, and some sectors are showing signs of recovery in earnings due to capacity reductions [10] Group 3: Hong Kong Market Analysis - The Hong Kong stock market outperformed globally in the first half of the year but has shown weakness since late June, influenced by U.S. tariff policies and currency fluctuations [13][14] - Current market heat in Hong Kong is at historical mid-levels, with technology and financial sectors showing lower heat compared to A-shares, while healthcare and consumer sectors are performing better [14] - Positive factors are accumulating for the Hong Kong market, suggesting a potential outperformance against A-shares in the second half of the year, driven by consumption policies and foreign capital inflows [15]

Core Viewpoint - The article discusses the current state of the bond market, highlighting the balance in the funding environment and the slight increase in long-term bond yields, while also noting the impact of central bank operations and market reactions to external news events. Group 1: Central Bank Operations - The central bank conducted a 450.5 billion yuan 7-day reverse repurchase operation, with a net injection of 360.5 billion yuan after 90 billion yuan of reverse repos matured [2] - The funding rates showed a slight decline, with DR001 around 1.46% and DR007 around 1.52% [2] - Continuous large net injections by the central bank over two days have contributed to a stable funding environment during the tax period [3] Group 2: Market Reactions - The overnight rumors regarding Powell's dismissal caused initial market turmoil, with U.S. stocks experiencing volatility before stabilizing [4] - The 10-year government bond yield opened at 1.659% and fluctuated slightly, reflecting a stable sentiment in the bond market [4] - Since June, the 10-year government bond yield has been oscillating within the range of 1.63% to 1.68%, indicating a narrow trading band [4] Group 3: Stock Market Performance - The stock market has shown resilience, remaining above 3500 points for six consecutive days, with investors expressing optimism despite potential downturns [4] - The surge in polysilicon prices by 50% since the end of June has contributed to a broader commodity market rally [4]

Core Viewpoint - Analysts are warning that global investors may be underestimating President Trump's commitment to his latest tariff threats, which could have significant implications for the market [2][3] Group 1: Market Reactions - The European market reacted mildly to Trump's announcement of a 30% tariff on goods imported from the EU and Mexico, with the Stoxx 600 index only dropping 0.06% on the first trading day after the announcement [2] - The index experienced a slightly deeper sell-off of 0.4% the following day, primarily influenced by concerns over rising inflation and economic growth [2] - In contrast to earlier market reactions, the current sentiment appears more complacent, despite the impending higher tariff rates compared to those set in April [2][3] Group 2: Investor Sentiment - Many investors are betting on the "TACO" trade, believing that Trump's tariff threats are merely negotiation tactics and unlikely to be fully realized [3] - Some analysts express concern that this complacency could lead to significant losses for investors who expect a trade agreement to be reached [3][4] Group 3: Economic Implications - Analysts warn that the implementation of a 30% tariff could derail the current bullish trend in European markets, potentially leading to a slowdown in GDP growth [6] - The Stoxx 600 index has risen over 7% this year, with significant gains in major indices like Germany's DAX and Italy's FTSE MIB, but high tariffs could disrupt this momentum [5][6] Group 4: Sector-Specific Insights - If tariffs are implemented, sectors such as defense, finance, and mining may perform relatively well, especially if defense spending continues to rise and the European Central Bank maintains low interest rates [6] - Conversely, European exporters, particularly in the automotive sector, are expected to be adversely affected by the tariffs [6]

Core Viewpoint - The article discusses the volatility in the market due to Trump's tariff threats and the subsequent delays in their implementation, highlighting the phenomenon of "TACO trades" since April's "Liberation Day" [1][2]. Major TACO Trades - On April 9, tariffs on multiple countries were set to a maximum rate of 50%, but Trump announced a 90-day suspension a week later, reducing the rates [1]. - On May 26, Trump threatened to impose 50% tariffs on the EU, but postponed the effective date to July 9 to allow for negotiations [1]. - In early July, the suspension of tariffs was extended to August 1, following the original July 9 deadline [1]. - On July 14, Trump threatened 100% tariffs on Russia if hostilities continued, but provided a 50-day buffer period [1]. - On July 16, reports emerged of Trump considering firing Powell, leading to significant market fluctuations, which he later denied [1]. Market Perspectives - Barclays believes rationality will prevail, as Trump's tolerance for market volatility appears limited [3]. - HSBC suggests that the Trump administration could easily delay tariffs again without any obstacles [3]. - Mitsubishi UFJ notes that the market does not expect a repeat of the turmoil caused by the April tariffs [3]. - Deutsche Bank warns that if Trump does not back down this time, significant market volatility could ensue [3]. - Nordea highlights the unprecedented scale of tariff increases, yet the market remains unusually calm, which is concerning [3]. - Analyst Jamie McGeever points out that the line between complacency and "TACO trades" may have blurred, potentially encouraging Trump to intensify tariff actions [3]. - SPI Asset Management indicates that the market currently views Trump's new tariffs on the EU and Mexico as mere noise, but risks are increasing as deadlines approach [3].

Group 1 - The core viewpoint of the article is that investors are currently underestimating the potential impact of Trump's tariffs on Mexico and the EU, believing that these tariffs will eventually be negotiated away or postponed [1][3]. - Deutsche Bank warns that the "TACO trade" (the belief that Trump will ultimately back down) is accumulating significant risks, suggesting that the market has not fully absorbed the implications of the high tariffs [2][3]. - Analysts from Deutsche Bank and Goldman Sachs express concerns that the market's expectation of these tariffs not being implemented may lead to severe market reactions if they do come into effect [3][4]. Group 2 - Morgan Stanley predicts that the economic impact of tariffs will lead to "stagflation tendencies" in the second half of the year, highlighting a disconnect between market pricing and economic forecasts [4]. - The article discusses the prevailing market sentiment that if the "TACO trade" fails, the Federal Reserve will intervene to support the market, but rising tariffs could complicate this scenario by increasing inflation [3][4].