Core Viewpoint - Long-term investors need to deeply interpret the direction of the reshaping world order and weigh the cost-effectiveness of various assets, as two key variables (Deepseek and reciprocal tariffs) have further strengthened the underlying logic of a new investment paradigm [1] Group 1: U.S. Recession Trading - The initiation of recession trading often leads the actual declaration of recession by the NBER by an average of 1-6 months [1] - Typical characteristics of U.S. recession trading include declines in U.S. stocks and industrial metals, a decrease in 10Y U.S. Treasury yields, widening U.S. credit spreads, and defensive stocks outperforming cyclical stocks [1] Group 2: Asset Volatility During Recession Trading - Historical data shows that asset volatility increases during U.S. recession trading phases, with risk assets experiencing a greater increase in volatility compared to safe-haven assets [2] - Specifically, the volatility amplification factor for risk assets (e.g., Nasdaq, Hang Seng Index) is greater than that for safe-haven assets (e.g., gold, U.S. Treasuries, Chinese bonds, A-share dividends) [2] Group 3: All-Weather Strategy Model - Investors need to focus on the asymmetric pricing risks in their portfolios, particularly the underestimation of U.S. recession risks [3] - The ranking of volatility amplification factors for various assets during past U.S. recession trading periods is as follows: Nasdaq > India SENSEX30 > Hang Seng Tech > U.S. Treasuries > Gold > Chinese bonds > Bitcoin > A-share dividends [3] - Adjustments to asset allocation based on corrected volatility factors indicate an increase in weight for Chinese convertible bonds and A-share dividends, while reducing weight for Nasdaq, India SENSEX30, and Hang Seng Tech [3]

Core Viewpoint - The article emphasizes the need for long-term investors to deeply interpret the reshaping of the global order and assess the cost-effectiveness of various assets, particularly in light of the underestimation of U.S. recession risks in global asset pricing [3][20][46]. Group 1: Introduction - The beginning of the year has seen two key variables (Deepseek and equivalent tariffs) that reinforce the underlying logic of a new investment paradigm, characterized by increasing de-globalization, trends in AI industries, and debt cycles [3][10]. - The global risk premium has risen, potentially amplifying asymmetric pricing risks, with current global risk assets having largely recovered to levels prior to the imposition of equivalent tariffs [3][20]. Group 2: U.S. Recession Trading - Historical data shows that U.S. recession trading often begins 1-6 months before the National Bureau of Economic Research (NBER) officially declares a recession [4][47]. - Typical characteristics during U.S. recession trading include declines in U.S. stocks and industrial metals, falling 10-year Treasury yields, widening U.S. credit spreads, and defensive stocks outperforming cyclical stocks [4][47]. Group 3: Volatility During Recession Trading - During past U.S. recession trading phases, asset volatility has increased, with risk assets experiencing greater volatility than safe-haven assets [5][65]. - The volatility amplification factors for risk assets (e.g., Nasdaq, Hang Seng Index) are higher than those for safe-haven assets (e.g., gold, U.S. Treasuries) [5][65]. Group 4: All-Weather Strategy Model - The article discusses how to adjust the all-weather strategy model to correct the underestimation of U.S. recession risks in asset pricing [6][73]. - The model suggests that the risk parity principle should be applied based on the adjusted volatility of various assets, leading to changes in asset allocation [6][73]. - The revised model indicates an increase in allocation for Chinese convertible bonds and A-share dividends, while reducing allocations for Nasdaq and Indian SENSEX30 [6][73]. Group 5: Asymmetric Pricing Risks - The current global investment landscape shows a significant underpricing of U.S. recession risks, which presents an opportunity for asymmetric trading strategies [20][46]. - The article highlights the importance of adjusting asset allocations to account for the potential impact of U.S. recession risks on various asset classes [20][46].

Group 1 - The core viewpoint emphasizes the need for global asset allocation strategies centered around three main factors: de-globalization, debt cycles, and AI industry trends [1][2] - The proposed investment strategy is a "global barbell strategy," which includes stable assets on one end and high-yield, high-volatility assets on the other [1][2] - The current global economic uncertainty necessitates a focus on asymmetric pricing opportunities within various asset classes [2][3] Group 2 - The analysis indicates that the U.S. trade policy is unlikely to reverse the three underlying logics of the new investment paradigm, potentially increasing global political and economic uncertainty [2] - The recommendation includes a focus on defensive sectors in response to potential U.S. economic recession risks, alongside the necessity of gold as a sovereign credit asset [3] - The domestic market is currently in a debt contraction phase, transitioning from "passive leverage" to "active deleveraging," suggesting that domestic interest rate bonds hold long-term investment value [4] Group 3 - The "barbell strategy" is also applicable to strategic asset allocation in China, with a continued positive outlook on interest rate bonds and a focus on dividend assets and AI technology [4] - The AI sector, particularly represented by the "Tech Seven Sisters" in the U.S. market, has shown strong performance, but significant investment risks are present this year [4] - Recommended sectors include resilient dividend assets such as utilities, telecommunications, and banking, as well as industries benefiting from the AI trend, particularly those in the infrastructure to downstream application transition [4]

Core Viewpoint - The global asset allocation should focus on three core factors: de-globalization, debt cycles, and AI industry trends [1] Group 1: Investment Strategy - The current global economic uncertainty necessitates an investment strategy that adopts a "global barbell strategy," which includes both stable assets and high-yield, high-volatility assets [1] - The company maintains a positive outlook on investments in gold, short-duration U.S. Treasury bonds, Chinese interest rate bonds, and China's dividend assets combined with AI technology industries [1]

Investment Rating - The industry is rated as "Buy" for several key companies, including Xining Special Steel, Nanjing Steel, Hualing Steel, and Baosteel [8]. Core Viewpoints - The market remains in a state of fluctuation, with the non-ferrous sector outperforming the black metal sector. Financial attributes of metals like gold, silver, and copper are expected to benefit from the current economic conditions [2]. - The macroeconomic policies are showing effectiveness, with the manufacturing PMI rising to 49.5% in May, indicating an overall expansion in economic output [4][12]. - The steel industry is experiencing a divergence in profitability across the black metal supply chain, with some companies undervalued and presenting good strategic investment opportunities [2][4]. Supply Analysis - Daily molten iron production has slightly decreased to 2.417 million tons, with a minor decline in the utilization rate of blast furnaces to 90.6% [3][11]. - The total inventory of steel has decreased by 0.1%, with a narrowing decline rate of 2.2 percentage points [23][25]. Demand Analysis - Apparent consumption of the five major steel products has weakened, with rebar consumption dropping by 7.9% week-on-week [38][49]. - The average weekly transaction volume for construction steel has increased by 2.0% [40]. Raw Material Analysis - Iron ore prices have declined, with the Platts 62% iron ore price index at $96.1 per ton, down 0.7% week-on-week [57]. - The average daily iron ore import volume at 45 ports has increased by 17.9% week-on-week [57]. Price and Profit Analysis - Steel prices are showing a slight improvement, with the current spot price for rebar in Beijing at 3,170 RMB per ton, up 1.9% week-on-week [73]. - The immediate gross profit for long-process rebar is reported at -134 RMB per ton, indicating a slight improvement in margins [72][73].

Core Viewpoint - The article discusses the underestimation of recession risks in the U.S. by global asset pricing, emphasizing the need for new asset allocation strategies in the context of the debt cycle [3][16]. Group 1: Economic Indicators - The current pricing levels of U.S. equities significantly deviate from the implied risks indicated by recent soft data, suggesting a potential mispricing in the market [4][8]. - The U.S. Soft CAI reflects subjective expectations of future economic conditions from businesses and consumers, which may not align with actual market performance [11][12]. Group 2: Market Sentiment - Recent market sentiment has been overly optimistic, as indicated by the VIX futures returning to a contango state, suggesting rising expectations of volatility and accumulated risks [12][14]. - The BNP global risk premium index has reached historical low levels, indicating high market sentiment towards U.S. equities [14]. Group 3: Investment Strategy - The article suggests a contrarian approach to U.S. equity allocation, focusing on defensive sectors in light of the current market conditions and potential risks [11][12]. - The analysis highlights the importance of monitoring economic policy uncertainty and its impact on equity risk premiums, which are currently misaligned with soft data indicators [9][10].

Introduction - The article discusses the "new investment paradigm" and highlights the ongoing restructuring of the global order, driven by unconventional methods to address the current global supply-demand imbalance [3][9]. Strategic Level - Global asset pricing significantly underestimates the risk of a U.S. recession, with a notable divergence in investor sentiment regarding the U.S. economy [3][18]. - The current market is seen as having a substantial mispricing of recession risks, particularly in U.S. assets, suggesting that a "recession trade" could be a favorable asymmetric trading strategy [3][52]. - The article emphasizes the need for long-term investors to deeply understand the direction of the global order's restructuring and to assess the cost-effectiveness of various assets [22][51]. Tactical Level - Short-term sentiment in global risk assets, particularly U.S. equities, is perceived to be overstretched, following a significant rebound catalyzed by tariff easing [5][53]. - Indicators such as the VIX futures returning to a contango state and the BNP global risk premium index reaching historical lows suggest high market sentiment but also an accumulation of risk [5][56]. - The article advises a contrarian approach to U.S. equity allocation, focusing on defensive sectors in the short term while monitoring developments in negotiations with key global players [5][64]. Macro Trading Background - The new investment paradigm is framed by three macro trading backgrounds: U.S. Treasury yields expected to remain high for an extended period, Chinese bond yields expected to remain low, and an elevation in the global risk premium [3][13]. - The article outlines the implications of these macroeconomic factors on global asset correlations and volatility, indicating a potential long-term disruption to existing asset allocation frameworks [13][18].

Group 1 - The core viewpoint of the article emphasizes that global major asset classes have shown significant recovery, particularly risk assets such as equities, commodities, and alternatives, following positive developments in US-China trade talks [4][10] - The "Global Barbell Strategy" is proposed as the optimal response for asset allocation in the context of a changing investment paradigm, focusing on three tactical opportunities for aggressive buying: improved win rates due to easing trade tensions, attractive valuations of Chinese assets, and liquidity issues leading to opportunities [5][13] - The article highlights that the strategic long-term view is influenced by three underlying logics: the intensification of de-globalization, misalignment of debt cycles, and trends in the AI industry, reinforcing the need for an all-weather strategy to balance risks and returns [5][13] Group 2 - Key financial indicators from May 5 to May 13 show a convergence in the SOFR-OIS spread, indicating a slight easing of US dollar liquidity, and an increase in the US financial conditions index, reflecting improved overall financial conditions [6][10] - The article provides a calendar of important global economic data releases and events from May 19 to June 1, including China's fixed asset investment and retail sales, as well as US initial jobless claims and GDP estimates [16] - The focus charts track global major asset dynamics, showing significant movements in various asset classes and their correlations, which are essential for understanding market trends and making informed investment decisions [17]

Core Viewpoint - The article emphasizes the irreversible logic behind the restructuring of the global order and the new investment paradigm, driven by unconventional policies from the Trump administration to address global supply and demand imbalances [3][4][14]. Group 1: Globalization and G2 Imbalances - The globalization process has intensified the trade, production, and debt imbalances between the G2 nations, with the U.S. positioned as the largest consumer and China as the largest producer [9][13]. - Since China's accession to the WTO in 2001, the U.S. has increasingly relied on debt expansion to create demand, leading to continuous trade deficits and external debt accumulation, while China has maintained a trade surplus through its manufacturing capabilities [9][13]. - As major economies move away from high growth, the importance of "efficiency" is yielding to "distribution," indicating a long-term trend towards increased de-globalization [9][13]. Group 2: Restructuring Global Order - The "Mar-a-Lago Agreement" aims to reshape global trade and monetary order through tariffs and the restructuring of U.S. debt, addressing long-standing trade and fiscal deficits while enhancing U.S. export competitiveness [4][11][23]. - Although the full implementation of the Mar-a-Lago Agreement faces significant challenges, understanding its implications is crucial for anticipating future policy directions from the Trump administration [4][11][23]. Group 3: New Investment Paradigm - The new investment paradigm is framed by three macro trading backgrounds: U.S. Treasury yields remaining "higher for longer," Chinese bond yields remaining "lower for longer," and an increase in global risk premium [5][12][25]. - The ongoing trend of de-globalization and isolationist policies under Trump will exacerbate uncertainties in global economic growth and inflation, reinforcing the underlying logic of the new investment paradigm [5][12][25]. - The elevation of the global risk premium will significantly affect the correlation between major asset classes and increase the volatility of global assets, fundamentally altering the existing global asset allocation framework [5][12][25][33].

Group 1 - The article emphasizes that the restructuring of the global order is an irreversible underlying logic, driven by unconventional methods to address the current global supply and demand imbalance [3][4][14] - It highlights the increasing imbalance in trade, production, and debt between the G2 countries, with the U.S. as the largest consumer and China as the largest producer [9][13] - The article discusses the "Mar-a-Lago Agreement," which aims to reshape global trade and monetary order to alleviate the U.S.'s long-standing current account and fiscal deficits [11][23] Group 2 - The new investment paradigm is framed by three macro trading backgrounds: U.S. Treasury rates being "higher for longer," Chinese bond rates being "lower for longer," and an increase in global risk premium [5][12][32] - The article suggests that the ongoing trend of de-globalization will significantly disrupt the existing global asset allocation framework [9][13][33] - It notes that the U.S. reliance on debt expansion has led to continuous current account deficits and manufacturing hollowing out, while China benefits from a persistent trade surplus [9][13]