Core Viewpoint - The ongoing conflict between President Trump and the Federal Reserve is escalating, with potential implications for the Fed's independence and monetary policy direction [1][11]. Group 1: Federal Reserve Actions - Federal Reserve Governor Lisa Cook is expected to file a lawsuit regarding her dismissal by President Trump [3][4]. - New York Fed President John Williams indicated that lowering interest rates may be appropriate at the right time, while maintaining a moderately restrictive policy stance [1]. - The Trump administration is exploring ways to exert more influence over the 12 regional Federal Reserve banks, particularly regarding the selection process for regional bank presidents [1][5]. Group 2: Implications for Fed Independence - Analysts warn that Trump's actions could signify the end of the Fed's independence, a status it has held since 1951, with financial markets yet to fully absorb this significant risk [1][11]. - Former Fed Vice Chair Lael Brainard views Trump's attack on Cook as part of a broader effort to pressure the Fed, potentially leading to the dismissal of multiple regional Fed presidents [6][8]. - The potential for Trump to control the Fed's monetary policy could result in higher inflation and increased volatility in the financial markets [11]. Group 3: Market Reactions - Current market conditions reflect a distortion in the Treasury market, with long-term yields rising and short-term real yields falling, indicating that the Fed's independence is perceived to be under threat [12]. - Deutsche Bank's report suggests that if Trump successfully removes Cook and appoints a candidate favoring significant rate cuts, the power dynamics within the Fed could shift dramatically, leading to a majority of "dovish" votes [12].

Global Asset Market Performance - The 10-year government bond yields of major economies on August 26, 2025, showed various values and changes. For example, the US was 4.262 with a latest change of -0.014, a one - week change of -0.045, a one - month change of -0.059, and a one - year change of 0.378 [2]. - The 2 - year government bond yields also had different figures. The US 2 - year yield on August 26, 2025, was 3.680 with a latest change of -0.110, a one - week change of -0.070, a one - month change of -0.080, and a one - year change of -0.260 [2]. - The exchange rates of the US dollar against major emerging economies' currencies on August 26, 2025, had different changes. For the Brazilian real, the latest change was 0.37% and the one - week change was -1.34% [2]. - Major economies' stock indices had different performances on August 26, 2025. The S&P 500 closed at 6465.940 with a latest change of 0.41%, a one - week change of 0.85%, a one - month change of 1.49%, and a one - year change of 16.41% [2]. - Credit bond indices showed different changes. The US investment - grade credit bond index had a latest change of 0.04%, a one - week change of 0.25%, a one - month change of 0.86%, and a one - year change of 4.11% [2][3]. Stock Index Futures Trading Data - Index performances: A - shares closed at 3868.38 with a decline of 0.39%. The PE (TTM) of the S&P 500 was 27.49 with a环比 change of 0.11 [4]. - Fund flows: The latest value of A - share fund flow was -952.90, and the near 5 - day mean was -305.08 [4]. - Transaction amounts: The latest value of the Shanghai and Shenzhen stock exchanges' transaction amount was 26790.20 with a环比 change of -4621.17 [4]. - Main contract basis and spreads: The basis of IF was -3.59 with a spread of -0.08% [4]. Treasury Bond Futures Trading Data - Treasury bond futures: T00 closed at 108.185 with a rise of 0.21%, and TF00 closed at 105.620 with a rise of 0.11% [5]. - Fund rates: R001 was 1.3596% with a daily change of -20.00 BP [5].

Core Viewpoint - Deutsche Bank suggests that if Trump successfully gains control of the Federal Reserve Board with four dovish votes, it could lead to aggressive monetary easing policies and allow for unilateral actions to lower the Interest Rate on Reserve Balances (IORB), bypassing the FOMC's decisions [1][3][12] Group 1: Control of the Federal Reserve Board - Trump's administration is seeking to gain control of the Federal Reserve Board by dismissing Governor Cook, which would enable the implementation of aggressive monetary policies [3][6] - Following the resignation of Governor Kuger, Trump has garnered increasing support for dovish monetary policies within the committee [4] - If Trump appoints a candidate favoring significant rate cuts to replace Cook, the power dynamics within the Board will change dramatically, potentially leading to a majority of dovish votes [6][7] Group 2: Impact on Monetary Policy - The emergence of four stable dovish votes within the Board would significantly increase internal pressure for faster and larger rate cuts, even amidst high inflation data [7][12] - The Board's majority could utilize its power to unilaterally lower the IORB, which has historically been aligned with FOMC targets, thus challenging the traditional decision-making framework [9][10] - This unilateral action could lead to unprecedented dynamics in the money market, creating potential chaos and directly impacting the FOMC's traditional decision-making process [11] Group 3: Restructuring the FOMC - The majority within the Federal Reserve Board also holds the long-term power to reshape the composition of the FOMC voting members, as all 12 regional Federal Reserve Presidents require Board approval for reappointment every five years [12][13] - A Board majority seeking aggressive easing could veto the reappointment of hawkish regional Fed Presidents, gradually eliminating opposing voices and paving the way for long-term easing policies [13]

Core Viewpoint - The short-term performance of Hong Kong stocks is expected to lag due to liquidity constraints, with A-shares having a liquidity advantage and ongoing earnings downgrades impacting the market [1][2][13]. Liquidity - The recent increase in Hibor rates indicates tightening liquidity in Hong Kong, with rates rising from near zero to nearly 3% within a week, affecting the secondary market [2][3]. - In contrast, A-shares have seen abundant liquidity, with daily trading volumes exceeding 3 trillion yuan and financing balances surpassing 2 trillion yuan, indicating a strong influx of funds [3]. Fundamental Factors - Earnings for Hong Kong stocks are being continuously downgraded, with consensus estimates for the Hang Seng Index's 2025 earnings showing a negative growth of -1.4%, compared to a positive growth of 17.8% for 2024 [5]. - Approximately 60% of companies within the Hang Seng Index are experiencing earnings downgrades, reflecting a broader economic weakness [5]. Valuation - The AH premium has dropped below 125%, reducing the attractiveness of dividends for many investors, which is consistent with previous analyses [5][13]. - The Hang Seng Index's risk premium is currently at 5.8%, lower than previous lows since October, indicating a challenging valuation environment [9][10]. Market Dynamics - The recent performance of A-shares may be driven more by liquidity than fundamentals, suggesting a potential for some spillover effects to Hong Kong stocks if the liquidity environment continues to strengthen [8][13]. - The Hang Seng Index's reasonable range is estimated between 24,000 and 26,000, with the need for further conditions to be met for a significant breakthrough [9][10]. Structural Opportunities - Long-term structural advantages remain for Hong Kong stocks, particularly in sectors like AI, new consumption, and innovative pharmaceuticals, which could provide stable returns [13][14]. - The market's structural dynamics indicate that capturing the right sector rotations can yield returns significantly above the index, emphasizing the importance of timing and selection [14]. Overseas Mapping - In a liquidity-driven market environment, overseas demand and mapping chains, such as technology narratives and U.S. real estate impacts, present additional investment opportunities [15].

Core Viewpoint - The Hong Kong stock market has been active this year but has recently lagged behind the A-share market, particularly since July, where the Hang Seng Index has struggled to break through the 25,000-point mark, showing only a 3% increase compared to A-shares' significant gains of 9.2% and 20% for the ChiNext Index [2][6]. Group 1: Market Performance - The Hang Seng Index has been stagnant since mid-July, contrasting sharply with the A-share market's performance, which has reached a ten-year high [2]. - Despite a recovery since April, the Hong Kong market has underperformed compared to global peers, with the Hang Seng Tech Index failing to recover losses from March [5][6]. Group 2: Reasons for Underperformance - The underperformance of the Hong Kong market is attributed to three main factors: liquidity tightening (Hibor rising), downward revisions in earnings, and low valuation (AH premium below 125%) [8][19]. - Hibor rates have surged from near zero to close to 3% within a week, indicating a tightening of liquidity in the Hong Kong banking sector [8][9]. - In contrast, the A-share market has enjoyed ample liquidity, with daily trading volumes exceeding 3 trillion yuan and financing balances surpassing 2 trillion yuan [11][12]. Group 3: Earnings and Valuation - Earnings for the Hang Seng Index have been continuously revised downwards, with consensus estimates for 2025 showing a negative growth of -1.4% compared to a positive growth forecast of 10% for the MSCI China A-share Index [19][22]. - The AH premium has dropped below 125%, reducing the attractiveness of dividends for many investors, which has contributed to the market's struggles [26][27]. Group 4: Future Outlook - The expectation of a potential interest rate cut by the Federal Reserve may provide some liquidity support for the Hong Kong market, but it is not seen as a definitive driver [14][17]. - The long-term structural advantages of the Hong Kong market remain, particularly in sectors like AI, new consumption, and innovative pharmaceuticals, which could attract investment despite short-term challenges [44][45]. Group 5: Investment Strategy - The current strategy suggests that while the Hong Kong market may lag in the short term due to liquidity issues and earnings downgrades, it holds long-term structural advantages that could yield better returns [44][45]. - Investors are advised to focus on structural opportunities rather than merely index performance, as the market has shown significant potential for alpha generation through sector rotation [45][46].

Group 1 - The politicalization of the Federal Reserve has intensified in recent months, leading to a higher risk premium in the U.S. [1] - Rising budget deficits and debt, along with unpredictable government actions, are causing investors to reassess their exposure to the U.S. dollar [1] - Although recent developments had a slight positive impact on the front-end yields of government bonds, this may not last if the Federal Reserve compromises under pressure from the Trump administration to lower interest rates amid persistent inflation [1]

Market Performance - The overall market maintained a strong upward trend, with the Shanghai Composite Index rising by 1.7%, the CSI 300 increasing by 2.4%, and the CSI 1000 up by 4.1% last week [1] - Growth-style assets outperformed, with the ChiNext Index surging by 8.6% and the STAR 50 Index rising by 5.5% [1] - The average daily trading volume in the A-share market significantly increased to 2.1 trillion yuan [1] Future Outlook - The risk premium indicator has not yet bottomed out, indicating potential for continued improvement in market risk appetite, with the CSI A500 having greater upside potential compared to the Shanghai Composite Index [2] - Historical analysis shows that previous significant market corrections were accompanied by risk premiums falling below critical thresholds, but current risk premiums remain above historical averages [5] - The current risk premium for the Shanghai Composite Index is 4.5%, slightly above its long-term average of 4.3%, while the CSI A500's current risk premium is 4.6%, above its long-term average of 4.2% [5] Policy and Economic Environment - Recent policies and industry trends are expected to enhance growth potential, with significant liquidity injections from the central bank and supportive macroeconomic policies [11] - The central bank conducted substantial reverse repurchase operations, injecting a total of 300 billion yuan into the market, alleviating liquidity pressures during peak government bond issuance [11] - The government's commitment to stabilizing the real estate market and enhancing macro policy effectiveness is expected to boost investor confidence and market risk appetite [11] Industry Trends - The growth sector is experiencing strong development potential due to supportive policies and industry trends, particularly in the content supply and humanoid robotics sectors [12] - The "Content Renewal Plan" aims to enhance content innovation in the television industry, providing a broad development space for related companies [12] - The humanoid robotics sports event marks a significant milestone, showcasing advancements in technology and potentially attracting investment into related growth sectors [12] Global Economic Context - The global economic environment is showing signs of improvement, with expectations of monetary policy easing from central banks, particularly the Federal Reserve [13] - Market sentiment is sensitive to the Fed's policy direction, with an 86.8% probability of a 25 basis point rate cut in September [14] - Increased foreign investment in the Chinese market is anticipated as global liquidity conditions improve, enhancing market activity and investor expectations [13]

Group 1 - The core issue is the growing skepticism among Wall Street investors regarding the reliability of government economic data, particularly after President Trump's dismissal of BLS head Erika McEntarfer and allegations of data manipulation [1][2][3] - Investors are increasingly turning to private data sources such as ADP Research's employment reports and Challenger, Gray & Christmas Inc.'s layoff data as alternatives to government statistics [1][2][3] - Analysts express concerns that if government data becomes politicized, it could undermine market trust and increase risk premiums, leading to a potential decrease in valuations and increased data volatility [3][4] Group 2 - Philip Petursson from IG Wealth Management highlights that the recent turmoil surrounding BLS raises questions about the future effectiveness of government data [2] - Michael O'Rourke from Jonestrading emphasizes the need to focus more on private data sources, particularly ADP Research, due to the current situation [2] - Economists like Brian Jacobsen view private data as a counterbalance to official statistics and plan to monitor Senate confirmation hearings for potential changes in BLS data collection methods [2][3] Group 3 - Julian Emanuel from Evercore ISI notes that as government data becomes increasingly questionable, there is a growing focus on private data sources [3] - Investors believe that private data can help quickly identify issues if government data is politicized, allowing for cross-validation of information [3] - Concerns are raised by Donald Ellenberger from Federated Hermes about the long-term implications of perceived government interference in data reporting, emphasizing the foundational role of trust in the financial industry [3] Group 4 - Despite these concerns, Wall Street is not completely abandoning BLS data, with the upcoming non-farm payroll report on September 5 being a significant market event [4] - There are existing issues with BLS data reliability, including funding shortages, outdated data collection methods, and declining response rates, which have led to increased reliance on estimates [4]

Core Viewpoint - Investors on Wall Street are increasingly considering reducing their reliance on government economic data due to concerns over potential political influence on the Bureau of Labor Statistics (BLS) data following President Trump's dismissal of its head and allegations of data manipulation [1][2][4] Group 1: Shift to Private Data Sources - Wall Street strategists are planning to increase their reliance on private data sources such as ADP Research's employment reports and Challenger, Gray & Christmas Inc.'s layoff data [1][2] - Philip Petursson, Chief Investment Strategist at IG Wealth Management, expressed concerns about the future effectiveness of government data due to the political turmoil surrounding the BLS [2] - Michael O'Rourke, Chief Market Strategist at Jonestrading, indicated that the situation looks "very bad" and plans to focus more on private data sources [2] Group 2: Concerns Over Data Politicalization - Investors believe that if government data becomes politicized, private data sources will help them quickly identify issues [4] - Brian Jacobsen, Chief Economist at Annex Wealth Management, stated that private data serves as a check against official data, allowing for cross-validation [4] - Donald Ellenberger, Senior Portfolio Manager at Federated Hermes, warned that if the Trump administration is seen as interfering with reporting procedures, the usefulness of government reports will diminish [4] Group 3: Current State of BLS Data - The BLS data has its own issues, including funding shortages leading to personnel shortages and outdated data collection methods, which have decreased reliability [5] - The response rate for surveys has been declining over the years, and the magnitude of data revisions has been increasing [5]

Group 1 - The Bank of Israel has decided to maintain the benchmark interest rate at 4.5%, aligning with market expectations [1] - The inflation rate in Israel has decreased over the past 12 months, with July's rate at 3.1%, slightly above the target upper limit, and forecasts suggest inflation will return to the target range in the coming months [3] - The central bank highlights various risks that could accelerate inflation or deviate from targets, including geopolitical developments, demand growth amid supply constraints, and deteriorating global trade conditions [3] Group 2 - The Israeli government has decided to raise the fiscal deficit ceiling to 5.2%, amid high geopolitical uncertainty and various potential developments in the security situation [3] - The central bank's governor, Amir Yaron, expressed hopes for three interest rate cuts next year, bringing the rate down to 3.75%, although the timing for such cuts remains uncertain [3] - A lower risk premium could lead to rapid demand expansion, and the appreciation of the shekel is expected to help reduce inflation [4] Group 3 - The Israeli economy faces uncertainties due to market and technological investments, with U.S. tariffs posing risks to the economy [4] - The deep involvement of pension funds in the stock market and the technology sector's reliance on U.S. venture capital are directly impacted by these uncertainties [4] - Amir Yaron emphasized the need for Israel to "reduce uncertainty" as quickly as possible to stabilize the economy [4]