Global Macro Trends - The Federal Reserve lowered interest rates by 25 basis points on September 18, leading to structural differentiation in global asset prices, with risk assets performing strongly overall but with notable differences among categories. Gold and U.S. stocks reached new highs, while Bitcoin experienced a significant decline [3][9]. - Economic data released on September 15 indicated a marginal slowdown in China's macroeconomic growth, with industrial output, retail sales, and fixed asset investment all showing slight declines compared to previous values, suggesting ongoing pressure on the economic fundamentals and increasing the likelihood of future easing policies [3][9]. Asset Allocation Strategy - The "Global Barbell Strategy" is recommended as the optimal response to the evolving investment paradigm characterized by three underlying logics: intensified de-globalization, misalignment of debt cycles, and trends in AI industries. This strategy includes allocations to Chinese government bonds, U.S. short-term treasuries, Chinese convertible bonds, Southeast Asian equities, high-dividend and high-growth Chinese stocks, and gold [4][12]. - A tactical approach suggests that the A-share market is driven by domestic funds, similar to the microcosm of the 2014-2015 market, characterized by weak economic conditions, low interest rates, and supportive policies. The strategy involves reducing high-dividend allocations and increasing exposure to more elastic assets [5][12]. Key Economic Indicators - The report highlights several key economic indicators and events, including the upcoming release of China's official and Caixin manufacturing PMIs, U.S. ADP employment changes, and Eurozone CPI data, all of which are deemed important for market participants [15][16]. - The Citigroup U.S. Economic Surprise Index has been positive but shows a declining trend, indicating that recent economic reports have been weaker than market expectations [21][23]. Financial Conditions - The U.S. financial conditions index has improved, reflecting a more relaxed overall financial environment, while the SOFR-OIS spread has widened, indicating some tightening in dollar liquidity [4][26]. - The report notes an increase in expectations for further rate cuts by the Federal Reserve in October and December, driven by ongoing economic uncertainties and policy adjustments [24][25]. Market Sentiment - The report emphasizes the importance of monitoring potential risks from overseas markets as the domestic holiday approaches, advising on risk control measures [3][9]. - The ongoing trend of household savings moving into the stock market is expected to favor thematic investments aligned with high-quality growth directions, with a focus on maintaining high liquidity and growth potential in the A-share market [5][12].

Global Macro Trends - Global risk assets are under pressure due to economic slowdown and geopolitical trade uncertainties, while safe-haven assets like bonds and gold perform well [3][10] - The U.S. manufacturing activity in August shows increased contraction, raising recession concerns, alongside trade policy uncertainties impacting market volatility [3][10] - The market maintains high expectations for a Federal Reserve rate cut in September, despite rising concerns over fiscal deficits and Fed independence pushing up U.S. Treasury yields [3][10] - Domestic manufacturing PMI in China has contracted for five consecutive months, indicating weak economic momentum, yet A-shares and Hong Kong stocks show resilience [3][10] Asset Allocation Strategy - The "Global Barbell Strategy" is recommended as the optimal response to the evolving investment paradigm, emphasizing a mix of long-term and tactical asset allocations [4][16] - Strategic allocations include Chinese government bonds, U.S. short-term Treasuries, convertible bonds, and equities from Southeast Asia, particularly India, alongside high-dividend and AI-related assets [4][16] - Tactical allocations suggest a shift towards growth stocks aligned with high-quality development, reducing high-dividend stock proportions in favor of more elastic investments [5][16] Key Economic Indicators - The SOFR-OIS spread has widened, indicating tightening liquidity in the dollar funding market [4][18] - The U.S. financial conditions index has improved, reflecting a slight easing in overall financial conditions [4][20] - The Citigroup U.S. Economic Surprise Index remains positive but shows signs of weakening, indicating that economic data is marginally underperforming market expectations [4][24] Upcoming Economic Events - Key economic data releases include China's foreign exchange reserves, trade balance, and CPI, as well as U.S. PPI and retail sales figures [17]

Global Asset Performance and Macro Trading Themes - Equity assets significantly outperformed commodities and bonds from August 11 to August 19, leading investors to increase equity risk exposure while maintaining a defensive stance in the bond market [3][9] - Global market risk appetite has shown fluctuations, with recent US-Russia talks boosting sentiment, but concerns arose following Fed Chair Powell's upcoming speech, leading to a retreat in US rate cut expectations [3][9] - In the domestic market, the "deposit migration" phenomenon has positively impacted equity performance, supported by easing external tensions and the effectiveness of domestic "anti-involution" policies [3][10] Asset Allocation - Global Barbell Strategy - The new investment paradigm emphasizes a "global barbell strategy" as the optimal response to the evolving landscape, driven by three underlying logics: intensified de-globalization, misalignment of debt cycles, and trends in the AI industry [4][14] - The strategic focus remains on an all-weather optimized barbell strategy, including Chinese government bonds, US short-term treasuries, convertible bonds, Southeast Asian equities, high-dividend Chinese stocks, and gold [4][14] - Tactical adjustments suggest a shift towards growth stocks aligned with high-quality development, reducing high-dividend allocations in favor of more elastic assets [5][14] Key Data: Global Economic Indicators and Event Calendar - A calendar of significant global economic data releases from August 24 to September 7 includes key indicators such as China's official composite PMI and the Eurozone's unemployment rate, highlighting their importance for market participants [15][17] Focus Charts: Global Asset Dynamics Tracking - The report includes various charts tracking financial conditions, economic surprises, and market indices, indicating a mixed outlook for the US economy and potential volatility in consumer confidence [21][24][28]

Group 1 - The core viewpoint of the article highlights the impact of renewed recession concerns in the US and tariff disruptions on global risk assets, leading to a decline in industrial metals and equities, while safe-haven assets like gold and US Treasuries have risen [3][4] - The article discusses the "global barbell strategy" as the optimal response for asset allocation in a fragile era, emphasizing the need for a diversified approach that includes Chinese government bonds, US short-term Treasuries, and high-dividend stocks in China, among others [4][11] - It notes that the Chinese risk assets have outperformed those in the US, with the Shanghai Composite Index continuing its upward trend supported by liquidity easing [3][4] Group 2 - The article outlines key economic data and events scheduled from August 10 to August 24, including important indicators such as the US CPI and Eurozone GDP [12][15] - It provides a detailed tracking of global asset dynamics, indicating a widening SOFR-OIS spread and a decline in the US financial conditions index, reflecting a tightening of overall financial conditions in the US [18][20] - The article mentions that the US consumer confidence index has shown fluctuations, which typically correlates with increased volatility in US equities [28][31]

Group 1 - The core viewpoint of the article highlights the differentiated performance of global major asset classes, with Chinese equity assets leading the rise and industrial metals experiencing a broad increase due to domestic policies and infrastructure plans [3][4] - The "global barbell strategy" is proposed as the optimal response for asset allocation in the context of a changing investment paradigm, emphasizing a mix of Chinese interest rate bonds, US short-term treasuries, and high-quality growth stocks [4][8] - Recent data indicates a widening SOFR-OIS spread, reflecting tightening liquidity in the US repo market, and a decline in the US financial conditions index, suggesting a deterioration in overall financial conditions [4][14] Group 2 - The tactical approach suggests that the current market resembles a micro-version of the 2014-2015 A-share market, characterized by weak economic conditions, low interest rates, and supportive policies, with domestic capital driving the market [8][29] - The article emphasizes the importance of monitoring key economic indicators, such as China's industrial enterprise profits and the US ADP employment change, which are crucial for understanding market dynamics [11][12] - The focus on high-quality growth stocks aligns with the trend of residents reallocating savings into the stock market, favoring thematic investments that meet high-quality development directions [4][8]

Introduction - The current global environment is characterized by a "chaotic period" as the old order is being disrupted and the new order is not yet clear [3][11] - The recommended asset allocation strategy is a "global barbell strategy" that is anti-fragile and based on an all-weather approach [3][11] 2025H1 Overseas Asset Market Review - The narrative of American exceptionalism is fading, facing three major challenges: the emergence of Deepseek affecting US-China tech narratives, concerns over fiscal tightening due to Musk's Doge initiative, and uncertainties from tariff policies [3][12] - Non-US assets have generally outperformed US assets in the first half of 2025 [12] Winning Probability - Global growth is expected to slow down in the second half of 2025, with the growth momentum between the US and non-US regions likely to converge [15] - Factors causing marginal changes include policy uncertainty damaging market confidence and delayed expectations for Federal Reserve rate cuts [24] - The overall economic headwinds for the US may ease compared to the first half of the year, but recession risks remain [44] Odds - US assets are currently overvalued compared to non-US assets, indicating asymmetric risks [5][45] - The implied risk pricing for US assets does not adequately reflect the potential for recession, suggesting a need for caution [45][46] Outlook for 2025H2: Global Asset Allocation - The global asset allocation should still follow the anti-fragile "barbell strategy," focusing on three core contradictions: de-globalization, debt cycles, and AI industry trends [72][75] - The strategy involves investing in a majority of low-risk assets while allocating a smaller portion to high-risk, high-reward assets [75] - Specific recommendations include over-allocating to Chinese government bonds and emerging markets in Southeast Asia, while maintaining a cautious stance on US equities due to potential volatility [75][88][104]

Core Viewpoint - The current transition between old and new orders is in a "chaotic period," suggesting that a "global barbell strategy" based on an all-weather approach is recommended for portfolio construction, focusing on Chinese assets for the second half of the year [3][10][14]. Group 1: Overview of the Current Situation - The core contradiction in the domestic macroeconomic environment remains the debt cycle, with China having passed the peak of the current debt cycle and entering a contraction phase [3][27]. - The transition from "passive leverage" to "de-leveraging" is ongoing, characterized by a decrease in total debt service relative to GDP while total debt remains elevated [3][37]. Group 2: Historical Context and Credit Pulse Conditions - Historical analysis indicates that conditions triggering credit pulses during debt contraction periods include a significant easing of monetary policy, which can alleviate the debt burden on the private sector [4][38]. - The relationship between nominal GDP growth and policy interest rates serves as a leading indicator for economic conditions, with a stable or expanding gap between the two indicating potential internal demand stimulation [38][39]. Group 3: Investment Strategy for the Second Half - The focus for Chinese assets should be on maximizing the "win rate," with fixed income expected to outperform equities and commodities during the debt contraction phase [6][61]. - The strategic asset allocation should favor high dividend and high-value factors while reducing exposure to high-growth factors in the A-share market [73][74]. Group 4: Risk and Pricing Assessment - The overall pricing of Chinese assets appears reasonable, with the equity risk premium (ERP) reflecting the structural transformation of the economy [48][59]. - The current yield curve should steepen, with short-term rates expected to decline more than long-term rates, indicating better value in short-term debt [52][53].

Global Macro Trends - Recent performance of global asset classes has shown divergence, with a significant rebound in the US dollar index and a general decline in commodities, while emerging markets have outperformed developed markets [3][8]. Asset Allocation Strategy - The "Global Barbell Strategy" is proposed as the optimal response to the evolving global asset allocation landscape, emphasizing the need for long-term investors to understand the reshaping of world order and assess the cost-effectiveness of various assets [4][11]. - The strategy is influenced by three underlying logics: increasing de-globalization, misalignment in debt cycles, and trends in the AI industry. The focus remains on an all-weather strategy that adjusts for asymmetrical pricing risks [4][11]. - A statistical analysis of historical asset volatility during US recession periods has been conducted, ranking assets by their volatility amplification factors. The order is as follows: Nasdaq, India SENSEX30, Hang Seng Tech, US Treasuries, Gold, China Bonds, Bitcoin, Convertible Bonds, and A-share dividends [4][11]. - Adjustments to asset allocation weights have been made based on the revised volatility factors, increasing the weight of Chinese convertible bonds and A-share dividends while decreasing the weight of Nasdaq, India SENSEX30, and Hang Seng Tech [4][11]. Economic Indicators and Data - The US financial conditions index has shown improvement, indicating a relaxation in overall financial conditions [5][17]. - The Citigroup US Economic Surprise Index has recorded positive values, suggesting that economic data has been exceeding market expectations [5][19]. - There is an increase in economic policy uncertainty in the US, which has negatively impacted consumer confidence [5][28]. - Historical trends indicate that deteriorating consumer confidence in the US often leads to increased volatility in the stock market [5][31]. Upcoming Economic Events - A calendar of significant upcoming economic data releases and events has been outlined, including consumer confidence indices, interest rate decisions, and GDP reports from various regions [14].

Core Viewpoint - The current transition between old and new orders is in a "chaotic period," suggesting a need for a "global barbell strategy" for asset allocation, focusing on Chinese assets in the second half of the year [3][10][14]. Group 1: Overview of the Current Situation - The core contradiction in China's macroeconomic environment remains the debt cycle, with the country having passed the peak of the current debt cycle and entering a contraction phase [3][27]. - The transition from "passive leverage" to "de-leveraging" is ongoing, characterized by a decrease in total debt service relative to GDP while total debt increases [3][37]. Group 2: Historical Context and Credit Pulse Conditions - Historical analysis indicates that conditions triggering credit pulses during debt contraction periods include a significant easing of monetary policy [4][38]. - The relationship between nominal GDP growth and policy interest rates serves as a leading indicator for economic trends, with a need for sustained monetary easing to alleviate private sector debt burdens [5][39]. Group 3: Investment Strategy for the Second Half - The focus for Chinese assets should be on maximizing "win rates," with fixed income expected to outperform equities and commodities during the debt contraction phase [6][61]. - Strategic asset allocation should favor high dividend and high-value factors while reducing exposure to high-growth factors in A-shares [6][73]. Group 4: Risk and Pricing Assessment - The overall pricing of Chinese assets appears reasonable, with the current equity risk premium reflecting the structural transformation of the economy [5][48]. - The yield curve is expected to steepen, with short-term debt offering better risk-adjusted returns compared to long-term debt [5][52][53].

Core Viewpoint - The article discusses the transition period between the old and new global order, emphasizing the need for a "global barbell strategy" for asset allocation in response to the current chaotic environment. It highlights that the key to success in the second half of 2025 lies in understanding the win rates for Chinese assets and the odds for U.S. assets [3][11]. Group 1: 2025H1 Overseas Asset Market Review - The narrative of American exceptionalism is fading, challenged by three main factors: the emergence of Deepseek affecting U.S.-China tech narratives, concerns over U.S. fiscal tightening led by Musk's Doge initiative, and the introduction of reciprocal tariffs increasing uncertainty around U.S. dollar hegemony [3][12]. - Non-U.S. assets outperformed U.S. assets in the first half of 2025, indicating a shift in market dynamics [12]. Group 2: Win Rates - Global growth is expected to slow down in the second half of 2025, with the growth momentum between the U.S. and non-U.S. regions likely to converge [15]. - The introduction of tariffs and the subsequent easing of these measures have led to a shift in market expectations regarding U.S. economic performance, with potential recession risks still looming [19][44]. Group 3: Odds - U.S. assets are currently overvalued compared to non-U.S. assets, indicating asymmetric risks that investors should be cautious of [5][45]. - The article warns that the pricing of U.S. assets does not adequately reflect the risks of a potential recession, suggesting that the market is underestimating the structural risks associated with U.S. economic policies [46][94]. Group 4: Outlook for 2025H2 - The global asset allocation strategy should continue to focus on the "global barbell strategy," which balances low-risk assets with high-risk, high-reward investments [72][75]. - The article identifies three core contradictions driving the new investment paradigm: rising anti-globalization, debt cycle misalignment, and the accelerating trend of AI industries [9][72]. - Specific asset classes recommended include Chinese government bonds, gold, and equities from emerging markets, particularly in Southeast Asia, which are expected to benefit from the ongoing global economic shifts [88][104].