Report Industry Investment Rating No information provided in the text. Core Viewpoints of the Report - The U.S. stock market is facing a significant downward shock, and investors should be cautious of the spill - over risk of the U.S. stock market during the long holiday. Global risk preference has shifted, and it is advisable to exit long positions in stock index futures and reduce positions in equity assets before the holiday [1][64]. Summary by Related Catalogues U.S. Stock Market - The expectation of the balance - sheet reduction policy of the incoming Fed Chairman Wash has severely hit the silver market and changed the market risk preference, leading to an upward movement of the U.S. dollar index [3][5]. - The Nasdaq is on shaky ground, with retail trading dominating. The Dow Jones Industrial Average hitting a new high is a result of the rotation of funds in the U.S. stock market, which is a dangerous signal for technology stocks represented by the Nasdaq [8][11]. - The S&P software index has been severely hit due to the acceleration of AI substitution, and $400 billion in private equity credit funds are in trouble. Amazon's 2026 capital expenditure guidance has increased to $200 billion, but the market has responded negatively [13][16]. - Due to power constraints, the growth of U.S. computing power may slow down significantly, and AI progress will hit a ceiling. Microsoft in MAGA7 has tumbled into a technical bear market due to AI's impact on the software industry and power constraints on capital expenditure [18][21]. - The Nasdaq has fallen below the six - month moving average, and the rebound on Friday was a technical pullback. A downward shock in the U.S. stock market is imminent [24]. Japanese Market - After the victory of the Japanese high - level government in the House of Representatives election, Japanese government bonds will face a new round of selling pressure, and Japanese bond yields are expected to continue to soar. A new round of yen depreciation may be inevitable. If the Bank of Japan continues to raise interest rates, yen carry - trade funds will flow back rapidly, impacting the global equity and bond markets [26][28]. Chinese Market - The Hang Seng Technology Index has broken through its support level. The CSI 500 Index has shown a phased top and entered an adjustment period. The CSI 300 Index has broken through its support level, with a locked - in area of 1 trillion yuan in ETFs above, forming a significant resistance level [31][34][36]. - The margin trading balance has entered a de - leveraging phase [39]. - In December, the year - on - year growth rate of the core CPI was 1.2%, and the real interest rate has been negative continuously, with a month - on - month growth of 0.2%. The month - on - month increase in the industrial producer purchase price index in December was 0.4%, indicating that the Chinese economy is moving towards re - inflation [42][45]. - China's export value in December reached a record high of $357.7 billion, with a year - on - year growth rate of 6.6%, showing resilience in exports [47]. - In December, the month - on - month value of manufacturing fixed - asset investment was 2.87 trillion yuan, with a year - on - year growth rate of - 10.5%, indicating a stall in manufacturing investment. The month - on - month value of infrastructure investment was 2.08 trillion yuan, with a year - on - year growth rate of - 15.9%, reflecting the financial difficulties of local governments. The year - on - year growth rate of real estate development investment in December was - 36.8%, hitting a new low [50][53][56]. - The total retail sales of consumer goods in December was 4.51 trillion yuan, with a year - on - year growth rate of 0.9%. In the context of a downward export outlook and a stall in investment, consumption has become the main driving force for economic growth, but the year - on - year growth rate in December hit a new low [59]. - The acceleration of the RMB's appreciation is conducive to the continuous inflow of international capital into China [62].

Core Viewpoint - The ongoing power struggle between the Federal Reserve and the White House signals important implications for the future of the global economy, particularly with the upcoming appointment of a new Fed chair in June [1]. Group 1: Federal Reserve Decisions - The Federal Reserve announced on January 29 to maintain interest rates, marking the first pause since September 2025, with expectations for a rate cut in June 2026 [1]. - Powell stated that the U.S. economy is on a "solid foundation," and both inflation and employment risks have "diminished," indicating that a rate cut is unlikely in the near term [3]. - The core inflation rate in the U.S. has not yet reached the 2% target, and tariffs are a significant factor in the Fed's decision-making process [3]. Group 2: Leadership Transition - Kevin Warsh is set to replace Jerome Powell as the next Fed chair, which may introduce a more aggressive economic policy approach [1][4]. - Warsh advocates for a balance between encouraging the real economy and managing liquidity, which could lead to greater market volatility [4]. - The transition from Powell to Warsh raises questions about the consistency of future policies between the Fed and the White House [6]. Group 3: Political Dynamics - The relationship between Powell's rhetoric and Trump's aggressive tariff policies reflects a complex political balance, with potential for renewed conflict after Warsh's appointment [6]. - The effectiveness of Trump's tariff policies in reviving U.S. manufacturing remains uncertain, as they may accelerate industry transformation rather than stabilize it [6]. - The upcoming June decisions by the Fed are anticipated to have significant repercussions not only domestically but also on the global economic landscape [8].

Group 1 - The U.S. government is facing a shutdown crisis as Congress has rejected short-term funding bills, risking a funding lapse by September 30, which could lead to 800,000 federal employees being furloughed and a quarterly GDP annualized growth reduction of approximately 0.2 percentage points [1][3] - The current political climate is marked by unprecedented measures from the White House, including requests for federal agencies to prepare for large-scale layoffs, indicating potential long-term structural adjustments within federal agencies and their employees [3][5] - The ongoing deterioration of bipartisan relations has resulted in significant opposition on key issues such as healthcare and immigration, with the Trump administration's relationship with congressional leaders being particularly strained, which could lead to immediate impacts on millions of citizens reliant on government assistance programs [5][7] Group 2 - The potential government shutdown could result in a weekly GDP loss of $7 billion, affecting federal employee salary payments and consequently reducing consumer spending, which may heighten market fears regarding policy uncertainty [7] - The U.S. national debt has surpassed $37 trillion, with the Federal Reserve becoming the largest seller of U.S. Treasuries, reducing its holdings from $5.8 trillion to $4.2 trillion since 2022, reflecting a tightening monetary policy amid inflation and employment pressures [10] - The U.S. economy is facing self-imposed challenges, such as tariffs that could lead to an annual loss of $125 billion, alongside border restrictions and immigration limitations that may further slow economic growth [10][11]