Group 1 - The core viewpoint is that the sharp decline in housing and car prices is not an opportunity for bargain hunting but a warning signal of economic contraction [1][3][5] - The phenomenon of "price drop traps" is described as a "deflationary spiral," where continuous price declines lead consumers to delay purchases, resulting in reduced demand and a vicious cycle of layoffs and income reduction [1][3] - The essence of the housing price drop is a revaluation of assets following the burst of an asset bubble, with significant declines observed in areas like Shenzhen, where prices fell over 30% from their peak [3][5] Group 2 - The automotive price drop reveals a crisis of overcapacity in the manufacturing sector, where price cuts fail to stimulate new demand and instead create anxiety among existing car owners about depreciation [3][5] - The "debt-deflation" vicious cycle is highlighted as a core feature of the deflation trap, where falling asset prices worsen corporate balance sheets and reduce consumer spending, leading to a negative feedback loop [5][7] - The need for effective policy measures is emphasized, suggesting a balance between stabilizing expectations and structural adjustments to avoid systemic risks while promoting high-quality development [5][7] Group 3 - Companies are encouraged to adopt an "anti-deflation" mindset, focusing on enhancing product value and service income rather than engaging in price wars [7][9] - Consumers are advised to approach price fluctuations rationally and avoid speculative behaviors, recognizing the potential pitfalls of "too good to be true" deals [7][9] - The importance of managing deflationary expectations is stressed, as entrenched beliefs about price declines can lead to prolonged economic downturns [7][9]

Core Insights - The article highlights the paradox of increasing household savings in China amidst declining interest rates, suggesting potential economic risks similar to Japan's past experiences [1][3][5] Group 1: Economic Indicators - In 2025, the one-year fixed deposit rate of major state-owned banks in China fell below 1%, reaching 0.95%, while the seven-day annualized yield of money market funds dropped below 1.2% [1] - The People's Bank of China reported that household deposits exceeded 162.02 trillion yuan in the first half of 2025, an increase of 10.77 trillion yuan since the beginning of the year, with per capita deposits reaching 105,000 yuan, marking a historical peak of 78.02 trillion yuan in "net deposits" [1] Group 2: Historical Context - The article draws parallels between current Chinese economic conditions and Japan's economic stagnation following the bubble burst in the early 1990s, where low interest rates did not effectively stimulate consumption or investment [3][5] - Japan experienced a shift in societal mindset post-bubble, leading to a "low-desire society" where individuals prioritized saving over spending due to economic uncertainty [3][5] Group 3: Societal Implications - The shift in public sentiment in China mirrors Japan's past, with a growing cautious attitude towards spending and a focus on saving for future uncertainties [5] - The article emphasizes that the core of consumption and investment is confidence, which diminishes when economic outlooks are bleak, leading to a societal trend of "defensive saving" [5] Group 4: Recommendations - The article suggests a balanced approach to wealth management, advocating for a "dumbbell" asset allocation strategy where a majority of assets (70-80%) are placed in safe, liquid investments, while a smaller portion (20-30%) is allocated for growth opportunities [6] - Investing in personal development is highlighted as a reliable strategy for enhancing earning potential during uncertain economic times [6][7]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Steel: In the off - season, trade based on expectations and pay attention to rebound opportunities. Negative feedback dominates the industry logic, and focus on the rhythm of steel mill production cuts. The cost of scrap steel is high, and attention should be paid to the rhythm of electric furnace production cuts [3][6]. - Iron Ore: With positive macro - expectations, it will fluctuate at a high level. The recent rebound in ore prices is mainly driven by stronger macro - expectations, but the industrial fundamentals may limit the upside space in the future [3][83]. - Coking Coal and Coke: The current supply - demand situation is tight, and prices will fluctuate at a high level. The spot prices remain strong, and the valuation may continue to fluctuate at a high level in the short term [3][132]. - Ferroalloys: Affected by sector sentiment and fundamental contradictions, prices will fluctuate widely [3]. 3. Summary by Relevant Catalogs 3.1 Steel (Thread and Hot - Rolled Coil) - **Macro - environment**: Overseas, US inflation in September declined more than expected, and the valuation of pro - cyclical commodities increased. The Sino - US summit had good results, easing the previous frictions. Domestically, manufacturing and infrastructure investment declined due to the "anti - involution" effect, and demand - side efforts are needed in the long - term. After the Fourth Plenary Session, the domestic market shifted back to "anti - involution" trading [8][11][12]. - **Supply - demand and inventory**: Supply is at a low level, demand has increased, and inventory levels are healthy. For thread steel, last week, the Shanghai spot price was 3230 (+30) yuan/ton, the 01 - contract price was 3106 (+60) yuan/ton, the 01 - contract basis was 124 (- 30) yuan/ton, and the 01 - 05 spread was - 60 (+3) yuan/ton. For hot - rolled coils, the Shanghai spot price was 3330 (+40) yuan/ton, the 01 - contract futures price was 3308 (+58) yuan/ton, the 01 - contract basis was 22 (- 18) yuan/ton, and the 01 - 05 spread was - 10 (+5) yuan/ton [7][25][46]. - **Demand**: For thread steel, new - home sales remained low, indicating weak market confidence, while second - hand home sales remained high, showing rigid demand. Land transaction area also remained low. For hot - rolled coils, the peak demand season was lackluster, but export profits were available, and exports remained at a high level [26][29][47]. - **Production profit**: The expected production restrictions were revised, and steel mill profits decreased. Last week, the thread steel spot profit was 52 (- 37) yuan/ton, the main - contract profit was 59 (- 3) yuan/ton, and the East China thread steel valley - electricity profit was 40 (- 7) yuan/ton. The hot - rolled coil spot profit was - 8 (- 26) yuan/ton, and the main - contract profit was 111 (- 5) yuan/ton [41][60]. 3.2 Iron Ore - **Supply**: The year - end shipment rush continued, and overseas shipments were at a high level. Global shipments in the recent week were 3388.54 million tons, with a year - on - year increase of 303.2 million tons. Australian shipments were 1919.5 million tons, Brazilian shipments were 925.1 million tons, etc. [81][82]. - **Demand**: The iron - water production decreased significantly on a month - on - month basis and was close to the level of the same period last year [83]. - **Contract and spot prices**: The main 01 - contract price fluctuated strongly, closing at 800.0 yuan/ton, with a position of 540,000 lots (a decrease of 25,400 lots). The average daily trading volume was 336,000 lots, a week - on - week increase of 55,000 lots. Spot prices increased week - on - week [85][89]. - **Inventory**: The port inventory accumulation trend continued, which may suppress the upside space of ore prices in the future [83][115]. 3.3 Coking Coal and Coke - **Supply**: The actual supply in the production areas was still lower than expected. The weekly production of FW raw coal was 851.81 (+3.81) million tons, and the production of FW clean coal was 434.92 (+1.47) million tons. The daily average production of independent coking plants was 64.61 (- 0.68) million tons [132][134]. - **Demand**: The trading atmosphere in the production areas was warm. With the strengthening of the expectation of further price increases for downstream coke, it may support the demand for high - priced coal [132]. - **Viewpoint summary**: The current supply - demand situation is tight, and spot prices remain strong. Affected by macro - factors, the valuation may continue to fluctuate at a high level in the short term [132].

1. Report Industry Investment Rating No information provided in the report. 2. Core Views of the Report - In the off - season, focus on expectations and look for opportunities for steel price rebounds. The overseas macro situation shows that the inflation in the US declined more than expected in September, which lifted the valuation of pro - cyclical commodities. Domestically, manufacturing and infrastructure investment decreased due to the "anti - involution" policy. To avoid deflation, long - term demand - side measures are needed. After the Fourth Plenary Session, domestic trading shifted back to the "anti - involution" theme. In the black industry chain, the peak - season demand was weak. To maintain inventory levels, supply reduction through price drops and profit compression is necessary. Attention should be paid to the reduction rhythm of electric arc furnaces [3]. 3. Summary by Related Catalogs 3.1 Macro - economic Situation 3.1.1 Overseas Macro - US inflation in September declined more than expected, leading to an increase in the valuation of pro - cyclical commodities [3][8]. 3.1.2 Domestic Macro - Manufacturing and infrastructure investment were affected by the "anti - involution" policy, showing a downward trend. After the Fourth Plenary Session, domestic trading shifted back to the "anti - involution" theme. To get the economy out of the deflation spiral, long - term demand - side efforts are required [3][7]. 3.2 Black Industry Chain - The industry logic is dominated by negative feedback. Attention should be paid to the reduction rhythm of electric arc furnaces as scrap steel used in electric arc furnaces is a high - cost iron element, and valley - electricity operations are in the loss state [3][11]. 3.3 Threaded Steel Fundamental Data 3.3.1 Basis and Spread of Threaded Steel - Last week, the Shanghai threaded steel spot price was 3200 (0) yuan/ton, the 01 - contract price was 3046 (+9) yuan/ton. The 01 - contract basis was 154 (- 9) yuan/ton, and the 01 - 05 spread was - 63 (- 7) yuan/ton [17]. 3.3.2 Threaded Steel Demand - Second - hand housing transactions remained at a high level, indicating the existence of rigid demand. However, new - housing transactions remained low, reflecting weak market confidence. Land transaction area also remained low [21]. - Threaded steel demand seasonally increased but was at a low level compared to the same period in previous years [22]. 3.3.3 MS Weekly Data - Supply was at a low level, demand increased, and the inventory level was healthy [23]. 3.3.4 Scrap Steel and Electric Arc Furnace - Scrap steel is still a high - cost iron element, and attention should be paid to the reduction rhythm of electric arc furnaces [31]. 3.3.5 Threaded Steel Production Profit - Last week, the threaded steel spot profit was 84 (0) yuan/ton, the main - contract profit was 62 (- 29) yuan/ton, and the East China threaded steel valley - electricity profit was 47 (+11) yuan/ton [37]. 3.4 Hot - rolled Coil Fundamental Data 3.4.1 Basis and Spread of Hot - rolled Coil - Last week, the Shanghai hot - rolled coil spot price was 3290 (+20) yuan/ton, the 01 - contract futures price was 3250 (+46) yuan/ton. The 01 - contract basis was 40 (- 26) yuan/ton, and the 01 - 05 spread was - 15 (+5) yuan/ton [42]. 3.4.2 Hot - rolled Coil Demand - The peak - season demand for hot - rolled coils was weak as the production schedules of the home - appliance and automobile industries were not good. However, export profit opportunities emerged, and exports remained at a high level [43][45]. 3.4.3 MS Weekly Data - Demand increased, and inventory decreased [48]. 3.4.4 Hot - rolled Coil Production Profit - Last week, the hot - rolled coil spot profit was 7 (+14) yuan/ton, and the main - contract profit was 116 (+8) yuan/ton [53]. 3.5 Variety Spread Structure - Pay attention to the opportunities for the expansion of the cold - hot spread and the medium - plate hot - rolled coil spread [54]. 3.6 Variety Regional Difference - Information on regional price differences of threaded steel, wire rod, hot - rolled coil, cold - rolled coil, etc. was provided, including the price differences between different regions such as Hangzhou - Beijing, Beijing - Guangzhou, and Shanghai - Tianjin [65][66]. 3.7 Cold - rolled Coil and Medium - plate Supply, Demand, and Inventory Data - Data on the seasonal total inventory, production, and apparent consumption of cold - rolled coils and medium - plates were presented [71].

Economic Sentiment and Housing Market - The central bank's survey reveals a significant disconnect between GDP growth and the economic sentiment of ordinary people, particularly regarding housing prices [1][3] - By the end of Q2, only 8.9% of respondents expected housing prices to rise, a sharp decline from 36.5% in Q2 2018, while 21.7% anticipated a drop in prices [3][5] - The lack of confidence in personal income growth has led to the lowest net increase in household debt since 2012, as individuals are hesitant to borrow for housing purchases [3][5] Consumer Behavior and Corporate Challenges - Rising income and employment pressures have resulted in a historical peak in household savings, driven by fear of future uncertainties rather than interest earnings [5][9] - Despite a 5.3% GDP growth in the first half of the year, business owners generally perceive the economy as weak, with only 0.6% feeling optimistic about their business prospects [5][9] - Over 30% of businesses reported losses, leading to cash flow issues and a reluctance to hire, exacerbating employment market pressures [5][9] Fiscal Deficits and Structural Issues - The fiscal deficit reached a record high of 5.25 trillion yuan in the first half of the year, surpassing the U.S. deficit for the same period [9][10] - Tax revenue growth has stagnated, dropping from an average of nearly 9% annually (2012-2018) to just 0.09% since 2019, primarily due to struggling businesses [10][12] - Local governments are increasingly relying on non-tax revenue, which has risen to 19.6% of total revenue, indicating a growing fiscal imbalance [12][14] Long-term Economic Concerns - The declining birth rate, projected to fall below 1, poses a long-term threat to economic growth and housing demand, mirroring Japan's experience with population decline [7][9] - The reliance on land sales for local government revenue has diminished, with land income in the first half of the year at only 41% of the same period in 2021 [14][16] - The increasing visible debt of local governments, which rose by 8.34 trillion yuan in the first half of the year, reflects a reliance on borrowing to maintain fiscal stability [14][16] Reform and Recovery Strategies - Comprehensive reforms in the fiscal and tax systems are essential to address the underlying issues, including transitioning from indirect to direct taxation [16][18] - The government aims to create a more stable income source for local authorities, reducing dependence on land sales and non-tax revenues [16][18] - Investments in social welfare and public services are crucial for restoring consumer confidence and stimulating economic activity [20][22]

Core Viewpoint - The article discusses the disparity between the general public's desire for falling prices and economists' preference for moderate inflation, highlighting the psychological factors influencing these perspectives [1][3][21]. Economic Perspectives - Economists advocate for a moderate annual inflation rate of around 2% to stimulate consumption and investment, as it encourages spending rather than delaying purchases due to anticipated lower prices [1][3]. - Inflation is seen as beneficial for governments as it helps dilute debt burdens, while businesses prefer it because wages are rigid and can only increase [1][3]. Individual vs. Macro Perspectives - The article illustrates the difference between individual experiences and macroeconomic data through various examples, such as the disconnect between low GDP growth and rising stock markets in the U.S. [4][5]. - It highlights that while large corporations and wealthy individuals benefit from economic growth, small businesses and ordinary citizens face stagnating wages and increased living costs [5][6]. Youth Employment and Satisfaction - Despite a high youth unemployment rate of 14.5%, many young individuals report higher satisfaction levels compared to the overall population, indicating a complex relationship between employment and personal fulfillment [7][11]. - The phenomenon of "youth unemployment" is partly attributed to a preference for quality jobs over any job, supported by family wealth [14][16]. Housing Market Dynamics - The article discusses the dual effects of rising housing prices: the "wealth effect," which encourages spending due to perceived increased wealth, and the "squeeze effect," which limits disposable income for other expenditures [17][18]. - It argues that the wealth effect is more pronounced and persistent compared to the initial squeeze effect experienced by homeowners [18]. Inventory Management Strategies - The concept of "price increases to reduce inventory" is explored, suggesting that while consumers may prefer lower prices, businesses may benefit from raising prices to stimulate demand and manage excess inventory [19][20]. - This strategy reflects the ongoing tension between individual consumer preferences and broader economic strategies aimed at stabilizing markets [21].

Group 1 - The article discusses the divergence between the general public's desire for falling prices and economists' preference for moderate inflation, highlighting the psychological factors influencing these perspectives [1][5][6] - Economists argue that a moderate annual inflation rate of around 2% is ideal as it encourages consumption and investment, preventing consumers from delaying purchases in anticipation of lower prices [2][3] - The article emphasizes that while inflation can benefit government debt management and corporate profits, it can exacerbate income inequality, as asset prices often rise faster than consumer prices during inflationary periods [4][12] Group 2 - The article presents examples of the disparity between individual experiences and overall economic data, such as the contrast between low GDP growth and rising stock markets in the U.S., where 73% of companies exceeded earnings expectations in the second quarter [7][9] - It highlights the phenomenon of high youth unemployment rates coexisting with high satisfaction levels among young people, suggesting that many young individuals prefer to wait for better job opportunities rather than accept unsatisfactory positions [15][23][25] - The article also discusses the wealth effect versus the squeeze effect of rising housing prices, indicating that while higher home values can boost consumer spending, they can also increase financial burdens for homeowners [27][28] Group 3 - The article addresses the paradox of price increases being used as a strategy to reduce inventory, noting that while consumers may prefer lower prices, macroeconomic trends show that falling prices can lead to decreased spending and increased savings [29][30] - It concludes that the ongoing tension between individual pain points related to living costs and economists' optimistic views on overall growth reflects a broader struggle in economic discourse [32]

Group 1 - Inflation leads to early consumption, creating an "inflation spiral" where rising prices stimulate further consumption [3][5] - In a deflationary environment, delaying consumption is beneficial, resulting in a "deflation spiral" that exacerbates deflation [4][13] - Borrowing is advantageous in inflationary conditions, as the real value of debt decreases, encouraging more borrowing and increasing money circulation [10][11] Group 2 - The impact of inflation and deflation on housing prices illustrates the risks associated with borrowing; a significant drop in property value can lead to substantial losses [11][12] - CPI statistics may exaggerate inflation during periods of consumption upgrades, while deflation may not be fully captured due to quality degradation in products [16][20] - Technological advancements generally exert a deflationary effect, while stagnation in technology can lead to inflationary pressures [21][30] Group 3 - The "Amazon effect" in the U.S. retail sector demonstrates how e-commerce can suppress inflation through lower prices and increased efficiency [27] - China's manufacturing advantages stem from a combination of efficient supply chains, infrastructure, and cost control, contributing to a deflationary environment [28][29] - Economic balance is maintained through the interplay of financial mechanisms creating inflation and technological advancements fostering deflation [34][35]