Group 1: Productivity Lag Effect - AI is a new general-purpose technology (GPT) that requires time to significantly impact productivity, similar to historical technologies like the steam engine and computers [1][3] - The productivity growth in the EU decreased by 0.6% in 2023 and is expected to grow by only 0.4% in 2024, which is below the average of 1% from 1995 to 2019 [3][5] - The average productivity growth in the US since 2020 is 1.8%, which is lower than the long-term average of 2.2% [3][5] - Future productivity growth from AI is projected to be only 0.4%-0.9% over the next decade, with total factor productivity improvement not exceeding 0.66% [3][5] Group 2: AI Investment Driving GDP Growth - Despite many AI model companies not being profitable, they are increasing investments, with the average capital expenditure of the four major US internet companies reaching 27.4% of their revenue in Q2 2024 [7][9] - Capital expenditures of these companies are expected to reach $245 billion in 2024 and $354 billion in 2025, significantly increasing their share of GDP [9][11] - AI data center spending is contributing more to GDP growth than consumer spending for the first time, indicating a shift in investment priorities [11][15] Group 3: AI Belief Illuminating the Future - The historical context of high expectations for technologies, such as nuclear energy, parallels current sentiments towards AI and nuclear fusion [15][16] - Investment in nuclear fusion has reached $9.766 billion, with significant backing from major tech companies and government initiatives [21][22] - The contrasting attitudes towards nuclear fusion highlight the ongoing debate about the feasibility and timeline of emerging technologies like AI and fusion energy [22][23]

Group 1: Market Overview - The upcoming weeks will reveal whether the current "super bull market" will continue or derail, with key data releases such as U.S. non-farm payrolls, inflation readings, and the Federal Reserve's monetary policy decisions [1][4] - The S&P 500 index recently recorded its weakest monthly gain since July 2024, while September is historically the worst-performing month for the index [1][4] - The MSCI global index has reached historical highs this year, indicating a critical juncture for global markets [1] Group 2: Economic Indicators - The U.S. labor market is showing signs of weakness, with economists predicting non-farm payroll growth to remain below 100,000 for four consecutive months, with August's expected increase at only 75,000 jobs [7][8] - The unemployment rate is projected to rise slightly to 4.2% in August, marking a significant adjustment in labor market expectations [8] - The upcoming CPI and PPI data are crucial for determining the Federal Reserve's monetary policy direction, with a high probability of a rate cut anticipated [9][11] Group 3: AI Chip Sector - Broadcom, a key player in the AI chip market, is set to release its earnings report, which is critical for investor sentiment regarding AI and tech stocks [5][6] - The demand for AI ASIC chips is expected to grow significantly, driven by major tech companies investing heavily in AI infrastructure [6] - The AI investment trend has led to a historic surge in stock prices for companies within the AI supply chain, including Broadcom and Nvidia [7] Group 4: Market Sentiment and Predictions - Market volatility is unusually low, with the VIX index remaining below critical levels, raising concerns about potential sudden market corrections [4][10] - Analysts express caution regarding the market's current calmness, suggesting it may precede significant volatility [10][12] - There is a growing concern that if the Federal Reserve does not cut rates as expected, it could negatively impact the stock market [16]

Core Viewpoint - The "One Big Beautiful Bill" passed in the House is expected to significantly increase the U.S. fiscal deficit over the next decade, confirming previous analyses that the U.S. is unlikely to effectively reduce its deficit due to structural issues like income inequality and re-industrialization [1][3][6]. Summary by Sections Overview of the "One Big Beautiful Bill" - The bill includes tax cuts, spending reductions, an increase in the debt ceiling, and policies on defense and immigration [1][3]. Key Components of the Bill - **Tax Cuts**: The bill aims to permanently extend and expand the Tax Cuts and Jobs Act (TCJA), with an estimated static reduction in fiscal revenue of approximately $4.3 trillion over the next decade [3][5]. - **Spending Cuts**: It proposes significant cuts to social welfare programs, including about $1 trillion in Medicaid cuts and $230 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) [5][6]. - **Defense and Immigration Policies**: Increased spending on defense and border security is included, supporting Trump's initiatives [6]. - **Debt Ceiling Increase**: The bill proposes raising the debt ceiling by $4 trillion [6]. Fiscal Impact - The bill is projected to increase the static fiscal deficit by approximately $2.8 trillion from FY2025 to FY2034, with dynamic adjustments raising this figure to about $3.2 trillion [6][9]. - The Congressional Budget Office (CBO) anticipates a deficit increase of $3.7 trillion over the same period [6]. Short-term and Long-term Implications - In the short term, the bill may lead to a slight decrease in the deficit for FY2025, but overall, the deficit is expected to remain high, around $1.9 trillion, with a deficit rate of 6.4% [9]. - The long-term outlook suggests that the U.S. will continue to face challenges in reducing the deficit due to ongoing structural issues and the need for fiscal stimulus to address income inequality and infrastructure deficits [11][15]. Market and Policy Responses - The anticipated increase in debt issuance may lead to liquidity pressures in the market, potentially prompting the Federal Reserve to consider measures such as restarting quantitative easing (QE) [25][26]. - The bill's passage could also accelerate financial reforms aimed at stabilizing the market and increasing liquidity in the U.S. Treasury market [26].