Economic Policy Meeting - Investors are anticipating a key economic policy meeting with President Xi Jinping and other leaders, seeking signals to sustain the stock rally that has occurred this year [1] - The annual Central Economic Work Conference is crucial as it sets the macroeconomic agenda for the following year, with the market looking for new catalysts to extend its solid performance [1] Fiscal and Monetary Policy Expectations - Investors expect Beijing to maintain a proactive fiscal stance and accommodative monetary policy in 2026, focusing on stronger domestic demand, technological innovation, and reducing excess capacity in the green economy [2] - Analysts highlight that fiscal policy will be a major focus, with potential front-loading of fiscal spending or deficits likely benefiting small-cap and high-beta consumer-discretionary companies, such as retailers [3] Market Performance and Economic Fundamentals - The CSI 300 Index has increased by 17% this year, outperforming the S&P 500's 16% gain, while the technology board of the Shanghai Stock Exchange has surged by 36% [4] - Recent data indicates a broadening economic slowdown and a continued decline in property prices, which has affected the market's ability to build on recent gains [4] Policy Priorities - An earlier Politburo meeting chaired by Xi Jinping has outlined priorities for the upcoming conference, emphasizing domestic consumption and technological self-reliance for 2026, along with continued fiscal expansion and monetary easing [5][6] - The meeting's readout did not specifically address the property sector or capital markets, indicating a potential shift in focus [6]

Core Insights - Wall Street is experiencing a solid earnings season, with strong sales and earnings per share (EPS) growth indicating a continuation of the bull market into next year [1][8] - Morgan Stanley's chief stock strategist highlights the importance of positive revenue surprises and EPS growth as key indicators of market strength [3][5] Sales and Earnings Growth - The sales growth rate of 2.3% is approximately double the typical rate of 1.1%, suggesting businesses are outperforming expectations in terms of sales [4] - The median companies in the Russell 3000 index achieved an 11% EPS growth, nearly double the second-quarter rate of 6%, indicating broad profit expansion across various sectors [5][6] Market Outlook - Analysts believe the current trends in sales and EPS growth support the view of a "rolling recovery" in earnings, with expectations for continued strength into 2026 [6][8] - The recent trade truce between the US and China has alleviated some trade tensions, which is seen as a positive development for the markets [7] Monetary Policy Considerations - There is uncertainty regarding interest rates, influenced by recent comments from Jerome Powell, which may affect the near-term monetary policy landscape [7][9]