Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China FX and rates markets**, tracking developments in foreign exchange and interest rates, including valuations, policy stance, technicals, flows, and fundamentals [4][5][34]. Core Insights and Arguments 1. **Economic Growth Forecast**: China's economy is projected to achieve approximately **5% year-on-year growth in 2025**, with a forecast of **4.8%** for 2026, surpassing the market consensus of **4.5%**. This outlook is based on strong exports and fiscal easing estimated at **1.2 percentage points of GDP** [4][5]. 2. **Policy Easing Approach**: The People's Bank of China (PBOC) is expected to adopt a cautious approach, focusing on medium-term growth rather than short-term cyclical issues. A lower growth target range of **4.5-5%** may indicate a higher tolerance for growth slowdown and reduced willingness for policy easing [4][5]. 3. **CNY Exchange Rate Dynamics**: The USD/CNY spot rate fell below **7.0** by the end of 2025, driven by broad USD weakness and year-end FX settlement demand. A gradual appreciation of CNY is anticipated, although a sharp appreciation could negatively impact exporters' profitability [4][5]. 4. **Interest Rate Cuts**: The PBOC is expected to implement two **10 basis points** cuts in the policy rate in 2026, reducing the **7-day OMO rate** to **1.2%** by the end of the year. This is part of a strategy to facilitate government bond issuance and manage liquidity [5][34]. 5. **Long-term CGB Yields**: Increased supply of long-term Chinese government bonds (CGBs) due to fiscal easing may lead to upward pressure on long-term yields, although weaker domestic demand could pose downside risks [5][34]. 6. **Trade Balance Improvement**: China's trade balance has improved, with a significant increase in the goods trade surplus. Travel exports reached about **200%** of 2019 levels, while travel imports were around **97%** of 2019 levels as of November 2025 [39][42]. Additional Important Insights 1. **Liquidity Management**: The PBOC has been active in liquidity management through open market operations (OMO) and repo transactions, with net liquidity injections noted in December [76][81]. 2. **Bond Issuance Trends**: Net issuance of central government bonds was approximately **RMB 335 billion** in December 2025, with local government bond issuance also showing significant activity [85][88]. 3. **Foreign Investor Activity**: Foreign investors continued to sell negotiable certificates of deposit (NCDs) in November, indicating a cautious stance towards the Chinese bond market [116]. 4. **Market Expectations**: Rising market expectations for a reserve requirement ratio (RRR) cut around the Lunar New Year holiday suggest a proactive approach to stimulate credit extension to major projects [5][34]. This summary encapsulates the key points from the conference call, highlighting the economic outlook, policy strategies, and market dynamics relevant to the China FX and rates markets.

Market Overview - Asian stocks continued a global record run, with investors focusing on upcoming U.S. economic data despite geopolitical tensions [1] - U.S. manufacturing activity contracted in December, the most significant decline since 2024, increasing expectations for Federal Reserve policy easing [1] Commodity Prices - Gold prices rose to over $4,460 an ounce, while oil prices eased after a previous increase of $1 per barrel due to concerns about crude flows from Venezuela [2] - The U.S. military operation in Venezuela has sparked optimism for future investments in the U.S. oil industry [5] Regional Stock Performance - China's Shanghai Composite index increased by 1.50% to 4,083.67, marking its highest level in over a decade [2] - Hong Kong's Hang Seng index surged by 1.38% to 26,710.45, driven by gains in the financial sector [2] - Japan's Nikkei average rose by 1.32% to 52,518.08, led by oil-related stocks and precision tools maker Disco Corp., which increased by 6.1% [3] - Seoul's Kospi average jumped by 1.52% to 4,525.48, supported by gains in semiconductors, brokerages, and shipbuilders [4] - New Zealand's S&P/NZX-50 index rose by 0.56% to 13,663.58, nearing a six-week high [5] U.S. Stock Market - U.S. stocks experienced gains, with the Dow increasing by 1.2% to a new record closing high, the S&P 500 gaining 0.6%, and the Nasdaq Composite advancing by 0.7% [6]

Core Insights - The Meridian Hedged Equity Fund reported a return of 1.67% in Q3 2025, underperforming the S&P 500 Index which returned 8.13% and the CBOE S&P 500 BuyWrite Index which returned 3.53% [1] Company Overview - Johnson & Johnson (NYSE: JNJ) is a major player in the healthcare sector, focusing on innovative pharmaceuticals and medical devices [3] - The company has a market capitalization of $495.785 billion, with its stock closing at $205.78 per share on December 23, 2025 [2] Performance Metrics - Johnson & Johnson's stock experienced a one-month return of -0.43% but gained 41.09% over the last 52 weeks [2] Strategic Developments - Johnson & Johnson is facing a critical transition as sales from its blockbuster drug Stelara decline due to patent expiration, but it is countering this with a strong pipeline of new drugs, particularly in oncology and immunology [3] - The company secured FDA approval for Inlexzo, a new bladder cancer treatment, and its lung cancer drug Rybrevant is moving closer to broader adoption following positive trial data [3] - Strong sales momentum from other key drugs has compensated for the decline in Stelara, and favorable legal developments have eased concerns regarding ongoing talc litigation [3] Investment Sentiment - Johnson & Johnson was held by 103 hedge fund portfolios at the end of Q3 2025, an increase from 95 in the previous quarter [4] - Despite its potential, some analysts believe that certain AI stocks may offer greater upside potential and less downside risk compared to Johnson & Johnson [4]

Core Insights - The Meridian Hedged Equity Fund reported a return of 1.67% in Q3 2025, underperforming the S&P 500 Index which returned 8.13% and the CBOE S&P 500 BuyWrite Index which returned 3.53% [1] - The fund's performance was influenced by a market focus on policy easing rather than weakening fundamentals, despite concerns about stagflation [1] Company Highlights - Intercontinental Exchange, Inc. (NYSE:ICE) is highlighted as a key stock in the fund's portfolio, with a one-month return of 3.84% and a 52-week gain of 7.64% [2] - As of December 23, 2025, Intercontinental Exchange, Inc. had a stock price of $161.95 and a market capitalization of $92.704 billion [2] - The company operates a global network of exchanges and data services across various asset classes, benefiting from a resilient business model that combines transaction-based revenues with recurring data and technology revenues [3] Investment Sentiment - Despite the underperformance of Intercontinental Exchange, Inc. in the recent quarter, the fund maintains confidence in its long-term potential due to strong cash flow generation for debt reduction and shareholder returns [3] - The company is not among the top 30 most popular stocks among hedge funds, with 82 hedge fund portfolios holding its stock at the end of Q3 2025, a slight decrease from 84 in the previous quarter [4] - The fund suggests that certain AI stocks may offer greater upside potential compared to Intercontinental Exchange, Inc., indicating a competitive investment landscape [4]

Core Viewpoint - Analysts predict that today's Federal Reserve meeting will create a favorable environment for Bitcoin to rally into the new year, largely due to expectations of a 0.25% interest rate cut by Fed Chair Jerome Powell [1] Group 1: Federal Reserve's Impact on Digital Assets - The CME FedWatch tool indicates an 88% probability of a quarter-point cut, with Polymarket bettors showing even higher confidence at 96% [1] - Andrew Forson from DeFi Technologies believes that any rate cut will reduce the riskiness of digital assets compared to US Treasuries, making the returns required for digital assets to be considered strong more achievable [2] - Several top Fed officials have hinted at upcoming policy easing, which is generally beneficial for risk-on assets like cryptocurrencies as it discourages investment in safe-haven bonds by lowering yields [3] Group 2: Current Market Conditions - The cryptocurrency market is currently $1 trillion below its all-time high, with Bitcoin's price around $92,000 after a 12% rally from November lows [4] - Bitcoin exchange-traded funds experienced inflows of $152 million on Tuesday, indicating positive market sentiment [4] - Broader US stock markets remained stable as traders awaited the Fed's decision, with analysts suggesting that the market may be nearing a reversal point [5] Group 3: Future Projections for Bitcoin - Mark Pilipczuk from CF Benchmarks noted a "volatility spike" signal in Bitcoin, which historically indicates market exhaustion and suggests bullish short-term performance, with projections of Bitcoin trading above $100,000 by next year [5] - Over longer time frames, historical data shows that every 12-month outcome has been positive, with potential gains around +140%, suggesting a price target of $220,000 per Bitcoin [6]

Group 1 - The dollar is easing after reaching a five-month high against a basket of currencies due to better-than-expected U.S. data [1] - The ADP private payrolls report and the ISM services purchasing managers' survey exceeded expectations, contributing to the dollar's previous strength [1] - There are growing doubts about another interest-rate cut in December following the recent Federal Reserve meeting, where Fed Chair Jerome Powell expressed caution regarding further policy easing [2]

Economic Growth - The Chinese economy grew at 4.8% in the July-September quarter, marking the slowest annual pace in a year and aligning with analyst expectations, attributed to trade tensions with the U.S. and weak domestic demand [1][7] - This growth rate is a decline from 5.2% in the previous quarter, representing the weakest quarterly growth since Q3 2024 [1] Trade Tensions & Export Data - Despite U.S. tariffs, China's overall exports remained resilient, with global exports increasing by 8.3% in September, the fastest growth in six months, while exports to the U.S. fell by 27% year on year [2] Property Sector & Consumer Weakness - The ongoing property market crisis in China has negatively impacted consumption and domestic demand, with residential property sales dropping by 7.6% in value during the first nine months of the year compared to 2024 [3] Future Projections - S&P projects new home sales to decline by another 8% year over year in 2025 and by 6-7% in 2026, indicating continued weakness in the property sector [4] - The World Bank predicts China's economy will expand by 4.8% in 2025, while S&P Global economists forecast GDP growth to slip to 4% year on year in the second half of 2025 [7] Monetary Policy Outlook - To address the slowing economy, China may implement policy easing, with Goldman Sachs suggesting a 10-basis-point cut in the key rate and a 50-basis-point reduction in the reserve requirement ratio [5][6] - The central bank's easing stance is seen as a response to deflationary pressures and the need to stimulate growth [6] Investment Opportunities - If rate cuts occur, high-growth tech stocks and ETFs such as KraneShares CSI China Internet ETF (KWEB) and Invesco China Technology ETF (CQQQ) may benefit, along with iShares China Large-Cap ETF (FXI) and iShares MSCI China ETF (MCHI) [8] - Despite subdued retail sales momentum, FXI and MCHI have advanced approximately 23% and 28% over the past six months, indicating potential for further growth with any policy stimulus [9]

Group 1 - The dollar fell to an 11-day low against a basket of currencies due to signals of further interest rate cuts from the Federal Reserve [1][2] - Fed Governor Christopher Waller expressed support for continued policy easing, aligning with Fed Chair Jerome Powell's earlier comments [2] - The next Federal Reserve policy decision is scheduled for October 29, which could impact market expectations [2] Group 2 - The October Philadelphia Fed business outlook survey showed a sharper decline than anticipated, indicating potential economic weakness [2] - A significant drop in oil prices is contributing to the dollar's decline, as the U.S. is a major energy producer [2]

The Federal Reserve’s September 16–17, 2025 FOMC minutes indicated that real GDP growth slowed and the labor market softened in H1, while core PCE inflation remained elevated. Most participants considered modest policy easing appropriate and expected further rate cuts this year. Many noted persistent upside inflation risks alongside growing downside risks to employment. https://t.co/Ga8FsHGeWD ...

Employment Data Overview - Australian employment unexpectedly fell by 5,400 in August, contrasting with a revised increase of 26,500 in July, and significantly below market expectations of a 21,500 gain [2][3] - Full-time positions dropped by 40,900, indicating a slowdown in employment growth [2][3] Labor Market Indicators - Annual jobs growth has decreased to 1.5% from 3.5% in January, while hours worked dipped by 0.4% [3] - The jobless rate remained steady at 4.2%, which is low by historical standards, and the participation rate slightly decreased to 66.8% [3] Central Bank Policy Outlook - The Reserve Bank of Australia (RBA) is expected to maintain interest rates this month, with a 75% probability of a cut in November [2][4] - The RBA has adopted a cautious approach to policy easing, having previously cut rates in February, May, and August [4] Economic Context - Leading indicators of labor demand remain solid, with job advertisements stabilizing above pre-pandemic levels [5] - Business surveys are generally positive, and consumer spending has increased recently due to lower borrowing costs and tax cuts [5] Job Cuts in Major Banks - ANZ plans to cut nearly 3,500 jobs over the next year as part of a restructuring effort, while National Australia Bank will reduce 410 jobs and relocate some positions overseas [6]