Core Viewpoint - Concerns are rising regarding the sustainability of U.S. debt, with warnings from prominent figures like Ray Dalio and Peter Schiff about a potential "debt death spiral" and the implications for the U.S. dollar and economy [1][6]. Economic Indicators - In fiscal year 2025, the U.S. government reported expenditures of $7.01 trillion against revenues of $5.23 trillion, resulting in a deficit of $1.78 trillion, contributing to a national debt nearing $38.5 trillion [2]. - The U.S. consumer price index increased by 3.0% annually in September, up from 2.3% in April, indicating rising inflation [3]. Job Market and Stock Performance - Layoff announcements have reached 1,099,500 in the first 10 months of 2025, highlighting challenges in the job market [3]. - The stock market has shown strong performance, with the S&P 500 climbing 16% year-to-date and the Nasdaq surging 20% [3]. Shift in Investment Trends - Central banks added 1,045 tonnes of gold to global reserves in 2024, marking the third consecutive year of significant net purchases, indicating a trend towards de-dollarization [5]. - Schiff emphasizes the importance of "strategic assets" as hedges against inflation and a weakening dollar, suggesting that gold is a key asset for wealth preservation [8][10]. Gold as an Investment - Gold is viewed as a safe haven asset, with its value not tied to any specific currency or economy, making it attractive during economic turmoil [10]. - Predictions suggest that gold could rise significantly, with estimates of reaching $10,000 per ounce by JPMorgan CEO Jamie Dimon and potential increases to $26,000 or even $100,000 per ounce as per Schiff [11]. Real Estate and Alternative Investments - Real estate is highlighted as a traditional asset for wealth protection during inflation, with the S&P Case-Shiller U.S. National Home Price Index increasing by 45% over the past five years [15]. - Alternative investments, including art and crowdfunding platforms for real estate, are gaining attention as ways to diversify portfolios and hedge against inflation [20][21].

Group 1: AI and Technological Revolution - AI is viewed as a technological revolution, with current benefits possibly overestimated in the short term while long-term benefits may be underestimated [4][3] - The critical question remains whether AI can boost global productivity sufficiently to justify the significant investments made, which are in the trillions of US dollars [4][3] - Historical technological revolutions have shown that while they change society and boost productivity, the impact takes time to materialize [5] Group 2: US Economic Performance - The US economy maintained robust growth of 2.9% in 2023 and 2.8% in 2024, despite aggressive monetary tightening by major central banks [7][8] - Two main factors contributing to this strong performance are fiscal policy, which has led to a budget deficit approaching 7%, and a substantial surge in immigration supporting the economy's supply side [8][9] - Current political polarization makes further fiscal expansion difficult, leading to a normalization and significant weakening of the US economy, with a recession probability estimated at around 30% [9] Group 3: Global Capital Shifts - There is a noticeable shift in global capital towards Chinese and European assets, driven by high US market concentration and elevated valuations [22][23] - The Chinese stock market has seen a revaluation, particularly in the technology sector, as global investors begin to recognize its potential [24] - European stocks have historically traded at a discount compared to US stocks, but recent developments suggest a potential reevaluation of this trend [27][29] Group 4: Market Valuations and Risks - Current market valuations are concerning, with a few stocks accounting for a significant portion of the US market, leading to potential market concentration risks [17] - The possibility of simultaneous crises emerging in the future requires vigilance, as current market conditions may not be sustainable [18] - The long-term sustainability of US fiscal policy is in question, with debt levels surpassing 100% of GDP and a budget deficit of 6% to 7% of GDP [13][14] Group 5: Gold and Currency Trends - Gold prices have surged, contrasting with the weakening US dollar, driven by factors such as geopolitical risks and central bank policies [19][20] - A reasonable allocation to gold in investment portfolios is suggested to be around 10% to 15%, reflecting a trend of diversification away from US dollar dependence [21] - The ongoing "de-dollarization" trend indicates a long-term shift in global reserve currency dynamics, with increasing interest in alternative assets [11][19]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific assets Core Insights - Uncertainty around US tariffs has intensified, with a recent court ruling against Trump's tariffs, suggesting potential risks of lower tariffs on China, but alternative authorities for tariff imposition remain [4][3] - Investor sentiment towards China remains negative despite a recent trade truce, with global investors showing interest primarily in sectors with clear earnings growth potential [9][12] - The People's Bank of China (PBoC) is promoting RMB internationalization as a strategy for de-dollarization, aiming to increase the RMB's share in goods trade to 40% [23][17] Summary by Sections Current Trade Recommendations - Long positions in 3-year CGB (FX-hedged) initiated on March 7, 2025, with a current yield of 1.49% and a profit of +4 basis points [2] Tariff and FX Market Dynamics - The FX market is experiencing a managed fix, with the CNY remaining stable against the dollar, tracking a narrow range of 7.18-19 [4][7] - The CNY has outperformed regional peers despite the broader dollar trend, indicating a degree of resilience in the currency [5][4] Investor Sentiment and Market Activity - Despite a normalization in export activities and a rebound in shipping prices post-trade truce, financial markets in China remain downbeat, with limited interest from local investors to repatriate dollars [9][17] - Local Chinese investors are hesitant to repatriate dollars due to weak economic fundamentals and low interest rates, with a notable shift from net buyers to net sellers of USD [17][25] RMB Internationalization Efforts - The share of CNY-denominated flows in goods trade has increased from 11% in 2018 to over 25% in 2024, driven by PBoC's policy push [23][27] - Commodity-related yuan settlement has risen significantly, indicating a growing trend towards using RMB in international trade [28][23]