Breakfast | The US bank earnings season kicks off with a bang! S&P performs a V-shaped reversal

Market Overview

Trade tensions suppress the rise of US stocks, with the three major US indices experiencing a decline during the session. The S&P and Nasdaq staged a thrilling rebound, while the Dow halted its two-day winning streak; The bank earnings season kicked off with a bang: Morgan Stanley and Bank of America, which reported excellent earnings, rose nearly 5% and over 4% respectively; the chip index rebounded by 3%, with AMD rising over 9%, while Nvidia initially rose nearly 3% before turning negative; after the US Army announced its nuclear energy development plan, nuclear energy stock NuScale surged nearly 17%; Rare earth mining stocks plummeted, with Critical Metals down 24%.

High-performing LVMH saw European stocks soar by 12%, supporting a 2% rebound in the French stock index, while ASML's European stocks rose over 3% due to positive earnings guidance.

Gold hit a new historical high for three consecutive days, breaking the $4,200 mark for the first time during the session, with a peak increase of nearly 2%; spot silver rebounded over 3%, and silver futures set a new closing high. Oil initially rose over 1% before turning negative, closing at a five-month low for two consecutive days. Copper prices rebounded but failed, initially rising over 1% before turning negative.

The yield on two-year US Treasury bonds fell to a one-month low before rising. The US dollar index fell for two consecutive days to a one-week low; the RMB central parity rate broke 7.10, with offshore RMB rising over 100 points to surpass 7.13 during the session; Bitcoin fell nearly 3% during the session, approaching the $110,000 mark, while Ethereum briefly dropped over 6%.

During the Asian session, A-shares and Hong Kong stocks rebounded, with the Shanghai Composite Index returning above 3,900 points. Technology stocks gained momentum in the afternoon, with the Hang Seng Tech Index rising over 2%, and tech stocks generally surged. Shanghai gold and silver rose over 2%, while government bonds fell.

Key News

China's new social financing in September was 3.53 trillion yuan, with new RMB loans of 1.29 trillion yuan, and the M2-M1 spread hit a new low for the year; China's September CPI year-on-year decline narrowed to 0.3%, with core CPI returning to 1% for the first time in 19 months, and PPI year-on-year decline narrowing to 2.3%.

Li Qiang presided over the 16th special study session of the State Council: Strengthening the empowerment of digital technologies such as artificial intelligence and systematically promoting the formulation and revision of standards.

A US court temporarily prohibits Trump from large-scale layoffs during the government shutdown, earlier the White House "butler" stated that layoffs during the shutdown could exceed 10,000.

Trump "appointed" Federal Reserve Governor Milan: Trade uncertainty makes interest rate cuts more urgent.

Federal Reserve Beige Book: Since the last report in early September, US economic activity has changed little, tariffs have pushed up prices, and consumers are feeling the impact.

Trump stated that Modi guaranteed India would stop buying Russian oil.

Morgan Stanley's Q3 performance exceeded expectations across the board, with stock trading revenue surging 35%, and loan loss provisions at 0; Bank of America's Q3 performance exceeded expectations, with a rebound in mergers and acquisitions helping investment banking revenue soar by 43%.

The AI arms race has increased demand, with ASML's Q3 order amounting to 5.4 billion euros, exceeding expectations, net sales of 7.52 billion euros, full-year sales guidance increased by 15%, and next year's sales are expected to be no less than this year

The domestic computing chip leader Haiguang Information's Q3 revenue and net profit attributable to shareholders both hit record highs.

The "AI infrastructure wave" has spread to Europe, with Microsoft signing a $14 billion "European AI cloud deal," leasing 116,000 NVIDIA GB300 GPUs.

Media reports reveal OpenAI's "next five-year plan": new revenue, new financing, and new hardware to support a trillion-dollar computing expenditure commitment; Anthropic launches the cost-effective small model Haiku 4.5, programming on par with Sonnet 4, with the company expecting revenue of $9 billion this year and striving to nearly double it next year.

To tackle the holiday season, Apple launches iPad Pro, Vision Pro, and MacBook Pro powered by the M5 chip.

The "run on the bank" continues for Wall Street credit funds: following Morgan Stanley, Singapore's GIC also requests redemptions.

Doubling "blood transfusions" to Argentina? The U.S. Treasury Secretary states that a new $20 billion tool is in the works, and the peso is supported for the second time in a week.

Market Report

U.S. and European Stock Markets: The S&P 500 rose 0.40%, closing at 6671.06 points. The Dow Jones fell 0.04%, closing at 46253.31 points. The Nasdaq rose 0.66%, closing at 22670.08 points. The European STOXX 600 index rose 0.57%, closing at 567.77 points.

A-shares: The Shanghai Composite Index rose 1.22%, closing at 3912.21 points, the Shenzhen Component Index rose 1.73%, closing at 13118.75 points, and the ChiNext Index rose 2.36%, closing at 3025.87 points.

Bond Market: By the end of the bond market, the yield on the U.S. ten-year benchmark Treasury bond was about 4.03%, unchanged from Tuesday; the two-year Treasury yield was about 3.50%, up about 2 basis points during the day.

Commodities: WTI November crude oil futures fell 0.73%, closing at $58.27 per barrel. Brent December crude oil futures fell 0.77%, closing at $61.91 per barrel. COMEX December gold futures rose 0.92%, closing at $4201.6 per ounce. COMEX December silver futures rose 1.49%, closing at $51.378 per ounce. COMEX December copper futures fell 0.17%, closing at $5.0145 per pound.

News Details

Global Highlights

U.S. Treasury Secretary sends signals of easing, both sides maintain communication, China reiterates "fight and talk" stance on the tariff war According to Global Network, Bessent stated that the situation of the United States imposing a 100% tariff on China may not necessarily occur, and both sides can avoid escalating the trade war through negotiations in the coming weeks. The Chinese Ministry of Commerce reiterated its consistent stance of "fighting to the end if necessary; the door is open for talks," pointing out that the working-level communication between both sides remains ongoing, but emphasized that the U.S. side needs to show sincerity in correcting its erroneous practices. Several U.S. media analyses pointed out that the recent contradictory statements from the U.S. side reveal internal policy differences, and the actual implementation may be "loud thunder but little rain," making it difficult to enforce extreme tariff measures.

China's new social financing in September was 3.53 trillion yuan, with new RMB loans of 1.29 trillion yuan. In September, China's new social financing was 3.53 trillion yuan, with new RMB loans of 1.29 trillion yuan and new RMB deposits of 2.21 trillion yuan. The M2-M1 scissors difference hit a new low for the year at 1.2 percentage points. Market analysts believe that the significant convergence of the M1 and M2 "scissors difference" this year reflects positive signals such as increased corporate production and operational activity and a recovery in personal investment and consumption demand.

China's CPI in September saw a year-on-year decline narrow to 0.3%, core CPI returned to 1% for the first time in 19 months, PPI year-on-year decline narrowed to 2.3%. The year-on-year decline in CPI in September was mainly due to base effects. In this month's CPI year-on-year change of -0.3%, the base effect accounted for about -0.8 percentage points. The prices of gold jewelry and platinum jewelry rose by 42.1% and 33.6%, respectively. The core CPI, excluding food and energy prices, rose by 1.0% year-on-year, marking the fifth consecutive month of increase. The PPI remained flat month-on-month for two consecutive months, with a narrowing year-on-year decline.

• Guangfa Macro believes that the CPI continues to show a slow improvement trend, with the core CPI excluding food and energy at 1.0% year-on-year, marking the fifth consecutive month of improvement and the first time it has surpassed 1% since March 2024. Although the PPI did not turn positive month-on-month in September, it has improved compared to the previous eight months of negative month-on-month growth, with one contributing factor being upstream mining, which was 1.2% month-on-month in September, showing significant improvement in coal mining prices over the past two months. "Anti-involution" remains very important for PPI recovery.

U.S. court temporarily prohibits Trump from large-scale layoffs during government shutdown. A federal judge in San Francisco issued a temporary restraining order requiring more than twenty federal agencies involved in the lawsuit to suspend issuing new layoff notices to union members and to stop executing already issued notices until the court further weighs whether to impose a longer-term injunction. Since last week, the Trump administration has issued layoff notices to over 4,000 federal employees

• Earlier on Wednesday, White House "butler", Office of Management and Budget (OMB) Director Russell Vought stated that during a federal government shutdown, the government could ultimately lay off more than 10,000 employees.

Trump "appointed" Federal Reserve Governor Milan: Trade uncertainty makes rate cuts more urgent. Federal Reserve Governor Stephen Milan stated that trade tensions have increased uncertainty in the economic growth outlook, making it more necessary for policymakers to cut rates as soon as possible, with two more rate cuts this year "sounding realistic."

Federal Reserve Beige Book: Little change in U.S. economic activity since the last report in early September, tariffs push up prices, consumers feel the impact. The Beige Book report also indicated a slight decline in overall consumer spending in the U.S.; employment levels remained generally stable, although most regions reported that more employers were reducing their workforce through layoffs or natural attrition. In the context of the U.S. government shutdown delaying the release of key economic data, anecdotal information from businesses and consumers like the Beige Book becomes particularly important.

Trump claims Modi assured India will stop buying Russian oil. Trump acknowledged that India cannot "immediately" stop purchasing, stating, "It will take a little time, but this process will end soon," and added that he expects India to resume buying oil from Russia after the end of the Russia-Ukraine conflict. Trump did not specify the exact timeline for India's reduction in purchases, nor did he disclose how the U.S. government would enforce or review this transition.

Morgan Stanley Q3 results exceeded expectations across the board, with equity trading revenue surging 35%, and loan loss reserves at 0. Morgan Stanley's net revenue for the third quarter was $18.22 billion, an 18% year-over-year increase, surpassing the estimated $16.64 billion; earnings per share for the third quarter were $2.80, with a return on equity of 18%, exceeding the estimated 13.4%. Among them, equity trading revenue surged 35% to $4.12 billion, exceeding the estimated $3.41 billion, far surpassing the expected 6.6% increase from analysts, and outperforming Goldman Sachs' similar business performance of $3.74 billion.

• Bank of America’s Q3 results exceeded expectations, with a rebound in mergers and acquisitions driving investment banking revenue to soar. Revenue and profit for the quarter grew by 10.8% and 23% year-over-year, respectively, with investment banking revenue increasing by 43%.

AI arms race boosts demand, ASML's Q3 order volume of 5.4 billion euros exceeded expectations, with net sales of 7.52 billion euros. ASML's order volume in the third quarter reached 5.4 billion euros, far exceeding the market expectation of 4.89 billion euros, demonstrating strong demand for high-end chip manufacturing equipment driven by AI infrastructure investment Looking ahead, ASML expects its full-year net sales in 2025 to grow by approximately 15% year-on-year, with a gross margin maintained at around 52%, and sales in 2026 will not be lower than those in 2025.

Domestic computing chip leader Haiguang Information reports record high Q3 revenue and net profit attributable to shareholders. Haiguang Information's Q3 revenue reached 4.026 billion yuan, setting a historical high, a year-on-year increase of 69.6%; the net profit attributable to shareholders was 760 million yuan, a year-on-year increase of 13.04%. The market expansion of high-end processor products is significant, with accelerated onboarding of key industry clients driving both revenue and profit growth.

"AI infrastructure wave" spreads to Europe, Microsoft signs $14 billion "European AI cloud mega deal", leasing 116,000 NVIDIA GB300 GPUs. UK startup Nscale has reached a massive agreement with Microsoft worth up to $14 billion to deploy over 116,000 NVIDIA GB300 chips in the US and Portugal, accelerating global AI infrastructure development. Despite market concerns about a bubble, Nscale has rapidly risen with its energy-efficient AI factories and experienced industry team, planning to go public in the second half of next year.

Media exposes OpenAI's "next five-year plan": new revenue, new financing, new hardware supporting trillion-dollar computing expenditure commitment? OpenAI is accelerating the expansion of its revenue sources, developing customized AI solutions for enterprise and government markets, and promoting the commercialization of new products such as Sora video generation services and AI agents. The company also plans to collaborate with former Apple designer Jony Ive to launch AI-driven personal assistant hardware, further expanding into the consumer market. The company aims to fulfill its commitment of over $1 trillion in expenditures through diversified revenue, innovative financing, and hardware layout.

Anthropic launches cost-effective small model Haiku 4.5, programming on par with Sonnet 4, with revenue expected to reach $9 billion this year, aiming to nearly double next year. The evaluation score of Claude Haiku 4.5 is lower than that of Anthropic's recently launched "world's strongest programming model" Sonnet 4.5, but comparable to its predecessor Sonnet 4, as well as OpenAI's GPT-5 and Google's Gemini 2.5. Haiku 4.5 costs only one-third of Sonnet 4 and is more than twice as fast. Anthropic claims that this month's annualized revenue is approaching $7 billion, with media reporting that its benchmark annualized revenue target for next year exceeds $20 billion, and in the best case, $26 billion To meet the holiday season, Apple launches iPad Pro, Vision Pro, and MacBook Pro powered by the M5 chip. Apple updated its product line on Wednesday, releasing the new iPad Pro, Vision Pro headset, and 14-inch MacBook Pro equipped with the M5 chip to welcome the year-end shopping season. The appearance of these three devices remains unchanged, but AI computing and graphics performance have been significantly upgraded.

The "run on funds" continues in Wall Street credit funds: Following Morgan Stanley, Singapore's GIC also requests redemptions. Jefferies is facing ongoing withdrawal pressure due to its fund's exposure to the bankrupt company First Brands. In recent weeks, Singapore's sovereign wealth fund GIC has been negotiating with Jefferies to redeem part of its funds. According to the redemption details disclosed by Jefferies, all redemption requests will take effect on December 31 and will be returned to investors in four quarterly payments, with the final payment expected in October 2026.

Double "blood transfusion" for Argentina? U.S. Treasury Secretary says a new $20 billion tool is in the works, supporting the peso for the second time in a week. Bessenet stated that a $20 billion private sector financing tool is being prepared to support Argentina's bond market. This tool has attracted interest from several banks and sovereign funds and will operate alongside the $20 billion currency swap agreement announced by the U.S. last week. Argentine government bond prices rose, and the peso, which had previously fallen more than 2%, managed to recover its losses during the session.

Domestic Macro

Li Qiang presides over the 16th special study session of the State Council: Strengthen the empowerment of digital technologies such as artificial intelligence, systematically promote the formulation and revision of standards. According to Xinhua News Agency, Li Qiang emphasized the need to optimize standard supply, closely align with the actual economic and social development, adhere to the principle of prioritizing urgent needs and orderly improvements, systematically sort out standard demands by industry, and strengthen the empowerment of digital technologies such as artificial intelligence, systematically promoting the formulation and revision of standards.

Qiushi Magazine: Further stabilize market expectations. An article by a commentator in Qiushi Magazine stated that expectation management is an important aspect of macroeconomic governance and a crucial tool for effective economic work. To consolidate and expand the positive momentum of economic recovery, it is essential to focus on both supply-demand balance regulation and expectation management and guidance, continuously improving the effectiveness of macro-control and boosting social development confidence. To further stabilize market expectations, timely responses to market concerns are necessary to enhance policy predictability. Additionally, leveraging the scientific formulation of the 14th Five-Year Plan as an opportunity to strengthen medium- and long-term expectation management is crucial. Continuous improvement of the institutional framework is also needed to create a long-term stable and predictable institutional environment To further stabilize market expectations, it is necessary to enhance economic publicity and public opinion guidance.

Domestic Companies

Photovoltaic stocks surge! A closed-door meeting in the photovoltaic industry emphasizing confidentiality unexpectedly triggered market fluctuations. Although the meeting prohibited electronic devices, small writings about "production limits and price limits" still circulated during trading, driving photovoltaic concept stocks to rise against the market trend. Industry insiders call for timely disclosure of minutes after the meeting to fill the information gap and eliminate the soil for rumors—after all, the real recovery of the industry ultimately relies on substantial increases in component prices and effective clearance of production capacity, rather than relying on the temporary stimulus of small writings.

Yu Donglai: The company has 4.1 billion yuan in funds, no loans, "Fat Donglai is an abnormal freak, and we need iron bars to enter"! The average after-tax salary of employees is nearly 10,000 yuan, and the turnover rate is only 0.94%. Fat Donglai's sales this year exceeded 18.4 billion yuan, surpassing last year's total. Yu Donglai stated that the sales planned for this year should be within 20 billion, and if sales rise too quickly, employees will have to work overtime. Data shows that the average net salary of employees after deducting social security and taxes is 9,886 yuan, and the monthly salary of store managers is 78,058 yuan, which has significantly increased compared to the same period last year. "The emphasis on 'people' is the key to our success."

Overseas Macro

Boosting market sentiment! Hedge fund giant Paul Tudor Jones: The Nasdaq will rise before the end of the year, and gold and silver are stronger "devaluation trades". Jones pointed out that the end of October to early November is a critical turning point. If the Nasdaq remains strong during that time, there is a chance for a strong rally at the end of the year. He further emphasized that the market trend starting on November 1 could either be the last "peak phase" of a bull market or a dangerous moment of accumulating top risks. Jones also noted that the currency devaluation trade has turned into gold and cryptocurrency trading, and only when the real debt moment arrives will gold and cryptocurrencies show their value.

"Look, the emperor has no clothes"! Hedge fund manager: Will the trillion-dollar AI investment pay off? Hedge fund manager Kuppy believes there is a huge gap in the return on investment for AI data center construction, which will require trillion-dollar-level investments over the next 3-5 years (the annual budget of the U.S. Department of Defense is only 1 trillion dollars); currently, companies like Meta/Microsoft are using equity/leasing data centers, effectively covering for PE/VC, creating "safe" assets, and the so-called "circular trading" revenue is false, aimed at luring Wall Street to invest more funds.

JP Morgan CEO Jamie Dimon admits: Holding gold "makes some sense," and gold prices could easily rise to $5,000 or $10,000 Jamie Dimon himself stated that he would not buy gold, citing a holding cost of 4%, but acknowledged that allocating some gold in the current environment is reasonable. It is worth mentioning that the 4% holding cost mentioned by Dimon mainly targets billionaires who need to store large amounts of gold bars; for ordinary investors, the holding cost of small amounts of gold is close to zero.

Gold: How Much to Allocate and When to Sell? The Guosen Securities strategy team led by Wang Kai believes that it is difficult to say that gold has peaked at the moment. The rise in gold is based on the re-evaluation of the dollar's credit and safe-haven demand. The opportunity for a third wave may be triggered when the overseas AI technology wave peaks and funds are redistributed, but there are no signs yet. It is recommended to focus on a certain allocation rather than timing, to avoid mistakes at turning points. A 2-10% allocation of gold for household families is more appropriate, which can enhance risk-adjusted returns and control drawdowns; institutional asset management products can increase to over 10%, with an optimal allocation of about 18%.

Overseas Companies

Jensen Huang recounts the "NVIDIA founding story": Insights from 1993, breakthroughs in 2012, and the future of AI. Jensen Huang stated that NVIDIA was founded in 1993 by foreseeing the end of Moore's Law and focusing on "accelerated computing." In 2012, it seized the breakthrough in deep learning through CUDA and cuDNN, strategically reshaping the computing stack. The DGX-1 and "full-stack collaborative design" allowed NVIDIA to break through the limitations of Moore's Law. In the future, AI will create two trillion-dollar markets: digital labor and physical AI, with computing shifting to 100% generative, supported by AI factories.

BlackRock, NVIDIA, xAI, and Microsoft form a consortium to spend $40 billion to acquire data center giant Aligned. Aligned currently operates or is developing about 50 campuses in the Americas, with a total operational and planned capacity of 5 gigawatts. The AIP plans to more than double the number of its central campuses in the coming years. This is one of the largest data center transactions in history, expected to be completed in the first half of 2026.

Meta to build a GW-level data center in Texas, USA, investing over $1.5 billion. The final installed capacity of this data center will reach 1GW, providing computing power support for high-end computing chips related to AI projects. A company spokesperson stated that the project is expected to be operational by 2028.

Zero revenue but a valuation of over $26 billion? The most serious AI bubble is actually in energy stocks! Driven by AI demand, the energy sector is accumulating a serious speculative bubble. A number of energy companies with no revenue at all have seen their total market value soar to over $45 billion, with the only support being investors betting that tech giants will pay for their yet-to-be-built power generation facilities Nuclear power stocks soar, U.S. Army announces "Janus" plan to power bases with micro nuclear reactors. The U.S. Army plans to deploy micro nuclear reactors with a power output of less than 20 megawatts to address multiple energy challenges faced by its bases. These micro reactors will be owned and operated by commercial companies, with support from the U.S. Army and the Department of Energy in terms of technology and critical uranium fuel supply.

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