Breakfast | U.S. economic data beats expectations, U.S. stocks rebound; Milan expects continued interest rate cuts and warns that tariff decisions may weigh on the economy

Market Overview

U.S. economic data exceeded expectations, with some tech stocks supporting the U.S. stock market rebound, as all three major U.S. stock indices rose for the first time this week. Ahead of the shareholder meeting, Tesla rose 4%, Google increased by over 2%, reaching a new high; the chip index rebounded by 3%, with AMD up 2.5%, Broadcom up 2%, and Micron up nearly 9%, while NVIDIA fell nearly 2%. Qualcomm reported excellent earnings but saw a drop of over 4% in after-hours trading.

After the U.S. ADP employment report, U.S. Treasury prices fell, and yields rose. Following the release of ISM data, the increase expanded, reaching a one-month high. After the U.S. ISM data, the dollar index hit a five-month high but then turned lower; the offshore yuan approached 7.14 during the day, hitting a three-week low, before rebounding nearly 100 points.

Cryptocurrency, which had been under pressure for several days, rebounded: Bitcoin rose back above $104,000 during the day, rebounding over 5% from Tuesday's low, while Ethereum rebounded over 10% from Tuesday's low.

Spot gold rebounded over 1%, and futures gold escaped a near one-month low. London copper halted a four-day decline, temporarily leaving a near two-week low. The U.S. EIA crude oil inventory unexpectedly increased last week, leading crude oil to turn lower during the day, closing at a two-week low, with U.S. oil falling below $60, down nearly 2% at one point.

During the Asian session, the Chinese stock market staged a major reversal, with the ChiNext index closing up over 1%, a surge in electric grid equipment stocks, while semiconductors remained weak, and the decline in Hong Kong stocks significantly narrowed.

Key News

Wang Jiang, Deputy Director of the Central Financial Office: Accelerate the construction of a financial powerhouse to provide strong support for Chinese-style modernization.

The moment to decide the fate of Trump's tariffs has arrived, as the U.S. Supreme Court holds public hearings, with judges questioning the legality of the tariffs.

The U.S. government has been shut down for 36 days, setting a record for the longest shutdown in history. Trump: The government shutdown has impacted the stock market, but it is still expected to reach new highs, calling for an end to the "lengthy debate" rules to quickly restart the government.

The market's "U.S. midterm election barometer": The first major election during Trump's term, with a "decisive victory" for the Democrats.

Employment stabilization signals: The U.S. "small non-farm" ADP added 42,000 jobs in October, exceeding expectations, with wage growth continuing to stagnate; the U.S. October ISM services PMI rebounded above expectations, reaching an eight-month high, with the price payment index at a three-year high.

The Eurozone's October composite PMI rose to a 29-month high, with Germany's strong recovery becoming the growth engine, while France remains mired in contraction.

The U.S. Treasury will keep its quarterly refinancing scale unchanged but indicates a possible increase in bond issuance in the future.

Federal Reserve Governor Milan: The ADP employment report is unexpectedly encouraging, expecting to continue cutting interest rates, and warning that tariff decisions may drag down the economy.

Is falling below $100,000 just the beginning? Bitcoin "whales" have sold off $45 billion in a month, and the selling spree may continue until next spring.

SK Hynix is gaining the upper hand in negotiations with NVIDIA, with HBM4 prices rising over 50%, securing record performance for next year in advance

Wegovy sales fell short of expectations, Novo Nordisk's Q3 revenue grew by 5%, lowering its full-year performance guidance for the fourth time.

Qualcomm's last quarter revenue exceeded expectations by 10%, and this quarter's guidance is above expectations, but it still dropped over 4% in after-hours trading.

Market Closing

U.S. and European stock markets: The S&P 500 rose 0.37%, closing at 6796.29 points. The Dow Jones increased by 0.48%, closing at 47311.00 points. The Nasdaq rose 0.65%, closing at 23499.797 points. The European STOXX 600 index increased by 0.23%, closing at 571.90 points.

A-shares: The Shanghai Composite Index rose 0.23%, closing at 3969.25 points; the Shenzhen Component Index rose 0.37%, closing at 13223.56 points; the ChiNext Index rose 1.03%, closing at 3166.23 points.

Bond market: By the end of the bond market, the yield on the U.S. ten-year benchmark Treasury bond was about 4.16%, up about 7 basis points during the day; the two-year Treasury yield was about 3.63%, up about 5 basis points during the day.

Commodities: WTI December crude oil futures fell by 1.59%, closing at $59.60 per barrel; Brent January crude oil futures fell by 1.43%, closing at $63.52 per barrel. COMEX December gold futures rose by 0.82%, closing at $3993.9 per ounce. LME copper futures rose by about 0.3%, closing at $10,698 per ton. LME zinc futures fell by about 1.5%, closing at $3,043 per ton.

News Details

Global Highlights

Wang Jiang, Deputy Director of the Central Financial Office: Accelerate the construction of a financial powerhouse, providing strong support for Chinese-style modernization. To accelerate high-level technological self-reliance, it is necessary to speed up the construction of a technology finance system, providing full lifecycle and full-chain financial services for technological innovation. To solidly promote common prosperity for all people, more solid and effective financial support measures must be introduced in optimizing regional economic layout, promoting coordinated regional development, consolidating and expanding the achievements of poverty alleviation, and advancing comprehensive rural revitalization.

U.S. officials revealed to obstruct discussions with China regarding Nvidia chips. According to Global Times, the Trump administration decided not to discuss Nvidia's request to sell the next generation of AI chips to China during the U.S.-China summit, amid near-unanimous opposition from senior U.S. advisors. This move marks the U.S. side's firm stance on advanced chip exports, despite Trump publicly emphasizing the importance of cooperation with China. The Chinese side urges the U.S. not to touch on four sensitive issues to ensure the friendly atmosphere from last week's U.S.-China summit can continueThe moment to decide the fate of Trump's tariffs has arrived, the U.S. Supreme Court holds a public hearing, judges question the legality of tariffs. At least a majority of the justices expressed reservations about the government's reliance on declaring a state of emergency to impose unlimited global tariffs. Chief Justice Roberts emphasized that the power to tax is a "core power" of Congress, rejecting the government's argument that tariffs are not taxes. Justice Barrett, appointed by Trump, asked the defendant's lawyer from the Trump administration where or when the emergency power law IEEPA cited by the government authorized the imposition of tariffs and questioned why there were universal retaliatory tariffs. Another Trump-appointed Justice Gorsuch questioned whether Congress could authorize the president to impose tariffs. The plaintiff's lawyer argued that tariffs are indeed taxes and that IEEPA does not allow for the dismantling of the global tariff framework.

The U.S. government has been shut down for 36 days, setting a record for the longest shutdown in history. Trump: The government shutdown has impacted the stock market, but it is still expected to reach new highs, calling for an end to the "lengthy debate" rules to quickly restart the government. Trump stated that the government "shutdown" is negatively affecting the stock market, the airline industry, and the Supplemental Nutrition Assistance Program (SNAP) food benefits, but he still expects the U.S. stock market to reach new highs.

• The key catalyst to end the U.S. government shutdown: The political consequences of SNAP disruption are severe, and both parties may be forced to compromise! The duration of the U.S. government shutdown has set a record, and payments for the Supplemental Nutrition Assistance Program (SNAP) have been interrupted, affecting about 12% of the U.S. population and directly impacting a large voter base. Bank of America warns that the resulting significant political costs may prompt both parties to accelerate negotiations to avoid further deterioration. Healthcare subsidies and Thanksgiving travel have also become strong catalysts, and the shutdown deadlock is about to see a breakthrough.

The "American Midterm Election Barometer": Trump's first major election during his term, a "decisive victory" for the Democrats. In local elections in the U.S., the Democrats achieved significant victories, with Spanberger becoming the first female governor of Virginia and taking power from the Republicans, while Democrat Mikie Sherrill also secured the governorship of New Jersey. The 34-year-old Mamdani was elected as New York City's first Muslim mayor, raising concerns on Wall Street due to his leftist policies. Against the backdrop of the sixth week of the government shutdown, economic pressure and the cost of living have become the most concerning issues for voters. The election results reflect public attitudes toward the government shutdown and judgments of responsibility, and may indicate voter tendencies ahead of next year's midterm elections, which will determine which party controls Congress.

• California passes a key proposition, Democrats may regain five congressional seats, significantly increasing midterm election chances! According to U.S. media reports, California voters approved Proposition 50 with a 65% support rate, allowing state legislators to redraw congressional district maps, potentially flipping up to five Republican seats for the DemocratsThis move directly responds to the Texas Republican redistricting actions, successfully offsetting their impact and significantly increasing the likelihood of the Democratic Party regaining control of the House of Representatives in the 2026 midterm elections.

Employment Stabilization Signal: The U.S. "Little Non-Farm" October ADP Added 42,000 Jobs Exceeding Expectations, Wage Growth Continues to Stall. The U.S. job market shows signs of stabilization after two months of consecutive decline, with the October ADP employment number increasing by 42,000, significantly exceeding the expected 30,000, and reversing the previous month's revised decrease of 32,000 (this revision is 29,000).

U.S. October ISM Services PMI Exceeds Expectations, Hits Eight-Month High, Price Payment Index at Three-Year High. The U.S. October ISM Services PMI index is at 52.4, expected 50.8, previous value 50. The new orders index surged, reaching a one-year high. While demand rebounds, inflationary pressures are also more pronounced. The input price index rose to 70, the highest level in three years. Employment conditions are stabilizing, although the relevant index is still contracting.

Eurozone October Composite PMI Rises to 29-Month High, Germany's Strong Recovery Becomes Growth Engine, France Deep in Contraction. The Eurozone October Composite PMI rose to 52.5, the highest since May 2023. Germany's services sector is experiencing a strong recovery, with significant growth in new orders and employment, becoming the growth engine of the region. The French economy has contracted for 14 consecutive months, with ongoing political uncertainty dragging down the economy. Input cost inflation has slowed to a three-month low, but output price increases have reached a seven-month high. Analysts believe that moderate growth and controllable inflation provide policy flexibility for the European Central Bank.

U.S. Treasury's Quarterly Refinancing Scale Remains Unchanged, but Hints at Future Possible Increase in Debt Issuance, 10-Year U.S. Treasury Yield Jumps. The U.S. Treasury announced the refinancing scale for the quarter from November to January, setting the debt issuance scale at $125 billion, unchanged from the previous quarter announced in July, in line with Wall Street bond traders' expectations. The Treasury stated that it would maintain the medium- and long-term U.S. Treasury auction scale unchanged for at least the next few quarters, but for the first time included wording indicating that it has "preliminarily considered increasing the issuance scale of fixed-rate and floating-rate U.S. Treasuries" in the future, which the market sees as paving the way for an increase.

Federal Reserve Governor Milan: ADP Employment is Encouragingly Unexpected, Expects Continued Rate Cuts, Warns Tariff Decisions May Weigh on the Economy. Federal Reserve Governor Milan, appointed by Trump, stated that he believes it is still a "reasonable action" for the Federal Reserve to continue cutting interest rates, including a potential rate cut at the last meeting of this year in DecemberMilan's stance on interest rate cuts makes him stand out compared to several other Federal Reserve officials. Milan described the latest ADP data as "a comforting surprise," but pointed out that considering the overall employment situation, he believes the trend before the U.S. government shutdown is still continuing. He warned that if the U.S. Supreme Court rules that the tariffs imposed by the Trump administration under economic emergency powers are illegal, it could increase uncertainty and drag down the economy.

Is breaking below $100,000 just the beginning? Bitcoin "whales" dumped $45 billion in a month, and the selling spree may continue until next spring. Bitcoin has fallen below $100,000, but the core of this decline is not due to leveraged liquidations. Data shows that in the past month, long-term holders sold about 400,000 bitcoins, worth $45 billion, with only $2 billion in liquidations. Analysts point out that "whale" holders have stopped buying, and institutional demand has faded. This selling spree may continue until next spring, with Bitcoin potentially falling further to $85,000.

SK Hynix has the upper hand in negotiations with Nvidia, HBM4 prices rise over 50%, locking in record performance for next year! Analysts expect that based on the high profit margins of HBM4 and soaring prices of general-purpose DRAM, SK Hynix's operating profit may exceed 70 trillion won next year. The overall performance of the HBM business is expected to grow by 40% to 50% compared to this year (with sales of about 30 trillion won and operating profit of 17 trillion won).

Wegovy sales fall short of expectations, Novo Nordisk's Q3 revenue grows by 5%, fourth downward revision of full-year performance guidance. Over the past year, as market competition has intensified, the company's sales growth has significantly slowed, contrasting sharply with the rapid growth previously achieved through Wegovy. In the face of growth pressure, Novo Nordisk has adjusted its full-year performance guidance. The company has lowered its full-year profit expectations and also reduced the upper limit of its full-year sales expectations: based on fixed exchange rates, the full-year sales growth expectation has narrowed to 8% to 11%, down from the previous expectation of 8% to 14%; the operating profit growth expectation has narrowed to 4% to 7%, down from the previous expectation of 4% to 10%.

Qualcomm's fourth-quarter performance exceeded expectations, with a 10% year-on-year revenue growth, and the first-quarter revenue guidance is above expectations. After the earnings report was released, Qualcomm's stock turned to decline in after-hours trading, dropping over 4% at one point.

Hong Hao: Now is not the time to buy gold, the bubble has not yet been fully digested, Bitcoin should wait until the end of Q3 next year. The surge in gold prices is like driving too fast, making it easy to have an accident.

Domestic MacroChina's October RatingDog Services PMI Slightly Decreases to 52.6, Total New Orders Maintain Expansion. China's service industry continues to maintain expansion at the beginning of the last quarter of this year. RatingDog founder Yao Yu commented that despite complex trade conditions suppressing export business, the solid improvement in domestic demand continues to drive the expansion of new orders.

Report: Industrial and Commercial Bank of China to Open Vault at Hong Kong Airport to Help Build Global Gold Trading Center. It is reported that the Industrial and Commercial Bank of China plans to establish a precious metals vault at Hong Kong Airport and expand its gold trading team to assist Hong Kong in building a global gold trading and clearing center. This move aligns with Hong Kong's strategy to increase gold storage to 2,000 tons and establish a central clearing system, further strengthening the influence of the Shanghai Gold Exchange.

Domestic Companies

AI Server Shipment Surge Drives Hon Hai's October Sales to Record Monthly High Since Company Establishment. Hon Hai's latest announcement shows that October revenue reached NT$895.7 billion, surpassing September's NT$837 billion and significantly higher than NT$804.8 billion in the same period last year. The AI server business has become the core growth engine, with strong demand for AI cabinet shipments leading all categories. Traditional PC and iPhone assembly businesses performed flat. The fourth quarter is expected to see "quarterly growth," benefiting from the surge in AI cabinet shipments and the peak season for ICT products.

China's Version of Tesla! In 2026, XPeng Motors to Collaborate with Amap to Launch Robotaxi and Mass Produce Humanoid Robots. XPeng Motors, in partnership with Amap, announced that three self-developed Robotaxi models will officially begin trial operations in 2026, integrating the Amap ride-hailing platform and opening up ecological layouts to enter overseas markets. XPeng also unveiled the humanoid robot IRON and announced a goal to achieve mass production of advanced humanoid robots by the end of 2026.

BYD's October Sales in the UK Surge: New Car Registrations Nearly Seven Times That of Tesla, Making the UK Its Largest Overseas Market. Last year, Tesla's sales in the UK were nearly six times that of BYD, but in just one year, the market positions of the two companies have fundamentally reversed. So far this year, BYD's sales in the UK have reached 39,103 units, an increase of over five times compared to the same period last year, while Tesla's sales have declined by 4.5% to 35,455 units.

Driven by Increased Trading Volume and IPO Surge, Hong Kong Stock Exchange's Third Quarter Profit Soars 56%. The latest financial report shows that the Hong Kong Stock Exchange's core trading and settlement fee income grew by 54% to HKD 7.5 billion in the third quarter, with stock trading volume doubling and the trading volume of the Shanghai-Shenzhen-Hong Kong Stock Connect increasing more than twofoldIn the first nine months, IPO fundraising reached HKD 188.3 billion, far exceeding the same period last year. The Hang Seng Index surged 29% in the third quarter, driving stock and derivative trading to set historical records, bringing substantial profits to the exchange.

Overseas Macro

The U.S. plans a critical minerals trading club. According to Global Times, the U.S. is collaborating with Japan, South Korea, Australia, and other countries to establish a "critical minerals trading club," aiming to restructure supply chains, reduce dependence on China, and compete for dominance in AI and green industries. Chinese experts believe that the U.S. will find it difficult to establish complete refining capacity in the short term, and the club is unlikely to have substantial effects within five years, but it may pressure resource countries to "pick sides."

At a sensitive moment, U.S. stock market alarms ring out! A famous valuation metric has "broken the red line for the second time in history," the last time being in 1999. The famous valuation metric—the cyclically adjusted price-to-earnings ratio (Shiller P/E)—has recently surpassed 40, marking the second time in history it has reached this high, the last occurrence being during the 1999 internet bubble. Predictions based on this valuation model indicate that the real returns of large U.S. growth stocks over the next decade may be negative.

Beware of bubbles, Deutsche Bank considers shorting AI stocks for risk hedging. Deutsche Bank is exploring ways to hedge its multi-billion dollar risk exposure in the data center industry, considering options such as shorting a basket of AI-related stocks and using derivatives for synthetic risk transfer (SRT). Current global concerns about an AI bubble are intensifying, with the Monetary Authority of Singapore and the Korea Exchange recently issuing warnings, while well-known "big short" Michael Burry has heavily shorted Nvidia and Palantir.

How big is the U.S. stock market bubble? UBS provides seven observation indicators. The current high valuations in the U.S. stock market have raised concerns about a potential bubble, with a UBS report indicating that the market exhibits seven indicators of bubble formation: "buying the dip" mentality, the "this time is different" narrative driven by AI technology, generational memory gaps, overall profit growth under pressure, high market concentration, active participation from retail investors, and a loose monetary environment. However, the report believes the market is still in the early stages of a potential bubble and has not yet reached a dangerous peak, as valuations have not reached extreme levels, the proportion of tech investment to GDP is manageable, and there are no extreme merger and acquisition signals similar to those seen during the millennium bubble.

Following South Korea, Singapore issues AI bubble warning: Tech stock valuations are too high, and market correction risks are increasing! The Monetary Authority of Singapore pointed out that the rise of AI-related stocks is primarily driven by valuation expansion rather than profit growth, and if market optimism about AI profitability wanes, it could trigger a significant market correctionJust before MAS issued a warning, a round of sell-off in global semiconductor stocks occurred due to the performance outlooks of companies like Palantir and AMD not meeting market expectations, resulting in a market value evaporation of approximately $500 billion.

Norway suspends "ethical investment rules" to avoid the world's largest sovereign fund selling U.S. tech stocks. The center-left Norwegian government urgently pushed a bill through parliament on Tuesday to suspend the work of the independent ethical committee to avoid being forced to sell shares in U.S. tech giants like Amazon, Microsoft, and Alphabet. The shares of the seven U.S. giants held by the fund account for more than 15% of its stock investment portfolio.

Overseas Companies

Tesla's board to shareholders: Pay Musk or face the consequences. Tesla's board is asking shareholders to approve a compensation plan for Musk of up to $878 billion, warning that refusal could lead to his departure and a collapse in stock prices. The board believes only Musk can achieve the goals of autonomous driving and robotics, and if successful, the company's market value could reach $8.5 trillion. However, major shareholders like the California Public Employees' Retirement System and the Norwegian sovereign fund oppose it, arguing that the compensation is excessive and exacerbates "key person risk." Experts criticize this as being coerced by a "superstar CEO," violating corporate governance principles.

Apple plans to spend $1 billion on Google AI services, with a 12 trillion parameter model to significantly upgrade Siri. Reports indicate that the new version of Siri is expected to launch in the spring of next year, with Google's Gemini model responsible for handling Siri's core functions such as information integration and task execution. However, Apple emphasizes that this is only a transitional solution and is still developing its own 10 trillion parameter model. Following the announcement, the stock prices of both companies briefly surged to intraday highs on Wednesday.

AI training sparks a cooling revolution? Goldman Sachs: Liquid cooling will fully surpass air cooling next year, with a compound annual growth rate exceeding 100%! Goldman Sachs' latest research report points out that the global server cooling market is entering a structural growth opportunity, predicting that the total scale will reach $17.6 billion by 2027. AI training servers are the core driving force, with an expected compound annual growth rate of up to 101%. The penetration rate of liquid cooling is expected to soar from 15% in 2024 to 80% in 2027, driven by the surge in demand for high-power AI servers and the increased value of liquid cooling solutions per unit.

Anthropic boasts, revenue to increase 180 times in four years, cash flow to turn positive three years ahead of OpenAI. Anthropic has significantly raised its revenue expectations: revenue is projected to reach $70 billion by 2028, an increase of about 13 times compared to this year and more than 182 times compared to last yearMore critically, Anthropic expects to achieve positive cash flow as early as 2027, three years ahead of OpenAI's 2030 target, which is mainly hindered by enormous development costs.

McDonald's Q3 net profit slightly declines, same-store sales exceed expectations, "value meals" drive recovery in the U.S. market. In the third quarter, McDonald's global same-store sales grew by 3.6%, slightly exceeding expectations, with the U.S. market seeing a 2.4% increase. The company lowered prices on certain meal combos in August and launched a "buy one get one free" promotion, covering products such as sausage biscuits and double cheeseburgers.

Today's News Preview

Japan's October services and composite PMI.

Federal Reserve Governor Waller, Federal Reserve Governor Barr, New York Fed President Williams, Philadelphia Fed President Harker, Cleveland Fed President Mester speak, St. Louis Fed President Bullard.

Bank of England announces interest rate decision.

Tesla Annual Shareholders Meeting.

Pony.ai and WeRide plan to list simultaneously on the Hong Kong Stock Exchange on November 6.

Airbnb announces financial results.

2025 World Internet Conference Wuzhen Summit