Hot news

• The China-US Economic Working Group held its third meeting

From February 5 to 6, the China-US Economic Working Group held its third meeting in Beijing. Treasury Secretary Lan Foan attended the meeting and had a brief exchange with the US. The Chinese side expressed concern over the imposition of tariffs by the US on China, restrictions on two-way investment, and the suppression of Chinese enterprises by sanctions. The two sides agreed to continue to maintain communication.

• Federal Reserve Meester: I still prefer to cut interest rates three times this year; there is no need to cut interest rates in a hurry

Cleveland Federal Reserve Bank Chairman Meester said he is in no hurry to start cutting interest rates. If the economy develops as expected, policymakers may gain confidence to cut interest rates “later this year,” but they are still inclined to cut interest rates three times in 2024.

• Another investment bank “punched in the face”, and Deutsche Bank retracted the judgment that “America will decline”

Deutsche Bank took a 180-degree turn in attitude and retracted the recession forecast two years ago. The bank said that the US economy performed well in 023, the inflation rate moved towards the Federal Reserve's target of 2%, and the labor market remained flexible. As financial conditions shift to easing, the downside risks facing economic growth are reduced.

• New York Federal Reserve: US credit card delinquency rate soared in 2023, highlighting “household financial pressure”

US household debt increased further in 2023, and the overall debt delinquency rate rose markedly. Among them, credit card debt arrears surged 59%, and credit card interest rates jumped from about 14.5% to 21.5%. The impact of high US interest rates on much consumer debt is quite obvious. The New York Federal Reserve Economic Research Adviser said that people are under increased financial pressure, especially among young and low-income families.

Resumption of US stock trading

• The three major indices fluctuated and closed higher, and the China Securities Index soared by nearly 6%

On Tuesday EST, the market was generally calm. The three major US stock indices closed up slightly. Investors examined mixed financial reports from large companies and looked for clues as to when the Federal Reserve would cut interest rates. By the close, the Dow was up 0.37%, the NASDAQ was up 0.07%, and the S&P 500 was up 0.23%.

Major technology stocks had mixed ups and downs. Tesla rose more than 2%, Google and Apple rose slightly, and Nvidia, Netflix, and Meta fell more than 1%.

Popular Chinese securities generally rose, and the Nasdaq China Golden Dragon Index rose 5.93%. NIO is up more than 12%, Xiaopeng is up more than 11%, and Ideal Auto is up more than 10%.

• Palantir surged 30% to achieve full year profit for the first time

American big data analysis company$Palantir (PLTR.US)$It soared 30%. In 2023, the company achieved revenue of US$2,225 million, an increase of 17% over the previous year; net profit for the whole year was US$210 million, which was not only better than market expectations, but also the first time that the company achieved annual profit.

• Multinational pharmaceutical giant Novartis takes another step, buying a German cancer drug company at a premium of over 60%

A multinational pharmaceutical giant headquartered in Switzerland$Novartis AG (NVS.US)$It was announced that it plans to spend 2.7 billion euros (about US$2.9 billion) to acquire German biopharmaceutical company MorphoSys AG to expand the company's pipeline in the field of oncology.

• More than just diabetes and weight loss! Eli Tilapotide is also expected to treat fatty liver disease

On Tuesday local time, US pharmaceutical giants$Eli Lilly and Co (LLY.US)$Earnings for the fourth quarter were announced, which exceeded expectations. In addition to the results, Eli Lilly also released some research progress on Tirzepatide (tirpotide) in the treatment of fatty liver disease. Eli Lilly mentioned in its earnings report that tirpotide showed positive results in a phase 2 trial for the treatment of a type called metabolic dysfunction-related steatohepatitis (MASH).

• New York Community Bank plummeted again, falling more than 22%, a new low since 1997

On Tuesday,$New York Community Bancorp (NYCB.US)$The stock price plummeted by 22.2%, a record low since 1997. It has revived Wall Street's concerns about the asset quality of regional and local banks and the crisis in commercial real estate in the US.

• Snap's adjusted earnings before interest and tax outlook for the first fiscal quarter fell short of expectations

$Snap Inc (SNAP.US)$Revenue for the fourth fiscal quarter was US$1.36 billion, analysts' expectations were US$1.38 billion; the number of daily active users was US$414 million; the estimated revenue for the first fiscal quarter was US$11.10 billion to US$1.14 billion, and analysts expected US$1.11 billion; the adjusted EBITDA loss for the first fiscal quarter was expected to be US$55 million to US$95 million, and analysts expected a loss of US$32.7 million. As of press release, the stock fell more than 30% after the market.

• China Securities Earnings Season Begins! Ali was the first to debut today

$Alibaba (BABA.US)$The financial report for the third quarter of fiscal year 2024 (that is, the usual quarterly report of 2023) will be announced in advance of the US stock market on February 7. This financial report was released half a month earlier than in previous years. Currently, the market generally predicts that Ali will achieve revenue of 261,724 billion yuan (RMB, same below), an increase of 5.64% over the same period last year; revenue per ADS is 14.78 yuan, a decrease of 17.5% over the previous year.

Top 20 US stock turnover

Hong Kong Market Outlook

• Beishui sells Hong Kong stock ETFs in a big way and increases positions in China Telecom and SMIC

On February 6 (Tuesday), Southbound Capital sold Hong Kong stocks at a net sale of HK$6.89 billion.

$CHINA TELECOM (00728.HK)$,$INNOVENT BIO (01801.HK)$,$SMIC (00981.HK)$Received net purchases of HK$131 million, HK$93.36 million and HK$64.14 million respectively;

$TRACKER FUND OF HONG KONG (02800.HK)$,$Hang Seng H-Share Index ETF (02828.HK)$,$CHINA MOBILE (00941.HK)$Net sales were HK$6.34 billion, HK$892 million and HK$132 million respectively.

Today's attention

Keywords: US trade balance, EIA short-term energy outlook, Cleveland Federal Reserve Chairman's speech, Alibaba/Disney earnings

On Wednesday, in terms of economic data, investors can pay attention to data such as the US trade balance and the US EIA crude oil inventory for the week.

The trade account is an indicator that measures the difference in price between imported and exported goods (exports minus imports). It is the largest part of a country's balance of payments. Export data can reflect the growth of the US economy. Import data indicates domestic demand. Foreigners must buy their own currency to pay for exports, which could have a big impact on the US dollar. If the indicator is higher than expected, the dollar should be considered strong/bullish, and if the indicator is lower than expected, the dollar should be considered weak/bearish.

Also, China's foreign exchange reserves for January will also be announced on the same day.

On January 7, statistics from the State Administration of Foreign Exchange showed that China's foreign exchange reserves in December were US$3127.69 billion, up US$10.2 billion from the end of November, or 0.33%. Gold reserves were 64.64 million ounces, an increase of 970,000 ounces over the previous month, for two consecutive months.

Guan Tao, the world's chief economist at BOC Securities, said that whether judging from traditional import payment capacity, short-term debt repayment capacity, or judging from the standard size of foreign exchange reserves issued by the International Monetary Fund, China's foreign exchange reserves are quite abundant.

In terms of financial reports,$Alibaba (BABA.US)$,$Uber Technologies (UBER.US)$,$Roblox (RBLX.US)$Results will be announced before the market;$Disney (DIS.US)$,$PayPal (PYPL.US)$The results market came later.

Alibaba Group founders Ma Yun and Cai Chongxin have both increased their Alibaba stock holdings significantly recently. As of January 23, Jack Ma's shareholding ratio has surpassed SoftBank to become Alibaba Group's largest shareholder. Many people in Ali and the Internet industry believe that Ma Yun and Cai Chongxin's actions have strengthened the confidence of Ali and the Internet industry, and everyone is very excited.

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—Charlie Munger

Editor/Corrine