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• The retail sales in the United States unexpectedly rose in August, indicating that the economic foundation is still firm.

Retail sales in the United States unexpectedly rose in August, suggesting that the US economy remained solid for most of the third quarter. Data showed that after being revised upward to 1.1% in July, retail sales in the United States increased by 0.1% month-on-month in August. Excluding autos, gasoline, building materials, and food services, retail sales, which were revised upward to 0.4% in July, increased by 0.3% last month. Core retail sales align closely with consumer spending in GDP. Consumer spending accelerated in the second quarter, putting it on a higher growth path before entering the 7-9 month quarter.

• "New Federal Reserve Communications Agency": The situation is complicated, and the extent of the Fed's first rate cut remains uncertain.

Nick Timiraos, a well-known financial journalist known as the 'New Federal Reserve Communications Agency,' wrote that the Fed is about to cut interest rates, but the extent of the first rate cut remains uncertain. The Fed usually tends to act with a 25 basis point cut, but this time, the situation has become complicated. Timiraos straightforwardly stated that the current benchmark interest rate of the Fed is 5.25%-5.5%, the highest level in 20 years. The Fed is expected to start cutting interest rates this Wednesday, with the aim of maintaining a stable job market in the face of cooling inflation pressures.

• Bond traders are betting on the Fed's "bold move" and a 50 basis point rate cut as a popular expectation.

As the debate over whether the Fed can achieve a soft landing intensifies, bond traders generally expect the Fed to launch an interest rate cut cycle this week, with the cut possibly reaching half a percentage point. Market data on Tuesday showed that the probability of a 50 basis point rate cut was about 55%. This expectation was formed after unexpected rise in retail sales data in August, which showed a recovery in US consumer spending, increasing uncertainty in the financial markets.

• What will happen next after the historical "50-basis point interest rate cut"?

Nomura Securities pointed out that three months after the Federal Reserve cut interest rates by 50 basis points, small cap stocks surged, value stocks outperformed growth stocks again, metal prices soared, and the yield curve steepened, indicating a bullish market trend. The Federal Reserve has previously raised interest rates by 75 basis points multiple times, so it is not surprising to start a rate-cutting cycle with a 50 basis point cut, and it may not necessarily trigger market panic.

• If the Federal Reserve reduces interest rates significantly in a conventional manner, the record-breaking bets may face huge risks of losses.

If U.S. Federal Reserve officials choose to start lowering interest rates in a standard way, the related record-breaking bets could lead to significant losses for traders. Data compiled by institutions shows that trading activity in October federal funds futures, which investors use to bet on Wednesday's decision, has surged to the highest level since the launch of comparable contracts in 1988. Most of these new bets are on the Fed cutting interest rates by 50 basis points. Subadra Rajappa, Head of U.S. Interest Rate Strategy at French Industrial Bank, said that this is putting immense selling pressure on the market in the event of a smaller rate cut by the Fed and Powell's gradual information delivery.

• Bank of America: Going long on the seven giants of the US stock market is still the most crowded trade.

A Bank of America survey shows that the long positions of the seven giants of the US stock market have been considered the most crowded trade for 18 consecutive months, with a total of 46% of respondents believing it is the most crowded trade, despite the fact that this is the smallest proportion since November last year.

• How to view the "historically pessimistic" oil price? Goldman Sachs: Short in the short term, long in the long term.

Goldman Sachs expects that Brent crude oil will recover to $77 per barrel in the fourth quarter of this year, as the market's overly pessimistic sentiment towards oil demand improves and the OECD inventory remains slightly below normal levels, providing some support for oil prices. However, over time, the market's pessimistic expectations for supply and demand balance are gradually increasing, putting further pressure on oil prices next year.

Gamestop's surge has dramatically narrowed, with the trading platform considering unplugging the internet of US retail investors.

• The countdown to the Federal Reserve's interest rate cut has begun, with the S&P and Dow hitting new intraday highs.

On Tuesday, the Dow and the S&P 500 index closed basically flat after hitting new record highs in early trading. Investors are preparing for the first interest rate cut by the Federal Reserve in four and a half years.$S&P 500 Index (.SPX.US)$The Dow and the S&P 500 index both hit new all-time highs in early trading, and closed almost unchanged. Investors are getting ready for the first interest rate cut by the Federal Reserve in four and a half years.

At the close, the Dow fell 15.90 points, or 0.04%, to 41,606.18 points; the Nasdaq rose 35.93 points, or 0.20%, to 17,628.06 points; and the S&P 500 rose 1.49 points, or 0.03%, to 5,634.58 points.

Large-cap tech stocks rose across the board, with Amazon and Netflix up more than 1%, while Apple, Microsoft, Tesla, Google, and Meta saw small gains and Nvidia fell more than 1%.

Popular China concept stocks rose across the board, with the Nasdaq Golden Dragon China Index up 1.83%. Li Auto rose more than 12%, Futu Holdings, iQiyi rose more than 4%, and Bilibili rose more than 3%.

• Apple's iPhone 16 series pre-order sales in the first weekend fell short of expectations, analysts say the long-term outlook remains optimistic.

Guo Mingxi, an analyst at TF International Securities, said, $Apple (AAPL.US)$ The pre-sale sales volume of the iPhone 16 series in the first weekend is estimated to be about 37 million units, a decrease of about 12.7% compared to the first weekend sales volume of the iPhone 15 series last year, and the key is that the iPhone 16 Pro series is below expectations. However, Seeking $ALPHA (0303.MY)$ Daniel Sereda, the head of Investing Group, believes that the short-term weakness in Apple's stock price may continue, but as Apple Intelligence is launched on a larger scale, the company may achieve stronger performance.

• Blackrock and Microsoft plan to establish a $30 billion fund to layout AI energy demand.

According to the Financial Times, informed sources said, $Blackrock (BLK.US)$ are preparing to launch a over $30 billion AI investment fund with tech giants $Microsoft (MSFT.US)$ to build datacenters and energy projects to meet the growing demand brought by AI. Blackrock will launch this fund jointly with its new infrastructure investment division, Global Infrastructure Partners, making it one of the largest investment tools in Wall Street history.

• JPMorgan and Apple are in deep negotiations and are expected to take over the Apple credit card project from Goldman Sachs.

Due to the negative performance of companies such as [unknown], there is a general expectation of an 11% decline during the earnings season. The average quarterly decline in earnings per share is about 5%. In addition, simulation chip inventory replenishment has not been as rapid as expected, and the risk in the automotive terminal market (which accounts for 14% of semiconductor demand) is also increasing. $Goldman Sachs (GS.US)$ Decided to exit the consumer finance business. $Apple (AAPL.US)$ Need to find a new bank to take over its credit card project with over 12 million users, which is a huge customer resource for any bank. $JPMorgan (JPM.US)$ Currently, Apple and JPMorgan are in negotiations, and JPMorgan hopes to take over the Apple credit card project at a favorable price due to the involvement of high-risk customers.

• Amazon CEO announced that the office will resume five days a week, and the management team will begin layoffs.

$Amazon (AMZN.US)$ CEO Andy Jassy announced that from now until January 2nd next year, Amazon is requiring employees to gradually return to the working status of 5 days a week before the pandemic. In addition, Andy Jassy also requires Amazon's organization to flatten and requires the ratio of IC to manager to reach at least 15%.

• Musk's brain-machine company: "Blindsight" obtains breakthrough medical device certification from FDA

$Tesla (TSLA.US)$ CEO Musk's brain-machine company Neuralink stated that it has obtained the breakthrough medical device certification from the U.S. Food and Drug Administration (FDA) for the "Blindsight" project. This project is used to help blind people restore their vision. Devices with breakthrough device certification can receive support from the FDA earlier, thereby accelerating their research and development and market approval process.

• ByteDance teams up with Taiwan Semiconductor to develop its own 5nm AI chip, which will be mass-produced by 2026.

According to The Information, insiders revealed that ByteDance is in the same $NVIDIA (NVDA.US)$ Important foundry partner for advanced chips. $Taiwan Semiconductor (TSM.US)$ Collaboration plans to co-produce two self-developed AI chips based on 5-nanometer (nm) process by 2026. Currently in the design stage, Byte's future plans may also change.

• Bilibili's stock rose more than 3% and was listed as one of the preferred leading internet platforms by institutions.

China Merchants Securities International's report states that the stock price of mainland leading internet platforms has shown resilience recently, benefiting from improved competitive environment and enhanced profit prospects. The bank rated it as one of the preferred companies in the industry, with a "buy" rating and a target price of $21. $Bilibili (BILI.US)$ China Merchants Securities lists it as one of the preferred companies in the industry, giving it a "buy" rating and a target price of $21.

Top 20 US stock transactions

BeiShui crazily bought China Mobile for nearly HKD 1.8 billion and sold Tencent for about HKD 200 million. On Monday (June 3rd), Southbound funds net purchased HKD 3.4 billion of Hong Kong stocks.

• The Hong Kong stock market will be closed for one day today.

The Hong Kong stock market will be closed on the day after the Mid-Autumn Festival, and will resume normal trading from September 19. Trading in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will be suspended from September 16 to 18, and normal trading will resume from September 19.

• The tourism sector fell against the trend as the enthusiasm for Mid-Autumn travel declined.

On the news front, data shows that consumer enthusiasm for travel during the Mid-Autumn Festival has declined. Big data from Qunar also shows that the average payment price for Mid-Autumn Festival air tickets has decreased by one-fourth compared to the summer, which is the same as the off-season in June. In terms of domestic travel, data from Ctrip's market insight platform FlightAI shows that average domestic air ticket prices have decreased by 20% compared to last year, and from the current booking situation, average domestic hotel prices have also significantly fallen compared to last year. Industry analysis suggests that this year's Mid-Autumn Festival falls between the summer vacation and the National Day holiday, and consumer travel demand may be concentrated during the National Day holiday.

The company's overall sales volume in 2023 was 18,000 kiloliters, with a year-on-year increase of 28.10%, indicating significant growth. In terms of product structure, the operating income of products worth 10-30 billion yuan were 401/1288/60 million yuan respectively.

Keywords: Huang Renxun discusses AI with Salesforce CEO, Hong Kong stock market holiday

On Wednesday, in terms of economic events, from 7:15 to 8:00 Beijing time on Wednesday, $NVIDIA (NVDA.US)$ CEO Huang Renxun and $Salesforce (CRM.US)$ CEO will discuss AI.

In terms of market conditions, Hong Kong stocks are closed.

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Editor/Emily