Recent Overview of Macroeconomic Market Hot Topics

The macroeconomic environment is showing positive trends

Recent macroeconomic data shows a favorable trend:

• Inflation cools down overall, CPI turns negative month-on-month, core CPI hits a new three-year low.
• The job market has slightly softened, but overall it remains relatively stable.
• Economic data fell short of expectations, the economic surprise index is at a low.
• Financial conditions remain accommodative, at the loosest level since the end of 2022.

These factors have created a favorable environment for the risk asset market. As inflation concerns ease, the market anticipates the Federal Reserve will take action to support economic expansion. Under the expectation of a soft landing, emerging markets and cryptocurrencies may benefit.

Q2 Earnings Season Under Pressure

The current market is focused on the Q2 earnings season, with optimistic expectations:

• S&P 500 earnings are expected to grow by 8.9% year-on-year, up from 5.9% in the previous quarter.
• But better than expected gains or worse than expected declines
• Increasing skepticism about the profitability of AI
• The sector may switch from large technology stocks to other industries.

Emerging fields such as humanoid robots may become new investment hotspots.

Boeing Company Admits Criminal Charges

Boeing agrees to plead guilty to the 737 Max incident and will face hefty fines and corrective measures. Although the penalties are not as severe as expected, it indicates that the relevant negative impacts have been fully accounted for, which may benefit the company's valuation recovery.

The market is optimistic about the Republican Party's election prospects

The derivatives market's expectation of Trump's victory probability has risen to 60%. The probability of a comprehensive Republican victory has also increased to 50%. Market focus is shifting from economic policy to political risk. Trump's ascension to power may bring changes in tariffs, taxes, and regulatory policies, affecting different industries in various ways.

China's Output Deflation Pressure

Overcapacity in China has led to a decline in export prices, which helps alleviate global inflationary pressures. This may provide more room for interest rate cuts by central banks in Europe and the United States, benefiting the stock market and the cryptocurrency market. However, there are structural issues in China's economic growth model that may hinder long-term growth potential.

Bitcoin underperformed

Since the beginning of this year, the risk-return ratio of Bitcoin has been significantly lower than that of U.S. stocks, which is relatively rare in history. This is mainly due to the unexpected sharp decline in recent times.

RWA Market Steadily Developing

BlackRock's BUIDL scale has surpassed 500 million USD, and MakerDAO plans to allocate 1 billion liquidity for US Treasury assets. Although the RWA market is not experiencing a speculative frenzy, the industry's progress is steady.