Morning News

# Market Overview

Source: Wallstreetcn

### Market Overview

Ahead of the release of the blockbuster jobs report, AI concerns reignited, pulling the S&P 500 and Nasdaq lower, while the Dow Jones Industrial Average hit a record high for the third consecutive day. New AI tools stoked worries about industry prospects, triggering a sharp sell-off in wealth management stocks, with Charles Schwab closing down over 7%. Among the "Magnificent Seven," Tesla was the sole gainer, rising nearly 2%, while Google led the declines with a drop of almost 2%. Memory chip stocks retreated sharply, with SanDisk plummeting more than 7%. Pan-European equity indices stepped back from record highs, led lower by a nearly 2% drop in the insurance sector; however, Kering surged 11% after reporting a less severe-than-expected decline in fourth-quarter sales.

U.S. retail sales data disappointed, fueling an accelerated rally in Treasury prices and a widening drop in yields. The 10-year U.S. Treasury yield hit its lowest level in nearly a month, while the U.S. Dollar Index extended its intraday losses to a fresh one-week low.

The Japanese yen rose more than 1% for a second straight trading session. The offshore Chinese yuan hit a nearly three-year high, breaking above 6.91 for the first time in almost three years during trading. Bitcoin fell below $68,000 intraday, down nearly 4% from its daily high.

Precious metals and crude oil halted their two-day winning streaks: Spot gold fell more than 1% intraday, dropping below $5,000; silver futures tumbled over 3% at one point. Both briefly turned higher in short-term trading following the release of U.S. retail sales data. Crude oil fell more than 1% at one stage.

During Asian trading hours, the Shanghai Composite Index fluctuated higher to notch a six-day winning streak, driven by a boom in AI applications, while space photovoltaic stocks underwent a collective correction. The Hang Seng Index rose 0.5%, with Zhipu AI surging nearly 15%.

### Key News

#### China

- The People's Bank of China (PBOC) released its Q4 Monetary Policy Implementation Report: It will continue to implement a moderately accommodative monetary policy and conduct regular treasury bond trading operations. Adjustments in household asset allocation do not signal significant changes in liquidity. With positive marginal changes in prices, the PBOC will continue to strengthen coordination between monetary and fiscal policies.

- Premier Li Qiang: Rational development of rare earth resources is required.

- ByteDance launched its new model, Seedream 5.0 Preview, positioning it as a competitor to Google's Nano Banana Pro.

- Alibaba unveiled RynnBrain, a large language model for robots, endowing them with a "thinking brain." It outperformed Google and NVIDIA in evaluations.

- Amid the ongoing AI spending boom, Taiwan Semiconductor Manufacturing Company (TSMC) reported a 36.8% year-on-year surge in January sales.

- Semiconductor Manufacturing International Corporation (SMIC) posted a Q4 net profit of 1.22 billion yuan, up 23.2% year-on-year. Its 2026 capital expenditure is expected to remain flat with 2025 levels.

- The surprise release of a gameplay trailer for *Black Myth: Zhong Kui* went viral, racking up over 2.2 million views and drawing 120,000 viewers within two hours of its launch.

#### Overseas

- U.S. retail sales unexpectedly stagnated month-on-month in December, indicating weak consumer spending at the end of the holiday season. The 10-year U.S. Treasury yield hit a nearly one-month low, and the U.S. Dollar Index fell to a fresh intraday low in over a week.

- Donald Trump is expected to hold a second round of talks with Iran next week, stating that "Iran will not have nuclear weapons or missiles." If negotiations fail, the U.S. may deploy an additional carrier strike group to the Middle East.

- AI panic spreads: Altruist's new tool triggers a sell-off in wealth management stocks, with Charles Schwab falling over 9% intraday.

- Alphabet's 100-year sterling bond was oversubscribed by more than 7 times. The company raised nearly $32 billion in debt across multiple markets, including its debut Swiss franc bond issuance.

- Elon Musk's xAI loses another key executive: Co-founder Wu Yuhuai announced his departure.

### Market Closing Levels

#### U.S. & European Equities

- S&P 500: -0.33% to 6,941.81

- Dow Jones Industrial Average: +0.10% to 50,188.14

- Nasdaq Composite: -0.59% to 23,102.47

- Euro Stoxx 600: -0.07% to 620.97

#### A-Shares

- Shanghai Composite Index: +0.13% to 4,128.37

- Shenzhen Component Index: +0.02% to 14,210.63

- ChiNext Index: -0.37% to 3,320.54

#### Bond Market

- At the close, the 10-year U.S. Treasury yield stood at approximately 4.14%, down about 6 basis points on the day.

- The 2-year U.S. Treasury yield was around 3.45%, down roughly 4 basis points intraday.

#### Commodities

- WTI Crude Oil (March): -0.62% to $63.96/barrel

- Brent Crude Oil (April): -0.35% to $68.80/barrel

- COMEX Gold (April): -0.95% to $5,031/ounce

- COMEX Silver (March): -2.25% to $80.384/ounce

- LME Copper: -0.5% to $13,108/tonne

- LME Aluminum: -1% to $3,093/tonne

- LME Nickel: +0.8% to $17,490/tonne (third consecutive daily gain)

# Detailed News

## Global Highlights

### China

- **PBOC Q4 Monetary Policy Implementation Report**: China will continue to implement a **moderately loose monetary policy** and conduct regular treasury bond trading operations. The report states that the People's Bank of China (PBOC) has rolled out a package of monetary and financial policies on top of existing measures, strengthening **counter-cyclical adjustments** to effectively support stable growth in the real economy and smooth operation of financial markets. Going forward, the PBOC will conduct regular treasury bond trading, monitor changes in long-term yields, and flexibly adjust the scale of operations.

- **PBOC Monetary Policy Report Column**: Adjustments in household asset allocation do not signal significant changes in liquidity. As China's financial markets deepen and direct financing expands, residents have more diverse options for allocating savings between bank deposits and asset management products. This primarily affects the structure of banks' liability sides but does not directly equate to comparable large-scale changes in liquidity across the financial system and real economy.

- **Latest PBOC Signals**: Positive marginal changes in prices are emerging; monetary and fiscal policy coordination will be strengthened. The column outlines three main modes of coordination:

 1. The PBOC maintains ample market liquidity via open market operations to support smooth government bond issuance.

 2. Joint efforts through **re-lending + fiscal interest subsidies** on both supply and demand sides of the credit market optimize financial resource allocation.

 3. Risk-sharing via guarantees and credit enhancement reduces risk costs for loans and bonds, boosting financial institutions' risk appetite and corporate financing support.

- **Premier Li Qiang**: Rational development of rare earth resources is required. According to Xinhua News Agency, Li stressed the need for overall planning, optimized industrial layout, improved recycling systems, and higher levels of conservation and intensive utilization. Ecological protection must be prioritized, with green standards across production and processing to promote full-cycle green development. He emphasized focusing on basic and applied research, advancing breakthroughs in core technologies, and building a rare earth innovation hub. Industry-university-research collaboration should be deepened to expand applications in new energy and materials, driving coordinated development across the industrial chain and improving quality and efficiency.

- **ByteDance Launches New Model**: Seedream 5.0 Preview, a rival to Google's Nano Banana Pro. The image model supports 2K/4K resolution and retrieval-augmented generation, with improved prompt understanding and detail rendering. It delivers more stable performance in abstract semantic processing and multi-step text-to-image generation. The iteration prioritizes practicality, enhancing web-connected knowledge, local editing, and intelligent reasoning—signaling a shift from visual spectacle to application depth. However, user sensitivity to minor updates is fading, and bottlenecks in complex logical composition and text rendering remain.

- **Alibaba Unveils RynnBrain**: A foundational robot AI model that gives robots a "thinking brain," outperforming Google and NVIDIA in evaluations. RynnBrain set new records in 16 **embodied AI** benchmarks, surpassing mainstream models from Google and NVIDIA. By integrating spatiotemporal memory and reasoning, it enables autonomous task planning and continuous multi-task execution in complex scenarios.

- **AI Spending Boom Continues**: TSMC's January sales surge 36.8% YoY. TSMC reported January revenue of TWD 401.26 billion, up 36.8% year-on-year and 19.8% month-on-month—exceeding its full-year 30% growth forecast—reflecting robust global AI spending.

- **SMIC Q4 Net Profit Rises 23.2% YoY; 2026 Capex to Match 2025**. SMIC posted Q4 2025 revenue of RMB 17.813 billion (+11.9% YoY) and net profit of RMB 1.223 billion (+23.2% YoY), with adjusted net profit surging 112.4% YoY. Full-year revenue reached RMB 67.323 billion (+16.5% YoY), with gross margin rising to 21.0%. The company expects Q1 2026 revenue to be flat sequentially, full-year growth to outpace the industry average, and 2026 capital expenditure to remain roughly unchanged from 2025's USD 8.1 billion.

- **Black Myth: Zhong Kui** Real-Time Footage Goes Viral: Game Science released a Lunar New Year gameplay clip that quickly topped Bilibili and Weibo trending lists. The video showcases detailed cooking mechanics and a grotesque fairy-tale world, highlighting physics engine and material rendering details. It garnered 2.2 million views in two hours and over 120,000 concurrent viewers. Producer Feng Ji stated the work blends surprise and weirdness, continuing the team's "must-do for every festival" marketing rhythm. The clip further stoked market anticipation.

### Overseas

- **U.S. December Retail Sales Stall Unexpectedly**: Weak holiday-season consumption weighed on markets. The 10-year U.S. Treasury yield hit a one-month low, and the Dollar Index fell to a fresh intraday low in over a week.

- **Trump to Hold Second Round of Iran Talks Next Week**: He stated "Iran will not have nuclear weapons or missiles." If negotiations fail, the U.S. may deploy an additional carrier strike group to the Middle East.

- **AI Panic Spreads**: Altruist's new tool triggers sell-off in wealth management stocks; Charles Schwab fell over 9% intraday.

- **Alphabet's 100-Year Sterling Bond Oversubscribed 7x**: The company raised nearly USD 32 billion across multiple markets, including its debut Swiss franc bond issuance. It marks the first ultra-long-term bond sale by a tech firm since the dot-com bubble, part of its multi-currency financing to fund AI capabilities—reflecting growing capital needs in the AI race. Strong demand signals market confidence in its financial strength despite long-term uncertainties.

- **Musk's xAI Loses Another Co-Founder**: Wu Yuhuai announced his departure. Previous exits include fellow co-founders Igor Babuschkin, Kyle Kosic, and Christian Szegedy. Greg Yang left last month to focus on battling Lyme disease.

- **Musk's Trillion-Dollar Bet: Space-Based AI Data Centers—Genius or Bubble?**: Wall Street and Silicon Valley buzzed as Musk seeks to merge SpaceX and xAI, vowing "space-based AI computing in 3 years." Deutsche Bank predicts space computing costs will match ground levels by 2030, but physicists and engineers remain skeptical—space is a "thermodynamic prison," not a cooling haven.

## Selected Views

- **Dalio's Latest Interview**: U.S. on brink of order collapse and civil war; gold is the only safe haven. Bridgewater's Ray Dalio warned the U.S. is in "Stage Five," teetering on collapse and civil conflict. Amid debt imbalances and political polarization, gold—"no one else's liability"—is the sole safe haven, warranting a 5–15% portfolio allocation. Dalio advised diversification and stable residency to hedge currency devaluation and upcoming volatility.

- **China's AI War: "Hundred Models" Battle Ends; Big Tech Captures Largest Profit Pool; How Zhipu and MiniMax Break Through?**: China's AI "hundred models" race is winding down, with only 10 serious players left. The stark conclusion: Tencent, Alibaba, and other distribution giants will capture the largest profits, not model developers. Independents like Zhipu retain 59% high margins via on-premise deployment, while MiniMax breaks through with 73% overseas revenue and multimodal products. As models become commoditized, monetization is king.

- **Spring Festival AI Hype Is Surface-Level; JPMorgan: Token Consumption to Surge 370x in 5 Years**: JPMorgan notes user migration to chatbots is driving long-term token growth, with China's token consumption projected to grow at a 330% CAGR. Investment focus should shift to "second-order winners": AI infrastructure providers and ad-related firms.

- **Anthropic's 2026 Trends Report: Largest Programming Revolution in History Is Unstoppable**: Programming is shifting from "writing code" to "commanding armies of agents." AI can autonomously execute long, complex system development, enabling non-technical users to build applications. This collapses development barriers, reshapes workflows, and elevates engineers to architects and agent orchestrators. Enterprises must master multi-agent coordination and embedded security for the "everyone can develop" era.

## Domestic Macro

- **Five Ministries, Including MIIT**: Boost integration and R&D for low-altitude equipment and communications. Advance 5G-A industrial development, upgrade ground base stations, accelerate maturity of integrated communication-sensing technologies, and lower equipment costs. Promote integration and R&D for low-altitude equipment and communications, validate 5G/5G RedCap modules for low-altitude aircraft. Explore integrated modules for low-altitude communication, navigation, and surveillance to accelerate technological and industrial maturity.

## Domestic Companies

- **European Commission Accepts Volkswagen's Price Commitment for Chinese EVs**: On February 10, the EC accepted Volkswagen's price undertaking for EV exports. Volkswagen (Anhui) may export the CUPRA Tavascan to the EU at or above the proposed minimum price, avoiding countervailing duties previously imposed on Chinese EV imports.

- **Ge Weidong and Fang Wenyan Invest RMB 1 Billion Each in JAC Motors Private Placement**: Prominent investor Ge Weidong and "super retail investor" Zhang Jianping's wife Fang Wenyan each invested RMB 1 billion, receiving 20.0481 million shares. The subscription price was ~24% above the floor, signaling strong institutional interest. Fang previously exited JAC's top 10 shareholders; her return suggests renewed optimism. Ge has built positions via associates, and this joint investment with top hot money underscores long-term confidence.

# Overseas Macro

- **Federal Reserve**: U.S. consumer debt delinquency rate surges to highest in nearly a decade.

A report from the New York Fed showed that the share of U.S. household debt that was delinquent rose to **4.8%** in the fourth quarter of last year, the highest since 2017, driven mainly by rising defaults among low‑income and young borrowers. The increase was led by higher mortgage delinquencies.

- End of “buy the dip”! Does Warsh’s nomination sharply raise the Fed’s bar for market rescue?

Citadel Securities believes that the nomination of Warsh means the Federal Reserve will **significantly raise the threshold for market intervention**. He advocates strict limits on central bank balance sheet expansion and treats liquidity support only as an exceptional tool in crises, directly weakening the “Fed put” that markets have long relied on. This could be an extremely dangerous signal for investors accustomed to buying the dip amid rising leverage and record U.S. Treasury supply.

- European Parliament approves digital euro with both online and offline functions.

The European Parliament voted to support a digital euro available in both online and offline forms, overturning a previous offline‑only proposal and aligning with the European Central Bank. The move aims to reduce reliance on payment firms such as Visa and safeguard EU monetary sovereignty. A pilot is planned for 2027 and a full launch in 2029. Parliament emphasized that dominance of payment digitization by non‑EU entities would create new sovereignty risks. The project still awaits final approval under the EU legal framework.

# Overseas Companies

- “Gas turbine giant” GE Vernova bottlenecks AI power supply; stock hits record high, up over 500% since early 2024.

AI data centers have triggered an explosion in power demand, leaving GE Vernova’s gas turbine capacity stretched and sparking a booking race. Customers must pay non‑refundable deposits for 2030 delivery, with “reserve first, negotiate later” highlighting strong seller power. The company’s share price has soared more than 500% since its spin‑off. Wall Street has doubled its 2030 profit forecast to $17 billion, as energy equipment giants enter a rare boom cycle.

- McKinsey’s $20 billion business changes hands, Neuberger Berman takes over MIO alternative investments.

The transaction marks a major expansion for Neuberger Berman and concludes McKinsey’s roughly year‑long strategic review of MIO. The deal excludes MIO’s $60 billion in passive index fund investments. MIO manages wealth for McKinsey partners and previously faced scrutiny over potential conflicts of interest with McKinsey’s consulting business. Neuberger Berman said it may open MIO’s core strategies to new clients in the future.

- Paramount refuses to give up, revises hostile bid, promises to cover Warner’s $2.8 billion breakup fee.

Paramount has improved its hostile takeover offer for Warner Bros., pledging to cover the $2.8 billion Netflix termination fee, provide $1.5 billion in debt refinancing guarantees, and introduce a quarterly “ticking fee” of 25 cents per share. The base $30‑per‑share offer remains unchanged. Analysts believe the bid is unlikely to sway the Warner Bros. board unless raised above $32 per share.

- Kering surges 14% in Europe; core brand Gucci sales beat expectations, with recovery eyed in 2026.

Kering, Gucci’s parent company, saw its Q4 sales decline narrow to 3%, beating market expectations and triggering a 14% stock jump — the largest in three years. Although the new CEO’s debut stabilized sentiment, Gucci’s 10 straight quarters of decline, halved profit margins, and worsening cash flow remain major headwinds. The turnaround remains challenging, with a meaningful recovery not expected until 2026.

- BodyArmor impairment drags Coca‑Cola Q4 GAAP operating profit down 32% YoY; full‑year guidance misses estimates.

Affected by a $960 million non‑cash impairment charge for BodyArmor, the sports drink brand it acquired, Coca‑Cola’s Q4 GAAP operating profit fell 32% year over year. The company expects 2026 full‑year organic sales growth of 4%–5%, with the lower end of the range below Wall Street’s average estimate of 5.01%. After years of growth driven by price hikes, investors are concerned the consumer giant’s growth engine is slowing as consumers become more price‑sensitive.

# Industries & Themes

### 1. Low‑Altitude Economy

Five ministries including the Ministry of Industry and Information Technology issued guidelines on strengthening information and communications capabilities to support low‑altitude infrastructure development.

The policy proposes supporting low‑altitude applications by integrating terrestrial mobile communications, satellite communications, and other navigation and surveillance technologies, based on existing public mobile communication facilities.

By 2027:

- Terrestrial mobile network coverage of national low‑altitude public routes ≥ 90%

- Mature integrated sensing solutions

- Improved navigation services

- At least 10 info‑related infrastructure standards developed

- A batch of typical low‑altitude scenarios in urban governance, logistics, culture and tourism

**Comment**:

The policy will provide a critical “neural network” for the low‑altitude economy by building space‑air‑ground integrated communications infrastructure. It will create incremental markets for communication equipment and module makers, and spawn new applications such as communication‑sensing integration. It will solve communication and monitoring challenges for low‑altitude aircraft, accelerating the shift from pilots to large‑scale applications. A new industrial chain will emerge covering communication suppliers, module makers, low‑altitude vehicle manufacturers, and service providers, deeply integrating communications and aviation.

### 2. HBM

Samsung Electronics will begin mass supplying HBM4 high‑bandwidth memory chips to NVIDIA in late February after the Lunar New Year holiday, according to Sina Finance.

This marks the world’s first large‑scale mass production and delivery of HBM4 chips. Samsung has completed all HBM4 certifications, with delivery schedules aligned with NVIDIA’s next‑gen AI accelerator development and launch cycle.

**Comment**:

A new wave of AI hardware upgrades is reshaping the memory supply chain. HBM represents a revolution in storage. 2026 is viewed as the first year of the “HBM supercycle”. Global HBM3E/HBM4 capacity is booked by NVIDIA, AMD, and cloud giants through Q1 2027, with a supply‑demand gap of 50%–60%.

The HBM market is projected to grow at 42% annually, from $4 billion in 2023 to $130 billion in 2033, when HBM will account for more than half of the entire DRAM market.

### 3. Medical Devices

China International Medical Equipment and Devices Trading (Centralized Procurement) Platform was launched in Tianjin, aiming to create a “global buy, global sell” marketplace for medical devices.

**Comment**:

The platform provides online product display, procurement and policy information, and market data analysis. It will lower cross‑border trade costs via innovative centralized procurement models, rules, and international cooperation, helping domestic medical devices go global.

On its launch day, domestic and foreign firms signed initial transactions and procurement intentions covering orthopedic surgical robots, dental implants, color Doppler ultrasound systems, and more.

# Today’s Key News Preview

- China January CPI, PPI

- SMIC Q4 2025 earnings conference call

- Lead Intelligent Holding Hong Kong IPO; trading expected on February 11

- OPEC monthly crude oil market report

- U.S. EIA crude oil inventories change

- U.S. January non‑farm payroll report

- U.S. January government budget

- Rare meeting by U.S. Joint Chiefs of Staff chairman; senior military officials from 34 countries to attend

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