Morning News

Source: Wall Street News

**Market Overview**  

The China-US London talks began, with chip stocks boosting the S&P 500 and Nasdaq to two consecutive gains. The chip stock index closed up nearly 2%, Qualcomm rose over 4%, and Nvidia briefly surged over 2%. Tesla gained over 4%, continuing to lead tech giants, while Apple's WWDC failed to announce major AI advancements, causing its stock price to decline over 1% against the market trend. Chinese concept stocks outperformed the broader market, with the China concept index rising over 2%, Baidu and XPeng Motors up over 3%, and JD.com up over 2%.  

The US Dollar Index fell; the offshore RMB once rose over 100 points, breaking through 7.18.  

US consumer inflation expectations comprehensively declined in May, leading to a rebound in US Treasury prices and a drop in yields. The 10-year US Treasury yield turned lower after hitting a one-week high.  

Crude oil rose for three consecutive sessions, with US oil up over 1% to a two-month high. Gold rebounded, with August gold futures closing higher after a 1% intraday drop. Silver rose over 2% during trading, continuing to hit a three-year high.  

During Asian trading hours, the Shanghai Composite Index closed up near 3,400 points, with pharmaceutical stocks surging. Hong Kong stocks moved toward a technical bull market, with Mixue up over 5% and China Rare Earth briefly surging 60%.  

**Key News**  

The first meeting of the China-US economic and trade consultation mechanism began in London, UK, on June 9 and continued on the 10th. *Global Times* reported that it implements the consensus from the heads of state's phone call, focusing on tariffs, technology, and rare earths. *Xinhua Commentary* stated that the new rare earth export control rules aim to "standardize exports," not a so-called "tactical countermeasure" on a whim.  

Allegedly, Trump may adjust export measures, causing the chip index to rise nearly 3% and the China concept index to gain over 2% during trading.  

To address urgent public needs, the General Offices of the Communist Party of China Central Committee and the State Council issued a document: reasonably raising the minimum wage standard and fully abolishing household registration restrictions for social insurance participation at the place of employment.  

China's May CPI fell 0.1% year-on-year, turning from a month-on-month increase to a decrease, while PPI's year-on-year decline expanded to 3.3%. China's exports in May increased 4.8% year-on-year in USD terms, with imports falling 3.4%. China's rare earth exports rose nearly 23% month-on-month in May, soybean imports surged 129% month-on-month to a record high, while coal and oil imports declined.  

Turmoil in Los Angeles escalated as California sued the Trump administration for deploying troops there. Trump supported arresting Governor Newsom, stating, "I don't want a civil war."  

At Apple's WWDC: AI-enhanced Siri still needs time; basic models were opened to developers; liquid glass interface design made its debut; OS naming was simplified by year, with multiple device OS 26 approaching; iOS received its first design update since 2013.  

Jen-Hsun Huang appeared at London Tech Week: The UK's AI environment is in a "Goldilocks" state but lacks computing infrastructure.  

Iran stated it would strike Israel's secret nuclear facilities if attacked by Israel.  

**Market Closing Reports**  

*European and American Stocks:* The Dow Jones closed nearly flat, the S&P 500 rose 0.09%, and the Nasdaq gained 0.31%. The European STOXX 600 Index fell 0.07%.  

*A-shares:* The Shanghai Composite Index rose 0.43%, the Shenzhen Component Index gained 0.65%, and the ChiNext Index rose 1.07%.  

*Bond Market:* By the end of trading, the yield on the 10-year US benchmark Treasury note was about 4.47%, and the 2-year yield was about 4.00%, both falling nearly 4 basis points intraday.  

*Commodities:* WTI July crude oil futures rose 1.1%. Brent August crude oil futures gained 0.86%. COMEX August gold futures rose 0.25%. COMEX July silver futures gained 1.82%. LME aluminum and tin closed up 1.1%, copper rose 1%, and zinc fell 0.6%.

**Detailed Key News**  

**Global Highlights**  

The first meeting of the China-US economic and trade consultation mechanism began in London, UK. According to Xinhua News Agency, on the local time of June 9, He Lifeng, a member of the Political Bureau of the Communist Party of China Central Committee and Vice Premier of the State Council, launched the first meeting of the China-US economic and trade consultation mechanism with the US side in London, UK.  

The talks continue! The first meeting of the China-US economic and trade consultation mechanism will resume. Yuyuantan Tian of CCTV learned that the first meeting of the mechanism will continue on the local time of June 10.  

Implementing the consensus from the heads of state's phone call and focusing on tariffs, technology, and rare earths, the China-US economic and trade consultations were held in London on Monday. According to the *Global Times*, after the Geneva talks, the US continued to impose restrictions on chip exports to China, while China implemented rare earth export controls, forming a "rare earth vs. chips" game. The US dispatch of Commerce Secretary Gina Raimondo to participate in the new round of consultations may indicate that technology export controls "may no longer be a non-negotiable area."  

*Xinhua Commentary*: The new rare earth export control rules aim to "standardize exports," not a so-called "tactical countermeasure" on a whim. Xinhua stated that China's goal is to "standardize exports" rather than "ban exports," and to "facilitate compliant trade" rather than cut off normal commercial exchanges. The Chinese Ministry of Commerce has repeatedly made clear public statements: it will approve applications that meet the regulations in accordance with the law. In response to concerns and suggestions from the EU and others, Chinese Minister of Commerce Wang Wentao explicitly expressed willingness to establish a "green channel" for eligible applications to accelerate approval during talks with the EU, and has instructed the working level to maintain timely communication on this.  

Allegedly, Trump may adjust export measures, causing the chip index to rise nearly 3% and the China concept index to gain over 2% during trading.  

Addressing urgent public needs! The General Offices of the CPC Central Committee and the State Council: Reasonably raise the minimum wage standard and fully abolish household registration restrictions for social insurance participation at the place of employment. The General Offices issued the *Opinions on Further Ensuring and Improving People's Livelihood and Focusing on Addressing Urgent Public Needs*, which mentions steadily and orderly increasing the proportion of urban employed persons participating in basic old-age and medical insurance for employees. Eligible college graduates, persons having difficulties in employment, etc., will be given social insurance subsidies. Places with conditions are supported and guided to directly issue maternity insurance benefits to insured persons in accordance with procedures.  

China's May CPI fell 0.1% year-on-year, turning from a month-on-month increase to a decrease, while PPI's year-on-year decline expanded to 3.3%. The month-on-month decline in CPI was mainly affected by falling energy prices. However, the prices of gold jewelry, household textiles, and cultural and entertainment durable consumer goods rose by 40.1%, 1.9%, and 1.8% year-on-year respectively, with all increases expanding. The year-on-year decline in PPI expanded to 3.3%, with marginal improvements in prices in some sectors.  

China's exports in May increased 4.8% year-on-year in USD terms, with imports falling 3.4%. China's rare earth exports rose nearly 23% month-on-month in May, soybean imports surged 129% month-on-month to a record high, while coal and oil imports declined.  

In the first five months, China's exports to ASEAN, the EU, Africa, and the five Central Asian countries increased by 16.9%, 13.7%, 35.3%, and 8.8% respectively; the total trade value between China and the US was 1.72 trillion yuan, a decrease of 8.1%, accounting for 9.6%. Among them, exports to the US were 1.27 trillion yuan, down 8.7%; imports from the US were 447.51 billion yuan, down 6.3%.  

In terms of quantity, as the world's largest rare earth producer, China's rare earth exports increased by 22.57% month-on-month in May to 5,864.6 tons, reaching a one-year high. Soybean imports grew most rapidly in May, with a year-on-year increase of 36.16%, and integrated circuit imports increased by 9.95% year-on-year, with a faster growth rate than in April. However, imports of refined oil, steel, coal, and lignite saw the largest year-on-year declines, falling by 30.23%, 24.49%, and 17.75% respectively.  

Minsheng Securities pointed out that May's foreign trade data showed three signs of slowdown. First, the front-loading of the US "rush to import" demand led to a decline in import momentum since May, with the drag on China's exports to the US expanding in May and the stimulating effect of tariff "reduction" not being fully reflected; second, the slowdown in US terminal demand weakened the support of "rush to re-export" from ASEAN and Latin America; third, imports turned negative year-on-year again, corresponding to the need to consolidate domestic demand recovery. Based on this, it is judged that the stimulating effect of tariff "reduction" on China-US trade has not been fully reflected in May's data and may be further reflected in June's data.  

Guo Lei of GF Securities noted that the slowdown in exports was mainly due to the drag from exports to the US, with the year-on-year decline in exports to the US expanding in May, and the impact of tariff and trade environment uncertainties beginning to emerge. Although there was a "rush to export" feature in the first and middle ten days of May, it weakened again in the late ten days, presumably due to short-term inventory replenishment by overseas importers after tariff easing, with the pulse release being rapid due to uncertain expectations.  

Turmoil in Los Angeles escalates! California sues Trump administration for deploying troops to Los Angeles, Trump: Supports arresting Governor Newsom, "does not want a civil war." The turmoil in Los Angeles caused by federal immigration raids entered its fourth day. Xinhua reported that the California state government requested the court to rule that Trump's order issued on the 7th was illegal and asked to revoke it. US officials revealed that the US military will temporarily deploy about 700 Marines to Los Angeles until the National Guard arrives. Trump said the situation in Southern California is currently moving in the right direction.  

Civil war in the US begins! Los Angeles is in chaos! Trump orders deployment of National Guard, police open fire on protesters. On the 7th, Trump bypassed the governor and directly deployed 2,000 National Guard troops, the first time since 1965 that state guard troops were mobilized without a governor's request. The White House threatened to arrest opposing governors and mayors.  

Apple's WWDC: AI-powered Siri still needs time, opens basic models to developers, liquid glass interface design makes debut.  

Apple's basic model framework allows third-party developers to directly integrate built-in large language models (LLMs) into apps, developed based on Apple Intelligence. The framework is now available for developer testing, with a public beta version to open in July. Apple has simplified the naming of operating systems by year; liquid glass will be used in the ecosystem of devices such as iPhones and Watches.  

iOS received its first design update since 2013, with redesigned Camera, Photos, Phone, and FaceTime apps in iOS 26; CarPlay Ultra is available for some vehicle models, and the SMS app adds group chat voting and cash sending functions; the Genmoji function allows combining to create new emojis; iPhone calls and videos support real-time translation; Apple Music can translate lyrics; ChatGPT strengthens the "Image Paradise" function; new features are added to Maps and Wallet apps; Apple Pay can redeem points and track orders in the Wallet app; new gaming apps are introduced.  

Apple also introduced watchOS 26, macOS Tahoe, visionOS 26, and iPadOS 26. Public betas of the new generation of operating systems will be released next month.  

Jen-Hsun Huang appears at London Tech Week: The UK's AI environment is in a "Goldilocks" state but lacks computing infrastructure. Huang praised the UK for having excellent conditions for AI prosperity but warned of the lack of AI infrastructure. Huang is on a tour of the European continent this week, revealing that there are "countless AI factories being planned" in the region, and he plans to speak at VivaTech in Paris and visit and meet with leaders of the UK, Germany, France, and Belgium, hinting that an infrastructure race will kick off in Europe.  

Iran says it will strike Israel's secret nuclear facilities if attacked by Israel.  

**Domestic Macro**  

Li Qiang: Unblock supply-demand docking channels to better promote the integrated development of technological and industrial innovation. Li Qiang chaired the 14th special study session of the State Council. After listening to the explanations and exchange speeches, Li Qiang pointed out that the transformation of scientific and technological achievements connects the innovation chain and the industrial chain, being the "last mile" of scientific and technological innovation, which is conducive to催生new products, industries, and drivers of growth, and forming new quality productivity. It is necessary to further coordinate various innovation resources, deepen institutional reforms, unblock supply-demand docking channels, and with greater achievements in the transformation of scientific and technological achievements, better promote the integrated development of technological and industrial innovation.  

Why are private enterprises suddenly actively acquiring land recently? Governments across the country have "prescribed the right medicine," timely adjusting land supply and canceling multiple restrictions, and this year have put forward many treasured land plots. The plot ratio has been comprehensively reduced, with low density becoming the mainstream; small plot size and low total price provide more possibilities for private enterprises with tight capital chains to acquire and develop land. The reasons for restarting land acquisition include seeing the recovery of the property market and entering a phase of periodic recovery; the year-on-year decline in second-hand housing prices continues to narrow, with some areas having truly bottomed out and rebounded.  

Hong Kong's interest rates are "abnormally" falling, sounding an alarm for US dollar assets. Over the past month, the Hong Kong dollar overnight rate has continued to hover near zero, forming a significant inversion with the US rate of 4%, and the arbitrage mechanism seems to have "malfunctioned." Senior financial journalist Harding noted that this phenomenon reflects the decline in Asian investors' appetite for US assets, the recovery of Hong Kong's capital markets, and the limitations of banks' and hedge funds' risk tolerance. At a deeper level, this may be a stress response of global markets to the uncertainty of Trump's trade policies.  

**Domestic Companies**  

Starbucks China cuts prices for the first time, focuses on the "non-coffee" market, with the average price of a grande cup decreasing by 5 yuan. Starbucks announced price adjustments for dozens of tea drinks, including Frappuccino, Iced Shaken Tea, and Tea Latte, with the average price of grande drinks decreasing by 5 yuan and the minimum price being 23 yuan. This is Starbucks' first direct price cut. Previously, Starbucks mainly lowered prices through coupons.  

**Overseas Macro**  

Global corporate executives gather in Washington this week to lobby the US Congress to repeal Section 899 "capital tax" of the "Magnificent" Act! This tax threat has made nearly 200 foreign-funded enterprises in the US within this lobbying organization feel uneasy, including giants such as Shell, Toyota, SAP, and LVMH. These foreign-funded enterprises provide 8.4 million jobs in the US, and the implementation of Section 899 may directly threaten this huge employment base.  

Federal Reserve survey: Consumer inflation expectations comprehensively declined in May, the first time since 2024. Among them, the one-year inflation expectation declined the most, from 3.6% in April to 3.2%, and the three-year and five-year inflation expectations also declined. The core reason is the temporary easing of China-US trade tensions. The survey also showed that US民众's views on employment, personal finances, and stock market prospects have slightly improved.  

The US Senate is brewing revisions to the "Magnificent" Act to save costs, which may trigger a split within the Republican Party. Media reports say the US Senate Finance Committee plans to save costs by modifying Medicaid and possibly including Medicare programs. This version may differ from the original bill that the House of Representatives narrowly passed in May on multiple key aspects. Analysts believe that once the revised draft is released, it is likely to trigger a new tug-of-war between fiscal conservatives and moderates.  

Is the "wolf" really coming? "New Fed News Agency": The US economy is truly heading for a "difficult summer." Nick Timiraos wrote an article stating that although the US economy avoided recession in 2023 and 2024, it is now entering another unsettling summer. The fragile balance of the labor market, changes in consumer spending, and financial market shocks - these three factors may break in an unexpected way, all depending on what Trump does next.  

After missing the big rebound in April, hedge funds are "chasing gains" in US stocks in a panic! Hedge funds have fallen into a "panic buying" mode, making net purchases of US stocks for the fifth consecutive week, with the scale of long positions exceeding short positions by a ratio of about 3:1. In this game of capital reallocation, industrial stocks have become the biggest beneficiaries, with net purchases in the sector hitting a new high in more than seven months, while hedge funds have made net purchases of US healthcare stocks for the sixth consecutive week.  

For the first time in 40 years, US "stocks, bonds, and cash" yields are almost the same. Currently, the gap between the highest and lowest yields among major US asset classes is the smallest in the past 40 years - the return rate of the S&P 500 is 4.7%, almost on par with the 4.4% yield of the 10-year US Treasury bond. This is mainly because the Federal Reserve's sharp interest rate hikes have pushed up Treasury yields, while the high valuations and profit margins of the S&P 500 have depressed stock return rates.  

The US is no longer "exceptional," but Europe is not ready? The world's largest sovereign fund warns: European stocks lack competitiveness, and their positions have been cut from 26% to 15%! The political uncertainty of the Trump administration has shaken the "safe haven" status of the US market, and international capital is seeking new destinations, but Europe may not be ready. The Norwegian Oil Fund, the world's largest sovereign fund with $1.9 trillion in assets, warns that European capital markets lack competitiveness due to structural problems, and its own allocation ratio to European stocks has dropped significantly from 26% to 15% over the past decade.  

Report: The Japanese government is considering repurchasing previously issued ultra-long-term Japanese government bonds. The report says Japan is considering repurchasing some of the ultra-long-term government bonds issued in a low-interest-rate environment. This move will be coordinated with the planned reduction in ultra-long-term bond issuance to cope with the sharp rise in yields on 20-year, 30-year, and 40-year Treasury bonds.  

Much ado about nothing, Morgan Stanley: No substantial production increase from OPEC yet. Through data analysis of refinery throughput, maritime exports, pipeline flows, and inventory changes, Morgan Stanley said the actual production growth of OPEC+ is hard to detect. The production increase quota is still "on paper," and Saudi oil wells remain quiet. However, the expectation of future production increases still exists, and the bank expects supply to increase by 420,000 barrels per day from June to September, half of which will come from Saudi Arabia. Morgan Stanley expects oil prices to fall to $57.50 per barrel in the second half of the year.  

**Overseas Companies**  

With subsidies disappearing and political concerns heating up, Americans are "not buying" electric vehicles. The proportion of US adults who said they are "very likely" or "likely" to buy a pure electric vehicle as their next car has plummeted from 25% in 2022 to 16% this year, the lowest in AAA's annual survey since 2019. 62% of respondents are worried about high battery repair costs, and 59% are deterred by high purchase prices.  

The final puzzle of AGI, what is reinforcement learning? What is its moat? Analysis shows that reinforcement learning is the core driving the leap in large model reasoning capabilities, and this technology may become the last key paradigm before AGI, with its computationally intensive nature bringing computing power challenges. In addition, high-quality data is the moat of reinforcement learning, where data quality is more important than quantity, and the cycle of AI designing AI accelerates technological iteration.  

**Industries/Concepts**  

1. **New Consumption**: Western Securities points out that young consumer groups focus on dimensions such as the multiplicity of self-pleasure (punk health preservation), the contradictoriness of carriers (new玩法 of time-honored brands), and the contradictoriness of prices (willing to buy expensive products but not overpay, spending small money for emotional value), and sorts out companies with relevant relevance.  

2. **Infrastructure**: Against the backdrop of fiscal counter-cyclical efforts, major domestic infrastructure projects have started construction one after another. Tianfeng Securities combs through four investment opportunities in major infrastructure projects in central and western China that deserve the most attention.  

3. **Amino Acids**: Lysine and threonine are core varieties of feed amino acids. Currently, the industry concentration is relatively high, and the competition pattern continues to optimize. The rise in upstream corn and soybean meal prices is further driving the demand and prices of lysine and threonine.叠加international supply shortages, the industry prosperity is continuing to recover.  

4. **Black Electronics**: Changjiang Securities notes that the market share of mainland panel manufacturers has further expanded, and the trend of production capacity transfer is obvious. Moreover, the panel cost ratio of Mini LED TV products is lower, and for black electronics leaders that lay out more upstream, the bargaining power is further enhanced. Currently, the Mini LED penetration rate is still at a low level. Based on the industrial pattern of continuous transfer of panel production capacity to China and the continuous increase in R&D of Mini LED display technology by Chinese enterprises, the improvement in profitability of Chinese black electronics enterprises in this round of technological iteration has sustainability.  

**Preview of Today's Key News**  

He Lifeng will visit the UK from June 8 to 13 and hold the first meeting of the China-US Economic and Trade Consultation Mechanism.  

The State Council Information Office will hold a press conference on policies to further ensure and improve people's livelihood.  

The EIA (Energy Information Administration) will release its monthly Short-Term Energy Outlook report.  

GameStop will announce its financial results.  

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