Morning News

Source: Wall Street News

### Market Overview

On Friday, the weak US non-farm payroll data shattered the narrative that "the labor market remains strong," and expectations of interest rate cuts surged sharply. Meanwhile, the Trump administration rolled out another package of tariff measures, coupled with a sudden escalation of geopolitical tensions, leading to a surge in risk aversion.

The Nasdaq fell more than 2% on Friday, the S&P 500 recorded its largest drop since May, small-cap stocks were the hardest hit, and the VIX fear index broke through 20. Amazon plummeted 8%, leading the decline among the seven tech giants.

A September rate cut by the Federal Reserve is almost considered a certainty by the market. The 2-year US Treasury yield plunged more than 28 basis points on Friday, and the 10-year yield fell 16 basis points. The US dollar dropped more than 1.3%. The yen recovered all its weekly losses, appreciating more than 2% intraday. Ethereum fell nearly 6%. Gold surged 2%.

In early Asian market trading on Monday, US stock futures fluctuated little, spot gold rose slightly to $3,363.86 per ounce, and WTI crude oil opened 0.5% lower.

### Key News

- Berkshire's Q2 net profit plummeted 59%, with cash reserves approaching a record high, warning that tariffs will hit performance. Berkshire wrote down its investment in Kraft Heinz by a huge $3.8 billion.

- OPEC+ agreed in principle to significantly increase production again in September.

- US non-farm payrolls added 73,000 jobs in July, far below expectations, and the data for the previous two months was sharply revised down by 258,000. "The New Fed Wire Service": Cooling non-farm employment opens the door for a September rate cut, despite lingering inflation concerns.

- The Federal Reserve's internal strife "went public": Two senior officials said "employment remains solid," while two dissidents issued statements that "waiting is a mistake."

- Federal Reserve Governor Kugler announced that she will resign on August 8. Amid weak non-farm data, Trump shifted blame: Compiled by officials appointed by Biden, dismiss the Bureau of Statistics director!

- Threatening sanctions, Trump demanded that Russia and Ukraine reach an agreement by August 8. Putin: If someone is disappointed with the results of the Russia-Ukraine peace talks so far, it is because "expectations were too high."

- The US Trade Representative said that the tariff policy will remain largely unchanged. There are differing opinions: The US claims that South Korea will open its agricultural product market, including rice, to the US, while South Korea denies it, saying "the US may have some misunderstandings." Trump "demanded an increase" at the last minute, then angrily imposed a 39% tariff, leaving Switzerland stunned.

### Market Closing Quotes

- European and American stock markets: The S&P 500 closed down 1.60% at 6,238.01 points, with a cumulative weekly decline of 2.36%. The Dow Jones Industrial Average fell 1.23% to 43,588.58 points, with a cumulative weekly decline of 2.92%. The Nasdaq fell 2.24% to 20,650.13 points, with a cumulative weekly decline of 2.17%. Europe's STOXX 600 index closed down 1.89% at 535.79 points, with a cumulative weekly decline of 2.57%.

- A-shares: The Shanghai Composite Index fell 0.37% to close at 3,559.95 points; the Shenzhen Component Index fell 0.17% to close at 10,991.32 points; the ChiNext Index fell 0.24% to close at 2,322.63 points.

- Bond market: The yield on the US 10-year benchmark Treasury note fell 16.21 basis points, hitting a new daily low of 4.21%, with a cumulative weekly decline of 17.59 basis points. The 2-year US Treasury yield fell 28.57 basis points to 3.6673%, with a cumulative weekly decline of 25.59 basis points.

- Commodities: COMEX gold futures for October rose 2% to $3,415.70 per ounce, with a cumulative weekly increase of 0.69%. WTI crude oil futures for September closed down 2.78% at $67.33 per barrel, with a cumulative weekly increase of 3.33%. Brent crude oil futures for October closed down 2.83% at $69.67 per barrel, with a cumulative weekly increase of 3.10%.

### Details of Key News

#### Global Highlights

Berkshire's Q2 net profit plummeted 59%, with cash reserves approaching a record high, warning that tariffs will hit performance. Berkshire stated in its earnings report that tensions from international trade policies such as tariffs accelerated in the first half of 2025, posing a threat to its diversified businesses. It warned, "Nearly all operating businesses and stock investments may face adverse consequences, which could significantly affect future performance." The earnings report also showed that Berkshire Hathaway has been a net seller of stocks for the 11th consecutive quarter, did not repurchase any stocks in the second quarter, and its top five holdings by the end of the second quarter were American Express, Apple, Bank of America, Coca-Cola, and Chevron.

Berkshire wrote down its investment in Kraft Heinz by a huge $3.8 billion. The outside world has labeled Kraft Heinz as "one of the greatest failures of the 'Oracle of Omaha'." However, the real "divine operation" lies in another aspect of the story: relying on its locked-in preferred shares and steady cash dividends, Buffett has already significantly recouped his investment costs. While the market laments his "failure," the Oracle of Omaha has actually made nearly a 60% profit from this seemingly loss-making deal.

OPEC+ agreed in principle to significantly increase production again in September. According to reports, OPEC+ plans to formally approve a production increase of 548,000 barrels per day at a video conference on Sunday, which will fully restore the previously suspended 2.2 million barrels of production cuts. Currently, OPEC+ still has another production cut plan of 1.66 million barrels per day, with the official arrangement set to last until the end of 2026, which will be the focus of market attention in the future.

US non-farm payrolls added 73,000 jobs in July, far below expectations, and the data for the previous two months was sharply revised down by 258,000. The unemployment rate rose to 4.2% in July, in line with expectations, compared with the previous reading of 4.1%. The year-on-year increase in hourly wages rose to 3.9% from the revised 3.8% (originally 3.7%), higher than the expected 3.8%. "The New Fed Wire Service": Cooling non-farm employment opens the door for a September rate cut, despite lingering inflation concerns.

With a total "downward revision" of up to 260,000 over two months, can the US non-farm data still be trusted after repeated setbacks? The main reason for the downward revision of 260,000 US jobs lies in the adjustment of institutional data, 40% of which is due to sample revisions by state and local education departments. However, the deeper structural issues lie in the low survey response rate and the potential impact of the Trump effect. Both not only weaken the immediate accuracy of the non-farm payroll report but also make the already complex economic picture more confusing.

The Federal Reserve's internal strife "went public": Two senior officials said "employment remains solid," while two dissidents issued statements that "waiting is a mistake." After the non-farm data, New York Fed President Williams and Cleveland Fed President Hamark described the weakness as a moderate cooling rather than a worrying deterioration. Before the non-farm data, Governors Waller and Bowman rarely issued statements defending their dissenting votes, saying that continuing to wait would threaten the economy. Analysts pointed out that the Fed's internal differences were fully exposed before and after the release of the latest employment data, posing a challenge for Fed Chair Powell to build consensus at the September meeting.

The Fed's dilemma: Stagnant employment and rising prices. Guotai Haitong Securities analysis believes that the gradual effectiveness of Trump's immigration expulsion policy may be an important reason for the divergence between new jobs and the unemployment rate. The Fed faces a dilemma of choosing between inflation and employment. Whether the job market has substantially deteriorated remains uncertain, and the potential inflation risks under the influence of immigration and tariff policies cannot be ignored. The July non-farm data may not be sufficient to change Powell's hawkish stance. Next, the Jackson Hole Central Bank Annual Meeting in August will be an important node to observe Powell's policy statements.

What does it mean for the market that a Fed governor resigned and the Bureau of Labor Statistics director was fired? Analysts pointed out that the Fed's independence and the authenticity of US economic data will be questioned after Trump appoints new candidates: If those collecting data are influenced by the president's political will, it may cast doubt on the future accuracy and impartiality of the data. The direct effect of Kugler's resignation is likely to accelerate the process of selecting the next Fed chair, and the new candidate will actually act as a shadow Fed chair before succeeding Powell.

Fed Governor Kugler announced that she will resign on August 8, and Trump is excited, hoping to interfere in interest rate decisions in advance and lay the groundwork for Powell's successor.

Amid weak non-farm data, Trump shifted blame: Compiled by officials appointed by Biden, dismiss the Bureau of Statistics director! Trump accused McEntarfer of politicizing the employment report without providing any evidence. Analysts said this is a very serious incident, and it will be difficult to continue to have high confidence in the integrity of the data.

Threatening sanctions, Trump demanded that Russia and Ukraine reach an agreement by August 8. Putin: If someone is disappointed with the results of the Russia-Ukraine peace talks so far, it is because "expectations were too high." According to Global Times, according to Trump, US Middle East envoy Wittkopf may visit Russia before the US imposes new sanctions on Russia on August 8. Putin emphasized that if Ukraine believes the time is not right, Russia is willing to wait, and negotiations need to be conducted in a calm atmosphere. He also stated that Russia's goals in Ukraine have not changed, and Russian troops are advancing "along the entire front line" in Ukraine.

US Trade Representative said that the tariff policy will remain largely unchanged. According to CCTV News, on August 3 local time, US Trade Representative Greer said that the new round of tariffs imposed by US President Trump on multiple countries last week is "basically finalized" and will not be adjusted in current negotiations, including a 35% tariff on goods imported from Canada, 50% on Brazil, 25% on India, and 39% on Switzerland. Greer said some tariffs are set based on bilateral trade surpluses and deficits, "these rates are basically fixed."

Differing opinions! The US claims that South Korea will open its agricultural product market, including rice, to the US, while South Korea denies it: The US may have some misunderstandings. According to Global Network, when Trump announced the达成 of the US-South Korea trade agreement, he said that South Korea will open its agricultural product market to the US. However, South Korea's Deputy Prime Minister and Minister of Planning and Finance said, "After persistent explanations from our negotiation delegation, the US understood the sensitivity of South Korea's agriculture and agreed not to further open the market."

Trump "demanded an increase" at the last minute, then angrily imposed a 39% tariff, leaving Switzerland stunned. Trump's focus on the commodity trade imbalance surprised Switzerland, as negotiators from both sides finalized the agreement framework more than a month ago, and the Swiss government approved the framework on July 4. According to two informed sources, Treasury Secretary Bessent and Trade Representative Jegreer both agreed to the draft, so Switzerland originally believed that the final approval of the Trump administration would be more of a formality.

US stocks had a "chaotic week." Goldman Sachs hedge fund director: Many results have been announced, but there are more questions than answers. Despite the strong earnings reports from large US tech stocks again, a new round of tariff fluctuations and an "extremely bad" employment report made the US stock market experience a "chaotic" and contradictory week. A senior Goldman Sachs executive pointed out that many events have settled, but what remains for investors are more questions than answers, and the short-term risk-reward ratio of the market has become extremely tricky.

Regardless of performance, US consumer stocks are falling! Goldman Sachs can't understand: Why "sell on dips"? Although the second-quarter earnings season for US companies was generally strong, there was an abnormal phenomenon in the consumer sector: whether earnings exceeded expectations or fell short, the stock prices of related companies generally came under pressure after the earnings release. This abnormal market reaction has confused investors and analysts and raised questions about the sustainability of consumer prospects.

#### Domestic Macro

How to understand the resumption of value-added tax on national bonds, etc. On August 1, the Ministry of Finance and the State Taxation Administration announced that from August 8, 2025 onwards, value-added tax will be resumed on interest income from newly issued national bonds, local government bonds, and financial bonds on or after that date.

Huatai Securities believes that the new policy aims to unify the tax system, optimize the bond pricing mechanism, and correct market distortions caused by the tax exemption system. The impact of taxation on new bonds is about 5-10 basis points, which will form a spread between new and old bonds. Public funds and other asset management products will be taxed at 3%, and proprietary trading accounts at 6%. The policy will narrow credit bond spreads, reduce the enthusiasm for bond switching operations, and be relatively beneficial to the stock market.

The standard for tax exemption on interest from national bonds purchased by ordinary people: no more than 100,000 yuan per month.

When all expectations are reversed. Guojin Strategy believes that before the confirmation of the bottoming out and rebound of A-share ROE, the market tends to show the characteristics of increased valuation contribution and accelerated industry rotation. The theme market that rose and fell sharply on the supply side based on policy expectations also appeared in April 2016, but the decline of the theme market is not the end, but the beginning of the real fundamental market. Overseas recession trades do not necessarily mean a recession, and there were signs of marginal improvement in the US economy in July. If poor readings lead to interest rate cuts, it may resonate with the forming trend of US manufacturing investment. After adjustment, earnings growth remains a trend.

Many financial central enterprises have added full-time deputy party committee secretaries to be in charge of organizational and personnel work. Since this year, many financial central enterprises such as Bank of China, Industrial and Commercial Bank of China, CITIC Group, Agricultural Development Bank of China, China Life Insurance Group, China Development Bank, and Everbright Group have added full-time deputy party committee secretaries to strengthen party building work. A person close to financial central enterprises said that in order to implement the spirit of the Central Financial Work Conference in October 2023 and comprehensively strengthen the Party's leadership in the financial system, several central management financial enterprises have appointed full-time deputy party committee secretaries to assist the "top leader" in managing party building work. The person also said that currently, the "top leaders" of many financial central enterprises no longer directly manage organizational and personnel work, which is generally managed by full-time deputy secretaries.

Summer box office exceeds 7 billion yuan. According to online platform data, as of August 3, the total box office (including pre-sales) of the 2025 summer档 (summer season) exceeded 7 billion yuan.

#### Domestic Companies

People's Daily comment: Nvidia, how can I trust you? People's Daily said that once the security risks of chip vulnerabilities and backdoors are triggered, we may encounter a "nightmare" at any time. Regarding the doubts about the "tracking and positioning" and "remote shutdown" risks of the H20 chip, enterprises can only eliminate the worries of Chinese users and regain market trust by providing convincing safety certificates in accordance with the requirements of the interview. For foreign enterprises to deepen their presence in the Chinese market, respecting Chinese laws and strictly abiding by the safety red line is a basic prerequisite.

Zong Qinghou's will is exposed! Understand the case through key issues.

The plaintiff "three Zong siblings" essentially filed an asset preservation application in Hong Kong, and the judgment issued by the Hong Kong High Court is only an injunction or property preservation order. Key issues such as whether the "three Zong siblings" are entitled to trust benefits, whether the trust has been established, and the distribution of trust benefits are all under the jurisdiction of mainland courts. The judgment of the mainland court is the key.

Zong Qinghou had a plan to establish a trust, entrusting Zong Fuli to set up three overseas trusts for Zong Jichang, Zong Jieli, and Zong Jisheng. Zong Qinghou and Zong Fuli signed an entrustment agreement on February 2, 2024.

Zong Qinghou's handwritten instructions to Guo Hong showed that the initial scale of the trust is planned to be $2.1 billion, with $700 million for each of Zong Jichang, Zong Jieli, and Zong Jisheng. The way for trust beneficiaries to receive benefits is to keep the principal intact and receive interest. Based on the annual US dollar deposit interest rate of about 5% in Hong Kong banks, each of the "three Zong siblings" can receive about 250 million yuan per year.

Zong Fuli tried to add her own children as trust beneficiaries.

Morgan Stanley: Don't miss the opportunity of Pop Mart's correction. New IPs have strong momentum, and the bottleneck is supply rather than demand. Morgan Stanley said that the company's new IP product lines have performed strongly, including popular products such as Crybaby and Twinkle Twinkle, which are frequently out of stock. The bottleneck is supply rather than weak demand. The company is actively expanding cross-border cooperation and global layout, expecting 2025 revenue to grow 138% to 31 billion yuan. The global IP market size reaches $800 billion, and Pop Mart's share is only 2.3%, with huge growth space. The bank maintains an "Overweight" rating, with a target price of HK$365, implying a 48% upside from the current level.

#### Overseas Macro

The most complete tariff list: The US官宣 "reciprocal tariffs" to take effect on August 7. The White House released the adjusted "reciprocal tariff" rate schedule, which will take effect on August 7, providing another negotiation window for various countries. In the new rates, countries with a trade deficit in goods with the US will have a 10% rate; countries that have reached agreements with the US or have a small trade surplus in goods with the US will have a rate of about 15%; countries that have not reached agreements with the US and have a large trade surplus in goods with the US will face higher rates. Among them, the US will raise the tariff rate on Canada from 25% to 35%, Switzerland and South Africa will face punitive tariffs of up to 39% and 30% respectively, and India will be subject to a 25% tariff.

With the implementation of "reciprocal tariffs," Singapore is the biggest winner in Asia, Vietnam is the loser, but the tariff risks for semiconductors and pharmaceuticals are greater. Barclays analysis shows that Vietnam faces the world's highest value-added weighted US tariff rate of 2.3%, and Vietnam has as much as 15.1% of domestic value-added directly exposed to exports affected by US tariffs. Singapore's value-added weighted tariff rate is only 0.5%, mainly due to the temporary exemption of semiconductors and pharmaceuticals. However, Barclays warned that the tariff risks for semiconductors and pharmaceuticals are greater; if Trump imposes a 200% tariff on pharmaceuticals, Singapore will face a serious impact.

Chaos within the US Department of Commerce, with thousands of export licenses backlogged, including Nvidia chips. According to reports, informed sources revealed that high-value export licenses, including Nvidia's AI chips, have been delayed in approval. A US official said that the current backlog of license applications is the worst in more than 30 years. This chaotic situation stems from internal management problems in the agency responsible for export controls within the Commerce Department. The agency has not only failed to issue new regulations in a timely manner but also restricted communication with industry representatives, leading to the loss of professionals and a serious decline in work efficiency.

### Overseas Companies  

Sam Altman officially announced: A lot of things will be released in the next few months. Sam Altman stated that OpenAI will launch a host of new products in the coming months, including: new models (speculated to be open-source models and GPT-5); and new products (rumored to be Sora 2 and image updates for GPT-4o).  

Apple held a rare company-wide meeting, with Tim Cook reassuring employees: "We rarely go first, but Apple will take control of AI." Cook emphasized that the significance of the AI revolution is on par with, or even greater than, that of the Internet, smartphones, cloud computing, and applications. He acknowledged that Apple started late in the AI field but stressed that the company has never been a technological pioneer; instead, it dominates the market by creating "modern versions" of products. Apple will invest heavily in AI—40% of the 12,000 new employees hired in the past year have joined R&D positions.  

The rise of AI cloud: Has the market ignored Microsoft’s pressures and underestimated Amazon’s potential? In the AI-driven cloud computing race, market attention is generally focused on growth rates. However, there is an "invisible war" over profit margins behind this: Microsoft and Google’s high-speed cloud growth may come at the expense of overall profit margins. In contrast, although Amazon AWS is growing slightly slower, its high-margin business structure and strong future revenue reserves may signal healthier long-term profitability—a potential that the current market may not have fully priced in.  

"Consulting giant" McKinsey: AI is a topic at every board meeting; this is a "do-or-die moment" for the consulting industry. McKinsey, a leading consulting firm, is facing a "life-or-death" challenge from AI. The company’s global managing partner stated that AI is a topic at every board meeting. Faced with the threat that AI may disrupt its core business, McKinsey has chosen not to defend but to actively embrace change. By massively deploying AI tools, reshaping its business model and team structure, it is attempting to turn a "survival crisis" into a "survival advantage."  

European bank stocks have risen 34% this year, soaring to their highest level since 2008! The European banking sector has reversed years of decline, with stock prices hitting a post-financial crisis high, boosted by rising interest rates and a strengthening economy. HSBC’s stock price briefly touched an all-time high last week, while Barclays’ stock price also reached its highest level since 2008. Meanwhile, the STOXX 600 Banks Index has risen 34% so far this year.  

"The King of Crude Oil" stumbles in a "cocoa gamble": Made a 50% profit last year, but suffered a 57% loss this year! Hedge fund manager Pierre Andurand, known for trading crude oil, experienced a roller-coaster ride in the cocoa market. After making a 50% profit from cocoa last year, a series of misguided trades and sharp market fluctuations caused his flagship fund to lose 57% in the first half of this year. Current cocoa prices have fallen from a high of over $12,000 per ton to around $8,000 per ton.  

### Industries/Concepts  

1. **Robotics**: A research report from Guotai Haitong Securities pointed out that Figure 02 demonstrates potential for household use, with strong flexible operation, human-machine interaction, and dynamic response capabilities, as well as a mature "robot brain." The report is optimistic about its subsequent scene implementation and mass production progress.  

2. **Cobalt**: China’s imports of cobalt raw materials from the Democratic Republic of the Congo fell by over 60% month-on-month in June, and July’s import data is expected to drop further. Domestic inventory depletion will accelerate. Even if the export ban is lifted when it expires at the end of September, considering transportation cycles, the first batch of raw materials is not expected to arrive in China until the end of 2025. With raw material shortages worsening and widespread hoarding in the industry, cobalt prices are expected to see a second round of increases.  

3. **Commercial Aerospace**: On July 30, China successfully launched the 06th group of low-orbit satellite internet satellites using the Long March 8A carrier rocket from the Hainan Commercial Aerospace Launch Site, with the satellites entering their scheduled orbit smoothly. Guotai Haitong Securities noted that specially designed high-reliability integrated circuits may have bottomed out, and coupled with the growth of low-orbit satellites, industry prosperity and demand are expected to rise.  

4. **Bio-based Compounds**: A report from Everbright Securities stated that as domestic and foreign research on FDCA (furandicarboxylic acid) deepens and application technologies mature, FDCA production is expected to grow steadily. Additionally, with the strong growth of the PET market and the superior performance of PEF (polyethylene furanoate) made from FDCA compared to PET, FDCA’s market demand has significant room for expansion. The report is optimistic about the development of the FDCA industry.  

### Today’s Key News Preview  

- U.S. June factory orders and durable goods orders.  

- Palantir releases earnings report.  

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