Trump's "Great Reset": Debt Resolution, Transition from Virtual to Real, Dollar Depreciation

Abstract "Trump intends to create a recession," "Trump disregards the stock market," "The U.S. economy may undergo a detox period" ... headlines that differ from Trump 1.0 have recently been impacting the already fragile U.S. stock market. Coupled with the multiple policy goals of Trump 2.0 that are difficult to reconcile, investors are left confused. We propose a framework to attempt to understand Trump's ultimate goals and policy path - "The Great Reset." We believe Trump is facing two fundamental issues that need to be addressed since World War II: the widening wealth gap and historically high government debt pressure. Within this framework, we expect Trump to attempt to reset the capital structure, that is, to adjust the relationship between industrial capital and financial capital, hoping to achieve a shift from virtual to real, re-industrialization, and ultimately narrow the wealth divide. At the same time, without significant productivity improvements, we believe Trump may attempt to reset the debt burden through inflation depreciation and, when necessary, financial repression to ultimately resolve debt risks. Whether shifting from virtual to real or resolving debt, in the absence of substantial productivity improvements, we judge that the intersection of his policy path is likely to point towards global capital rebalancing, inflation pressure, dollar depreciation, and financial repression. Shifting from virtual to real means that the dollar repatriation system established since globalization is facing challenges, and financial capital will rebalance between the U.S. and non-U.S. markets, which will have profound impacts on the price system centered around inflation, exchange rates, and interest rates. First, moderate high inflation, if accompanied by a resurgence of the real economy and industrial capital, may no longer be the main contradiction. Second, dollar depreciation may not only manifest against major trading partners but also against a basket of physical assets that help with debt reduction and re-industrialization. Finally, under the dynamic balance of high endogenous U.S. Treasury yields versus exogenous repression, and the reduction of U.S. Treasury holdings overseas versus increases domestically, we expect the yield on 10-year U.S. Treasuries to maintain a central level of +4.0%, unless QE or financial repression is implemented to significantly lower the yield curve. After this year's debt ceiling resolution, without debt restructuring, the supply shock of U.S. Treasuries is likely to lead to liquidity "bloodletting," rising interest rates, and increased volatility in financial markets, potentially triggering risks of high leverage and credit investors being forced to liquidate positions. When the historically high scale of hedge fund basis arbitrage trading encounters the current historically high valuation of U.S. credit bonds, which are facing a concentrated maturity peak over the next two years, coupled with the Federal Reserve's overnight reverse repos - the liquidity reservoir - having dropped to a historical low, this may exacerbate liquidity shocks and even the risk of the non-bank sector being forced to reduce positions. We expect this will compel a restart of QE, further lowering the dollar. In the stock market, we judge that the "U.S. stock exception theory" since 2012 may come to an end. European, emerging markets, especially the Chinese stock market are expected to initiate a trend revaluation. Under the shift from virtual to real, the valuation trend of U.S. stocks is downward, with a style transition. We are optimistic about the trends of industrial, materials, energy, and consumer sectors, which mainly represent industrial capital, outperforming the large-cap growth stocks that mainly represent financial capital. Main Text Trump Takes Over the "Biden Cycle" at a High Level The Biden administration has initiated a "new macro paradigm" in the United States characterized by "3, 4, 5" (see "Asset Pricing Under the Major Changes in the Macro Paradigm"), which means we expect the U.S. to remain at a long-term inflation center of +3%, a rate center of +4%, and a nominal GDP growth center of +5% in 2022. More specifically, through a combination of tight monetary policy and loose fiscal policy, the U.S. has experienced high growth, high interest rates, and a booming stock market post-pandemic, attracting continuous inflows of foreign capital into the U.S. and supporting the upward trend of the dollar. In terms of approach and effect, the Biden administration has effectively replicated the "Reagan Cycle," raising the valuations of U.S. stocks and the dollar to historical highs. Chart 1: U.S. Stock Shiller PE Valuation at Historical Highs Source: http://www.econ.yale.edu/~shiller/data.htm, CICC Research Department Chart 2: The Real Effective Exchange Rate of the Dollar is Also at Historical Highs Source: FRED, CICC Research Department The "Reagan Cycle" is essentially pro-cyclical, often leading to systemic imbalances and adjustments in exchange rates. Specifically, loose fiscal policy drives high economic growth and dollar appreciation, which often leads to a worsening trade deficit, compounded by the difficulty of reducing the fiscal deficit in the short term. The dual deficit issue will eventually attract investor attention and even concern. When the U.S. dual deficit exceeds a certain threshold for a period of time, under certain catalysts, it often triggers a long-term depreciation of the dollar (Chart 3, see "The Next Long Cycle of the Dollar: Cycles and Changes"). From an economic and asset perspective, we believe Trump has taken over the "Biden Cycle" at a high level. Looking ahead, Trump's formal replication of Reagan's economic policies is likely to make it difficult for the dual deficit to effectively converge or even worsen (see "Trump + Bessenet, Fiscal Tightening Difficulties"), further exacerbating systemic imbalances and ultimately leading to a major adjustment in asset prices. Interestingly, a major adjustment in asset prices may be an inevitable path for Trump to achieve his "Great Reset" goal. Why does Trump want to achieve the "Great Reset"? How will he achieve the "Great Reset"? What are the asset implications of the "Great Reset"? Chart 3: The Widening Fiscal and Trade Dual Deficits Often Weigh Down the Dollar Index Source: FRED, CICC Research Department "The Great Reset": Why Reset, What to Reset, and How to Reset? Trump's multiple goals are difficult to reconcile, leading the market to often get lost in his random and contradictory policy signals, making it hard to grasp the main line. Let's consider a different perspective: What might Trump's ultimate goal be? What would the policy path be to achieve that ultimate goal? Three years ago, when we began to think about the "New Macroeconomic Paradigm," two questions first caught our attention: the most significant wealth gap in the U.S. since World War II; the reorientation of U.S. fiscal philosophy and debt sustainability. These two issues are also the fundamental starting point for our consideration of Biden's and Trump's 2.0 government policies. Wealth Disparity and Resetting the Capital Structure Since the Reagan administration initiated globalization, financialization, and deindustrialization, the U.S. has shifted from a real economy to a virtual one, with financial capital gradually growing while industrial capital, mainly representing traditional manufacturing and small and medium-sized enterprises, has gradually declined. During this period, the share of labor income has decreased, while the share of capital income has increased, leading to a worsening trend in income and wealth inequality indices, reaching historically high levels during the financial crisis. Looking at the long cycle, since the late 19th century, the U.S. has experienced three major cycles of worsening - improving - worsening in income and wealth inequality indices, each lasting about forty years. These correspond to different fiscal philosophies: strict fiscal balance before World War II, functional big fiscal policy from World War II to the 1970s, and quasi-balanced fiscal policy from the 1980s to pre-pandemic times. Chart 4: A long historical view shows that the cycles of U.S. income inequality and fiscal philosophy are synchronized. Source: OurWorldinData, FRED, CICC Research Department Since the Obama administration, revitalizing American manufacturing has become a consensus solution for both parties to address wealth disparity. The Democratic Party tends to increase fiscal spending to support specific industries, while the Republican Party leans towards tax cuts and deregulation to stimulate entrepreneurship; both essentially aim for fiscal expansion combined with industrial policy to achieve reindustrialization. The Biden administration has achieved de-inflation under high growth, and the stock market has soared. According to the historical pattern of the past thirty years, presidents who succeed economically have a high probability of re-election, but the Democratic Party still lost the 2024 election. Therefore, the issue may not lie in the total amount but in distribution. First, the stock market's continuous rise benefits high-income groups more, while the middle and low-income groups, which make up a large proportion, gain very little. After all, the top 1% of U.S. households have 61% of their assets allocated in the stock market, while the bottom 50% of households only have 4% allocated to the stock market. Secondly, since mid-2022, the U.S. economic structure has shown significant divergence. On one side, high-tech industries such as AI, semiconductors, and new energy are making strides with the support of Biden's industrial policy, while on the other side, small businesses are struggling. Small businesses provide nearly half of GDP and employment (see "Small Businesses Drive the Restart of the U.S. Nominal Cycle"), and this segment of employment has a higher marginal propensity to consume, determining the economy's terminal demand During this period, the nominal wage growth rate has significantly declined. For low- to middle-income groups with a low proportion of stocks in their asset allocation, they have not benefited from the booming development of the high-tech industry or the stock market; instead, the lower or even negative real wage growth has dragged down their daily consumption. Fundamentally, the Democratic Party has failed to adequately address the interests of Main Street, represented by traditional manufacturing, small businesses, and the broad middle class, leading to a loss of support for the Democratic Party in traditional manufacturing states. With Biden's experience as a lesson, we believe Trump will focus on addressing the issue of wealth disparity. How to achieve this? Shift from virtual to real, reset the capital structure, and adjust the relationship between industrial capital and financial capital, that is, heavy industry vs. light finance. In fact, during Trump's 1.0 period, he accelerated the return of foreign direct investment (FDI) to the United States through domestic tax cuts combined with external tariffs. The return of FDI brought about an increase in capital expenditure and job creation, with the "revival" of manufacturing indeed starting from the trend in 2017. Compared to the 1.0 period, we believe Trump 2.0 is more likely to substantively promote the shift from virtual to real: on one hand, accelerating tax cuts and deregulation, especially in banking, encouraging banks to lend more to Main Street, combined with industrial policies to stimulate the vitality of small and micro enterprises; on the other hand, hoping to boost American manufacturing and improve the U.S. trade deficit through a sequence of tariffs followed by exchange rate adjustments. It can be seen that both paths are conducive to inflation. Therefore, in the process of improving wealth disparity and shifting from virtual to real, supporting corporate investment and resident consumption demand, inflation remains resilient. Without policy intervention, nominal interest rates are likely to be difficult to lower, but considering that developing manufacturing and revitalizing Main Street requires interest rates not to be too high, we expect that targeted QE, incentivizing banks to hold more U.S. Treasury bonds, or even some form of financial repression like YCC (yield curve control) may help lower interest rates, especially real interest rates. Resetting the capital structure means that the dollar system may face challenges. Since the 1980s, when the U.S. and Europe began global integration and financial liberalization, the circulation of the dollar has been based on the following key paths: the U.S. maintains a current account deficit, trading partners purchase dollar assets with trade surpluses, and the U.S. maintains a financial account surplus. Since the pandemic, with the worsening of the U.S. twin deficits, the dollar has strengthened, and one important reason is the trend of overseas funds significantly purchasing dollar assets. According to the balance of payments identity, an improvement in the U.S. trade deficit means a reduction in the financial capital account surplus, with portfolio investment projects being the first to be affected. If we add the possibility of more FDI returning under U.S. reindustrialization, the loss of capital inflows into dollar assets under portfolio investment projects may exacerbate the situation. Therefore, Trump 2.0's shift from virtual to real means that U.S. financial assets may face challenges. Chart 5: During Trump's 1.0 period, the proportion of capital expenditure in manufacturing from FDI inflows significantly increased. Source: fDiMarkets, China International Capital Corporation Research Department Chart 6: U.S. Current Account Deficit and Financial Account Surplus Since the Start of Globalization in the 1980s Source: FRED, China International Capital Corporation Research Department High Debt Wall and Resetting Debt Burden Compared to restructuring the capital structure, the U.S. government faces significant pressure to reduce debt. The privately held U.S. government debt/GDP is currently close to 100%, and according to the CBO forecast, it will continue to rise to 117% over the next decade, exceeding the historical high during World War II, while the deficit rate remains at a historically high level of around 6%. According to the proposal submitted by the budget committees of both houses of Congress in March this year, the government leverage ratio may rise to 125% over the next decade, and the CRFB estimates that the fiscal deficit will expand by approximately $2.8 trillion based on the CBO forecast. Additionally, in February this year, U.S. federal spending reached $603 billion, a year-on-year increase of 6%, with a deficit of $307 billion, a year-on-year increase of 3.7%. This indicates that, as we have emphasized, the U.S. deficit is unlikely to tighten in the coming years (see "Trump + Bessent, Fiscal Tightening Difficulties"). The high nominal interest rate center under the new macro paradigm undoubtedly exacerbates the U.S. government debt burden. Chart 7: Trump's Tax Cuts May Significantly Raise Government Leverage Ratio Source: CBO, CRFB, China International Capital Corporation Research Department Chart 8: Trump's Tax Cuts May Raise Deficit Rate Note: The forecast after the budget reconciliation plan is based on CBO and PennWharton predictions. Source: PennWharton, CBO, China International Capital Corporation Research Department Beyond the total amount, the structure of government spending is also worth noting. Since the pandemic, the interest burden on U.S. debt has surged, reaching $881.7 billion in 2024, surpassing defense spending for the first time since World War II. The CBO estimates that this year's interest could reach as high as $952.3 billion, potentially exceeding the second-largest expenditure, Medicare, and closely following the largest expenditure, Social Security. According to "Ferguson's Law," when the interest burden of imperial debt exceeds defense spending, it is often accompanied by instability in the geopolitical order. Therefore, reducing debt, especially lowering the interest burden on U.S. debt, will become a key issue for the Trump administration in the coming years. How does the government reduce debt? Generally, there are three avenues: debt restructuring; inflation; and technological progress. Over the past two years, the "AI narrative" in the U.S. has not only supported the valuations of U.S. tech stocks but, more importantly, has bolstered investors' "fiscal faith" in the U.S. government: a tendency to believe that the U.S. is likely to achieve real technological progress through AI, thereby enhancing total factor productivity to reduce debt After the emergence of DeepSeek, the market began to question whether the large-scale investments made by the U.S. government and AI technology companies over the past two years, regardless of cost, could yield the expected returns. It also started to consider whether this round of AI technological revolution could improve the total factor productivity in the U.S., or whether it might be more likely to achieve an increase in total factor productivity in China. In other words, the market may gradually start to price in the debt risk of the U.S. into dollar assets. In 2025-26, we believe the problem in the U.S. lies not in the real (real economy), but in the virtual (financial market). From a technical perspective, since the Federal Reserve began to reduce its balance sheet in 2022, U.S. hedge funds have become the largest marginal buyers of U.S. Treasury bonds. The continuous large-scale purchases of U.S. Treasury bonds by hedge funds are not due to a bullish outlook on U.S. Treasury bonds, but rather to engage in Treasury basis arbitrage trading: going long on Treasury cash bonds with one hand while shorting Treasury futures with the other. When market volatility is low, holding futures to maturity can earn the term price difference basis with relatively low risk. These hedge funds often leverage their purchases of Treasury cash bonds in the repurchase market to enhance their returns. The scale of this trading may have reached nearly twice the historical high point in the second half of 2019, and the trigger for the global financial market turmoil in March 2020 (which led to a sell-off of all assets for cash) was the unexpected liquidation of the historically high scale of basis arbitrage trading at that time. This trading essentially bets against volatility, so once volatility rises significantly, it can easily trigger liquidation risks and subsequent asset sell-offs. Chart 9: The scale of hedge fund basis arbitrage trading reaches a historical high Source: Federal Reserve, China International Capital Corporation Research Department What factors could trigger a significant rise in financial market volatility? We believe that resolving the debt ceiling is a key event. We expect that after the debt ceiling is resolved, in the absence of debt restructuring, the risk of a "triple kill" in U.S. stocks, bonds, and currencies will increase. Once the debt ceiling is resolved, the U.S. Treasury will issue the Treasury bonds that were previously restricted due to the debt ceiling. The supply shock of U.S. Treasury bonds will lead to an increase in interest rates and cause a "bloodletting" of liquidity from other assets (see "The Path to Resolving the U.S. Debt Ceiling and Its Asset Implications"). A recent case to reference is the "U.S. Treasury storm" following the resolution of the debt ceiling in June 2023. At that time, the overnight reverse repurchase agreement, as a liquidity reservoir, still had over $2 trillion, with ample water levels; whereas now, the reservoir is nearing depletion. If interest rates fluctuate significantly due to the supply shock of U.S. Treasury bonds, it may trigger the liquidation of the already historically high scale of basis arbitrage trading. Once hedge funds liquidate their arbitrage trades, it could trigger cross-asset sell-offs, further exacerbating market volatility. Chart 10: Increase in corporate bond maturities in the next two years Source: Bloomberg, China International Capital Corporation Research Department The above analysis discussed the trigger for "debt killing," so where might the trigger for "debt killing" be? Pay attention to corporate credit bond risks. The risk premium for U.S. high-yield credit is basically at historical lows, meaning that its investors are not pricing in credit risk very much. This is not a big problem, but with a concentration of U.S. credit bonds maturing in the next year or two, coupled with the impact of the debt ceiling resolution potentially exacerbating interest rate increases and liquidity "bloodletting" pressure, along with overnight reverse repos dropping from over $2 trillion two years ago to around $100 billion now, who will provide large amounts of cheap refinancing liquidity? If the risk of basis arbitrage trading unwinding intensifies at that time, the U.S. credit bond market may be the first to suffer, especially since high-leverage hedge funds have accelerated their holdings of credit bonds post-pandemic, which could amplify asset sell-off risks. In this case, U.S. stocks would also be hard to escape. Considering the trend of foreign capital buying U.S. stocks and U.S. credit bonds significantly since the pandemic, this could trigger a depreciation of the U.S. dollar. If financial market turbulence occurs, we expect the Federal Reserve to restart QE to smooth out financial volatility, which will further weaken the dollar and bring certain inflationary pressures. Of course, compared to interest rate cuts that are more targeted at inflation and the real economy, QE is more focused on liquidity and financial markets. Additionally, pay attention to the actions that U.S. sovereign wealth funds may take during financial market turbulence, such as whether they might buy U.S. dollar assets at low prices. Resetting the debt burden means that, in the absence of significant debt restructuring and technological advancements, the U.S. government is likely to reduce debt through depreciation and inflation. Furthermore, we do not underestimate the possibility of using administrative means (targeted QE, incentivizing banks to hold more U.S. Treasuries, YCC) to lower the interest rate curve and thus the interest burden. Whether to achieve Trump's ultimate goal or phased goals, inflation is likely to be easier to rise than to fall. How to resolve this? According to news reports, U.S. Secretary of Commerce Gina Raimondo and Elon Musk suggested excluding government spending from GDP calculations. Considering that the U.S. has a precedent for changing the "thermometer": in the early 1970s, then-Federal Reserve Chairman Burns invented core inflation to exclude volatile components, we expect that when economic and inflationary pressures significantly intensify in the future, there may be a change in the "thermometer" again. It should be noted that when U.S. Treasury yields may face administrative intervention, inflation may not be an exception. The Asset Implications of the "Great Reset" As seen in the second section, whether resetting capital structures or resetting debt burdens points to a rebalancing of global funds between the U.S. and non-U.S., inflationary pressures, dollar depreciation, and financial repression. This brings clear implications for strategic asset allocation in the coming years. Trump's "Great Reset" is a continuation and upgrade of the "new macro paradigm," thus generally following the asset pricing logic under the new macro paradigm, but with new connotations (see "Asset Pricing under the Great Changes of the Macro Paradigm"). First, dollar depreciation may be an intersecting path for the U.S. to shift from virtual to real and to resolve debt. The shift from virtual to real also means that the dollar's return to the system faces challenges; before the resurgence of U.S. manufacturing, reshaping dollar credit may require a package of physical assets to enhance its credibility. The physical assets here include not only precious metals and energy resources but also strategic materials such as ports and docks Therefore, the depreciation of the US dollar is more likely to be reflected in a basket of physical assets. Second, US Treasury bond yields are currently and will likely spend a long time in a "boring" period. Trump's attempts to re-industrialize, narrow the trade deficit, and strategically withdraw globally mean that the willingness to hold US Treasuries overseas will further decline. Germany and even the broader European fiscal landscape, as well as Japan's interest rate center, may trend upwards, indicating that developed countries' ability to hold US Treasuries will weaken. Under the dynamic balance of high endogenous US Treasury yields vs. exogenous suppression, and the reduction of US Treasuries held overseas vs. increases domestically, we expect the 10-year US Treasury yield to maintain a central level of +4.0% (see "Asset Pricing under the Macro Paradigm Shift"). Chart 11: During Trump's first term, overseas trends reduced holdings of US Treasuries Note: Cumulative values start from 1995, with 4Q1994 recorded as $0 billion. Source: Haver, CICC Research Department Third, physical assets are entering a super cycle. The physical assets here include not only commodities but also infrastructure such as ports, power grids, pipelines, and logistics. A weak dollar is just a bonus; the key is the supply-demand imbalance during the transition from virtual to real, and the natural attributes of being anti-inflation and anti-volatility will cause physical assets to shine again in the long term (see "Looking at 'China's Special Valuation' from the New Macro Paradigm"). In recent years, as the dollar system faces challenges and the global financial system undergoes a re-anchor, we have seen the financial attributes of gold (such as against the dollar and US Treasury yields) increasingly diminish. Similarly, the pro-cyclical nature of global physical assets may also weaken: they are no longer just production materials but may become the anchor of the new system. Chart 12: The dollar cycle and the commodity/US stock cycle are expected to converge again Source: Bloomberg, CICC Research Department Fourth, US stock valuations are declining, and there is a style shift. Value cyclicals are expected to outperform the broader growth market in the long term, i.e., the Dow Jones is expected to outperform the Nasdaq. First, during periods of high nominal GDP growth in the US, US stocks and growth valuations often trend downward over several years, while value cyclicals tend to outperform growth. The possible logic is that when nominal growth is high for an extended period, the market tends to allocate more to styles or sectors with high earnings elasticity along with high nominal growth: finance, industrials, materials, energy, and consumption, which are more concentrated in the Dow Jones index. Second, Trump's restructuring of capital and push towards real assets may benefit the Dow Jones, which better represents industrial capital, while negatively impacting the Nasdaq, which better represents financial capital. Third, in the "Macro Market Exploration February Report: DeepSeek Triggers Revaluation of US-China Assets," we pointed out that DeepSeek has impacted the "AI narrative" in the US over the past two years, and it will take time to digest the overly optimistic earnings expectations of US AI tech companies. Fourth, under the super cycle of physical assets, global funds often rebalance between US stocks and physical investments over the long term, thus putting pressure on the valuation trend of US stocks, especially growth stocks Last but equally important, the dollar system is loosening, and global capital is being rebalanced. From 1980 to 2024, foreign capital has cumulatively net purchased USD 2.3 trillion in U.S. stocks, while domestic U.S. funds have only net bought USD 462.4 billion. The trend of foreign capital inflow was particularly steep during the globalization acceleration period from the 1990s to the 2010s. Notably, since the birth of ChatGPT, foreign capital has been the absolute main force in net purchases of U.S. stocks, accounting for a cumulative 70.2%. This reflects the trust in the safety and growth potential of dollar assets during the globalization period, but this trust is beginning to show cracks with the U.S. global contraction strategy, and global capital is likely to rebalance between the U.S. and non-U.S. assets. Chart 13: When the nominal GDP growth rate is high, U.S. stock valuations are often in a downward cycle. Source: Bloomberg, http://www.econ.yale.edu/~shiller/data.htm, China International Capital Corporation Research Department Chart 14: The super cycle of physical assets and the rebalancing of U.S. stock valuations. Source: https://davidjacks.org/data/, Bloomberg, China International Capital Corporation Research Department Chart 15: In the era of globalization, overseas funds continue to increase their holdings in U.S. stocks. Note: Cumulative holdings are calculated from Q1 1980, with 4Q1979 set at USD 0 billion. Source: Haver, China International Capital Corporation Research Department Chart 16: Since the birth of ChatGPT, foreign capital has been the main force in net purchases of U.S. stocks, accounting for 70.2%. Source: Haver, China International Capital Corporation Research Department Chart 17: After the European debt crisis, European funds have continuously flowed into U.S. stocks on a large scale, accelerating after the pandemic. Source: Haver, China International Capital Corporation Research Department Fifth, we are optimistic about European stocks. On the surface, against the backdrop of rearmament in Europe and Germany's large fiscal policies, euro assets are expected to be boosted. Fundamentally, in the context of multipolarity and the loosening of the dollar system, we expect that the European funds that have long flowed into dollar assets are likely to trend back to Europe (Chart 32) This will have a profound impact on assets in the US and Europe. Sixth, we are optimistic about emerging markets, especially Chinese assets. Generally speaking, a weak dollar tends to benefit global capital expenditure and emerging market stocks. In particular, the long-term re-industrialization of emerging markets not only boosts local demand but also brings incremental external demand to China through capital goods and service trade. As pointed out in the "Macroeconomic Market Exploration March Report: US-China Revaluation, from Trading ABC to Allocating ABC*" report, the revaluation of US stocks, the weakness of the dollar, combined with China's supply and demand policies, is expected to lead the market, especially foreign capital, from the current short to medium-term trading AIboostedbyChina (ABC) to the medium to long-term allocation AIboostingChina (ABC*), thus forming a positive feedback loop with the long-term appreciation of the renminbi. Chart 18: A weaker dollar benefits the performance of emerging market stocks Source: Bloomberg, CICC Research Department Seventh, we are optimistic about global "cash cows." In the "Great Reset" era, policy uncertainty increases, and macroeconomic volatility intensifies. Cash was trash; cash is treasury (see "Global 'Cash Cows' Under the New Macroeconomic Paradigm"). Especially as the safety of US Treasury bonds declines, "cash cow" assets from the US, China, Europe, and Japan are expected to become the bottom layer of global asset portfolios. Authors of this article: Zhang Jundong, Fan Li, Zhang Wenlang from CICC, Source: CICC Insights, Original Title: "CICC | Trump's 'Great Reset': Debt Resolution, Moving from Virtual to Real, Dollar Depreciation" Risk Warning and Disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk