Breakfast | US stocks faced a "Black Tuesday," with all three major indices hitting new lows in over a week, led by declines in technology stocks

Market OverviewConcerns over high valuations have intensified, U.S. stocks faced a "Black Tuesday", with all three major indices hitting new lows for over a week, the Nasdaq fell 2%, leading the decline in tech stocks, with the IT sector dropping over 2%; ahead of the shareholder meeting, Tesla fell over 5%; AI concept stocks plummeted, with Nvidia and Palantir, shorted by the fund of Michael Burry, the prototype of the movie "The Big Short," falling nearly 4% and almost 8% respectively, while Oracle dropped nearly 4%; Advanced Micro Devices saw a post-market drop of up to 10% due to disappointing earnings, Pinterest fell nearly 20% after hours, and AMD had a post-market drop of 3% due to less-than-stellar guidance.U.S. Treasuries rebounded, with the yield on the 10-year Treasury moving away from a three-week high. The U.S. dollar index recorded five consecutive days of gains, reaching a three-month high; the British pound fell nearly 1% during the day to a nearly seven-month low, and the offshore yuan fell over a hundred points, breaching 7.13 to a nearly three-week low. Cryptocurrencies have suffered significant losses, with Bitcoin falling below $100,000 for the first time in over four months, and Ethereum dropping over 10% during the day.Commodities broadly declined: Oil halted a three-day rise, falling from a one-week high, with U.S. oil dropping nearly 2% during the day. Gold fell back below $4,000, dropping nearly 2% during the day, with futures gold closing at a nearly one-month low. Copper fell for four consecutive days, closing down nearly 2% to a nearly two-week low.During the Asian session, A-shares experienced volatile adjustments, with the ChiNext Index falling nearly 2%, precious metals and innovative pharmaceuticals leading the decline, while local stocks in Fujian and the banking sector led the gains, and Hong Kong stocks saw widespread declines in gold stocks.Key NewsJoint Communiqué from the 30th Regular Meeting of Chinese and Russian Premiers: Deepening cooperation in Arctic shipping routes, artificial intelligence, and information technology.China's Ministry of Commerce commented on ASML semiconductor-related issues: The Dutch side continues to act unilaterally and has not taken any practical actions to resolve the issues, hoping the Dutch side will stop interfering in internal corporate affairs.The U.S. Supreme Court will make a decision on Wednesday, with the fate of Trump's tariffs resting on three justices he appointed; U.S. Treasury Secretary Yellen stated she would go to the Supreme Court, emphasizing the importance of tariffs.The U.S. Senate failed to pass a funding bill, and the federal government "shutdown" will break records.Wall Street warns: The market is overly optimistic about inflation, beware of "hawkish surprises" risks; CEOs of Goldman Sachs and Morgan Stanley issued warnings: U.S. stock valuations are too high, and a correction of at least 10% may occur.The cryptocurrency market is once again in turmoil, with Bitcoin falling below the $100,000 mark for the first time since June, and Ether plummeting 10%.Data from job site Indeed: U.S. job vacancies in October fell to the lowest level since April 2021.Two AI concept stocks fell after earnings reports: AMD reported a 36% year-over-year revenue growth in Q3, but the Q4 guidance was not impressive, leading to a post-market drop of 3%. Advanced Micro Devices had disappointing earnings last quarter and guidance for this quarter, leading to a post-market drop of 10%NVIDIA partners with Deutsche Telekom to build Europe's largest AI center: Deploying up to 10,000 GPUs, increasing Germany's AI computing power by 50%.Apple plans to launch its first low-priced Mac, priced well below $1,000, challenging Microsoft and Chromebooks.U.S. office real estate crisis accelerates: Office building CMBS default rate exceeds 11.8%, reaching a historic high, surpassing the peak of the 2008 financial crisis.Market ReportU.S. and European Stock Markets: The S&P 500 fell 1.17%, closing at 6,771.55 points. The Dow Jones Industrial Average dropped 0.53%, closing at 47,085.24 points. The Nasdaq Composite declined 2.04%, closing at 23,348.637 points. The European STOXX 600 index fell 0.30%, closing at 570.58 points.A-shares: The Shanghai Composite Index fell 0.41%, closing at 3,960.19 points; the Shenzhen Component Index dropped 1.71%, closing at 13,175.22 points; the ChiNext Index declined 1.96%, closing at 3,134.09 points.Bond Market: By the end of the bond market, the yield on the U.S. 10-year benchmark Treasury bond was about 4.09%, down about 2 basis points during the day; the yield on the 2-year U.S. Treasury bond was about 3.58%, also down about 2 basis points during the day.Commodities: WTI December crude oil futures fell 0.80%, closing at $60.56 per barrel; Brent January crude oil futures fell 0.69%, closing at $64.44 per barrel. COMEX December gold futures fell 1.33%, closing at $3,960.5 per ounce. COMEX December silver futures fell 1.58%, closing at $47.291 per ounce. LME copper futures fell about 1.8%, closing at $10,664 per ton. LME aluminum futures fell nearly 1.5%, closing at $2,859 per ton.News DetailsGlobal HighlightsJoint Communiqué from the 30th Regular Meeting of Chinese and Russian Premiers: Deepening Cooperation in Arctic Navigation, Artificial Intelligence, and Information Technology. According to Xinhua News Agency, the two sides agreed to cooperate on Arctic issues and deepen cooperation within the framework of the Arctic Navigation Cooperation Subcommittee of the Regular Meeting of Chinese and Russian Premiers. An expert committee on artificial intelligence cooperation will be established within the framework of the AI working group of the Communication and Information Technology Cooperation Subcommittee of the Regular Meeting of Chinese and Russian Premiers, serving as an analysis and consultation mechanism to provide specific recommendations, technical solutions, and practical paths for cooperation in areas such as ethical governance, standardization, and industrial application of artificial intelligence. Strengthening exchanges between the National Internet Information Office of the People's Republic of China and the Federal Service for Supervision of Communications, Information Technology, and Mass Media of the Russian Federation in relevant fieldsThe Ministry of Commerce of China comments on issues related to ASML: The Dutch side continues to act unilaterally and has not taken any practical actions to resolve the issues, hoping the Dutch side will stop interfering in the internal affairs of enterprises. According to the Ministry of Commerce of China, the Dutch government issued an administrative order on September 30, improperly intervening in the internal affairs of ASML, after which the Dutch corporate court made an erroneous ruling depriving Chinese enterprises of their equity, severely infringing on the legitimate rights and interests of Chinese enterprises. Subsequently, the Dutch government ignored the reasonable demands repeatedly raised by the Chinese side during consultations, showing no constructive attitude or actions, and escalating the global supply chain crisis. ASML (Netherlands) announced on October 26 that it would stop supplying wafers to ASML (China), resulting in the latter's inability to produce normally, causing turmoil and chaos in the global semiconductor supply chain. The Dutch side should bear full responsibility for this.The U.S. Supreme Court will make a decision on Wednesday, the fate of Trump's tariffs rests with three justices he appointed himself. The core of the case is whether the president has the authority to impose tariffs without explicit authorization from Congress during a national security emergency. Although the court is led by justices appointed by the Republican Party, the three key justices personally appointed by Trump—Barrett, Gorsuch, and Kavanaugh—are under close scrutiny, as they have previously hinted that they may not support the president's expansion of power. Analysts believe that Kavanaugh is most likely to support the tariffs, Gorsuch is doubtful due to his textualism, and Barrett's attitude is more pragmatic, making her one of the most unpredictable "swing votes." The final outcome of the case will depend on the voting tendencies of these justices.U.S. Treasury Secretary Yellen: I will go to the Supreme Court, emphasizing the importance of tariffs. The U.S. Supreme Court is set to hear whether Trump's tariff policy is legal this Wednesday, and Yellen publicly stated that she would go to the Supreme Court to "emphasize the importance of tariffs." If the court makes an unfavorable ruling, "we will find another way." Trump had previously considered attending the hearing in person but later changed his mind, stating he would not be present, "I don't want everyone to focus on me. This is not about me personally, but about our country."The U.S. Senate failed to pass the funding bill, the federal government "shutdown" will break records. The U.S. Senate failed again on the 4th to pass the temporary funding bill for the federal government. This means that the current federal government "shutdown," which began on October 1, is about to break the historical record of a 35-day shutdown from late 2018 to early 2019, becoming the longest government "shutdown" in U.S. history.After a month of shutdown, the U.S. government finally shows "signs of reopening"After 34 days of the U.S. federal government shutdown, a breakthrough has emerged, with senior Senate Republicans expressing optimistic signals, stating that they are close to a solution. Although both parties sense progress, the issue of healthcare subsidies remains the core obstacle to reaching an agreement, and moderate House members have proposed specific compromise plans to try to break the deadlock.The U.S. is heading towards a "liquidity crisis," is the "government shutdown" equivalent to a rate hike? The next steps are crucial for the market.The core reason for the liquidity crunch is that the government shutdown has forced the Treasury to increase its cash balance from $300 billion to $1 trillion over the past three months. The U.S. government shutdown has withdrawn $700 billion in liquidity from the market, leading to a sharp decline in bank system liquidity and a surge in financing rates, with effects comparable to multiple rate hikes. Key financing indicators show that market pressure has reached a critical point.Analysis points out that the trillion-dollar fiscal cash could trigger risks for assets. If financing conditions worsen further before the government "reopens," the market may replay the vicious cycle of the 2019 repurchase crisis. However, the crisis also contains opportunities; once the government reopens, the Treasury will release hundreds of billions of dollars in cash, and this "invisible quantitative easing" could trigger a massive buying spree for risk assets, driving the stock market significantly higher by year-end.Wall Street warns: The market is too optimistic about inflation, beware of "hawkish surprises" risk.Deutsche Bank and JP Morgan warn that investors may underestimate the persistence of inflation and the lagging effects of tariffs. Deutsche Bank believes that strong economic growth, rapid interest rate cuts, fiscal stimulus, and rising energy prices are accumulating inflationary pressures; JP Morgan estimates that tariffs could push the U.S. core CPI up to 4.6% by 2026. If inflation exceeds expectations, the central bank may be forced to turn hawkish again, leading to a stock market correction and a rebound in gold.Goldman Sachs and Morgan Stanley CEOs issue warnings: U.S. stock valuations are too high, a correction of at least 10% may occur! The CEOs of Goldman Sachs and Morgan Stanley believe that despite strong corporate earnings, the current valuation levels are concerning, especially for technology stocks. Goldman Sachs expects a potential correction of 10% to 20%, but emphasizes that it is a healthy adjustment rather than a crisis. Meanwhile, Goldman Sachs and Morgan Stanley remain optimistic about the Asian market, favoring growth prospects in China, Japan, and India.The cryptocurrency market is once again in turmoil, Bitcoin falls below $100,000 for the first time since June, Ethereum plunges 10%. On Tuesday, Bitcoin's price accelerated its decline, falling below the $100,000 mark for the first time since June, dipping to around $99,932, and breaking below the 200-day moving average, marking the second-largest single-day drop of the year. According to coinglass statistics, over the past 24 hours, 342,000 people across the network were liquidated, with liquidation amounts exceeding $1.3 billion, of which long positions accounted for 85% of the losses“Institutional demand for Bitcoin falls below mining speed for the first time in 7 months”. Analysis suggests that the shadow of turmoil in the cryptocurrency market in October still lingers, and investors are unlikely to enter the market easily until clear signals of price support emerge. Meanwhile, institutional demand for Bitcoin has fallen below the speed of new coin mining for the first time in seven months, indicating that large buyers may be retreating. Additionally, some previously dormant wallets have been activated, and profit-taking has added some selling pressure to the market.Indeed data: U.S. job vacancies in October fall to the lowest level since April 2021. Indeed's job vacancy index was reported at 101.9 as of October 24, the lowest level since early February 2021. This level represents a decrease of about 0.5% from the beginning of the month and a decline of about 3.5% from mid-August, which was the last time the U.S. Bureau of Labor Statistics published related data. The index is benchmarked to 100 as of February 2020.AMD's third-quarter revenue exceeded expectations with a 36% growth, but fourth-quarter guidance is not impressive. The midpoint of the revenue guidance range is $9.6 billion, which, while above the average analyst expectation of $9.2 billion, is still below some analysts' optimistic forecast of $9.9 billion; the gross margin guidance is 54.5%, in line with analyst consensus expectations. Following the earnings report, AMD's stock price fell about 3% in after-hours trading.Supermicro's performance and guidance are disappointing, with first-quarter revenue and EPS earnings both falling short of expectations, and second-quarter EPS guidance also underwhelming. After the earnings report was released, the stock price fell by as much as 10% in after-hours trading.NVIDIA partners with Deutsche Telekom to build Europe's largest AI center: Deploying up to 10,000 GPUs, boosting Germany's AI computing power by 50%! The two companies will jointly build a €1 billion ($1.2 billion) data center in Munich, Germany, expected to begin operations in the first quarter of 2026, which will enhance Germany's AI computing capacity by approximately 50%.Severe shortage of storage chips, DRAM and DDR prices rising “uncontrollably,” UBS raises target prices for Samsung and SK Hynix. The storage chip industry is facing a "severe shortage," with a UBS report indicating that DDR memory contract prices are expected to rise by 21% or more quarter-on-quarter in the fourth quarter of 2025. Based on this, UBS has raised the target stock prices for Samsung Electronics and SK Hynix, and expects the supply shortage to last at least until the end of 2026, with price increases likely to continue into the first quarter of 2027Apple plans to launch its first low-priced Mac, priced well below $1,000, challenging Microsoft and Chromebooks. Media reports indicate that Apple is preparing to launch its first low-priced Mac laptop, expected to be priced well below $1,000, with a debut as early as the first half of next year. The new device will use an iPhone processor and low-end LCD screen, targeting the education and entry-level markets, challenging Chromebooks and Windows PCs.The U.S. office real estate crisis accelerates: CMBS default rate for office buildings exceeds 11.8%, hitting a historic high, surpassing the peak of the 2008 financial crisis. In October, the CMBS default rate for U.S. office buildings soared to 11.8%, reaching a historic high and surpassing the peak of 2008. In just three years, this rate has skyrocketed tenfold from 1.8%. The prevalence of remote work has driven the vacancy rate up to 20%, with San Francisco reaching as high as 36.9%. By 2025, $230 billion in office loans will mature, with many projects already facing defaults, posing risks of asset revaluation and loss spread for regional banks and pension funds.Domestic MacroU.S. media: China has never had this level of pricing power over maritime iron ore and will begin to take control. The world's largest undeveloped iron ore mine, Simandou, has officially commenced production. Through key equity stakes and infrastructure dominance by its leading enterprises, China has for the first time secured a stable supply of high-quality maritime iron ore. This move will reshape the global iron ore landscape, which has been monopolized by three major players, enhancing China's pricing power over iron ore.How the new gold policy affects market participants. CITIC Construction Investment Securities believes that the intention of this new gold policy is clear: to guide trading towards exchanges, enhance regulatory transparency, and divert investment and consumption demand. It affects three groups: exchange members must strictly declare, investors face lower tax burdens for on-exchange trading, and processing retailers may see increased costs passed on to consumers.Deutsche Bank: Gold ETF sell-offs are weakening, and the impact of China's new tax policy is minimal. The recent wave of gold ETF sell-offs that drove gold prices down is gradually weakening, with cumulative sell-offs reaching 86% of the previous total, indicating that most selling pressure has been released and that price corrections are nearing an end. Meanwhile, the impact of China's new value-added tax policy on gold is expected to be mild, as falling gold prices offset cost pressures while investment demand remains stable.Hong Kong real estate market rebounds: Daniel Zhang and other billionaires flock to buy super luxury homes, mainland buyers have spent nearly 100 billion in Hong Kong real estate. The transaction volume in Hong Kong's real estate market has significantly rebounded, with mainland buyers spending nearly HKD 100 billion on properties in Hong Kong in the first nine months, and over 80% of new luxury home buyers in Hong Kong are from the mainlandFormer Alibaba CEO Daniel Zhang recently purchased a four-bedroom property for HKD 53.54 million. One important reason for mainland residents buying homes in Hong Kong is that, in addition to the high rental yield, Hong Kong's position is becoming increasingly important in the context of the US-China rivalry amid a general environment of interest rate cuts.Domestic CompaniesTesla China's shipment volume returns to a downward trend: October down 9.9% year-on-year, down 32.3% month-on-month. According to data released by the China Passenger Car Association on Tuesday, Tesla's Shanghai factory shipped 61,497 vehicles in October, a year-on-year decline of 9.9%, reversing the slight growth of 2.8% in September, and a month-on-month drop of 32.3%. Global demand is weakening simultaneously, the termination of US tax subsidies, and a sluggish European market are putting pressure on sales.Feitian drops below 1700 yuan, Moutai faces its most uncertain winter.Starbucks China changes ownership, plans to open 12,000 more stores in the future.Overseas MacroeconomicsThe awkward truth behind the US stock market rally: Apart from the seven giants, 493 other stocks are "in deep trouble". The S&P 500 index's rally heavily relies on the seven major tech giants, whose third-quarter profit growth reached 27%, while the profit growth of the remaining 493 constituent stocks was only 8.8%. The equal-weighted index is trading at a discount of over 25% relative to the S&P 500, approaching the levels seen during the tech bubble in the late 1990s. Despite concerns about market concentration leading to a bubble, Wall Street strategists believe that as long as the tech giants maintain strong earnings, this trend should continue, and the likelihood of a significant market downturn is low.US dollar index breaks above 100 for the first time since August 1. The core driver of this round of gains stems from the unexpectedly hawkish signals released by Federal Reserve Chairman Jerome Powell, combined with the relative weakness of monetary policies in major economies such as Japan and Europe, as well as safe-haven demand arising from the political deadlock in the US.Pound falls to a seven-month low, UK Chancellor Reeves promises to cut debt, paving the way for tax increases. UK Chancellor Reeves hinted that the Labour government may abandon its "no tax increase" pledge to address a fiscal gap of up to £35 billion. She emphasized that reducing debt and curbing inflation are top priorities, setting the stage for potential tax increases in the November budget.Overseas CompaniesOpenAI palace intrigue follow-up: 52-page PPT full of Ultraman "dirt," beautiful CTO reports. Former OpenAI Chief Scientist Ilya Sutskever's 62-page testimony reveals that the firing of Ultraman in November 2023 was planned for a yearSutskever wrote a 52-page secret memorandum based on second-hand information and screenshots provided by former CTO Murati, accusing Altman of "lying, manipulating, and sowing discord," which led to the decision for his dismissal. The board had discussed a merger with competitor Anthropic within 24 hours of Altman's firing, but it was shelved due to practical obstacles.When Microsoft's CEO said "insufficient power may lead to chip pile-up," neither he nor Altman knew how much power AI actually needs. The AI giants are facing a new bottleneck: power. Microsoft CEO Satya Nadella revealed that the chips the company has purchased are idle due to insufficient power and data centers. Altman pointed out that tech companies are in a dilemma: if they lock in long-term power contracts now, they may suffer losses in the future due to breakthroughs in new energy technology; if they underinvest, they may not meet the explosive growth in AI demand.SK Hynix skyrocketed 240% this year, South Korean exchange issues rare risk warning. On Monday evening, the South Korean exchange issued an "investment caution notice" for SK Hynix stocks, which led to a 5.4% drop in SK Hynix on Tuesday on the Korean stock exchange, marking the largest decline in three weeks. Such warnings from the South Korean exchange for large-cap stocks are extremely rare and are triggered by sudden or unexplained large fluctuations in stock prices or trading volumes, aimed at reminding investors to act cautiously without immediately halting trading.Shorting the AI bubble, the "big short" has an 80% position shorting Palantir and Nvidia. Michael Burry is betting on the collapse of the AI bubble with real actions. Regulatory filings show that about 80% of the positions in his managed Scion fund are concentrated on shorting Nvidia and Palantir, with a nominal value exceeding $1 billion. However, both stocks have continued to rise since the end of September, putting his positions in a paper loss. Palantir CEO angrily responds to the "big short", calling the move "insane" and questioning the existence of market manipulation.As one of Tesla's top ten shareholders, Norway's sovereign fund will vote against Musk's "trillion-dollar compensation package" again. As early as 2024, this largest sovereign wealth fund in the world had opposed Musk's $56 billion compensation plan. Musk previously stated that if shareholders reject his compensation plan again, he would leave Tesla. Morgan Stanley warned that if Musk's compensation plan is not approved, Tesla's stock price could face an immediate sell-off of over 10%, which would be seen by the market as a vote of no confidence in his leadershipUber Q3 total bookings surged 21%, operating profit fell short of expectations. Uber's Q3 operating profit was $1.11 billion, below analyst expectations. However, operational data was impressive, with total bookings increasing by 20% to $49.7 billion, exceeding analyst forecasts. The ride-hailing and food delivery businesses performed strongly, but the freight business continued to lag. The financial report showed the company's Q3 profits were weak, and the growth guidance for Q4 has slowed, causing the company's stock price to drop over 5%.The U.S. "merger and acquisition frenzy" is approaching historical records, with 4 major mergers in one day totaling over $80 billion. On Monday, Kimberly-Clark acquired Tylenol's parent company, Kenvue, for $48.7 billion. After the merger, Kimberly-Clark will become the world's second-largest health and personal care product seller, behind Procter & Gamble. The other three transactions cover the energy, industrial, and mining sectors. This year, the number of transactions over $1 billion in the U.S. has reached 57, setting a record high since 1970. The U.S. merger and acquisition frenzy reflects the recovery of global trading activities, with the total global merger and acquisition transaction amount reaching $3.8 trillion this year, approximately 38% higher than the same period in 2024.Wind power giant Ørsted "cuts off an arm to survive," selling half of the shares in the "world's largest offshore wind farm" to PE giant Apollo for $6.5 billion. Ørsted is raising $6.5 billion from Apollo by selling equity in core assets to alleviate the dual pressures of rising interest rates and North American policy risks. This transaction will help the company maintain operations on other projects while bringing in Apollo's capital and expertise in infrastructure, ensuring the continued construction of flagship projects and advancing key decarbonization projects in the UK.Pfizer's Q3 revenue fell 6% year-on-year, exceeding expectations, with non-COVID business becoming a highlight, and the company raised its full-year profit forecast. Pfizer's Q3 revenue was $16.65 billion, a 6% year-on-year decline, mainly due to a drop in demand for COVID products. Pfizer expects adjusted earnings per share for the full year to be $3.00 to $3.15, up from the previous estimate of $2.90 to $3.10, as growth in its non-COVID business offsets the overall revenue decline. Pfizer's stock rose over 2% in pre-market trading but fell nearly 1.5%.Today's News PreviewChina, the U.S., Eurozone, and the UK October services and composite PMI.Eurozone September PPI.Trump may personally attend the hearing, observing the U.S. Supreme Court's key "tariff ruling."The 8th China International Import Expo will be held in Shanghai from November 5 to 10.The Bank of Japan will release the minutes of its September monetary policy meeting.Cyrus is expected to be listed on the Hong Kong main board on November 5.U.S. EIA crude oil inventory changes last week