Breakfast | NVIDIA fell nearly 3%, Apple’s market value returned to $4 trillion

Market Overview Weak ADP employment data suggests that the U.S. labor market is cooling, boosting expectations for a Federal Reserve interest rate cut, coupled with the prospect of the U.S. government shutdown coming to an end, the Dow Jones Industrial Average surged over 1%. The Nasdaq, however, fell due to the drag from tech stocks. Apple rose 2.16%, with its market value returning to $4 trillion. Nvidia dropped nearly 3%, as SoftBank completely exited its Nvidia position in Q3. CoreWeave plummeted nearly 16% after earnings. The economic bellwether FedEx released an optimistic outlook, boosting investor confidence in traditional economic sectors. Driven by the ADP data, the yield on 10-year U.S. Treasury futures fell by more than 5 basis points, returning below 4.1%; the 2-year yield fell nearly 4 basis points. The dollar dropped 0.48% from its daily high. Bitcoin fell 2.9%, ending a two-day rise. Ethereum dropped over 3.5%, approaching $3,400. Gold rose 0.36%, marking its third consecutive increase. Silver rose nearly 1.5%, returning to $51. During the Asian session, A-shares opened high but fell, with the ChiNext Index dropping over 1%. The photovoltaic sector surged across the board, storage chips were active, and Hong Kong stocks fluctuated slightly higher. Key News People's Bank of China Q3 monetary policy report: A natural decline in the growth rate of total financial volume is expected in the future, and it is necessary to maintain a reasonable interest rate parity relationship; vigorously develop the bond market "technology board", effectively utilizing risk-sharing tools for technology innovation bonds; research and formulate a financial technology development plan for the "14th Five-Year Plan" period, and steadily and orderly promote the application of large models of artificial intelligence in the financial sector. Double 11 battle report: JD.com’s transaction volume reached a new high, with the number of ordering users growing by 40% and order volume increasing by nearly 60%. "Little Non-Farm" October ADP private sector employment decreased by 45,000, the largest decline in two and a half years. White House National Economic Council Director: Some U.S. data from October may be permanently lost. Lisa Su: By 2030, the AI data center market size is expected to exceed $1 trillion, AMD's revenue growth may exceed 35% annually. Barclays downgraded Oracle’s debt rating: Cash may run out by November next year, potentially becoming "junk bonds." "Big Short" Burry: Tech giants’ "underestimated depreciation leads to inflated profits," with Oracle's profits inflated by 26.9% in 2028 and Meta by 20.8%. SoftBank's Q3 net profit doubled, heavily investing in AI stocks for significant gains, with the Vision Fund earning $19 billion, exiting Nvidia and increasing investment in OpenAI. Ahead of Nvidia's earnings report, Citigroup shouted: Buy, as AI demand far exceeds supply, and the bubble theory does not hold water. Capacity is "extremely tight," with customers "urgently increasing orders," TSMC's gross margin is expected to "significantly improve." This may be the most revealing conversation about OpenAI's "true intentions"! Altman: Give us a few months, we are not that crazy, we have a plan. Overnight, three key executives of Tesla left the company, and the Model 3, Model Y, and Cybertruck simultaneously lost their leaders. Tesla plans to expand its Texas Gigafactory, aiming for an annual production of 10 million Optimus humanoid robots. Morgan Stanley: The market underestimates the significance of xAI for Tesla, and FSD 14.3 may become the "steam engine moment" for autonomous driving. Meta's Chief AI Scientist LeCun has been reported to leave to start a new venture, differing from Zuckerberg's vision of "superintelligence." Market Report U.S. and European Stock Markets: The S&P 500 index rose by 0.21%, closing at 6846.61 points. The Dow Jones increased by 1.18%, closing at 47927.96 points. The Nasdaq fell by 0.25%, closing at 23468.301 points. The European STOXX 600 index closed up 1.28%, at 580.13 points. A-shares: The Shanghai Composite Index fell by 0.39%, closing at 4002.76 points, the Shenzhen Component Index fell by 1.03%, closing at 13289 points, and the ChiNext Index fell by 1.4%, closing at 3134.32 points. Bond Market: U.S. Treasuries were closed. Commodities: WTI December crude oil futures rose by 1.51%, closing at $61.04 per barrel. Brent January crude oil futures closed up 1.72%, at $65.16 per barrel. COMEX gold futures rose by 0.28%, closing at $4133.50 per ounce. News Details Global Highlights China's Central Bank Q3 Monetary Policy Report: A natural decline in future financial total growth rate, maintaining a reasonable interest rate parity relationship. The report, presented in a column format, states that the growth of social financing scale and money supply is basically in line with nominal economic growth, while a slightly lower loan growth rate is also reasonable, reflecting changes in China's financial supply-side structure. It continues to optimize the intermediate variables of monetary policy, gradually downplaying the focus on quantitative targets. A natural decline in future financial total growth rate is consistent with China's transition from high-speed growth to high-quality development. Maintaining a reasonable interest rate parity relationship, especially focusing on the important interest rate parity relationships between central bank policy rates and market rates, as well as the yields of different types of assets. Vigorously developing the bond market "technology board" and effectively utilizing technology innovation bond risk-sharing tools. Research and formulate the financial technology development plan for the 14th Five-Year Plan period, steadily and orderly advancing the application of large models of artificial intelligence in the financial sector Double 11 Battle Report: JD.com’s transaction volume hits a new high, number of ordering users grows by 40%, order volume increases by nearly 60%. JD.com announced that the transaction volume of new mobile phone products increased by more than 4 times year-on-year; the transaction volume of home appliances and home goods new products increased by 150% year-on-year; JD.com’s food delivery service participated in Double 11 for the first time, with the average daily order volume of the TOP 300 catering brands increasing 13 times compared to the first month of food delivery launch; live streaming sales orders increased by more than 150% year-on-year; JD Worldwide’s transaction volume of over 1,500 imported brands increased by more than 3 times year-on-year, and JD Global Sales in Japan, South Korea, Singapore, and other places saw transaction volume increase by more than 100% year-on-year; as of November 11, 23:59:59, Xiaomi’s total payment amount across all channels exceeded 29 billion yuan. “Little Non-Farm” issues another warning! October ADP private sector employment decreased by 45,000, the largest decline in two and a half years. ADP data shows that in the four weeks ending October 25, the number of payroll jobs in U.S. private enterprises decreased by an average of 11,250 per week. Cumulatively, 45,000 jobs were lost that month (excluding government employees), marking the largest monthly decline in employment numbers since March 2023. Due to worsening profit conditions and declining economic optimism, the U.S. small business confidence index fell to a six-month low in October. White House National Economic Council Director: Some U.S. data from October may be permanently lost. White House National Economic Council Director Hassett stated that the record-length government shutdown means that some economic data that should have been collected in October may never be recorded, making it difficult to comprehensively assess the health of the U.S. economy. Lisa Su: By 2030, the AI data center market is expected to exceed $1 trillion, AMD’s revenue growth may exceed 35% annually. AMD expects that by 2030, the total market size (TAM) of AI data centers will far exceed this year's approximately $200 billion, with a compound annual growth rate (CAGR) exceeding 40%; in the next three to five years, AMD’s average annual revenue CAGR will exceed 35%, and revenue from AI data centers will grow by an average of 80%. During Su’s speech, AMD’s stock price, which had fallen nearly 4% during the session, turned to increase. Barclays downgrades Oracle’s debt rating: Cash may run out by November next year, potentially becoming “junk bonds”. Barclays Bank downgraded Oracle’s debt rating to “underweight,” pointing out that Oracle’s massive capital expenditures for AI data center construction have far exceeded its free cash flow capacity, with a debt-to-equity ratio as high as 500%, the highest among major technology companies Barclays predicts Oracle's credit rating may drop to BBB-, close to junk bond threshold. “Big Short” Burry: Tech giants “underestimating depreciation leads to inflated profits,” Oracle's profits inflated by 26.9% in 2028, Meta inflated by 20.8%. “Big Short” Michael Burry pointed out that the actual lifespan of AI chips and other equipment is only 2-3 years, but some companies extend the depreciation cycle to 6 years. He expects that from 2026 to 2028, large tech companies will inflate profits by $176 billion due to underestimated depreciation. In September, Bank of America also warned that the future surge in depreciation expenses will severely impact the profitability of tech giants. SoftBank's Q3 net profit doubles, heavily investing in AI stocks and earning $19 billion from the Vision Fund, liquidating Nvidia and increasing investment in OpenAI. The latest financial report shows that SoftBank Group's net profit for the second fiscal quarter reached 2.5 trillion yen (approximately $16.6 billion), a year-on-year increase of 111.9%, marking the third consecutive quarter of profitability, thanks to the soaring value of its tech stock portfolio including Nvidia and Intel. SoftBank stated that it sold all its shares in Nvidia for $5.83 billion in October. SoftBank signed a revised agreement with OpenAI, committing to an additional investment of $22.5 billion. Ahead of Nvidia's earnings report, Citigroup shouts: Buy! AI demand far exceeds supply, bubble theory is unfounded. Citigroup expects Nvidia's earnings report, set to be released on November 19, to show “strong performance with revenue exceeding expectations and guidance raised,” maintaining a “buy” rating and raising the target price to $220. They believe that the current limitation on Nvidia's growth is not weak AI demand, but supply chain bottlenecks such as CoWoS packaging, making the AI bubble theory unfounded. Production capacity “extremely tight,” customers “urgently increasing orders,” TSMC's gross margin expected to “significantly improve”. In the face of explosive demand for next-generation chips from AI giants like Nvidia, TSMC's N3 advanced process capacity is nearing its limit. JPMorgan predicts that by 2026, even if TSMC “squeezes toothpaste” by converting old production lines, there will still be a significant capacity gap. This scarcity, in turn, drives up TSMC's profits, as customers compete to pay high premiums for capacity, potentially pushing its gross margin above 60%. This may be the conversation that best reflects OpenAI's “true intentions”! Altman: Give us a few months, we are not that crazy, we have a plan. OpenAI CEO Sam Altman stated that they are advancing unprecedented investments in infrastructure, products, and research with a “ultimate YOLO (You Only Live Once)” strategic boldness Aiming to create an omnipresent personal AI assistant. Its platform strategy focuses more on ecological empowerment rather than interface control, demonstrating a long-term layout that transcends zero-sum games. In one night, three key Tesla executives left, Model 3+Y+Cybertruck simultaneously lost their leaders! Within 24 hours, Tesla's Model 3/Y and pickup product lines lost their respective "soul figures." Tesla's automotive business is under significant pressure: Cybertruck's second-quarter deliveries fell by 50.8% year-on-year, and Model Y's sales in China saw their first year-on-year decline. The departure of several executives is seen as a signal of Tesla's strategic shift, as Musk is shifting his focus from the automotive business to AI, robotics, and Robotaxi. Tesla plans to expand its Texas Gigafactory, with an annual production of 10 million Optimus humanoid robots! Tesla plans to build a dedicated production line at its Texas Gigafactory for mass production of Optimus humanoid robots, expected to be operational by 2027, with an annual capacity of 10 million units, ten times that of the existing production line. Musk stated that this product is expected to become "the greatest product in Earth's history," fundamentally changing the way humans perform tasks. The project has entered the ground construction phase. Morgan Stanley: The market underestimates the significance of xAI for Tesla, FSD 14.3 may become the "steam engine moment" for autonomous driving. Morgan Stanley believes that Tesla's relationship with xAI, breakthroughs in Full Self-Driving (FSD), vertical integration of chips, distributed reasoning cloud networks, space AI satellites, and the revolutionary production methods of Cybercab will reshape Tesla's long-term value. These strategic layouts far exceed the scope of traditional automakers, pointing to an AI-driven "Muskonomy." Meta's Chief AI Scientist LeCun reportedly leaving to start a business, differing from Zuckerberg's "superintelligence" vision. After the poor performance of the Llama 4 model, Zuckerberg decided to accelerate AI product iterations and reduce long-term foundational research investments. Turing Award winner LeCun advocates for the development of a new generation AI system called "world model," believing that while large models are "useful," they can never reason and plan like humans. Domestic Macro The Ministry of Commerce responds to reporters' questions about the U.S. side's suspension of the implementation of export control penetration rules: Both sides will continue discussions after a one-year suspension. The Chinese side noted that the U.S. announced a suspension of the implementation of export control penetration rules from November 10, 2025, to November 9, 2026, during which entities listed on the U.S. export control "entity list" will be affected For enterprises on the sanctions list, their affiliated companies with more than 50% shareholding will not be subjected to equivalent export control sanctions due to the penetration rules. This is an important measure by the U.S. side to implement the consensus reached during the China-U.S. Kuala Lumpur economic and trade consultations. The two sides will continue discussions regarding arrangements after a one-year suspension. In comparison to 2020-2021, where is the A-share market now? Dongxing Securities believes that the current situation is more akin to August-October 2020, where strategic funds have completed guiding market stock funds into the market, forming the early stage of a slow bull market. In the short term, it may enter a phase of valuation adjustment and high-low switching. Compared to the market phases of 2020-2021, the current round of the market may only have progressed to about 1/3 of the early stage of the previous round in terms of time and space. Behind the stabilization of the property market, what level has the rent-to-sale ratio in Hong Kong reached, and what does it mean for first-tier cities? Recently, Hong Kong's property market has significantly stabilized, with the private residential price index rising for four consecutive months and the rental index increasing for ten months, reaching a historical high. Against the backdrop of a stabilized property market, the net rental yield for mid-to-high-end residential properties in Hong Kong has reached 3.04%, while older residential properties have reached 3.59%. From an international comparison, in a stabilized housing price environment, net rental yields in Tokyo, Hong Kong, New York, etc., are generally around 3%. Furthermore, Cathay Pacific Securities believes that the key to stabilizing housing price expectations lies in stabilizing macro inflation and residents' income expectations. Domestic Companies Hesai Technology turns a profit in Q3, with LiDAR shipments surging over twofold year-on-year, raising full-year net profit guidance. Hesai Technology reported a net income of 795 million yuan in Q3 (up 47.5% year-on-year) and a net profit of 256 million yuan (compared to a loss of 70.4 million yuan in the same period last year). The Q4 net income guidance is set at 1-1.2 billion yuan (a year-on-year increase of 39%-67%), and the full-year net profit guidance has been raised to 350-450 million yuan. Goldman Sachs deeply analyzes China's software industry: number of employees declines, per capita revenue surges by 35%, driving profit margin improvement. Goldman Sachs believes that Chinese software companies are transitioning from a "labor-driven" to a "product-driven" new growth phase. While companies are reducing redundant personnel, they are reallocating resources to core businesses and high-growth areas such as AI. The effects of operational optimization are already evident in the first half of 2025, with the average operating profit margin of the software industry improving from -12% in the first half of 2024 to -6% in the first half of 2025, and there is still considerable room for efficiency improvement. Overseas Macro Market "Big Event": Trump explicitly states the specific amount of "tariff refunds," $2,000 per person reappearing as "pandemic checks"? The U.S. Congressional Budget Office has preliminarily calculated that the cost of Trump's "tariff refund" plan could reach as high as $600 billion, far exceeding the expected tariff revenue of about $300 billion Economists criticize this as an "irresponsible" approach that could lead to severe inflation similar to that caused by pandemic stimulus. U.S. Treasury Secretary Janet Yellen hinted that the "USD 2,000 dividend" may be reflected in tax cuts. BofA: The "AI bubble theory" is a "real boon" for chip stocks, avoiding overcrowding, Nvidia is undervalued. BofA believes that the "AI bubble theory" is a real boon for chip stocks because the prevailing skepticism in the market can prevent overcrowding in the sector, helping to keep the market calm and ensuring healthier, sustainable returns. Nvidia's valuation is only 24 times earnings while maintaining 50% revenue growth, and its stock price does not reflect its true growth potential, indicating significant undervaluation. The AI frenzy "siphons" global capital, has AI caused the dollar to "bottom out"? U.S. tech giants' AI infrastructure investment scale exceeds expectations, projected to exceed USD 3 trillion over five years, attracting capital globally through corporate bond issuance. Barclays stated that this corporate-level transformation has led to a new high in investment contributions to U.S. GDP in 2023, driving economic growth resilience and reassessing interest rate cut expectations, reinforcing the judgment that the dollar has bottomed out. UK unemployment unexpectedly rises, market bets on Bank of England rate cut in December, government autumn budget under pressure. The UK's unemployment rate rose to 5% in September, exceeding market expectations, with a decrease of 32,000 salaried employees. Following the data release, market expectations for a Bank of England rate cut in December rose to 75%. Analysts pointed out that the unemployment data has increased pressure on the government and the Bank of England to change direction, calling for tax cuts and rate cuts, respectively. However, both are not simple. The government must find a way to address the severe fiscal situation facing the country without stifling market vitality. Overseas Companies Buffett's "Last Letter" in full: I was "just lucky," but "Father Time" has caught up with me, I will "go quiet". In his letter, Buffett concluded his legendary 60-year investment career with the British expression "I’m ‘going quiet’." He admitted that he has been favored by "Lady Luck" throughout his life, as if he "drew an unusually long straw." In his farewell, he criticized the greed and comparison among executives, urging his successor Greg Abel to adhere to long-termism, and announced an additional USD 1.3 billion donation to charity. Finally, he left the adage: "You can never be perfect, but you can always get better." As peers fall into the "AI cash-burning competition," Apple has become a safe haven in the tech sector. As Wall Street questions the return on investment from tech giants' AI investments, Apple has become a safe haven due to its low capital expenditures. Its stock price has risen 31% in the second half of this year, far exceeding the broader market and most tech giants Strong cash flow and balance sheet make it a defensive investment choice in the tech sector, but there are voices questioning whether it is merely a "lagging stock" rather than a true hedging tool. Microsoft to invest $10 billion to build AI data centers in Portugal. Microsoft announced it will invest $10 billion to build artificial intelligence data centers in Portugal, becoming one of its major investments in Europe this year. The park is being developed in collaboration with Portuguese developer Start Campus and UK startup Nscale. To address the shortage of computing power, Microsoft is actively expanding its computing infrastructure and has partnered with several emerging cloud service providers. Google to invest €5.5 billion in data centers and offices in Germany. Google, a subsidiary of Alphabet, announced plans to invest €5.5 billion (approximately $6.4 billion) in computing resources and operations in Germany over the next four years, marking another example of tech companies increasing their investments in Europe recently. Today's News Preview U.S. Treasury Secretary Janet Yellen to speak. Federal Reserve Governor Christopher Waller, Federal Reserve Governor Lisa Cook, New York Fed President John Williams, Federal Reserve Governor Michelle Bowman, Philadelphia Fed President Patrick Harker, Atlanta Fed President Raphael Bostic, and Boston Fed President Susan Collins will speak. U.S. Treasury to auction $42 billion in 10-year bonds. Germany's October CPI. OPEC to release monthly oil market report. EIA to release monthly Short-Term Energy Outlook report. Cisco and Circle to announce earnings.