Market Review

The dollar index is expected to record its worst weekly performance since August this week, as investors worry that Trump's tariff policy will eventually drag down the U.S. economy, along with seasonal weakness and overcrowding in dollar long positions. As of the time of publication, the dollar index hovers around 105.92, and is expected to rise for the second consecutive month this month.

Spot gold recorded an overall decline this week. On Monday, news of Israel and Hezbollah nearing a ceasefire agreement eased market risk aversion, while traders took profits, leading to a sharp drop of nearly $100 from the day's high. In the following trading days, gold prices slightly rebounded. As of the time of publication, gold prices hover around $2,660 per ounce, and are expected to record a decline for the first time in five months this month.

In terms of non-U.S. currencies, as the dollar's upward momentum stagnates, non-U.S. currencies have a chance to breathe. This week, the euro, pound, Australian dollar, and Canadian dollar have all risen against the dollar. The Japanese yen has risen significantly. On Friday during the Asian session, the dollar against the yen expanded its decline due to expectations of a rate hike by the Bank of Japan in December and a decrease in U.S. bond yields, briefly breaking below the 150 mark. The yen also benefited from safe-haven buying triggered by tariff concerns, rising nearly 3% this week.

International oil prices experienced relatively volatile trends this week. The news of a ceasefire between Israel and Hezbollah eased market concerns over crude oil supply disruptions. Although OPEC+ postponed its online meeting to discuss production issues until December 5, potentially delaying the increase in production again, WTI and Brent crude oil are still expected to decline this week.

Additionally, the Dow Jones and S&P 500 indices set new historical highs this week; the yield on U.S. 2-year and 10-year Treasury bonds inverted for the first time in two months; in the cryptocurrency space, Bitcoin experienced increased volatility below the $100,000 mark, falling back $8,000 from a high point this week.

Investment Bank Insights Share

Barclays strategists are optimistic that U.S. stocks will perform even better next year, predicting that driven by constructive positioning and a robust macro economy, the S&P 500 index is expected to reach 6,600 points by the end of next year. JPMorgan has abandoned its pessimistic forecast for the S&P 500 index, expecting an 8% increase by 2025.

Morgan Stanley predicts that the dollar will peak before the end of the year and enter a 'bear market pattern' in 2025, and given that the Bank of Japan will raise interest rates while the Australian central bank will slow its rate cuts, the yen and Australian dollar have the greatest potential for appreciation next year.

Bank of America strategists remind investors not to underestimate the trade war risks during Trump's term, predicting that emerging market currencies will decline by 5% in the first half of 2025.

Citigroup pointed out that gold is completely suitable for a 'buy on dips' strategy, expecting a short-term decline but a long-term increase, stating that any price below $2700 is a cheap buying point, reaffirming the prediction that gold prices will reach $3000 by 2025. JPMorgan also maintains a multi-year bullish outlook on gold, predicting that gold prices will rise to $3000 per ounce next year.

Weekly Major Events

1. The ceasefire agreement between Israel and Hezbollah was 'torn apart' the day after it took effect.

Israel and Hezbollah reached a 60-day ceasefire agreement under U.S. mediation, with Israeli troops gradually withdrawing from Lebanon; the agreement came into effect at 4 a.m. local time on Wednesday and aims to achieve a permanent ceasefire. Biden also revealed that he would promote a ceasefire in the Gaza region with multiple countries in the coming days. AFP also reported that Hamas expressed readiness to achieve a ceasefire in Gaza after the ceasefire between Israel and Hezbollah.

However, on Thursday, the day after the ceasefire agreement took effect, both sides accused each other of violating the ceasefire agreement. The Israeli military claimed to have detected the arrival of suspects in several areas in southern Lebanon, which violated the ceasefire agreement with Hezbollah. The Lebanese military claimed that Israel repeatedly violated the ceasefire agreement by infringing on its airspace.

Israeli Prime Minister Netanyahu reportedly instructed the Israeli military to conduct 'intensive combat' if any violations of the ceasefire occur.

2. Trump announced new tariffs on Mexico and Canada

This week, Trump stated that as one of his first executive orders, he will sign all necessary documents to impose a 25% tariff on all products entering the U.S. from Mexico and Canada.

Provincial governors in Canada are calling for Prime Minister Trudeau to convene an emergency meeting before Trump's inauguration to discuss Canada-U.S. relations. A senior official stated that they are already considering the possibility of imposing retaliatory tariffs on certain American products. Mexican President López Obrador also stated that if Trump follows through on his tariff threats after taking office, Mexico will retaliate.

Additionally, Trump also made absurd claims about imposing an additional 10% tariff on Chinese goods. A spokesperson for the Chinese Embassy in the U.S., Liu Pengyu, responded, stating, 'Regarding the U.S. tariffs on China, China believes that the essence of China-U.S. economic and trade cooperation is mutual benefit and win-win, and there will be no winners in a trade war and tariff war.'

Trump stated that imposing new tariffs on Mexico and Canada is to urge the two countries to strengthen border security and crack down on the export of fentanyl to the U.S., while China also needs to take sufficiently strong measures to prevent illegal drugs from entering the U.S. from Mexico.

3. The Federal Reserve maintains a cautious stance on rate cuts

The minutes of the Federal Reserve's November monetary policy meeting show that as the economy remains stable and inflation cools slowly, decision-makers generally support a cautious approach to future rate cuts. The Fed stated that due to the uncertainty of the neutral rate level, assessing the extent of monetary policy restrictions has become complicated, thus 'gradually reducing policy restrictions is appropriate.'

Additionally, the minutes also reveal that Federal Reserve officials are considering 'technical adjustments' to the overnight reverse repurchase agreement rate to align it with the lower bound of the benchmark rate. The minutes indicate that Fed staff believe that lowering the reverse repurchase rate by 5 basis points to align with the lower bound of the federal funds rate might exert downward pressure on other money market rates.

This week, U.S. data showed that the second estimate of GDP for the third quarter indicated that the economy maintained a robust growth rate of 2.8%, with consumer spending showing the largest increase of the year; meanwhile, the core PCE price index that the Fed focuses on accelerated to rise year-on-year in October, further supporting the central bank's cautious stance on rate cuts; the number of initial jobless claims in the U.S. slightly decreased to 213,000, while the previous week's continuing jobless claims unexpectedly rose to a three-year high.

Federal Reserve 'hawkish', Minneapolis Fed President Kashkari stated that a rate cut in December is a reasonable consideration, suggesting that the neutral rate may be higher and that policy restrictions may not be so tight. Chicago Fed President Goolsbee stated that he still advocates for continued rate cuts unless there are signs of overheating in the economy, and slowing the pace of rate cuts as rates approach neutral levels is entirely reasonable.

4. Putin: Decision centers in Ukraine may be attacked using new hypersonic missiles

On November 28, Russia launched a large-scale airstrike on Ukraine's energy infrastructure, prompting Ukraine to issue nationwide air defense alerts in response to incoming missiles, resulting in power outages for at least 1 million people in three regions of western Ukraine.

Putin stated that Russia has used 100 missiles to strike Ukrainian military facilities in response to Ukraine's use of U.S. Army tactical missile systems (ATACMS) against Russian territory. Putin also warned this week that Russia might use the new 'Zaitsev' hypersonic missile to strike at the 'decision-making center' in Kyiv, Ukraine, in response to Ukraine's launching of Western long-range missiles at Russian territory.

Last week, after the U.S. imposed additional sanctions on Russia's third-largest bank, the Russian ruble plummeted, prompting the central bank to take emergency measures this week, stating that it would stop buying foreign currency to alleviate pressure on the financial markets. Putin also reassured the public, stating that there is no reason to panic about the ruble exchange rate and that the situation is under control.

5. The French budget crisis triggers turbulence in financial markets

The French budget dispute has entered a new phase. Prime Minister Barnier is trying to raise 60 billion euros through tax increases and spending cuts to control France's rising public deficit, but this budget proposal has faced opposition in parliament. After making significant concessions, the National Rally made additional demands. Opposition members threatened to vote for a no-confidence motion against the Prime Minister, and the current government faces the risk of being overthrown in the coming weeks.

Financial markets reacted sharply. The French stock market fell to its lowest point in over three months this week, and the French bond market was also impacted. On Thursday, the yield on French benchmark bonds equaled that of Greece for the first time in history, putting this second-largest economy in the EU on par with a country that was once in the eye of the European debt crisis.

6. OPEC+ postponed its virtual meeting to December 5

On Thursday, it was reported that OPEC+ postponed its virtual meeting to December 5. OPEC+ representatives had previously stated that key OPEC+ member countries have begun discussing delaying plans to restore oil production scheduled for January, potentially for several months.

On Tuesday, according to a statement from the Iraqi Prime Minister's Office, the Saudi Energy Minister met with the Russian Deputy Prime Minister and the Iraqi Prime Minister to discuss maintaining stability in the oil market. Eight OPEC+ countries plan to gradually increase production by 2.2 million barrels per month starting in January as previously planned, a plan that was supposed to be implemented in October but was repeatedly postponed due to falling oil prices.

7. The U.S. SEC approves the first exchange for 5X23-hour trading

Startup 24 Exchange, supported by Point72 Ventures, announced this week that it has received SEC approval to operate the 24X National Exchange, becoming the first national securities exchange in the U.S. to allow trading for 23 hours every day from Monday to Friday.

The 24X will be launched in two phases, with the first phase opening in the second half of 2025, with trading hours from 4 a.m. to 7 p.m. Eastern Time. After upgrading the public data feed for reporting U.S. stock prices to operate around the clock, 24X will be permitted to add overnight trading, which will be from 8 p.m. on Sunday to 7 p.m. on Friday, with a one-hour pause between 7 p.m. and 8 p.m. for routine software upgrades and functionality testing.

8. Guangzhou: Adjusting housing provident fund policies

On November 26, the Guangzhou Housing Provident Fund Management Center issued a notice regarding the adjustment of housing provident fund policies, effective from the date of issuance and valid for five years.

Specifically, the maximum loan amount for a single applicant is adjusted to 800,000 yuan, and the maximum loan amount for two or more people applying jointly for the same self-occupied housing is adjusted to 1.6 million yuan. The minimum down payment ratio for applying for housing provident fund loans for the first and second self-occupied housing is 20%. For those purchasing affordable housing, the minimum down payment ratio for housing provident fund loans is 15%.

In addition, families with two or more children (at least one child is a minor) who purchase their first and second self-occupied housing will have the maximum amount of housing provident fund loans increased by 40%.

9. Mergers and acquisitions welcome heavy benefits again!

The Financial Office of the Shenzhen Municipal Committee is publicly soliciting opinions on special policies for mergers and acquisitions, proposing to establish a project library for mergers and acquisitions, connect with Hong Kong to access domestic and foreign merger resources, and 14 specific measures, aiming to comprehensively improve the quality of listed companies in Shenzhen and exceed a total market value of 15 trillion yuan by the end of 2027; to promote a sustained active market for mergers and acquisitions, with the total number of completed projects exceeding 100 and the total transaction value exceeding 30 billion yuan.

The Beijing Securities Regulatory Bureau and the Financial Office of the Beijing Municipal Committee held a seminar on mergers and acquisitions in Beijing, establishing a connection platform for listed companies and unlisted enterprises, merger funds, and other relevant entities, to activate the vitality of mergers and acquisitions in the capital market.

10. Seven departments jointly issued (Action Plan for Promoting High-Quality Development of Digital Finance)

Seven departments jointly issued (Action Plan for Promoting High-Quality Development of Digital Finance), aiming to accelerate the digital transformation of financial institutions, strengthen the foundation for digital finance development, improve the digital finance governance system, support financial institutions in enhancing the quality and efficiency of financial services through digital technology, and promote the high-quality development of China's digital economy.

11. The General Office and State Council: Encourage the development of new logistics models in conjunction with platform economy, low-altitude economy, and unmanned driving.

The General Office of the CPC Central Committee and the General Office of the State Council issued (Action Plan for Effectively Reducing Logistics Costs for the Whole Society), encouraging major logistics technology breakthroughs, promoting the widespread application of technologies such as big data, 5G, and Beidou satellite navigation systems, advancing the research and application of important logistics equipment, systematic integration and innovation of smart logistics, developing new logistics models that combine with platform economy, low-altitude economy, and unmanned driving, improving and optimizing management standards and norms, and supporting the commercial innovation application of enterprises.

12. The 'multiple-entry visa' and 'one-week-one-entry' policies will make travel to Hong Kong and Macau more convenient.

On November 29, with the approval of the State Council, the Exit-Entry Administration of the People's Republic of China decided to implement a 'multiple-entry visa' policy for traveling to Hong Kong in Shenzhen, and a 'one-week, one-entry' policy for traveling to Macau in Zhuhai, as well as a 'multiple-entry visa' policy for traveling to Macau in the Hengqin Guangdong-Macao Deep Cooperation Zone.

Starting from December 1, 2024, residents of Shenzhen and holders of residence permits can apply for a 'multiple-entry visa' for traveling to Hong Kong, allowing unlimited trips to Hong Kong within one year, with each stay not exceeding 7 days.

13. Buffett announces latest will arrangements

Berkshire Hathaway issued a statement saying that Buffett converted 1,600 shares of Class A Berkshire stock into 2.4 million shares of Class B stock and donated them to four family foundations. Following this donation, Buffett's holdings of Class A shares in Berkshire Hathaway will decrease to 206,363 shares (approximately $147.4 billion).

In addition, Buffett stated in a statement that after his death, his children will be fully responsible for gradually distributing all Berkshire shares he holds, and the method of distribution 'must not betray the special trust that Berkshire shareholders have in Charlie Munger and me.'

Article forwarded from: Jin Shi Data